SBI Card profit gets squeezed by bad loans, impairment charge, and a big provision for COVID-19
Prerna Sindwani/Business Insider India
- This is the first earnings report released by
SBI Cardsand Payment Services since it was listed on the bourses in March 2020.
- In Q4 2020, SBI Card's profits fell by 66% compared to the same period last year, to ₹83.5 crore from ₹249 crore.
- The company also created a provision of ₹489 crore to account for the economic concerns arising due to the Covid-19 pandemic.
- On the flip side, SBI Card's asset quality improved, with its non-performing assets declining to 2.01% from 2.44% a year earlier.
“Considering the possible effects from the pandemic relating to COVID-19, the company has performed sensitivity analysis and based on current estimates has created a specific provision of Rs 489 crore,” SBI Card said in a release.
The company also posted an improvement in asset quality, with non-performing assets decreasing to 2.01% from 2.44% during the same period last year.
SBI Card was listed on the bourses in March this year at ₹661 against the issue price of ₹755, with the Coronavirus crisis and aggressive pricing causing the stock to lose 13% of its value on debut.
Here’s why analysts are bullish on SBI Card
According to the latest Bank of America Securities report dated April 21, the SBI Card stock has the potential to regain most of its lost ground over the next one year. “Despite factoring the near-term impact of COVID-19, we see strong long-term growth supported by SBIC’s diversified model,” the report says.
The report states that the SBI Card stock could bounce back to ₹680 in the next one year, which is an upside of 19% based on the closing price as of yesterday, May 7.
It is to be seen if the latest earnings from the company changes estimates.
Here's why SBI Card share price may jump 30% in the next one year, according to Bank of America-Merrill Lynch
₹10,000 invested in SBI Card during IPO is worth about ₹6,700 now— here’s why
SBI Card lists on the worst possible day and its stock slips 13% on debut
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