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SBI Cards shares update

SBI Cards shares update


Category : Knowledge Center

The latest information about SBI Cards can be summarized as follows:

  • SBI Cards and Payment Services reported a 5% year-on-year fall in net profit at Rs 593 crore in Q1 FY24 due to higher provisions for cards issued in 2019.
  • The company faced challenges in understanding the risk associated with cards issued before Covid due to the pandemic's impact on the credit profile of customers.
  • Credit costs for the company may remain elevated going forward, and credit cost spiked to 6.8% in the April-June quarter.
  • The company's asset quality deteriorated with gross non-performing assets rising to 2.41% and net non-performing assets at 0.89% as of June 30, 2023.
  • Nuvama Institutional Equities downgraded the stock to 'reduce' from 'hold' due to the delay in recognizing the risk from 2019 cards.
  • However, foreign broking firms HSBC and Morgan Stanley are positive on the stock, with HSBC giving a 'buy' rating and a target of Rs 990 per share, and Morgan Stanley giving an 'overweight' rating with a target of Rs 1,155.
  • HSBC has lowered EPS estimates for FY24/FY25/FY26, but remains positive about the company's medium-term outlook on strong AUM (Assets Under Management) growth despite near-term challenges.

The company's new account volume in the quarter grew 22% year-on-year to 10.97 lakh, and the management highlighted that loans acquired after Covid have a healthy quality due to tightened credit sanctioning.

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