SBI Cards Q2FY21 Call Highlights - YES Securities

Business traction and Market Share

- Spend and new account acquisition approaching pre-Covid level (average of Dec-Jan-Feb)

- New account acquisition was ~2.5x in Q2 v/s Q1 and stood at 0.69mn - Sept. new account acquisition stood at 98% pre-Covid level which was 0.3mn+ accounts

- Expanding the market by increasing sourcing from the banca channel by going into Tier-3 cities and beyond

- Acquiring more New-To-Credit customers - market share in NTC segment reached 31%

- Market share in terms of CIF and spends has increased to 18.7% and 20.5% respectively based on the August data

Retail Spends

- Retail spends grew 50% qoq, partially driven by pent-up demand
- Retail online spend at 114% of pre-Covid level - now contributes 54% of overall retail spend
- POS spend at 72% of pre-Covid level
- Overall retail spends in Sept. at 92% of pre-Covid level
- Retail spends have accelerated in October driven by festive programs
- 1 in 4 POS transaction is through contactless cards

Asset quality and Provisioning

- Enhanced management overlay provisions by Rs2.6bn in Q2 and the overall additional prov. stands at Rs7.6bn now

- RBI restructuring at Rs21bn, 9% of total receivable of Rs240bn - enrolled customers to take RBI scheme in August and Sept. as interest rates come down to half (14-18%) - their cards are blocked and limits will be opened after a satisfactory amount has been paid - 10% prov. made as per RBI guidelines - these loans are reported to CBs

- SC stand-still portfolio at Rs7.6bn (which otherwise would have slipped in Sept.) - proforma GNPL at 7.5% v/s reported 4.3% - management has however made 66% prov. of Rs5bn on this pool (as per the policy on Stage-3 accounts) - these cards are currently blocked

- Portfolio o/s under EPP (easy payment plan - conversion into EMI based TLs with IR of 12-20%) at Rs1.6bn (0.7% of receivables) - these cards are currently blocked and limit will be opened after payment of 3-4 EMIs - EPP customers not reported to CBs as minimum amount has been cleared

- Major portion of RBI restructuring and EPP customers are self-employed and mainly acquired from the open market

- Management overlay of Rs7.6bn includes Rs5bn prov. created on the SC stand-still portfolio.

- Credit cost could remain high in coming quarters, but may not spike further

- Banca channel asset quality much better than the overall reported NPLs

Source : Equity Bulls

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