SBI Cards and Payment Service, the only listed Credit Card Issuing Company, announced its Q4FY21 results on 27th April 2021. Here is the 5 point analysis of the quarterly result of the company. Read this blog to know more.
The Only Listed Credit Card Issuing Company in India, SBI Cards & Payment Services, has released its Quarterly Result for the last quarter of the Financial Year 2020-21. We will be discussing the result with the help of a 5-Point Analysis which are as follows:
SBI CARDS- 5 Point Analysis
1) Q4FY21 Results: SBI Cards Annual Report
First of all, the finance cost of the SBI Cards has been reduced by 27% YoY from Rs. 334 Cr. in Q4FY20 to Rs. 244 Cr. in Q4FY21. Finance Cost has come down by 6.5% QoQ.
The Income from Fees and Services has gone up by 16% YoY from Rs. 959 Cr. in Q4FY20 to Rs. 1,114 Cr. in Q4FY21. In Q3FY21, Income from Fees and Services was Rs. 1,107 Cr.
The SBI Cards future growth has reported a massive increase in its Other Income, which has grown by 107% every year from Rs. 77 Cr. in the last quarter of FY20 to Rs. 159 Cr. in Q4FY21. QoQ the other income has increased by 16% from Rs. 137 Cr. in Q3FY21.
Another positive thing for the bank is its Impairment Losses and Bad Debt by 16% YoY from Rs. 838 Cr. in Q4FY20 to Rs. 705 Cr. in Q4FY21. From Q3 of FY21, this number is down by 9%.
Profit Before Tax (PBT) of the company is also gone up by 109% YoY from Rs. 112 Cr. in Q4FY20 to Rs. 234 Cr. in Q4FY21. But quarterly, PBT is down by 17.3%.
Further, SBI Cards has recorded massive growth in Net Profit of 110% YoY in the quarter ended 31st March 2021 to Rs. 175 Cr. against Rs. 84 Cr. in Q4FY20. Like PBT, the Net Profit of the SBI Cards has also weakened by 16.6% QoQ, down from Rs. 210 Cr. in Q3FY21.
The primary source of income for the SBI Cards has been negatively impacted in this quarter and hence a piece of bad news for the company. Interest Income of SBI Cards is down by a notable 20% YoY from Rs. 1,348 Cr. in Q4FY20 to Rs. 1,072 Cr. in Q4FY21. Also, Interest Income has come down by 8.2% QoQ from Rs. 1,168 Cr. in Q3FY21.
Likely, Net Interest Income (NII) has also come down by 18.3% YoY and 8.7% QoQ. NII in Q4FY20, Q3FY21, and Q4FY21 was Rs. 1,014 Cr., Rs. 907 Cr., and Rs. 828 Cr. respectively.
The fall in Interest Income has also led to a fall in revenue from operations of the SBI Cards. It has fallen by 5% YoY from Rs. 2,433 Cr. in Q4FY20 to Rs. 2,309 Cr. in the quarter ended 31st March 2021. Revenue from Operation has further gone down by 3.9% QoQ from Rs. 2,403 Cr. in Q3FY21.
Pre-provisioning Earnings (PPOP) is also down by 1% YoY and up by 0.8% QoQ.
SBI CARDS- Q4FY21 Results
FY21 Performance: SBI Cards Valuation
Interest Income of the company has increased by 2% from Rs. 4,841 Cr. in FY20 to Rs. 4,928 Cr. in FY21.
SBI Cards has reported a fall in Finance Cost of 20% from Rs. 1,301 Cr. in FY20 to Rs. 1,043 Cr. in FY21.
NII on a whole year basis has gone up by 10% from Rs. 3,540 Cr. in FY20 to Rs. 3,885 Cr. in FY21.
Income from Fees & Services is down by 2% in FY21 and stands at Rs. 3,908 Cr.
Revenue from Operations growth has remained almost flat and is at Rs. 9,277 Cr. in the fiscal year 2021.
Other Income of the company has also gone down by 8% from rs. 9,752 Cr. in FY20 to Rs. 9,714 Cr. in FY21.
Due to the lowering of Finance costs, PPOP has also increased by 10% in the FY21 to Rs. 4,024 Cr.
Due to Covid-19 Pandemic, Company has faced a rise in impairment & Losses of 39% in FY21.
The rise in losses and fall in income has led to a downfall in the profit figures also. Net Profit of the company is down by 23% from Rs. 1,730 Cr. in FY20 to Rs. 1,324 Cr. in FY21.
SBI CARDS-FY21 Performance
2) Portfolio Trends: SBI Cards Growth Rate
i) Portfolio Trends- New Accounts:
SBI Cards has managed to open 7.91 Lakh New Accounts in Q4 of the Financial Year 2021 but failed to cross the yearly levels and is down by 7% YoY. Accounts opened in Q3FY21 was 9.18 lakh, and hence a fall of 14% QoQ has been reported by the company.
In total 26.85 Lakh, new accounts were opened in FY21, down by a massive 27% YoY from 34.08 lakh accounts in FY20.
Renewed waves and new variants of COVID dampened the consumer sentiments & reflected in the de-growth of New Accounts in Q4 & FY21.
SBI CARDS- New Accounts
ii) Portfolio Trends - Retail Spends & Corporate Spends: SBI Cards Growth
Every year, Retail Spends has shown a little difference. It was Rs. 1,02,843 Cr. in FY20, and currently, it is at Rs. 1,02,414 Cr.
But, Corporate Spends has come down from Rs. 28,072 Cr. in FY20 to Rs. 20,002 Cr. in FY21. Corporate Spending was Rs. 6,080 Cr. in Q4FY21.
SBI CARDS- Retail Spends & Corporate Spends
3) Key Operating Metrics: SBI Cards Value Research
i) Cards in Force:
Total Cards in Force of SBI Cards are 1.18 Cr. in Q4FY21, up by 12.4% YoY from 1.05 Cr. in Q4FY20. It was 1.15 Cr. in the quarter ended 31st December 2020; it was up by 2.6%.
The company has issued 7.91 Lakh Cards in Q4FY21, which is down by 7% from its performance in Q4FY20 of 8.51 Lakh Cards. Quarter-on-Quarter, this figure has come down by 14% from 9.18 Lakh Cards in Q3FY21.
But a steadily increase in the market share of cards in force has been witnessed by the SBI Cards, which can be seen in the image given below:
SBI Cards- Cards in ForcEvery year
Spends has increased by 11% YoY from Rs. 32,429 Cr. in Q4FY20 to Rs. 35,943 Cr. in Q4FY21. Quarter-on-Quarter, it has gone down by 5% from Rs. 37,797 Cr. in Q3FY21.
Every year, Spending has come down by 6% from Rs. 1.31 Lakh Cr. in FY20 to Rs. 1.22 Lakh Cr. in FY21.
Fall in Spends has also brought down the Spends per Average Card from Rs. 1.26 Lakh Cr. in Q4FY20 to Rs. 1.23 Lakh Cr. in Q4FY21, amounting to a fall of 2.4% YoY. Further, Spends per Average Card has come down by 8.2% QoQ; it was Rs. 1.34 Lakh Spends per Average Card in Q3FY21.
In terms of SPENDS, the market SBI Card share was 17.9% in FY20 every year, which gone up to 201% in 8MFY21(April-November). Now, as of FY21, the market SBI Card share price in terms of Spends has fallen to 19.5%.
SBI CARDS- Spends
4) Key Ratios:
Substantially, Net Interest Margin has gone down from 19.2% in June 2020 to 17% in Sep. 2020, and 14.5% in December 2020, to 13.2% in March 2021.
The Cost of Funds has consistently fallen from 7.4% in March 2020 to 5.5% in March 2021.
Possible reasons behind the fall in Net Interest Margin of SBI Card can be a regular payment from the Cardholders.
Cost to Income Ratio of SBI Cards as of March 2021 is 57.8% which is relatively high from 47.2% in June 2020. Year on year, the same is up by just 1.5% from 56.3% in March 2020.
The company is maintaining a solid Capital Adequacy Ratio of 24.8% as of March 2021. It was 22.4% in March 2020.
SBI CARDS- Key Ratios
5) Asset Quality: SBI Cards Stock Analysis
Currently, the Gross NPA of SBI Cards is 4.99% which is quite good compared to the Pro-forma Gross NPA of 7.46% in September 2020.
Likewise, Net NPA was also comparatively low at 1.15% in March 2021 against the Pro-forma Net NPA of 2.70% in September 2020.
SBI Cards is having a good Provision Coverage Ratio of 77.9%.
Total Management Overlay Provision of Rs.297 Cr available as of Mar-21.
SBI CARDS- Asset Quality
SBI Cards has not presented a decent result quarterly but have posted good figures every year. Further, the second wave of Covid-19 Pandemic and lockdowns may hamper the earning for the coming quarter of the company as well. Talking ahead, With the coming of Normalcy in the market, it can work well for the company. SBI Cards is the only listed player in Card Business in India, and this company will always be benefitted. As an Investor, Do mindful research before investing in the stock.