SBI Cards: Navigating Headwinds, Testing Shareholder Patience

SBI Cards, the only listed standalone credit card provider in India, finds itself under pressure as competition mounts. Once a clear industry leader, it has slipped to third place, now behind HDFC Bank and ICICI Bank. Its share in credit card spends has declined to 16.7% as of June, although the number of cards in force slightly increased to 19.1%. For shareholders, the quarter’s performance raises caution. Net profit for June fell to Rs 556 crore, from Rs 594 crore a year before, mainly due to rising credit costs and a conservative lending approach. Delinquencies, particularly for longer-tenure card holders, are on the rise, suggesting stress not just among new users but also among its established customer base. The company faces persistent risks in its loan portfolio. With the exit of GE Capital in 2017, SBI Cards lost a key back-end partner. Now, without strong external support, the company operates in an intensely competitive market, struggling to keep pace with more agile private banks. Growth is visibly slower: new card additions are at a multi-quarter low, as the company avoids risky customer segments. While this limits defaults, it also curbs new revenue. Margins stayed steady, but credit costs rose to their highest in four years and are likely to stay high. Receivables growth guidance for FY26 is trimmed to 10-12%. Further, the departure of a key risk officer has raised corporate governance questions. Shareholders face a muted short-term outlook. Although SBI Cards has a solid brand and network, rising bad loans, flat growth, and leadership flux might limit returns and hurt market confidence for now.