Beat cards, weak revenue growth amid margin compression

PAT grew 19.5% YoY; credit cost improved 301 bps to 6.5%

Revenue ₹5,040.6 Cr with 3.4% YoY growth

Spend growth strong at 27% but revenue growth only 3.4%—mix shift to lower-margin products

RBI data: 4.84 lakh net additions, confirmed highest in industry

Gross NPA 2.04% (down 102 bps YoY), net NPA 0.83% (lowest since Q3 FY23)

Beat prior guidance of 0.9-1.0M new accounts/quarter with >1M this quarter (17% YoY). Per RBI: 4.84L net additions, highest in industry. Signals successful Banca and open-market sourcing.

FY26 guidance assumed steady growth. Q1 FY27 revenue only ₹5,040.6 Cr (+3.4% YoY) despite ₹58,269 Cr receivables (+3% YoY). Growth lags prior expectations due to mix shift away from high-yield revolvers.

Gross credit cost 6.5% this quarter (down 301 bps YoY from 9.6%). Prior guidance 'credit costs to moderate' fully delivered. NPA stock reduced ₹544 Cr YoY to ₹1,191 Cr.

Revolver rates 22% IBNEA with acknowledged 'downward bias.' Prior FY26 call noted potential revolver decline; materialized with mix shift toward EMI (now 33% of receivables portfolio).

Spend market share 19.5% (up from 18.1% FY26). Cards in force share 18.6%. Transaction share also up. Consolidated #2 position maintained across all metrics.

Revolver expected stable with slight downward bias but similar range. No numerical EMI guidance given; uptick expected during festive season. IBNEA initiatives driving better portfolio yields.

Cost of funds expected to remain similar range now but trend higher per market rates. Spend monitored carefully; no substantial impact seen yet. Will stay alert given unsecured lending model.

Focus on spend-to-lend EMI conversion via OEM partnerships, payment gateways, mobile app. Limits being rationalized (increased) for eligible customers based on improved analytics and income imputation. PL product under internal evaluation; not offered to new customers currently.

No specific numbers given. Credit cost will moderate further; initiatives over 1.5-2 years position stock for continued improvement. Receivables growth expected in H2 FY27 with higher acquisitions and festive season.

Both credit card and NBFC lending growing consistently—different use cases (payment vs lending). EMI product pricing competitive with personal loans (9-11 month tenor vs 33-36 months for PL). Large TAM (350-400M credit-scored customers) accommodates both. SBI's customer base (53Cr SBI customers, 1.5-2Cr cardable) provides organic growth.

Opex increase this quarter from wage code change provision and past services liability. Opex growing in line with business growth (card sourcing, spend volumes). Yes, festive season will see higher expenses.

Multiple strategies: increase credit lines (for EMI customers to purchase more), benchmark rate pass-through on incremental book, mix management. NIM expected to hold at current levels via cost of funds management and portfolio actions.

Two components: model and data refresh. Data refresh will lead to ECL release as asset quality improves (happening now with ₹65 Cr release). Model review done annually; unlikely to relax, may enhance. Carrying ₹70 Cr Stage 1 overlay for geopolitical risks. Very confident in robust ECL model.

Corporate target ~20% of spends (industry 20-25%, prefer lower end). Corporate: no lending, income mainly interchange (varies by MCC, card type). ROA low on corporate (fee income only). Retail: fee + interest income, primary profit driver.

Corporate target 20% ± (customer-dependent, seasonal). Retail spend strategies: RuPay card expansion (higher attachment on PSPs), Tier 2/3 market focus, tech investment in hyper-personalization. Active rate up 1pp to 53%. Retail spend up 14% YoY. Focus will continue on retail expansion.

Rental volume minimal; we stopped it due to KYC gaps on end-recipient (landlords). Recent resume is low-volume. Strategy: don't let rental grow large, keep controlled. Some cash-out moved to education/other categories where fees levied. Instance-based fees down now (late fees decline benefit). Will rise again in H2 minus late fee.

Overall portfolio showing resilience. No cohort per se giving concern as of now. Entry rates at decadal lows.

Festive season will see higher cost-to-income. Yearly guidance: 56-58% (average across all 4 quarters). Not providing Q-on-Q expectations.

We analyzed our portfolio and conducted separate IT sector analysis. Not seeing any concerns or stress. Monitoring situation.

Continuous monitoring and interventions to protect yield. EMI growth increases overall yield (transactor portion down). Smartly managing cost of funds. NIM should hold at current range via portfolio actions and funding source management. Will continue market scanning to protect NIMs.

Management avoiding specific FY27 revenue/PAT guidance. H2 FY27 asset growth expected with higher acquisitions and festive demand.

Expected from Q1 onwards high new acquisitions and festive season demand in Q3. Receivables expected to pick up after modest Q1 growth.

Multiple yield protection strategies (credit limit increases, EMI growth, cost of funds pass-through). But revolver decline and rising opex pose headwinds.

Festive season will spike cost-to-income higher; Q1 level not sustainable. Yearly guidance = average across all 4 quarters.

Spend growth 27% YoY but revenue only 3.4% signals mix shift toward lower-yield products (EMI, revolver decline). Portfolio yield 16% stable but blended yield declining as revolver (high-margin) shrinks vs EMI (mid-margin). Revenue per receivable falling despite card growth.

Operating costs rising faster than revenue. Employee opex increased due to wage code provision and past services liability. Festive season expected to push cost-to-income higher. Cost-to-income guided 56-58% yearly, but Q1 level to be worse in H2. Opex growing in line with card sourcing and spend volumes—not driven by efficiency gains.

Middle East conflict posing tail risk to fuel prices, inflation, and customer cash flows. Company carrying ₹70 Cr Stage 1 ECL overlay specifically for geopolitical uncertainties. While current portfolio shows resilience and entry rates at decadal lows, unsecured lending model is inherently vulnerable to sudden macro deterioration. No major sector or cohort stress visible yet but monitoring required.

EMI strategy is key to offset revolver decline and maintain yield. Company claiming double-digit monthly EMI conversion but no quantified growth target for EMI receivables % (currently 33%). PL (personal loan) on credit card product under 'internal evaluation'—not offered to new customers. If EMI doesn't scale as expected or PL launch delayed, yield compression risk accelerates.

NBFC credit growth to consumer durables (via personal loans) growing steadily. Some revolver customers switching to personal loans for large-ticket purchases. Industry TAM large (350-400M credit-scored customers, but only 52-55M cardholders currently), so growth runway exists. SBI parent (53Cr+ customers) provides organic base. However, if personal loan rates become materially cheaper, revolver decline could accelerate beyond current 'slight downward bias.'