By Kavita Mistry 
On 25th July, the India’s SBI Cards and Payment Services reported its first-quarter profit which was below the expectations weighed by a surge in the credit card service provider’s write-offs reportedly.
How Did This Happen?
On Friday, SBI Cards released its results for the first quarter of financial year 2026 in the post market hours.
The results are highlighting the fact that the country’s lenders are grappling with rising bad loans especially in some sectors such as microfinance, credit cards and personal loans.
Moving ahead the analysts have attributed this to over-leveraging and an increase in loans outstanding per borrower.
This all started when the SBI Card, majority owned by the country’s largest lender, State Bank of India – reported a 6.5per cent fall in profit after tax to 5.56 billion rupees ($64.3 million) for the three months ended June.
This was alarming as this profit has gone lower than analysts’ average expectations of 5.86 billion rupees, as per the data compiled by LSEG which is a leading global financial infrastructure and data provider playing a vital social and economic role in the world’s financial system.
This release holds a significance as it markes the fourth quarter of a profit drop for SBI Card, which has faced elevated delinquencies over the last few quarters.
While talking about this situation, the company said gross write-offs jumped 32 per cent from a year earlier to 12.80 billion rupees.
In the meantime, the overall spending by cardholders rose 21 per cent to 932.44 billion rupees, while cards-in-force, or the sum of all credit cards issued, rose 10per
cent from last year.
Although there is an improvement in the company’s revenue from operations as it rose 12 per cent on-year to 48.77 billion rupees.
There is an improvement in the gross non-performing assets ratio which improved slightly to 3.07 per cent from 3.08 per cent in the previous quarter.
But still, it was marginally higher than 3.06per cent a year earlier.
Results Affecting SBI Cards Share Prices
The results have implacted the shares of SBI Cards and Payment Services as they dropped over 6 percent on July 28.
This was also affected after brokerages slashed their rating and target prices for the stock following its weak Q1 earnings announcement.
If you are wondering regarding this shares, then the Yes Securities downgraded the stock to ‘Reduce’, with a target price of Rs 847 apiece.
It indicates a downside potential of nearly 5 percent from the previous closing price.
Whole reasoning this, the brokerage firm said, “SBI Card’s PAT was 6% below expectation, even as PPOP stood 3% better than estimate, owing to an unexpected rise in credit cost to a new peak of 9.6% (annualized).”
Contrary to this, Emkay Global Financial Services retained its ‘Add’ rating on the stock, but reduced its target price by 5 percent to Rs 1,025 apiece.
While giving the reason, the brokerage said, “We believe SBIC will be a key beneficiary of the policy rate cut as well as asset quality normalization cycle in the card portfolio.”