SBI Card reports surprise rise in Q4 net profit at Rs 596 cr on higher consumer spending

SBI Cards and Payment Services Ltd on Friday reported a sudden jump in its net profit to Rs 596 crore in the quarter ended March 2023. This happened due to the increased consumer spending, which overcame higher funding expenses.

The company had reported a net profit of Rs 581 crore in the same quarter of the previous fiscal.

SBI Card said in its regulatory filing that the company's overall income for the January-March 2022-23 period increased to Rs 3,917 crore from Rs 3,016 crore the previous year.

The surprisingly good report of SBI came amid a broader post-pandemic recovery in enterprises and consumer spending, as well as improved asset quality at non-banking financial firms.

The company, which is backed by the country's largest lender, State Bank of India, said the cost of capital increased by 185 basis points to 6.7 per cent over the previous year as interest rates remained high. Net interest margins, a crucial indicator of profitability, decreased 170 basis points in the quarter to 11.5 per cent.

The company further reported that its interest income jumped to Rs 1,672 crore in the fourth quarter, up from Rs 1,266 crore the previous year, while its fees and commissions income increased to Rs 2,090 crore, up from Rs 1,584 crore.

The net profit of the SBI-backed card company increased by 40 per cent to Rs 2,258 crore in 2022-23, up from Rs 1,616 crore in 2021-22.

The entire income for the fiscal year increased to Rs 14,286 crore, up from Rs 11,302 crore in FY22.

According to SBI Card, the company's gross NPA (non-performing assets) and net NPA (non-performing assets) as of March 31, 2023, were 2.35 per cent and 0.87 per cent, respectively as against 2.22 per cent and 0.78 per cent a year ago.

Impairment losses and bad debt expenses jumped by 60 per cent to Rs 630 crore in Q4FY23, compared to Rs 393 crore the previous year.

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