SBI Cards and Payments Services was trading lower in the morning session on June 23 after the company posted strong card growth in May but saw the share of spends dip.
The company’s credit cards in force (CIF) was up 21 percent, higher than that of the industry, year on year (YoY) to 17.1 million and its share of cards rose 5 basis points (bps) month-on-month to 20 percent, foreign brokerage Jefferies said in a report.
CIF for the industry rose 14 percent YoY to 88 million in May, the Reserve Bank of India data shows.
CIF refers to the total number of cards issued by a financial institution that are active and in use. It is an important metric used by banks, credit card companies, and others to evaluate the size and reach of their cardholder base.
SBI’s share of net additions rose to 23 percent in May from 8 percent in April.
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At 10.40 am, SBI Card was trading 0.90 percent down at Rs 871.95 at 10.40 am on BSE.
Card game
The industry’s credit card spends growth was healthy at 24 percent YoY, though this moderated slightly from April’s 26 percent.
SBI Card's spend growth fell to 12 percent in May from 24 percent in the preceding month. Its share of industry spends also fell 137 bps month on month to 16.9 percent.
One basis point is one-hundredth of a percentage point.
“Lower share of corporate spends may have been partly driven by the fall in spends share,” the brokerage added.
Among key card players, Axis Bank and ICICI Bank’s spends market share rose 54 bps and 34 bps month-on-month.
Morgan Stanley in a note assigned an “overweight” rating to SBI Card with a target price of Rs 1,155, a 32 percent upside for the current market price.
Morgan Stanley, too, attributed the company’s market share decline to lesser focus on corporate spending but added that the company continues to outpace the industry in CIF.
Also Read: SBI Card reports marginal rise in Q4 net profit to Rs 596 crore
SBI Card reported a marginal increase in its net profit to Rs 596 crore in the quarter ended March 31, 2023. The pure-play credit card issuer had reported a net profit of Rs 581 crore in the same quarter of the previous fiscal.
Its total income during the January-March period rose to Rs 3,917 crore from Rs 3,016 crore in the year-ago period.
SBI Card has gained 9 percent this year, while the 1-year return stands at nearly 19 percent.
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