SBI Card shares decline as credit card growth lags compared to the industry rate

According to the May credit card spending data, SBI Cards’ spending market share logged a 27 bps rise month-on-month (MoM) to 16%. Also, the company’s total number of active credit cards increased by 12% year-on-year, lagging behind the industry’s growth rate of 18%.

SBI Cards and Payment Services' shares closed lower on June 26, settling at ₹731.05 each on the NSE, with a decline of 0.13% for the session. The stock opened at ₹732, matching its previous close, and reached a high of ₹733.40 during the day before retracing gains and dipping to an intraday low of ₹725.75.

According to reports, the Reserve Bank of India said a notification that the momentum in SBI Card’s year-on-year growth for June 2024 was lower compared to the stronger performance observed in May 2024. Although SBI Card saw a 25% increase in transaction volumes year-on-year in May 2024, it fell short of the industry’s more robust 32% year-on-year growth.

On April 26, in an exchange filing, SBI Cards and Payment Services reported its financial results for the quarter and year ended March 31, 2024. In Q4FY24, SBI Card reported a 14% year-on-year (YoY) increase in total revenue to ₹4,475 crore compared to ₹3,917 crore in Q4FY23. Profit after tax (PAT) also rose by 11% YoY to ₹662 crore from ₹596 crore in the same period last year. However, the Return on Average Assets (ROAA) declined to 4.7% in Q4FY24 from 5.4% in Q4FY23, while the Return on Average Equity (ROAE) decreased to 22.2% from 24.6% in the previous year’s fourth quarter.

SBI Cards and Payment Services Limited is a non-banking financial company (NBFC) specialising in a diverse credit card portfolio, including lifestyle, rewards, travel, fuel and corporate cards. With around 1.9 crore active cards as of Q4FY24, it caters to various income profiles and lifestyles.