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In the absence of the ordered standstill, the GNPA number would have jumped to 7.46%, SBI Card management said. (Mint)
In the absence of the ordered standstill, the GNPA number would have jumped to 7.46%, SBI Card management said. (Mint)

Unpaid dues hit SBI Card asset quality

  • SBI Cards reported impairment losses and bad debt expenses at 862 crore in the quarter against 329 crore for the same period last year
  • The rise in provisioning and bad loans led to a 46% drop in profit to 206 crore. Revenue from operations, however, grew 5% to 2,413 crore

SBI Cards and Payment Services Ltd, India’s second-largest credit card firm, on Thursday reported a sharp deterioration in asset quality as thousands of cardholders skipped payments, the latest sign of the coronavirus pandemic’s impact on people’s financial health.

The company’s gross non-performing assets (GNPA) rose to 4.29% in the September quarter from just 1.35% in the preceding three months.

The asset quality could have been worse had not a top court order put a standstill on recognition of bad loans. Lenders cannot label loans as bad, even if a default has occurred.

In the absence of the ordered standstill, the GNPA number would have jumped to 7.46%, SBI Card management said.

SBI Cards reported impairment losses and bad debt expenses at 862 crore in the quarter against 329 crore for the same period last year.

“Additionally, management overlay provision created for 268 crore in Q2 FY21; total management overlay provision is at 758 crore as of September," the company said.

The rise in provisioning and bad loans led to a 46% drop in profit to 206 crore. Revenue from operations, however, grew 5% to 2,413 crore.

While asset quality concerns emerged in the fiscal second-quarter, the credit card company said that retail spending showed resurgence.

Retail spending increased by about 50% in the second quarter from the preceding three months. Retail spending was at 90% of pre-covid (December 2019- February 2020) levels.

“Card-in-force"—total number of cards issued and outstanding—grew 16% to 11 million as of Q2 FY21 as against 9.5 million in the same period last year.

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