SBI Cards (SBICARD) Q2 FY27 Profit Jumps 75% as Bad Loan Costs Plunge
The credit card issuer posted a 75% yearly profit surge to ₹778 crore, driven by sharply lower provisions, even as revenue growth remained modest.
SBI Cards' Q2 profit soared 75% to ₹778 crore, powered by a 37% drop in bad loan provisions. Revenue grew a modest 3.6%, highlighting a quarter defined by cost control over top-line expansion.
SBI Cards delivered a quarter of powerful profit growth built on a foundation of cleaner loans. While revenue from operations grew a steady 3.6% year-on-year to ₹5,141 crore, net profit surged 75% to ₹778 crore. The story is not one of booming sales, but of a sharp reduction in the cost of risk, as the company's focus on portfolio quality paid off handsomely.
The numbers show a clear trajectory. Net profit margin expanded dramatically to 15.1%, up 610 basis points from a year ago. This improvement came from a single, powerful lever: impairment losses and bad debt expenses fell 37% year-on-year to ₹819 crore, according to The Economic Times.
Revenue (₹ Cr)
Profit (₹ Cr)
Net Profit Margin
| Metric | CurrentQ2 FY27 | PreviousQ1 FY27 | Same quarter LYQ2 FY26 |
|---|---|---|---|
| Period | Sep 2026 | Jun 2026 | Sep 2025 |
| Revenue (₹ Cr) | 5,140.53YoY +3.6% | 5,040.55 | 4,960.98 |
| Profit (₹ Cr) | 777.6YoY +75% | 664.44 | 444.77 |
| Net Profit Margin | 15.1%YoY +68% | 13.2% | 9.0% |
The engine behind the profit leap
The profit jump was almost entirely driven by a dramatic improvement in asset quality. Gross non-performing assets (GNPA) fell to 1.90%, their lowest level since the pandemic and down from 2.85% a year ago. Net NPAs improved to 0.77%. This allowed the company to set aside far less money for potential loan losses, a tailwind that may be reaching its peak.
Management, cited in an Investing.com transcript, now expects gross credit costs to stabilize around 5.5% to 6% for the full year, implying the period of rapid improvement is largely over. The company also made an additional ₹30 crore provision this quarter, citing macroeconomic uncertainty from prolonged geopolitical tensions.
The growth challenge beneath the surface
While profitability soared, underlying business growth was more measured. Total card spends grew just 3% year-on-year, with a 12% decline in corporate spends offsetting a 6% rise in retail. Outstanding receivables contracted by 2% to ₹58,376 crore, even as the card base expanded by 8% to 2.32 crore cards.
This points to a portfolio that is growing in customer numbers but not in average balances, a dynamic that pressures interest income. Net interest margin (NIM) narrowed by 42 basis points year-on-year to 10.8%, as reported by The Economic Times, reflecting this mix and a rising cost of funds.
The path ahead and market skepticism
The company's guidance for the rest of FY27 focuses on stability. It expects retail spend growth in the mid-to-high teens and aims to keep the cost-to-income ratio between 57% and 59%. Receivables growth is anticipated to pick up in the second half, starting with the festive season in Q3.
Yet, the stock fell over 3% following the results, as noted by Investing.com. This suggests investors are looking past the exceptional credit cost benefit and questioning the durability of earnings growth without a stronger acceleration in the core business or further margin expansion.
Key Points
- Net profit surged 75% year-on-year to ₹778 crore, primarily due to a 37% reduction in impairment losses.
- Asset quality improved significantly, with Gross NPA falling to 1.90%, the best level since the pandemic.
- Underlying business growth was muted, with total spends up only 3% and receivables down 2% year-on-year.
- Management expects credit costs to stabilize around 5.5%-6%, limiting a major future earnings tailwind.
- The stock's negative reaction post-results reflects investor focus on sustainable revenue growth over one-time provision gains.
Hexa Perspective
SBI Cards' quarter showcases the powerful earnings leverage that materializes when credit costs normalize from a high base. The 610-basis-point margin expansion tells that story clearly. However, the guidance for stable credit costs and the modest top-line growth indicate the low-hanging fruit has been harvested.
The next phase depends on translating customer additions into higher receivables and spend, while managing the pressure from rising funding costs. Investors are now weighing whether the company's foray into tier 2/3 markets and digital partnerships can reignite the growth engine before the tailwind from falling provisions completely fades.
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