SBI Cards and Payment Services is grappling with declining asset quality, as its gross non-performing asset (GNPA) ratio reached 3.3%, the highest in 12 quarters. The company's credit costs have surged, reflecting the broader challenges in the unsecured lending sector.
Management has observed early signs of improvement in delinquencies, but the macroeconomic outlook remains unfavorable for the credit card segment. Corporate spending has sharply declined following regulatory changes in February, impacting overall revenue and market share.
The credit card industry is witnessing rising delinquency levels, primarily due to increased household debt and borrower leverage. As a result, the GNPA ratio has risen, adversely affecting profitability.
Despite a strong performance in retail spending, corporate spending has faltered, leading to a slowdown in overall growth. The management had anticipated a recovery in corporate spending by July, but this has not materialized.
In the first half of FY25, fee income growth has been stagnant, reflecting the correlation between spending and fee revenue. The management projects only a slight increase in corporate spending moving forward.