SBI Card Doubles Its Profit By Allowing Its Users To Spend 80% More

State Bank Of India (SBI) Card, one of the top merchants of credit cards in India and the world, has reported its June quarter results with a substantial rise in profits to 627 crore, nearly more than doubling from Rs305 crore one year ago. The company also reported the growth of 33% in its revenues to reach 3,263 crore. Meanwhile, its interest income increased by just 20% to reach Rs1,387 crore.

SBI Card is currently the second-largest provider of credit cards in India and has an average market stake of 18.4 percent, which is less than HDFC Bank, which has an 22.4 percent share, according to the most recent data released by the Reserve Bank of India. The overall optimism in the numbers of SBI Card is also evident by another metric that is crucial - the spending of its cardholders. According to the exchange filing, although it was able to add 48% more accounts during Q1 FY23 and an increase of 19% in its credit card accounts that are active in the range of 14.3 million, total spend on credit cards increased 79% to reach around Rs59,671 crore during the period between April and June 2022.

Net non-performing assets (NPA), a important metric used by financial services companies, fell to 0.79 percent during this time from 0.88 percent in the previous year. Incredibly, corporate spending grew at a faster rate than retail spending - however, while the corporate clients increased their spending by 15%, while retail spending only increased by 9.9% in a row. Despite the slowdown in retail, they have the highest impact, and are three times more than corporate spending.

On the other hand the rise in provisions was modest, at 5% per year increasing to the tune of Rs503 crore. Although the figures have so far painted an optimistic picture but the growth prospects for SBI Card is a bit dull. According to SBI Card, FY23 is beginning with a slow start and its share of purchases, cards issued and transactions all falling in comparison to the prior two years. It is unclear whether the projections of the company for FY23's remainder increase.