SBI Cards Q2 FY27 Earnings Call: PAT Surges 75% on Credit-Cost Gains, Maintains 1 Million+ Quarterly Account Additions (SBICARD)

SBI Cards & Payment Services Ltd held its Q2 FY27 earnings call on October 23, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

PAT Surges 75% on Credit-Cost Improvement; Revenue Growth Modest

• PAT of Rs.778 crore (+75% YoY) — Q2 FY 2026-2027 profit growth was mainly driven by improved credit cost, not top-line; revenue from operations rose only 4% YoY to Rs.5,141 crore.
• Cost-to-income at 58.7% (+193 bps YoY) — operating cost rose 7% YoY to Rs.2,649 crore in Q2 FY 2026-2027, though OpEx was flattish QoQ as growth investments offset the expected marginal decline from lower corporate spends.
• NIM of 10.8% in Q2 FY 2026-2027 — portfolio yield 16.1%, interest-earning assets 55%, revolver rate 22%; management expects NIM to remain range-bound as cost of funds (6.8%, +18 bps QoQ) rises over the next few quarters.
• ROA 4.4% (+180 bps YoY) and ROE 18.4% (+631 bps YoY) — capital adequacy above 26%; receivables stood at Rs.58,376 crore as of Q2 FY 2026-2027.
• GNPA 1.9% (-14 bps QoQ, -95 bps YoY), NNPA 0.77% — management said NPAs are at their lowest level post-COVID-19.
• Rs.30 crore additional provision in Q2 FY 2026-2027 — for heightened macro uncertainty (prolonged West Asia conflict, higher energy prices, inflation, interest rates); total additional provision now Rs.100 crore as of quarter ended September 30, 2026, vs Rs.70 crore up to the previous quarter.

Industry-Leading Origination Run-Rate; CIF Share Restated Up

• Over 1 million new accounts added in Q2 FY 2026-2027 (+18% YoY) — 11,06,000 additions vs the company's 1 million+ origination guidance for the quarter; management will maintain a >1 million quarterly run rate through FY 2026-2027.
• Net card additions of 8.6 lakh in FY 2026-2027 till August — highest in the industry; cards in force ~2.32 crore (+8% YoY), CIF market share 18.5% (India's #2 issuer), spends market share 19% per RBI August 2026 data.
• SBI's share in CIF lifted to 46% in Q2 FY 2026-2027 from 36% in Q1 — driven by a classification refinement (slide 14) that reclassified ~10% of the portfolio; management noted the same revised classification applied to the prior quarter would have left bank vs open market numbers unchanged.
• Industry backdrop — UPI transaction volumes grew 27% YoY to ~145 billion in H1 FY 2026-2027; industry cards-in-force rose 10.5% YoY to over 124 million as of August 2026; cumulative industry credit card spends exceeded Rs.10 trillion in the first 5 months of FY 2026-2027.
• Macro forecasts cited from third parties — RBI projects India real GDP growth at 7.1% for FY 2026-2027 (revised up from 6.7%); IMF raised India's growth forecast to 7% for both FY 2026-2027 and FY 2027-2028, citing resilient domestic demand.
• Demographic tailwind per industry reports — nearly half of first-time credit card users are aged 30 or below, and ~46% of new users come from semi-urban, tier 2/3 and rural markets.

Festive Timing Distorts Q2; Retail Spends and UPI-Led Growth Intact

• Total spends of Rs.1,10,689 crore (+3% YoY) in Q2 FY 2026-2027 — record retail spends of Rs.95,299 crore (+6% YoY) despite festive sales shifting to Q3; corporate spends Rs.15,390 crore; credit-card UPI spends +17% QoQ.
• Festive base effect explains soft growth — last year's festive season began 22 September 2025 alongside GST benefits, while FY 2026-2027 festivities started 11 October, pushing spend-to-receivables traction into Q3 FY 2026-2027; management said a Q2-vs-Q2 comparison is not apt as spends build with a lag after acquisition.
• Spends per card ~Rs.167,000 in Q2 FY 2026-2027 — Girish guided it will "definitely" be above Rs.170,000 in Q3 FY 2026-2027 with the festive season underway.
• 30-day spend-active rate of 53% in Q2 FY 2026-2027 — without festive support, versus 53% in the year-ago festive season; cited by management as evidence of higher engagement. 12-month customer activity is almost close to 100%, with exits enforced in the 13th month per RBI guidance on inactive customers.
• Rs.21,300 crore of spends through UPI in Q2 FY 2026-2027 — incremental spend coming from RuPay UPI cardholders as acceptance outlets expand, a trend identified ~1.5-2 years back that is even more significant in tier 2 and tier 3 cities; RuPay-linked cards are more than one-third of the base per management (Girish).
• Corporate spends dipped in Q2 FY 2026-2027 — management said nothing adverse; it deliberately let go of certain spends "for the margin purposes" and keeps corporate spends below 20% of overall spends (period unspecified), describing them as an opportunistic play.
• Retail spend growth guided at mid-teens to high-teens for FY 2026-2027 — versus the current run-rate of 14-16% (per Girish; CEO noted ~16% as of now).

Cost of Funds Rising; Management Leans on EMI Repricing and Borrowing Mix

• Cost of funds up ~18 bps in Q2 FY 2026-2027 — T-bills rose 50-55 bps over the last 1.5 months (flagged by Bhaskar Basu, Jefferies India) and repo increased at the recent MPC; borrowings reference both T-bill and repo rates, with the exact split undisclosed and a "moving number."
• Yield hikes already underway, not just mix — POS EMI subvention yields moved from ~16% about 6-9 months ago to ~16.5% three months ago and up to ~17% as of Q2 FY 2026-2027; rates for converting dues into EMIs before the due date have also been raised.
• EMI conversion is the biggest yield lever — EMI share ~33% (per analyst, who suggested a 2-3 pp increase may be needed to offset COF rises, period unspecified); CFO Rashmi noted the ability to reprice the incremental EMI book to pass on higher funding costs; revolvers held stable despite their earlier downward bias.
• Working capital loans cheaper than CP by 70-80 bps — as of Q2 FY 2026-2027 (CFO Rashmi); CP is currently not being used given unfavorable rates; the borrowing mix comprises working capital loans, term loans and NCDs, optimized via instrument, tenor and lender selection.
• On a hypothetical 70 bps RBI hike cycle in FY 2026-2027 — the CFO said the assessed 50 bps, even if it comes in FY 2026-2027, will hit with a lag as the book reprices in 60-75 days, so the full cost pressure will not land within FY 2026-2027; in Q1 FY 2026-2027 cost of funds rose only ~3 bps due to bunched liability maturities, while Q2 absorbed the full impact.
• No NIM guidance for FY 2027-2028 — management said "not as of now"; analyst Nitin Agarwal (Motilal Oswal) flagged potential margin pressure in FY 2027-2028 from rising funding costs as banks pass through rate changes; management reiterated cost-discipline commitment rather than providing forward guidance.

Credit Cost "More or Less Plateaued"; Rs.100 Crore Macro Overlay Built

• Gross credit cost 5.6% in Q2 FY 2026-2027 (-98 bps QoQ, -342 bps YoY) — H1 FY 2026-2027 credit cost stood at 6.05%; management guided ~6% for FY 2026-2027 and is comfortable in the 5.5-6% range, viewing it as a level that optimizes risk-return, with no expectation of moderation much beyond that as the book grows and seasonalities emerge.
• Rs.100 crore management overlay built as of Q2 FY 2026-2027 — to buffer potential macro adversities; management said the Rs.30 crore in Q2 was a write-back with Rs.30 crore retained as an overlay, and it will take a call on further action if the situation worsens.
• Middle East crisis more prolonged than initially expected — originally seen resolving in a couple of months; inflation prints and rising interest rates have emerged as the conflict stretches, though GDP remains resilient; management said nobody has complete clarity on how it will play out.
• Underwriting standards not relaxed despite improved credit costs — origination filters remain tight; the company continues pilots to identify cohorts with better income potential, an effort underway for almost a year, with the lens on overall profitability rather than risk alone.
• New-vintage revolver offtake lower than the existing book — after roughly one-and-a-half years of stringent customer acquisition through Q2 FY 2026-2027; current book mix cited at 33% revolver / 22% EMI, while EMI adoption shows equal takers across new and old vintages.
• Risk-categorization models working well — based on in-house spend behavior and ecosystem borrowing data; early actions on risky customers have saved losses, and account aggregator tools — hardly used 2-3 years back — are now being utilized, which management cited as the reason GCC is where it is. Spend patterns across risk categories are more or less unchanged.
• Marginal QoQ rise in Stage 2 assets in Q2 FY 2026-2027 — management said Stage 2 plus Stage 3 combined was unchanged, characterizing the move as quarterly/seasonal rather than a trend.

H2 FY27 Receivables Pickup Reaffirmed; Fee and Cost Guidance Held

• Receivables growth reaffirmed for H2 FY 2026-2027 — beginning Q3 FY 2026-2027 with festive sales and Diwali falling in October–November; early festive trends (EMI offtake, spends-to-EMI conversion) described as "very encouraging," but management declined to quantify (including the analyst's mid-single-digit framing), noting 45% of the portfolio is transactor and transactor volumes can move overnight.
• Cost-to-income guidance of 57-59% for FY 2026-2027 — Q3 FY 2026-2027 OpEx will rise as most customer spends occur during the festive season, but management will adhere to the guidance; no FY 2027-2028 guidance issued as of now, though management aims to sustain profitable customer acquisition and "if possible" reduce the ratio further.
• Fee income framework for FY 2027-2028 and FY 2028-2029 — responding to Anuj Singla (JP Morgan), who cited regulatory focus on cutting fee income across lending entities, Girish said interchange fees will grow along with spends (interchange rate constant or slightly increasing over time), while instance-based fees should grow in line with cards growth, broadly CIF growth; no guidance given so far for the receivables-linked fee component.
• Interchange income-to-spends ratio ~1.35% in Q2 FY 2026-2027 — as cited by Pranit Shah (3P Investment Managers); the rise was driven by card networks raising interchange rates on certain categories; management guided the ~1.35% ratio is sustainable "within a range" going forward (period unspecified), noting a "definitive increase from the past trend line."
• Co-brand strategy selective — the newly launched Eternal card is the latest in an existing co-brand line, with four prominent partners: Flipkart, Google Pay, Tata Nu and PhonePe (Google Pay tie-up done in FY 2026-2027); management skipped the first wave of Amazon/Flipkart co-brands 4-5 years back for profitability reasons and will partner only where "great customer value and profitability" can be created.
• Product launches in Q2 FY 2026-2027 — Google Pay Flex SBI Card and FD-backed Advantage SBI Card on SBI Yono; continued Apple partnership (instant discount on iPhone 18 Pro); the hyper-personalization program won the CII National AI award. Forward agenda rests on five levers: tier 2/3 expansion, banker penetration, premiumization and spend per card, credit-cost optimization, digital/data analytics, and sustained cost discipline.