SBI Cards' Q2 FY26: A Festive Spending Spree Fuels Growth Amidst Improving Asset Quality

SBI Cards and Payment Services Limited has reported a robust performance for the second quarter of Financial Year 2026 (Q2 FY26), demonstrating significant growth in key operational and financial metrics. The company's total income surged by 13% year-on-year to INR 5,136 crore, while profit after tax (PAT) also saw a healthy 10% increase, reaching INR 445 crore. This strong showing was primarily driven by an unprecedented surge in customer spending, which reached an all-time high of INR 107,063 crore, marking an impressive 31% year-on-year growth. The festive season, coupled with strategic digital initiatives and new product launches, played a pivotal role in this accelerated performance, reinforcing SBI Cards' position in India's rapidly expanding digital payments landscape.

The quarter witnessed continued momentum in customer acquisition, with 9.36 lakh new accounts added, contributing to a 10% year-on-year growth in cards-in-force. The company's focus on quality acquisition, balanced between Banca and open market channels, underscores a disciplined growth strategy. Retail spends, a significant component of the overall spending, grew by 17% year-on-year to INR 89,611 crore, with online transactions accounting for a substantial 62.5% of total retail spend in the first half of FY26. Corporate spends also saw strong growth, reaching INR 17,452 crore, reflecting the company's continuous efforts to diversify use cases and enhance profitability. The increasing adoption of UPI on credit cards, particularly through RuPay and QR acceptance, further bolstered transaction volumes and value.

Strategic Initiatives and Market Leadership

SBI Cards continued its strategic thrust with the launch of three marquee co-brand credit cards: Flipkart SBI Card, PhonePe SBI Card, and IndiGo SBI Card. These partnerships are designed to offer curated benefits, digital agility, and convenience, catering to diverse customer needs in e-commerce, digital payments, and travel. The company also rolled out a nationwide festive campaign, 'Khushiyan Unlimited,' featuring over 1,250 offers across 2,900 cities, which significantly contributed to the surge in spending. Digital campaigns and regional awareness programs further amplified brand visibility and customer engagement, particularly in South and East markets.

Technological advancements remain a cornerstone of SBI Cards' strategy. The strengthening of eKYC through a centralized K-Locker enabled paperless and secure onboarding for over 2.5 lakh customers, enhancing operational efficiency. Furthermore, the ongoing Hyper Personalization Phase 1A of the SBI Card App, integrating the Oracle Responsys Platform, aims to deliver rich and personalized mobile push and in-app notifications, improving customer experience through event and offer-based communication and cross-channel orchestration.

Asset Quality and Financial Health

Despite the robust growth, SBI Cards maintained a strong focus on asset quality. The Gross Non-Performing Assets (GNPA) improved to 2.85% in Q2 FY26 from 3.07% in the previous quarter, reflecting effective underwriting and portfolio management. The Expected Credit Loss (ECL) rate also saw a reduction of 17 basis points quarter-on-quarter, settling at 3.3%. Management expressed optimism about continued improvement in credit costs over the next two quarters, projecting them to fall below 9%. This proactive approach to risk management ensures long-term stability and resilience.

The company's liquidity position remains strong, with a capital adequacy ratio of 22.5%. The cost of funds (COF) for the quarter decreased to 6.4% from 7.1% in Q1 FY26, positively impacting the net interest margin (NIM), which stood at 11.2%. While the higher transactor volume during the festive season led to a slight moderation in portfolio yield to 16.5%, the overall financial health remains robust. Operating costs, however, increased due to festive campaigns and corporate pass-backs, resulting in a cost-to-income ratio of 56.8%. Management acknowledged this and indicated that the full-year cost-to-income ratio would likely be on the higher side of the 54-56% range.

Outlook and Strategic Focus

SBI Cards remains optimistic about the strong growth prospects for the credit card industry in India, driven by the country's resilient economy and rapid digitalization. The management reiterated its guidance for new card sourcing at 0.9 million to 1 million accounts and aims to maintain interest-bearing earning assets (IBNEA) growth between 10% and 12%. The company's commitment to value creation, sustainability, and prudent risk management positions it well to capitalize on market opportunities. With a clear focus on enhancing customer experience, expanding product offerings, and leveraging digital platforms, SBI Cards is poised for sustained growth and continued market leadership in the evolving Indian financial landscape.