SBI Cards and Payment Services Ltd, a leading credit card services company in India, has announced its decision to raise funds through the issuance of non-convertible debentures (NCDs) amounting to Rs 3,000 crore. This move was approved during a board of directors meeting held on Monday. The company plans to carry out the fundraising in one or more tranches on a private placement basis.
In the previous quarter, SBI Cards and Payment Services surprised the market with a notable increase in its profit, primarily driven by robust consumer spending that managed to offset the impact of higher funding costs.
According to Refinitiv IBES data, the profit after tax for the quarter ended March 31 rose by 2.7% to Rs 596 crore ($72.8 million), surpassing analysts’ expectations of a decline to Rs 542 crore.
This positive financial performance aligns with the broader trend of post-pandemic recovery in both businesses and consumer spending, along with improving asset quality among non-banking financial companies. However, SBI Cards and Payment Services experienced a rise in the cost of funds, which increased by 185 basis points to 6.7% compared to the previous year, due to persistently high interest rates. Additionally, the net interest margins, a crucial profitability metric, declined by 170 basis points to 11.5% in the quarter.
During the quarter, the credit card services company witnessed a significant increase in total expenses, which surged by 39.3% to reach Rs 3,117 crore. This rise was primarily driven by a substantial 89.7% surge in finance costs. Despite these expenses, the company achieved a 32% growth in total revenue from operations, reaching Rs 3,762 crore compared to the same period last year.
SBI Cards and Payment Services, with the support of State Bank of India, is strategically positioning itself to raise substantial funds through the issuance of NCDs. The company’s strong financial performance and positive market outlook indicate its potential for continued growth and success in the credit card services sector.
About SBI Cards:
SBI Cards & Payment Services Ltd., formerly known as SBI Cards & Payment Services Private Limited, is an Indian credit card company and payment provider. It was launched in October 1998 as a collaboration between the State Bank of India and GE Capital.
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