On Monday SBI Cards and Payment Services (SBI Card) said it was planning to raise up to Rs 2,000 crore by issuing non-convertible debentures (NCDs). on March 12 the company has called a meeting of the board of directors to consider and approve raising of funds, which will be raised in one or more tranches over a period of time, it said. Within a month this will be a second announcement of fund-raising via NCDs after it had raised Rs 550 crore in February.
SBI Cards had informed Last month that it had raised Rs 550 crore through issuing NCDs on a private placement basis. The NCDs have a tenure of three years with a coupon rate of 5.9% per annum. Fund-raising after new MD and CEO Rama Mohan Rao Amara took over in January 2021, the company had announced .
The company had reported a 52% year-on-year fall in its net profit to Rs 210 crore during the December quarter (Q3FY21). Its total income stood at Rs 2,540 crore during the quarter, against Rs 2,563 crore in the year-ago period. The capital adequacy ratio was at 23.7%, compared to the minimum regulatory requirement of 15%. On a proforma basis, gross non-performing assets (NPAs) stood at 4.51%, compared to 7.46% in the September quarter. The Supreme Court had earlier directed lenders to not declare any fresh NPAs after August 31, 2020. Therefore, lenders had disclosed NPAs on a proforma basis to reflect the true picture of asset quality.
In a recent report, Credit Suisse said the asset quality stress for SBI Card had peaked. The company has seen an increase in stress post Covid-19, with proforma slippage of 8%, and 10% of loans being restructured, Credit Suisse said. “Given strong pre-provision profitability, while it has provided 65% on pro-forma NPAs as well as 35% on restructured loans, FY21E RoAs (return on assets) are likely to be around 4%,” it said.
Credit Suisse also expects strong growth for SBI Card. “We expect growth to remain strong (> 30% in spends) as it raises penetration within SBI customers,” Credit Suisse said.