SBI Cards sees sharp jump in Q2 provisions

MUMBAI: India’s second largest credit card company State Bank of India ( SBI) Cards and Payment Services Ltd on Thursday reported a sharp rise in its gross non-performing assets ( GNPA) to 4.29% in the quarter ended 30 September, as covid- 19 hurt asset quality.

The credit card company’s GNPA for the previous quarter, ending 30 June, stood at 1.35%.

The asset quality could have been worse if not for the Supreme Court order that has put a standstill on recognition of bad loans. Also, lenders cannot label loans as bad even if a default has occurred.

In absence of the Supreme Court standstill, the gross nonperforming assets number would have jumped even higher to 7.46%, SBI Card management said.

SBI Cards reported impairment losses and bad debts expenses for Q2 FY21 at Rs862 crore as compared to Rs329 crore for the same period last year.

“Additionally, management overlay provision created for Rs268 crore in Q2 FY21; total management overlay provision is at Rs758 crore as of Sep’ 20,” the company said.

The rise in provisioning and bad loans led to a 46% year over year drop in profit to Rs206 crore in the September quarter.

Revenue from operations, however, grew 5% to Rs2,413 crore year over year.

While asset quality concerns emerged in Q2, the credit card company said that retail spends showed resurgence and are returning to precovid levels.

“Retail Spends in Q2 FY21 have increased by ~ 50% as compared to Q1 FY21. Retail spend for Q2 FY21 is at 90% of pre- Covid ( Dec’ 19- Feb’ 20) levels.

The company’s “card- inforce” grew by 16% to 1.1 crore as of Q2 FY21 as against 95 lakh in same period last year.

Total spends were however lower at Rs29,590 crore in Q2 FY21, when compared to spends of Rs33,176 crore for Q2 FY20

The company said that its market share by number of cards stood at 18.7% in the September quarter.