SBI Cards profit up despite sharp spending decline

SBI Cards spending trends

The amount of money spent by an average SBI Credit Card user fell by 43% to about Rs 24,000 per month during the three months from April to June, but the company still managed to post a higher profit due to higher interest income and lower costs.

Compared to Rs 24,000 in the latest period, an average SBI Card user had spent around Rs 42,000 per month in the preceding three months (January-March). A year ago too, they were spending an average of Rs 47,000/month.

The biggest dip in spending, as expected, was seen in April, with May and June showing a gradual recovery.

Retail spending improved in May and June

The total spend by retail card customers on SBI Cards platform during the month of April was Rs 118 cr per day, compared to Rs 307 cr per day before the COVID-19 lockdown.

This rose to Rs 182 cr per day in May and to Rs 248 cr per day in June, though it was still down by about 19% compared to pre-COVID trends.

The trend was even more stark among corporate customers.

Against the usual level of Rs 74 cr per day, spending on corporate cards fell to Rs 19 per cr in April. This improved to Rs 22 cr per day in May and to Rs 41 cr/day in June, still down 45% compared to pre-COVID levels.

Not surprisingly, most of the decline during April-June was seen in usage at point-of-sale terminals — such as at super markets and malls.

There was a 41% fall in credit card spends at point-of-sale terminals installed in shops selling relatively discretionary purchases such as consumer durables, apparel, jewelry and restaurants.

In comparison, spends at non-discretionary locations (necessities) — such as supermarkets, petrol pumps, hospitals and schools — fell by 32%.

The biggest hit was seen in offline travel spends, where there was a collapse of 85% compared to pre-COVID levels.


In sharp contrast, spends increased at the online outlets — with the exception of online travel sites.

Online retail accounted for 56.1% of total spends during Apr-Jun, compared to 44.2% during Jan-Mar.

Online spends on non-discretionary items — such as grocery and education — rose 23% during April-June compared to the pre-COVID period of December-February.

Even in the discretionary category of consumer durables, apparel, jewelry and restaurants, online spends rose by 21%.

However, online spends on travel sites fell 78% as long distance travel was banned during most of the three-month period.


Despite the sharp fall of 43% seen in average card spend during the Apr-Jun period, the amount receivable per card remained largely static, which helped the company’s profit margin.

The average receivable per card was at Rs 22,005 in Apr-Jun, compared to Rs 22,888 during for previous three months.

During the latest three months, 45% of the receivable amount was in ‘revolver’ status, meaning that it had been rolled over at least once by the user.

In comparison, in the earlier three months (Jan-Mar), only 40% of the total receivables were in ‘revolver’ status.

During the latest period, 30% of the receivables were in ‘term’ status, meaning that the end user had converted it into a term payment (EMIs and so on).

Only the remaining 25% of the receivables were in ‘transactor’ status, meaning that they were generated by transactions/purchases that took place during the previous billing cycle. In Jan-Mar, this was slightly higher at 27%, and in Apr-June of the previous year (2019), 31% of the total receivables were in this category.

A rise in the share of revolving and term credit could indicate higher stress levels among consumers.

The government had also announced a moratorium on credit card bills for six months up to August 31.

However, due to the high levels of interest charged on rolled over amounts, the take-up for such moratorium has been less among credit card users.

As of April end, 6,669 cr of total outstanding amount was under the moratorium scheme. This increased to Rs 7,083 cr by the end of May.

However, by the end of June, most people had opted out of the moratorium scheme and only Rs 1,471 cr remained under moratorium.

In terms of users, out of the 10.55 million total card users, 1.21 million availed of the moratorium facility as of April. This number rose to 1.25 million as of the end of May, but fell sharply to 0.15 million by the end of June.


SBI Cards managed to bring down its operating costs sharply during the Apr-Jun period compared to the Jan-Mar period.

Total operating costs fell to just Rs 907 cr from Rs 1,226 cr in the previous three months and Rs 1,073 in the same period of last year.

This was achieved by a 16% reduction in employee costs compared to the previous three months and a 27% reduction in ‘other operating expenses’.

Moreover, the company also saw a 35% increase in the interest charged paid by its consumers to Rs 1,412 cr from Rs 1,049 cr a year earlier, which translated to a 5% increase from the Jan-Mar period.

This helped the company not only protect its profit line from the impact of COVID-19, but actually improve it from Rs 346 cr last year to Rs 393 cr in Apr-Jun 2020.

SBI Cards Quarterly financial performance