SBI Cards posted a dismal set of earning for Q3FY21 with net profit for the quarter coming in 52% (YoY) lower at Rs.210 crore. NII was down 9% at Rs.1168 crore.

A 62% increase in other income and 24% drop in finance costs helped keep a leash on the falling net profit.

In terms of asset quality, Gross NPA came in at 1.6% v/s 4.3% (QoQ) and Net NPA went up from 0.6% to 1.5%.

Following the ruling of the Supreme Court, the company has not classified any accounts which were not NPA and even accounts that would have been classified as NPA, as of August 31, 2020. And if the company had classified such borrower accounts as NPA after August 31, 2020, its Gross NPA would have been 4.51% and not 1.6% and Net NPA ratio would have been more or less the same at 1.6%.

The company said that though there have been some improvements in economic activities in Q3, the continued slowdown impacted new credit card originations, use of credit cards by customers and the efficiency in collection efforts. SBI Card had offered moratorium on credit card dues to eligible borrowers till August 31, 2020 and later, as per the rules, allowed one time resolution to eligible customers by offering them an option of converting credit card dues into EMls of up-to 24 months. As of December 31, 2020, outstanding balance of such accounts was Rs 2345 crore. The company has classified such balance under Stage 2 assets and said that it holds adequate provision against such assets.

Its total management overlay provision was at Rs.1,113 crore v/s Rs.758 crore (QoQ).

During the quarter, its receivables grew 4% to Rs 25,749 crore, and new accounts volume increased by 8% to 9,18,000 accounts. SBI Cards said its impairment losses and bad debt expenses went up 72% (YoY) to Rs 648 crore.

But the market threw this performance to the winds and concentrated on the asset quality improvement, going on to hit a new high today at Rs.1026, rising almost 5%. Volumes were up two-times.