In the past one month, SBI Card outperformed the market by gaining 23 per cent, as compared to 6 per cent rise in the S&P BSE Sensex.
As structural demand begins to roll in and shock absorbers in place to tackle credit quality, SBI Cards
geared to return to normalcy sooner than expected with increased spends (25 per cent YoY growth) and fee income (20 per cent YoY growth) for FY22-23E, according to analysts at Prabhudas Lilladher.
SBI Card stands geared to return to normalized business scenario sooner on the back of emergence of greenshoots (fall in unemployment rate to pre-Covid levels, digital transactions uptick), improving corporate spends led by non-discretionary focus (vendor, tax & utility payments & gradual pick-up in domestic travels), increasing banca potential (58 per cent new account sourcing from SBI), focus on non-discretionary (88-90 per cent of spends led by both retail & corporate) and digital spends (online retail spends rose to 55 per cent in H1FY21 from 44 per cent in FY20), it said.
Meanwhile, brokerage firms expect SBI Card to report improvement in advances on the back of festive season spending.
“In Q3FY21, spends is to witness improvement on the back of festive season spending. The acceleration in new cards sourcing with open market channel is beginning to contribute. However, the provisions are expected to remain elevated YoY, while higher slippages to result in higher asset quality stress, the brokerage firm said result preview. The management commentary around the stressed asset pool and movement in the restructured book to be a key monitorables,” Axis Securities said in result preview.
Kotak Securities expects advances to go up around 4 per cent QoQ on the back of higher spends during the festive season. Discussion would be mainly around the progress on performance of the restructured book and any further movements in the pool of stressed asset, it said.