SBI Cards and Payment Services · Material risks, their source context, and severity in the latest available quarter.
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Risk intelligence
Credit costs remain at 9% versus historical normalized levels of 6.5-7%. While management expects improvement, analyst asked about normalization timeline; management declined to provide specific guidance on when costs would return to pre-2024 levels, stating focus on credit cost reduction before accelerating growth.
Corporate spends (now 16% of total) carry lower interchange rates with higher cashback passed back to customers, compressing income as percentage of spends. Management acknowledged this as the reason fee income grew only 3-4% despite 15% spend growth. Growing corporate mix structurally pressures margins.
Rental transactions have nearly stopped post-RBI KYC mandate for payment aggregators. Rental was previously 18%+ of retail POS spends; now impacting 3-5% of overall retail spend. Management characterized the impact as 'minimal' given strong overall growth, but this represents a permanent structural shift in category mix.
Revolver rate at 22% (down from historical levels) due to selective customer acquisition over past 8 quarters. While management expects revolver to increase post-Diwali as transactors convert, the sustained decline reflects deliberate risk aversion that may limit NIM expansion unless underwriting stance changes.
