Mr. Jaikishan Parmar - Sr. Equity Research Analyst, Angel Broking Ltd
SBI cards reported Below expectation numbers for Q2FY21. Loan Book grew 4% YoY to Rs. 23,978 Cr, while NII increased by 20% on the back of a strong NIM to 17.0% vs YoY 15.1% due to lower cost of funds. The major surprise came from provision cost, as in Q1FY21, Company did not take any covid related provision and did not expected deterioration in asset quality, however, GNPA spiked and provision cost escalated. Provision Cost came at Rs. 862 Cr (14.7%) vs QoQ Rs. 485 Cr (8.7%) & YoY Rs. 329 Cr (5.7%). In Q2FY21 It took contingent provision worth of Rs.268 cr and total contingent provision stood at Rs.758cr which is 3.2% of Loan Book. GNPA came at 4.3% vs QoQ 1.3% vs YoY 2.33%. Without the Supreme Court ruling on standstill accounts, the GNPA would have been at 7.46% and NNPA at 2.7%. .Restructuring under the RBI RE (resolution plan) stands at Rs. 2108 Cr (8.8% of AUM). SBI cards is trading at 68x of trailing earnings. An investor would wait to analyse the behavior and slippage from the restructured book and final credit cost for FY21.