SBI Cards & Payment Services Ltd (SBICARD) Q1 FY27 Earnings Call: Spends Hit Record Rs 1.18 Lakh Cr, Gross NPA Falls to 2.04%

SBI Cards & Payment Services Ltd held its Q1 FY27 earnings call on July 24, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Record Spends, Profit Growth & Asset Quality Inflection

• Total spends of Rs.1,18,475 crore — a record for Q1 FY 2026-2027, up 27% YoY; retail spends reached Rs.94,033 crore, up 14% YoY.
• PAT of Rs.664 crore — up 20% YoY in Q1 FY 2026-2027, driven by a significant improvement in credit cost.
• Cards-in-force grew 7% YoY to 22.6 million — net card additions of 484,000 were the highest in the industry for the quarter.
• ROA of 3.9% — up 51 bps YoY and 26 bps sequentially; management expects to achieve medium-term ROA guidance of 4–4.5%.
• ROE of 16.5% — up 72 bps YoY and 89 bps QoQ in Q1 FY 2026-2027.
• BPCL co-brand card crossed 5 million cards — one of India's largest fuel co-brand partnerships.

Sharp NPA Compression, Further Moderation Expected in H2

• Gross NPA fell to 2.04% — down 36 bps QoQ and 102 bps YoY; net NPA of 0.83% is the lowest since Q3 FY 2022-2023.
• Gross credit cost improved 116 bps QoQ and 301 bps YoY to 6.5% — management expects credit cost to stay within the current range subject to geopolitical impacts, with further moderation anticipated in H2 FY 2026-2027.
• Entry rates into the first delinquency bucket were at a decadal low in Q1 FY 2026-2027, supporting the improving trend.
• ECL rates increased for Stage 1 and Stage 3 — resulting from the annual ECL review and refresh; management confirmed ongoing asset quality improvements will lead to ECL release through the data refresh process, but the annual model review will not involve relaxing the model.
• Additional provision of Rs.70 crore sitting in Stage 1 — separate from a Rs.35 crore write-back on account of improved asset quality, carried over from the previous quarter.
• Management confirmed no stress from IT sector job losses in Southern India in their own portfolio; however, industry ground checks indicated a 300–400 bps increase in early bucket delinquency for that pool (period unspecified, based on third-party checks).
• One mid-sized private bank competitor indicated credit cost may revert to 5% by Q3 FY 2026-2027 — management noted "normalization" is debatable but acknowledged moderation.

Retail-First Focus, Corporate Share Capped at 20%

• Corporate spend share declined to 20.33% in Q1 FY 2026-2027 — from 21.92% in Q4 FY 2025-2026; management guided that the ratio will remain in a "20% plus/minus" range, targeting approximately 20% as the higher end of its desired range.
• Retail spends grew ~14% YoY in Q1 FY 2026-2027 — driven by a focused RuPay card strategy, hyper-personalisation tech investments, and expansion in tier-2/3 markets.
• Active customer rate improved 1 percentage point to 53% among existing customers in the quarter.
• For Q2 FY 2026-2027, management expects retail spending to remain "fairly strong" — with the festival season still some distance away; monsoon impact on rural demand is seen as minimal given low credit card penetration in rural areas.
• Total addressable market headroom cited via SBI's ~53 crore+ customer base — of which 1.5–2 crore are "cardable," plus Flipkart's 500 million+ transacting customers; management noted that credit bureaus "have data on 350–400 million consumers, indicating significant headroom for the industry over the next decade."
• Rental spending volumes remain very minimal — KYC for landlords is now required; management sees no growth in this category and aims to keep it controlled to prevent misuse for cash-out.

Cost-to-Income Guided at 56–58% for FY 2026-2027

• Full-year cost-to-income ratio guided at 56–58% for FY 2026-2027 — based on an average of all four quarters; the festive season is expected to drive higher cost-to-income, but the company provides only an annual figure.
• Employee opex increase in Q1 FY 2026-2027 — driven by a provision increase in the past services account to account for liability from the new wage code.
• Operating expenses increased due to business growth — including higher new card sourcing and customer spend volumes; management expects further increases during the upcoming festive season in Q2/Q3 FY 2026-2027.
• NIM expected to remain around the current range for Q1 FY 2026-2027 — supported by cost of fund management, yield optimization via EMI mix, and ongoing portfolio monitoring; no specific numeric NIM guidance was provided for FY 2027-2028.
• Cost of funds expected to remain broadly stable in FY 2026-2027 — subject to central bank policy rate actions; any increase in cost of funds is passed on via benchmark changes to the incremental book.
• Fees expected to increase from H2 FY 2026-2027 onward — due to base effects, while late fees will stay at current levels; instant base fees are currently down, primarily due to lower late fees.
• India's GDP projected to grow ~6.6% in FY 2026-2027 — and the industry trend of 121 million credit cards in circulation were cited by management as supportive macro tailwinds.

EMI-Led Lending, App Engagement and Credit Limit Expansion

• Double-digit percentage of monthly spends converted to installment lending in Q1 FY 2026-2027 — management is executing a spend-to-lend EMI strategy with arrangements across most OEMs and payment gateways for point-of-sale and online conversions.
• Mobile app rated 4.5 on iOS and 4.6 on Play Store — the app prominently features a "pay in EMI" option next to the pay button, driving conversion; higher consumer durable prices in Q1 FY 2026-2027 further increased the conversion rate to EMI.
• Credit limit rationalization underway — increasing limits for eligible customers, reversing the earlier conservative stance; enabled by improved analytics and income data.
• Personal loan (PL) product under internal evaluation — not currently offered to new customers as of Q1 FY 2026-2027; no decision or timeline announced; EMI lending on cards typically has 9–11 month tenures versus PL averaging Rs.1.5–2.5 lakhs over 36 months.
• EMI portfolio stands at 33% of the overall book — management expects an uptick during the upcoming festive season but provided no formal guidance on the share.
• Revolvers expected to remain stable with a slight downward bias in FY 2026-2027 — management noted a slight reduction in revolver rates as part of competitive EMI pricing efforts.