SBI Card FY26: Profit up 13% as credit costs ease, but receivables growth stays muted

SBI Cards and Payment Services Limited closed FY26 with a cleaner asset-quality profile and higher profitability, helped by a steady reduction in credit costs over the last few quarters. For the full year, total income rose to INR 20,708 crore, up 11% year on year, while profit after tax increased 13% to INR 2,167 crore. The company also ended the year with lower gross NPA at 2.41% (March 2026), down 67 basis points year on year.

In Q4 FY26, total income came in at INR 5,187 crore, up 7% year on year, and PAT rose 14% to INR 609 crore. Management repeatedly framed the quarter as a profitability-led outcome driven by better credit cost trends, with gross credit cost improving to 7.7% in Q4 from 8.3% in the previous quarter.

But FY26 also showed a slower balance sheet build. Receivables stood at INR 56,926 crore at March 2026, up only 2% year on year. New accounts added during FY26 declined to 3,590k from 4,092k in FY25. Management described the acquisition approach as calibrated and quality-led, with underwriting tightened across the industry after a phase of elevated stress in unsecured credit.

Spends momentum stayed strong, led by corporate growth

The operating momentum was most visible in spends. SBI Card reported total spends of INR 430,359 crore in FY26, up 29% year on year. Q4 spends alone were INR 115,350 crore, up 31% year on year. Retail spends grew steadily, while corporate spends surged sharply, and management said the corporate business expanded profitably.

A notable mix shift over time has been the increasing share of online payments. Online retail spends rose to 62.5% of total retail spends in FY26, up from 58.9% in FY25. The company also highlighted continued traction in UPI spends on RuPay credit cards, with over 10% growth in Q4 FY26 compared to Q3, and higher usage in Tier 2 and beyond markets.

Operationally, customer engagement indicators were stable. The 30-day retail spend active rate remained healthy at 52% in Q4 FY26, broadly consistent with recent quarters.

Note: FY25 operating cost is derived from the P&L table total operating and other expenses for FY25 (INR 6,637 crore) plus fees and commission expense (INR 633 crore) as presented; quarterly operating cost shown in the presentation is a specific line item.

Profitability improved as credit costs moderated

The key driver of earnings improvement in FY26 was credit cost moderation alongside stable margins. In Q4 FY26, impairment on financial instruments declined 10% quarter on quarter to INR 1,097 crore. Gross credit cost was INR 1,098 crore in Q4 versus INR 1,220 crore in Q3. Gross write-offs were INR 1,145 crore in Q4.

Asset quality improved meaningfully through the year. Gross NPA reduced to 2.41% and net NPA to 1.04% at March 2026. Management said delinquency trends have been improving for multiple quarters, and highlighted that Stage 3 stock reduced by INR 268 crore quarter on quarter to INR 1,370 crore.

At the same time, SBI Card retained a conservative provisioning stance. Management stated it continues to hold an overlay of INR 220 crore for ECL provision, citing ECL model refresh and uncertainty due to geopolitical conditions. On the earnings call, management clarified that an additional INR 100 crore overlay added during Q4 was routed through the P&L.

Margins held up in Q4 despite softer interest income. Q4 yield was 16.2% versus 16.3% in Q3, while cost of funds declined to 6.6% in Q4 from 6.7% in Q3. NIM improved marginally to 11.1% in Q4. For FY26, NIM was 11.2%, higher by 31 basis points year on year.

Cost-to-income remains structurally higher due to corporate spends

A key debate point through FY26 has been operating efficiency. Cost-to-income rose to 57.2% in Q4 FY26, and FY26 cost-to-income stood at 55.3%. Management attributed the increase primarily to higher corporate spends, which have associated passback costs and thinner margins. On the call, management guided that the cost-to-income ratio is expected to remain in the range of 55% to 58% in FY27.

The company also acknowledged one-offs affecting comparability in other income. Management said other income included one-offs related to provision release and a tax matter provision, while PIDF provision reversal reduced expenses.

Funding and balance sheet: comfortable capital, but cautious on rates

SBI Card ended March 2026 with a strong capital buffer. Capital adequacy ratio improved to 25.5% in Q4, with Tier 1 at 20.0%. Borrowings were INR 44,064 crore at March 2026, slightly lower than INR 44,947 crore at March 2025.

Cost of funds continues to trend down. FY26 COF was 6.7%, down 71 basis points year on year. Management noted that a large portion of borrowings are floating and linked to T-bills or repo, and that borrowings typically reprice in a 60 to 90-day window. However, the CFO did not provide a clear forward view on FY27 cost of funds, citing uncertainty on RBI stance amid geopolitical tension.

What management is watching in FY27

Three themes stood out from management commentary.

First is acquisition discipline. Management reiterated a quarterly acquisition range of 9 lakh to 1 million new accounts, with continued focus on quality-led sourcing. It expects asset growth to follow acquisition trends, but did not provide explicit guidance on receivables growth.

Second is the revolver mix. Revolver balances were 22% of receivables, and management expects a slight downward bias in revolver rates in FY27. The company’s first preferred response is to build the installment lending and EMI book rather than using blunt levers such as materially cutting rewards.

Third is medium-term profitability aspiration. Management reiterated its medium-term ROA goal of 4% to 4.5%, against 3.2% in FY26 and 3.6% in Q4 FY26.

The year ended with an interim dividend declaration of INR 2.50 per equity share, which management justified on the call by pointing to comfortable capital adequacy and improved asset quality.

Investor takeaways

FY26 was a year of repair and re-acceleration for SBI Card. The company delivered higher profit and materially improved asset quality while sustaining strong spends momentum. But it also showed a deliberate slowdown in balance growth, visible in muted receivables growth and lower full-year account additions.

Going into FY27, the key variables to track will be the pace of credit cost moderation, how effectively the company builds its EMI and installment lending book to offset softer revolving behavior, and whether cost-to-income stays within the guided 55% to 58% range as corporate spends remain an important contributor.