SBI Cards and Payment Services Ltd. delivered robust financial results for Q1FY27, with standalone net profit rising 20% year-on-year to ₹664 crore from ₹556 crore in the corresponding quarter last year. According to the latest earnings summary, the credit card issuer announced these results after market hours on Friday, marking a steady start to FY27 with improved profitability metrics. The company's total revenue from operations rose 3.4% year-on-year to ₹5,041 crore, driven by higher card spending as demand for credit remained strong after picking up in the second half of the previous year. SBI Cards shares surged nearly 4% to their intraday high of ₹642.65 on Monday, July 27, as equity investors focused on the healthy Q1 performance driven by commission and fees income growth. The stock was trading 3.3% higher at ₹639.35 during the session, compared to ₹618.75 in the same period a year earlier.
The latest earnings reveal even stronger growth momentum than previously reported, with total card spending reaching ₹1,18,475 crore, up 27% year-on-year, reflecting robust demand for credit as the company benefits from higher corporate spending and steady momentum in the retail segment. According to the company's latest disclosure, cards in force, or the sum of all credit cards issued, rose 7% from last year to 2.26 crore million, indicating continued expansion in the company's customer base. The retail spends grew 14%-17% YoY to ₹94,033 crore, with online spends contributing over 62% of retail spend, demonstrating the company's successful digital transformation strategy. Income from fees and commission services surged 9.7% to ₹2,405.54 crore in Q1, while interest income declined 3% to ₹2,420.63 crore compared to ₹2,493.15 crore a year ago, boosting overall Q1 earnings despite the decline in traditional interest income.
The credit card firm's performance was significantly boosted by improved asset quality metrics, with gross non-performing assets declining to 2.04% as of June end compared to 3.07% in the same quarter of the previous year, representing a 103 basis points improvement. As reported by Moneycontrol, net non-performing assets were at 0.83% as of June 30, 2026, as against 1.42% as of June 30, 2025. Loan provisions and expenses dropped 13.6% quarter-on-quarter and 30% year-on-year to ₹948 crore, while credit costs fell 301 basis points year-on-year and 116 basis points quarter-on-quarter to 6.5%. The company has steadily tightened credit underwriting over the last few quarters to tackle asset quality stress and higher delinquencies in credit cards, contributing to the overall improvement in financial metrics. This strong performance validates the company's strategic focus on high-spend segments rather than pure volume acquisition.
The market response to SBI Cards' Q1 results has been mixed, with CLSA upgrading the stock to 'Outperform' from 'Accumulate' and raising its target price to ₹730, implying an upside of about 18% from Friday's closing price of ₹618.95. According to CNBC TV18, Bernstein maintained its 'Underperform' rating with a target price of ₹610, flagging concerns about weak pre-provision operating profit despite the 20% earnings increase. Jefferies retained its 'Hold' rating with a target price of ₹675, showing a 9% upside potential, while UBS maintained its 'Neutral' rating and cut its target price to ₹700. As per Bloomberg analyst recommendations, 12 of the 27 analysts covering SBI Cards have a 'Buy' rating, while five recommend 'Hold' and 10 have a 'Sell' rating, with the consensus target price standing at ₹702, implying an upside of about 13%.
The company's financial health has strengthened significantly, with net interest margin for Q1 at 10.8%, portfolio yield at 16%, and daily average cost of funds stable at 6.6%. Finance costs dropped 8.4% year-on-year to ₹744.53 crore compared to ₹812.82 crore in the same quarter of the previous financial year, adding support to the increase in overall profits. As per the latest earnings summary, capital adequacy ratio stands at 25.6% with ROA at 3.9% and ROE at 16.5%, indicating robust capital management and operational efficiency. The company expects asset growth to pick up in H2 FY27, supported by higher new acquisitions and festive season, while gross credit cost is expected to remain within current range, barring adverse geopolitical impacts.
