SBI Cards and Payment Services Ltd (SBICARD) Q2FY27 Concall Transcript - Sep-2026 Qtr
Swapnali: Ladies and gentlemen, good day, and welcome to the SBI Cards and Payment Services Limited Q2 FY '27 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star, then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Salila Pande, MD and CEO, SBI Cards. Thank you, and over to you, Ms. Pande.
Salila Pande (SBI Cards and Payment Services Ltd): Thank you, Swapnali. A very good afternoon to everyone who is present on the call today. Along with the management team of SBI Cards, I extend a warm welcome and sincere thanks for joining us for the Q2 FY '27 earnings call. India's growth outlook remains resilient despite an uncertain global environment. As per RBI, real GDP growth for FY '27 is projected to be 7.1%
Salila Pande (SBI Cards and Payment Services Ltd): up from 6.7% projected earlier, reflecting the strength of domestic economic activity. The International Monetary Fund has also recently raised India's economic growth forecast to 7% for both FY '27 and FY '28, citing resilient domestic demand and strong services activity. The upward revision reinforces India's position as the world's fastest-growing major economy, despite rising global oil prices and persistent geopolitical tensions. Against this macroeconomic backdrop, the growing scale of digital transactions and increasing access to formal credit are contributing to the development of more integrated payments and credit ecosystems. Digital payments ecosystem continues to scale rapidly with UPI remaining at the center of this expansion. UPI transaction volumes grew 27% YoY to approximately 145 billion transactions during the first half of FY '27, underscoring the increasing frequency and ubiquity of digital payments in India. The credit card industry continues to maintain a healthy growth trajectory with cards-in-force increasing by around 10.5% YoY to over 124 million as of August 2026. Cumulative credit card spends for the first 5 months of FY '27 stood at more than INR10 trillion, reflecting the growing scale of the credit card ecosystem. The industry continues to witness evolution, both in terms of customer demographics and usage patterns. As per the industry reports, credit card customer base is becoming younger and more diverse. Nearly half of the first-time credit card users are now aged 30 or below, while approximately 46% of the new users are coming from semi-urban, Tier 2, Tier 3 and rural markets. This reflects the growing democratization of credit and the expanding opportunity to serve customers beyond traditional metropolitan centers. As a customer-centric organization, SBI Card understands this and is well positioned to make the best of these opportunities. Our strategy is focused on building a more robust credit card business, leveraging differentiated products, strategic partnerships, and digital capabilities as key growth levers. During Q2 of FY '27, we continued to focus on building a healthy, sustainable, and well-balanced portfolio, while maintaining our priorities around profitable customer acquisition, customer engagement, operating efficiency, and portfolio quality. During this quarter, we augmented our cobranded credit card portfolio with the launch of Google Pay Flex SBI Card. This credit card is designed to simplify and elevate the everyday payment experience, delivering a convenient blend of rewards, flexibility, and security. We also launched the Advantage SBI Card on SBI YONO to offer a seamless digital journey that enables SBI customers to avail a secured credit card backed by a fixed deposit. We continue to roll out customer-centric national and regional offers with many revered brands including Amazon, Flipkart, Myntra, Air India, Bosch, LG, Sony, HP, among others. We continued the long-term strategic partnership with Apple for instant discount across different Apple products, including the newly launched iPhone 18 Pro. We continue to strengthen our AI capabilities across customer engagement, sales and employee productivity. We are happy to share that CII National Artificial Intelligence -- AI, awarded our hyper-personalization program under the innovative category. Coming to the business performance, our robust business model, disciplined portfolio management, and prudent risk management has enabled us to deliver strong results. Let me share the key metrics. Cards-in-force have grown to around 2 crore 32 lakh with 8% growth YoY. In line with the guidance, we added more than 1 million new accounts during the quarter, witnessing 18% increase YoY. The net card addition for FY '27 till August is at 8,60,000 new cards, which is highest in the industry. We will continue to maintain quarterly run rate of more than 1 million new accounts during the year. Our new account sourcing distribution remains balanced with about 49% sourcing from Banca and 51% from open market during Q2. Total spends for Q2 FY '27 grew by 16% YoY to INR94,763 crore. This was driven by a healthy growth in retail spends of 17% YoY. Corporate spends also grew by 8% YoY. Retail spends per card continue to grow by 9% YoY for Q2 FY '27. Overall, receivables grew by 14% YoY to INR63,010 crore.
Salila Pande (SBI Cards and Payment Services Ltd): 1% from open market this quarter. SBI Card continues to be India's second largest credit card issuer with cards-in-force market share at 18.5%. As regards spends, as per RBI August 2026 data, our spends market share has grown to 19% in FY '27. Total spends during the quarter reached 1,10,689 crore with a growth of around 3% year-over-year. Retail spends reached the highest ever level of 95,299 crore with a 6% growth YoY. This is despite the festive sales being in Q3 this year and there being a seasonality impact on the Q2 spends. We have seen robust growth across most POS and online spends categories. Online spends contributed 62.8% of the tot- total retail spends in the first half year of financial year, witnessing strong growth across discretionary categories. Key categories include consumer durables, furnishing and hardware, apparel, restaurants and jewelry, among others. Corporate spends were at 15,390 crore during the quarter. UPI spends on credit cards continued to grow 17% quarter-over-quarter, majorly in department stores, groceries, utilities, fuel, electronics and apparel categories driven by RuPay and QR acceptance expansion. Tier 2+ markets have the highest UPI active cards-in-force and UPI spends adding to the growth momentum. With festive sales and Diwali starting in October and November this year, we expect the spends to pick up further. Coming to the financial performance for the quarter, revenue from operations was 5,141 crore, registering a 4% YoY growth. PAT was strong at 778 crore with an increase of 75% year-over-year, mainly driven by improved credit cost. Operating cost during the quarter was 2,649 crore with 7% increase YoY. The cost-to-income ratio for the quarter was 58.7%, up 193 basis points year-over-year. We expect cost-to-income to remain around 57% to 59% for the year. Receivables for the quarter were 58,376 crore. We continue to focus on building the EMI book. With festive season and sales now underway, spends and receivables are expected to pick up in Q3 of FY '27. The interest-earning assets were stable at 55% with revolver rate at 22%. Portfolio yield for the quarter was 16.1%. The daily weighted average cost of funds for Q2 was 6.8%. The cost is up by 18 basis points quarter-over-quarter. Net interest margin for the quarter was 10.8%. With cost of funds expected to increase over the next few quarters, we expect NIM to be range-bound. We will continue to optimize our borrowing mix to minimize the impact and of increase in cost of funds, and continue building a bigger EMI-based portfolio to keep the NIM stable. Speaking about the asset quality, actions taken over the last 2-3 years have led to continued improvement in the asset mix, with NPAs now being the lowest post COVID-19. Continuing the reducing trend witnessed over the last five quarters, gross credit cost has improved further by 98 basis points quarter-over-quarter and 342 basis points year-over-year to 5.6%. Gross NPA has reduced by 14 basis points quarter-over-quarter and 95 basis points year-over-year to 1.9%. Net NPA is at 0.77%. Slippage ratio is also showing continued reduction. Company was carrying an additional provision of 70 crore up to the previous quarter. The prolonged conflict in West Asia and the resulting higher energy prices, inflation and interest rates may impact household cash flows. Accordingly, an additional provision of 30 crore has been made to prudently provide for the heightened macroeconomic uncertainty. With this, the company now carries an additional provision of 100 crore rupees as of quarter ended September 30, 2026. With disciplined customer acquisition, prudent portfolio management, we expect gross credit cost to stay around
Salila Pande (SBI Cards and Payment Services Ltd): percent for the current financial year. Subject to any adverse impact of the ongoing geopolitical crisis on asset quality. Our liquidity position continues to be strong. Our Capital Adequacy Ratio was at a comfortable level of more than 26%. ROA for the quarter was 4.4%, 180 bps higher YoY, while ROE was at 18.4%, 631 basis points higher YoY. To conclude, India's credit card industry continues to offer significant opportunities for growth and SBI Card is well positioned to capitalize on them. We will continue to focus on strengthening customer relationships, enhancing our market position, and driving sustainable profitable growth. Our forward agenda rests on five levers: expanding our footprint into tier 2 and tier 3 markets, focusing on banca penetrations, deepening premiumization and spend per card, optimization of credit cost, enhancing our digital and data analytics capabilities, and sustained cost discipline. Now we are open to take questions. Thank you.
Swapnali: Thank you, ma'am. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and then one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and then two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. A reminder to all the participants, you may press star and one to ask a question. We have the first question from the line of Anuj Singla from JP Morgan. Please go ahead. Mr. Anuj, please proceed with the question. Mr. Anuj, please proceed with the question. Due to no response, we will take the next participant. We have the next question from the line of Kunal Shah from Citi. Please go ahead.
Kunal Shah (Citi): Yeah. Thanks for taking the question. So firstly on the overall spend spends growth as well as that translating into the receivables, we were of the view that 2Q could be an infection point with respect to the receivables growth and maybe spends growth should also get into double digit kind of a number. So should we see that traction going forward getting into Q3, maybe Q2 last year had a higher base and that's the reason like spend growth appears to be still in a low single digit kind of a number and how how long would that entire journey take in terms of like spends moving to that level and receivables also improving? Yeah. So that's the first question. And second, with respect to overall margins, if we see the cost of funds, it's been up on a daily average basis by almost like 20 odd basis points, we have not seen that kind of an impact on margins in this particular quarter. But if you have to look at it in terms of the margin profile looking at the rate hikes which are now expected, how do we see the margin trajectory from 10.8 odd percent currently? Yeah.
Salila Pande (SBI Cards and Payment Services Ltd): Yeah. So, Kunal, for your first question, as to the when we had spoken, I think, last quarter or the quarter before that, we had given this guidance that because the festive season as well as the acquisitions that we have been doing, the uptick in the acquisitions which has happened, we had guided that the receivable growth will be witnessed in the second half of the current financial year. And we stick to that guidance that you are right about the base being higher this time, because the festival had started as of 22nd of September 2025 along with the GST benefits, whereas this year the most of the festive festivities have started from 11th of October. So, obviously the spends and they getting translated into receivables will be happening in this cut quarter. And actually we are seeing very encouraging results already in respect of the spends, but it is still early days, and we stick to the guidance that we have given that the spends getting translated into receivables will happen in the second half and will start from Q3 itself.
Kunal Shah (Citi): Yeah, but, so overall
Kunal Shah (Citi): Just in terms of like just having started the festive period at all, maybe how has been the traction in the first few days? And when we look at it, maybe in terms of that entire trajectory of maybe a double digit or mid teens kind of a retail spend growth, if you were to look at it, is that very much visible?
Salila Pande (SBI Cards and Payment Services Ltd): Yeah. So, yes. As I mentioned, we are seeing very good encouraging results, the way the EMI offtake is happening, the way the conversion of spends into EMIs is happening. So, the, in the early days, whatever we have witnessed till now, the results are very encouraging and as of now, as we had said, we will not give a guidance on the asset quality asset growth, because we still need to see how the entire quarter will play out. The guidance we had given was that in the second half, the receivables will grow. We're already witnessing it. And as regards to spends, we will stick to that. In the retail spend category, we continue to see good traction. Festivities have just started and we are expecting the spend growth to be somewhere from the mid-teens to the high-teens for the entire year.
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