SBI Cards & Payment Services conducted a conference call on 26 April 2024 to discuss its financial results for the quarter ended March 2024. Abhijit Chakravorty, MD&CEO addressed the call:

Highlights:

The credit card have been significant contributor to the overall digital growth in the country. There is 21% growth in the number of cards in H2FY22024 and credit card transactions value stood at Rs 9.39 lakh crore rising 11% during the same period.

Total number of credit cards in the industry crossed 100 million in February 2024

Spends have seen an impressive growth with over 27% from Rs 1.4 lakh crore in FY23 to over Rs 1.8 lakh crore in FY24.

The regulator has taken many measures in FY2024 such as offering of card network options to customers, roll out of master directions on internal mechanism in regulated entities, implementations relating to billing account closures and risk weight hike for unsecured lending etc. These measures are crucial for the long-term stability of industry as the credit card penetration in India is increasing.

SBI card has been compliant with regulations and maintained a strong growth momentum

In FY2024, the company has completed 25 years of successful journey in the Indian credit card market.

The new card acquisition was 4.4 million in FY2024 and 1.03 million in Q4FY2024. The company has been selective in new acquisitions. the would maintain new acquisitions at 1-1.5 million per quarter for next two quarters.

The cards base of the company has increased to 1.89 crore end March 2024. It continues to be the second largest credit card issuer in the country.

CIF market share is at 18.6% during FY2024

Cards spends has grown to Rs 3.3 lakh crore during FY2024. Retail spends is at over Rs 2.6 lakh crore up 27% over FY23. Card spends stands at Rs 79653 crore with 11% yoy growth in Q4FY2024. Of this, the retail spends have contributed Rs 69189 crore with 25% yoy growth.

The company has seen good growth in spends across all key spend categories including departmental stores, health, utilities, education, travel, entertainment, restaurant among others. Online spends continue to be strong and have contributed 58% of total retail spends in FY2024.

With new guidelines coming into play corporate spends are at Rs 10464 crore in Q4FY24.

The company expects retail spends to grow at around 23 to 25% in FY25.

Driven by customer centricity, the company has rolled out many new initiatives during FY24. The company will continue to assess, curate and launch more customer centric products. The focus and investment in harnessing the power of technology continues.

In FY2024, the company has rolled out around 2,200 offers across 27,000 cities to enhance festivities of customers.

The company has continued focus on ESG efforts.

The receivables have reached Rs 50846 crore with a 25% yoy growth in FY24. Receivables per card has also grown to Rs 26918 in Q4FY24 from Rs 24293 in Q4FY23.

The share of Interest earning receivables is at around 61% in Q4FY24. The percentage share of revolvers in the receivable mix has increased marginally to 24% in Q4FY24.

The cost of fund was around 7.4% for Q4FY24. The impact of increased risk weight on bank borrowings for NBFCs on the cost of fund was higher by 20 bps.

Given the uncertainty around interest rate cuts, the company expect cost of funds to increase marginally in Q1FY25. However, the company feel comfortable in being able to absorb this nominal increase through transmission onto the asset side and keep NIMs stable.

NIM was 10.9% in Q4FY24 and 11.3% for FY24.

The cost to income was at 51% in Q4FY24 showing improvement due to non-festive season and lower corporate spends proportion.

The cost to income ratio is expected to be in the range of 58 to 60% for FY25. It expected to be at 55% for Q1FY25 due to lower corporate spends targeted to grow gradually.

Gross NPA is at 2.76% end March 2024.

Gross credit cost is at 7.6% in Q4FY 24 as against 7.5% in Q3FY24.

The industry has been witnessing stress in the overall card segment over the last few quarters driven by macro factors like higher leverage and growth in advances.

The company expects the average credit cost for the FY2025 to be lower than the current levels but it may prevail above 7%.

The company continue to leverage a large number of analytic capabilities in order to create early warning triggers about portfolio.

The return on average assets is at 4.7% in FY24 as against 5.6% in FY2023. Going forward the company expect return on average assets to be around 4.5%.

The company look forward to FY25 to continue growth trajectory and scale up the business in a profitable manner.

The company has grown at CIFs at CAGR of 13.5% in the last 5 years.

Spends have grown strong at CAGR of 20.3% in last 5 years.

SBI card is actively working on many initiatives to increase customer focus and thereby growing CIFs and spend in future as well.

Liquidity coverage ratio is at 105% as against the statutory requirement of 85%.