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SBI Card Q1 FY27: Spends surge, credit costs ease, and a cautious eye on funding

SBI Cards and Payment Services opened FY27 with a familiar mix of scale and discipline. In Q1 FY27, revenue from operations came in at INR 5,041 crore, up 3% year on year. Profit after tax rose faster, at 20% year on year to INR 664 crore, helped largely by lower credit costs.

The operating context is important. Management anchored the quarter in two structural trends: India’s expanding digital payment ecosystem led by UPI, and the growing convergence of payments and credit. In that framing, UPI creates daily engagement, while credit cards deepen customer relationships through credit access and rewards. The company also pointed to the rising adoption of RuPay credit cards on UPI as a meaningful evolution for the card industry.

Growth led by spends and acquisition momentum

The quarter’s strongest operational signal was spending growth. Total spends reached INR 1,18,475 crore in Q1 FY27, up 27% year on year. Retail spends were INR 94,033 crore, up 14% year on year, while corporate spends were INR 24,442 crore, up sharply on a year-on-year basis.

New sourcing remained strong. The company added 10.23 lakh new accounts in the quarter, up 17% year on year, taking cards-in-force to 2.26 crore, up 7% year on year. Management also noted that, as per RBI June 2026 data, the company posted the highest net card addition in the industry for the quarter (4.84 lakh).

A key behavioural indicator was the continued rise in online spending. Online spend accounted for 63.0% of retail spends in Q1 FY27, up from 62.5% in FY26 and 58.9% in FY25, reflecting sustained digital adoption.

Management also highlighted the role of UPI on credit cards, particularly via RuPay, noting a 13% quarter-on-quarter increase in UPI spends. In the investor presentation, SBI Card indicated that Tier 2 and smaller cities accounted for the bulk of active UPI users and UPI spends on RuPay cards, supporting the view that expansion beyond metros is increasingly tied to QR acceptance and UPI-led usage.

Financial summary

Profitability: lower credit cost offsets higher operating expenses

The company’s P&L in Q1 FY27 showed steady revenue growth, but the margin mix continues to shift. Interest income was INR 2,421 crore, while fees and other revenue was INR 2,620 crore, showing that fee-led revenue remains a major component of the model.

Operating cost was INR 2,620 crore in Q1 FY27, up 23% year on year. Management linked this increase to business growth, including higher sourcing and costs linked to spends. On the earnings call, the CFO added that employee expense rose due to provisions related to past service cost and liabilities under a change in the new wage code.

The most important swing factor was impairment on financial instruments, which fell to INR 948 crore from INR 1,097 crore in Q4 FY26 and INR 1,352 crore in Q1 FY26. This translated into lower credit cost and lifted profitability. The company’s gross credit cost declined to 6.5% in Q1 FY27 from 7.7% in Q4 FY26.

In return ratios, ROAA improved to 3.9% and ROAE to 16.5%. Management stated that the improved profitability and ROA place the company on track to achieve its medium-term ROA guidance of 4% to 4.5%.

Asset quality: improving delinquencies and calibrated provisioning

Asset quality continued to trend better. GNPA reduced to 2.04% and NNPA fell below 1% to 0.83%. Management also said NPA stock reduced to INR 1,191 crore and that entry rates into early delinquency buckets are very low.

A significant accounting and risk-management development in the quarter was the annual ECL model review and refresh. Management stated that INR 180 crore was consumed from the INR 220 crore overlay carried in March 2026. With improved portfolio mix, a provision of INR 65 crore was released, while INR 70 crore of overlay was retained in Stage 1 due to geopolitical uncertainties.

This combination is notable. On one hand, it reflects confidence in improving portfolio behaviour and better mix. On the other, it signals that the company is unwilling to declare victory too early, explicitly calling out possible second order impacts from Middle East conflict on fuel prices, inflation and customer cash flows.

Funding, margins and the cost-to-income watchlist

Funding metrics were stable in the quarter. Cost of funds (COF) was 6.5% in Q1 FY27, broadly in line with recent quarters, and management noted the daily average COF remained stable at 6.6%. Capitalisation remains comfortable with CAR at 25.6%, and the company reiterated strong credit ratings (A1+ short term and AAA stable long term).

However, management also acknowledged that cost of funds is expected to trend higher in line with market rates, even though near-term movement depends on policy actions and market benchmarks. Yield stood at 16.0% and NIM at 10.8% in Q1 FY27, both lower year on year.

Management’s response is to work the levers available within the card model: expanding instalment lending through spend-to-EMI conversion, improving customer engagement through app-led journeys, and refining offer targeting through analytics. The company also discussed credit limit rationalisation, clarifying that this includes increasing limits where customers are eligible, which can help remove constraints on spends.

On efficiency, the CFO reiterated a full-year cost-to-income expectation of about 56% to 58% (average across the year), while noting that festive season quarters can show higher expense intensity.

Takeaways from Q1 FY27

SBI Card’s Q1 FY27 performance was marked by a clear operational contrast: strong spends and acquisition momentum, modest receivable growth, and a sharp improvement in credit cost. PAT growth was primarily credit-cost driven, while operating expenses continued to rise with business volume.

The narrative for the rest of FY27 will likely hinge on three measurable checkpoints mentioned by management. First, whether receivables growth picks up in the second half as acquisitions season and festive demand flow into balances. Second, how well NIM holds if funding costs drift up with market rates. And third, whether the asset quality improvement sustains without needing additional overlays beyond the INR 70 crore Stage 1 cushion currently carried.

For now, the quarter supports management’s stance of balancing growth with profitability and maintaining underwriting discipline, while pushing new engagement rails like RuPay-on-UPI to expand relevance across India’s rapidly digitising payments landscape.