SBI Card's Q3 Profit Drops 30% to ₹383 Crore Amid Rising Loan Defaults

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Posted by NewAdmin on 2025-01-29 03:03:48 |

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New Delhi | January 28, 2025 – SBI Cards and Payment Services Ltd. (SBI Card) has reported a 30% decline in its net profit, falling to ₹383 crore for the third quarter ended December 2024, primarily due to higher delinquencies and rising impairment costs.

The pure-play credit card company, promoted by State Bank of India (SBI), had registered a net profit of ₹549 crore during the corresponding quarter of the previous financial year, indicating a significant hit to its earnings.

Marginal Growth in Total Income

Despite the steep fall in profitability, SBI Card's total income grew marginally by 0.5%, reaching ₹4,767 crore in Q3 FY25 compared to ₹4,742 crore in the same period last year. The slow growth suggests challenges in revenue expansion amid macroeconomic uncertainties and increased defaults.

Decline in Operating Costs

One silver lining was a 13% reduction in total operating costs, which dropped to ₹2,107 crore from ₹2,426 crore in the year-ago period. This indicates that the company has taken cost-cutting measures to improve efficiency.

Rising NPAs Reflect Credit Stress

SBI Card's asset quality deteriorated, with gross non-performing assets (GNPA) increasing to 3.24% in Q3 FY25, up from 2.64% in the same quarter last year.

Similarly, net non-performing assets (NNPA) rose to 1.18% from 0.96%, signaling increased stress in loan recoveries.

Sharp Rise in Impairment Costs

One of the major contributors to the profit decline was a 49% jump in impairment on financial instruments, which surged to ₹1,313 crore, compared to ₹883 crore in Q3 FY24. This suggests that the company had to allocate significantly higher provisions to cover potential losses from bad loans.

Industry Outlook and Challenges

The rise in NPAs and impairment costs highlights the broader challenges in the Indian credit card industry, where higher interest rates, consumer credit stress, and post-pandemic repayment issues are contributing to increased delinquencies.

While SBI Card remains one of the leading players in India's fast-growing digital payments ecosystem, the company may need to strengthen its risk management strategies and tighten credit policies to mitigate further losses.

Despite steady revenue growth and cost-cutting efforts, SBI Card faces significant headwinds due to rising loan defaults. Going forward, the company’s focus on asset quality and risk mitigation will be crucial in navigating the challenging financial landscape.

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