SBI Cards shares drop 6% as profit takes a hit in Q1; what should you do?

The company's profit after tax (PAT) for the quarter ended June 30, 2025, declined 6.3 per cent to ₹556 crore as against ₹594 crore reported in Q1FY25.

SBI Cards and Payment Services share price today: Shares of State Bank of India's (SBI) credit card company, SBI Cards and Payment Services, dropped 6.5 per cent on Monday, July 28, 2025, logging an intraday low of ₹830.

At 9:21 AM, shares of SBI Cards and Payment Services were trading at ₹860.20, down by 3.19 per cent on the National Stock Exchange. In comparison, Nifty50 was also trading in red, down by 71 points or 0.29 per cent, quoting 24,765.5 level.

The selloff on the quarter came after the company released its earnings for the first quarter of the financial year 2025-2026 (Q1FY26).  CATCH STOCK MARKET LATEST UPDATES LIVE

 

SBI Cards Q1FY26 earnings

The company's profit after tax (PAT) for the quarter ended June 30, 2025, declined 6.3 per cent to ₹556 crore as against ₹594 crore reported in the corresponding period of the previous fiscal year.

Total income for the quarter under review stood at ₹5,035 crore in Q1FY26, marking a 12 per cent rise from ₹4,483 crore recorded in the first quarter of FY25. This was largely on the back of an 11 per cent rise in the company's interest income, which stood at ₹2,493 crore in Q1FY26 as against ₹2,243 crore reported in the same period of the previous financial year.

Credit costs also increased during Q1FY26 to 9.6 per cent, hitting a multi-quarter high. The management is estimating credit costs to remain elevated and range-bound in the coming quarter between 9-9.6 per cent in Q2FY26. However, considering the turbulent macro picture, the management has refrained from giving a full year growth guidance.

Meanwhile, SBI cards also witnessed a 13 per cent rise in fees and commission income during the quarter under review to ₹2,384 crore from ₹2,115 crore reported in Q1FY25.

On the asset quality front, the company experienced a marginal rise in its gross non-performing assets (NPA) to 3.07 per cent during the quarter under review from 3.06 per cent reported in Q1FY25. Net NPA also rose to 1.42 per cent in Q1FY26 as compared to 1.11 per cent reported in the first quarter of the previous financial year.  ALSO READ | LIC portfolio sees Rs 46,000 crore dent in July; RIL biggest value drag

What should investors do?

While the company saw a marginal improvement in credit cost during the last quarter (Q4FY25), it rose again to 9.6 per cent in Q1FY26 from 9 per cent. D-street analysts believe that higher credit costs will continue to be a major pain point for SBI Cards and Payment Services.

Nuvama Institutional Equities has lowered its earnings estimate for the coming quarters, maintaining a long-term 'Buy' rating on the stock with a revised target price of ₹1,025 per share.

"The rise in credit cost was driven by the quarterly expected credit loss (ECL) reset and higher individual expected accrual (IEA). We are cutting growth and hiking credit cost estimates, yielding earnings cut of 15 per cent/7 per cent in FY26E/27E," the brokerage firm said.

Emkay Global has also slashed earnings outlook by 14 per cent and 9 per cent for FY26 and FY27, respectively. "Credit cost could remain elevated in Q2 due to higher charge-off and should ease gradually (still elevated though). We believe SBI Cards will be a key beneficiary of the policy rate cut as well as the asset quality normalisation cycle in the card portfolio. We retain ADD with a 5 per cent cut in target price to ₹1,025, implying Jun-27E PE of 24x," the brokerage firm said.