SBI Cards Q2FY23 Preview: Profit may grow in double-digit YoY on higher income and lower credit costs – check expectations

SBI Cards Q2FY23 Preview: Index heavyweight SBI Cards and Payment Services Limited is expected to register strong second-quarter earnings for the financial year 2022-23 (Q2FY23) on Thursday, October 27, 2022, Zee Business senior research analyst Varun Dubey said in its preview report.

According to Dubey, SBI Cards' profit may surge by 76.8 per cent year-on-year to Rs 610 crore (estimate) in the July-September quarter of FY23 on the back of higher income and lower credit costs. In comparison, the SBI subsidiary had posted Rs 345 crore profit in the same quarter a year ago.

Similarly, the company’s net interest income (NII) is likely to jump by 19.7 per cent to Rs 1,100 crore (estimate) in Q2FY23 as against Rs 919 crore in the corresponding quarter of the previous fiscal.

The senior research analyst said that the increase in travel and hospitality will benefit SBI Cards and estimated 30 to 40 per cent increase in receivables, similarly, the non-interest income is expected to rise by 25 per cent during the quarter.

The asset quality of the company is also likely to improve, as Dubey expects that the gross non-performing assets (NPA) may come around 2.1 per cent (estimate) in Q2FY23 as against 2.24 per cent YoY and net NPA to be around 0.7 per cent (estimate) from 0.79 per cent YoY.

The monthly Credit Card spends in July and August crossed the Rs 1 trillion mark which is positive, according to Streets. In this regard, SBI Card saw market share gains in August, and therefore BoB Capital estimates 55 per cent YoY growth in spends for Q2FY23.

In line with Zee Business expectations, Axis Securities also estimate that the new customer additions/Spends/CIF growth to remain robust and receivable growth to pick up. Improved business volumes/spends to aid fee income and credit costs to be moderate YoY during the quarter, it said.

Shares of SBI Cards closed over 1 per cent lower on the BSE to Rs 844.9 per share as compared to 0.48 per cent fall in the S&P BSE Sensex. The stock in the last one year has witnessed correction, down around 25 per cent and slipped nearly 9 per cent year-to-date.