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SBI Card customers made a lot of festive spends in the last 10 days of September, some of which the card issuer expects to come as revolvers — or carried forward credit — as well as EMIs. In an interaction with CNBC-TV18, SBI Card CEO Rama Mohan Rao Amara said most of this festive spend will lead to "incremental incur."

The remarks from the top helm of SBI Card come days after the company failed to excite Dalal Street with its quarterly financial performance at a time of a festive-related boost in spends. RBI data last month showed credit card spending jumped 35 percent for SBI Card in August, in stark contrast to a 45 percent slump across the industry.

Many analysts lowered their earnings estimates for SBI Card even as the company reported a 52.4 percent jump in net profit for the July-September period to Rs 525.6 crore on the back of a 28 percent increase in revenue.

Amara said revolvers have been stagnant, as reflected across the industry.

“The percentage of customers in terms of number of customers who are opting for revolvers has more or less remained stable in the last 1-2 quarters...

Directionally, the net interest margin will get compressed some more at our end as we also have to transmit the rate increase to the customers as and when we make new disbursals," he said.

Credit card companies earn a hefty amount of money from higher rollovers, which allow the borrower to postpone a full payment against a high rate of interest.

“It is still hovering around the range of around 25-26 percent,” he said.

SBI Card's management exuded confidence that it would maintain credit costs below pre-COVID levels for a long term. “Pre-COVID, we were operating at around 6-6.5 percent,” Amara said.

First Published:Nov 1, 2022 6:54 AM IST