SBI Cards and Payment Services Ltd reported a 20% year-on-year increase in net profit for the quarter ended June 30, driven by improved asset quality, lower credit costs and robust customer spending. According to the company's stock exchange filing released on Friday, profit after tax rose to Rs 664 crore in the April-June quarter from Rs 556 crore in the corresponding period last year. Total income increased 3.4% year-on-year to Rs 5,205 crore from Rs 5,035 crore.

The country's second-largest credit card issuer by cards in force continued to witness strong consumer spending during the quarter. Card spends rose 27% year-on-year to Rs 1.18 lakh crore, while the number of cards in force increased 7% to 22.6 million. New account additions also improved, reaching 1.02 million during the quarter compared with 873,000 in the same period a year ago, reflecting sustained demand for credit cards.

SBI Cards also reported a significant improvement in asset quality. Gross non-performing assets (GNPAs) declined to 2.04% as of June 30 from 3.07% a year earlier, while net non-performing assets (NNPAs) fell to 0.83% from 1.42%. The improvement resulted in a sharp reduction in impairment losses and bad debt expenses, which dropped 30% year-on-year to Rs 948 crore.

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Despite the strong profit growth, revenue expansion remained relatively modest. Interest income declined 3% year-on-year to Rs 2,421 crore, although this was partially offset by a 10% increase in fee and other income, which rose to Rs 2,620 crore. Meanwhile, operating expenses climbed 23% to Rs 2,620 crore, leading to a 12% decline in earnings before credit costs to Rs 1,841 crore.

The company said its receivables stood at Rs 58,269 crore at the end of June, marking a 3% increase from the previous year. SBI Cards also strengthened its capital position, with its capital adequacy ratio improving to 25.6%, including a Tier-I capital ratio of 20.3%, comfortably above the regulatory requirement.

The financial results were approved by the company's board of directors at its meeting held on July 24. The latest quarterly performance highlights SBI Cards' ability to sustain profitability through improved credit quality and strong consumer spending, even as it navigates moderate revenue growth and higher operating expenses in a competitive credit card market.

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