SBI Cards and Payment Services Ltd (NSE: SBICARD) Q3 2025 Earnings Call dated Jan. 28, 2025
Corporate Participants:
Abhijit Chakravorty — Managing Director & Chief Executive Officer
Girish Budhiraja — Chief Sales & Marketing Officer
Rashmi Mohanty — Chief Financial Officer
Analysts:
Mahrukh Adajania — Analyst
Krishnan ASV — Analyst
Piran Engineer — Analyst
Shweta Daptardar — Analyst
Nishant Shah — Analyst
Pranav Gundlapalle — Analyst
Roshan Chutkey — Analyst
Dhaval Gada — Analyst
Unidentified Participant
Bhavik Dave — Analyst
Nitin Aggarwal — Analyst
Jignesh Shial — Analyst
Rohan Mandora — Analyst
Shubhranshu Mishra — Analyst
Pranuj Shah — Analyst
Rohit Jain — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the SBI Cards and Payment Services Limited Q3 FY ’25 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the call, please signal an operator by pressing star then zero on your touchstone phone. I now hand the conference over to Mr Abhijit Chakarvati, MD and CEO, SBI Cards. Thank you, and over to you, sir.
Abhijit Chakravorty — Managing Director & Chief Executive Officer
Thank you,. Good evening, everyone. I’m pleased to welcome you to the earnings call along with my senior management team. Projections indicate that digital economy will account for 20% of GDP by 2026 and exceed USD1 trillion by 2028 UPI transactions, for example, saw an 8% month-on-month increase in volume to INR16.73 billion in December 2024, the highest-volume for the digital system since it became operational in April 2016. As per the RBI December 2024 data, credit card spends have grown to INR1.88 lakh crore in value terms with transaction values exceeding INR1.14 trillion on e-commerce platforms. This trend further highlights the increasing perform — increasing preference on credit for online purchases. At SBI Card, we understand and remain committed to focusing on Indian credit card industry’s growth potential and increasing digital payment adoption. As India’s largest pure-play credit card player, with an 18.7% market-share of cards in-force, we are well-positioned to drive the sector’s strong growth. A significant milestone for us this quarter has been surpassing the INR2 crore cards, surpassing the INR2 crore cards in-force mark in December ’24, reflecting SBI Card’s expanding customer-base and market presence. Let us now look at SBI Cards business overview in Q3 FY ’25. We have sustained growth trajectory with growth — with strong business performance while continuing to focus on customer experience and operational efficiency. As part of key initiatives, we rolled-out many customer-centric initiatives and campaigns, for extent, the promotional campaign during festive period of October, November 2024, 100 plus festive offers were introduced across varied categories on an array of brands and segments. Collaboration with e-commerce platforms, Amazon and Flipkart were launched to drive high-spend customer engagement and penetration. During the quarter, we have launched our hyper personalization platform and have commenced running campaigns. The platform now gives us the capability to run customized and targeted campaigns. The key objective of hyper personalization platform is to enhance customer lifetime value through personalized customer engagement. This will be done through scaling up and augmenting existing capabilities to more than 10 times and achieve higher levels of personalization and one-to-month communication through SBI card mobile app. We continue to grow end-to-end digital acquisition capabilities. For instance, owing to integration of SBI Card Sprint platform with SBI Yono and SBI Internet Banking, majority of Banca new account acquisition is now being achieved digitally. We have leveraged AI to automate Dube stage and application processing journey, bringing in efficiency, cost benefits and error proofing on application decisioning. We continue to focus on varied ESG initiatives. Our commitment to sustainability continues to deliver results as evidenced by our consistent A-rating from MSCI. Registered with SEBI to provide ESG rating companies this year. Our ESG rating of 16.5 from Sustainalytics places us in the low-risk category. These ratings reflect our dedication to integrating ESG principles into our business operations. Coming to financial performance, the results for the company for the quarter are in-line with the seasonality of the business. The key financial highlights are about new accounts, I’m pleased to share that during this quarter, we have achieved a significant milestone. Our cards in-force have crossed the INR2 crore mark, witnessing a healthy 10% year-on-year growth. During Q3 FY ’25, our new account acquisition was at INR11.75 lakh with a 7% year-on-year growth. This is significant considering our continued focus on selective acquisition during past few quarters and to grow in a calibrated manner. SBI Card’s CIF market-share in Q3 FY ’25 was 18.7%. Share of new account sourcing from Banca and open-market channel stands at 55% and 45% respectively. Regarding spends, retail spends remained strong atees INR80.792 crore with 10% year-on-year increase. Corporate spends are stable at INR5,301 crore. SBI Card spends market-share is at 15.6%. Retail spends per average card have remained steady at INR1.62 lakh similar to Q3 FY ’24 despite festival season being spread over September and Q3 this year. Category comprising of consumer durables, furnishings and hardware, apparel and jewelry witnessed 36% year-on-year growth for the nine-month period this fiscal. Online spends are robust with a share of around 58.5% of total retail spends for the nine-month period. Rupee spends at UPI terminals continue to grow and have shown a growth of more than 45% over the previous quarter. Department stores and grocery utilities, film, apparel and restaurants continue to be among the top-five categories for UPI spends. Tier-2 plus customers are utilizing this facility more as it increases the number of acceptance outlets for card. Total revenue has grown to INR4,767 crore, almost similar to last year. It is higher by 5% quarter-on-quarter contributed by both interest and fee income. Profit-after-tax for the quarter is at INR383 crore, 30% lower year-on-year. Receivables as on 31st December ’24 are at INR54,773 crores registering a 12% year-on-year growth. Receivables per-card is INR27,052 versus 26,438 in Q3 FY ’24. Interest-earning asset and revolver rate is stable at 60% and 24% respectively. With newer and quality vintages reflecting a lower revolver rate, we expect the receivables to grow at a lower rate. Cost of fund has remained stable at 7.4%. We expect cost of fund to remain at around current levels going-forward till we see any rate cut action. Our cost-to-income for Q3 FY ’25 is at 53.5%, almost similar quarter-on-quarter, quarter-on-quarter owing to festive offers during the quarter. Regarding the asset quality for the company, the refreshed data from the credit bureaus suggests that the credit card industry defaults have remained elevated due to the continued stress in unsecured portfolio. We have been taking several steps to strengthen our new acquisition, underwriting and portfolio management framework. As a result, we have been seeing a continued reduction in our flows into delinquency and an improvement in the delinquencies of the new acquisitions. The asset quality composition is also improving and is moving towards higher bureau scores as indicated by the increased proportion of prime and above prime segments in the newer acquisitions, as well as overall portfolio. This is evidenced in the following. Our GNPA for the quarter has remained stable at 3.24% as compared to 3.27% in the previous quarter. We expect the GNPA ratio to start improving now. The gross credit cost has increased by-40 basis-points to 9.4% from 9% in the previous quarter. We believe we are at an inflection point in our credit cycle. As we further intensify efforts on our tightening underwriting standards, portfolio management and collections, we expect the credit cost to start moderating. However, rate of moderation will depend on the changes in the unsecured lending ecosystem and macroeconomic factors. Our liquidity position continues to be strong. Capital adequacy — capital adequacy ratio for the period ended 31st December 2024 is at a healthy 22.9% as compared to around 18.4% in the same-period last fiscal. This will support our growth aspirations. Liquidity coverage ratio for Q3 FY ’25 is 114% as against statutory requirement of 100%. ROA for quarter is 2.4% and for the nine-month period is 3% so the credit card industry continues to offer growth opportunities. As per reports, the number of credit cards in use in India is projected to continuously increase as per projections up to 2029. As India’s largest pure-play credit card player, we realize the potential and are well geared to take advantage of these opportunities. Thank you and now we are open to questions.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask questions may press star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Katajania from Nuvama. Please go-ahead.
Mahrukh Adajania
Good evening, sir. So sir, I have a few questions that if you see your write-offs, they continue to increase and other provisions are declining. So what would give you the confidence that write-offs would taper on — taper off from 4th-quarter because that is essentially what will bring down our credit cost, right? Or is it that asset quality will start improving and then credit cost will improve with a lag? I mean, how do we view this? When do we see credit costs improving and what would drive that write-offs are — they have been continuously rising and sharply. So will they taper off now? Is this the peak? That’s my first question.
Abhijit Chakravorty
So thank you. Thank you for the question. But then of what we have seen in the financials also, the lesser provision is indicating towards a better asset mix. Somewhere the Stage 2 and Stage 3 composition has reduced and we are seeing it to continue during the quarter. And as we stated just now, we are also seeing reduction in the into X that is into delinquency. All these taken together now gives us an indication that things are going to improve from here onwards. And we see that from next quarter, the improvements should be visible. Now to what extent that will depend, that will depend on how the larger portion of our Stage 3 will behave. If you strictly speak about write-offs, you will be knowing that we have an NTA pool. We continue to work upon them. The NPA pool has reduced but then how we continue to work upon them and extract most out of it will depend to the what extent the write-offs will be reducing. But we do see a inflection point, whether it is gross NPA and the credit cost both concerned and supplementally.
Mahrukh Adajania
Okay. And. And so basically from Q4, it should look better. We don’t know-how much better.
Abhijit Chakravorty
Exactly.
Mahrukh Adajania
Okay.
Abhijit Chakravorty
And let me go back to my some — to a couple of quarters earlier call, where we had indicated that what we are seeing over the quarters is that by year-end we would — we were expecting the improvements to come up. And I — today what we can see is that probably we will be adhering to what we expected.
Mahrukh Adajania
Got it, sir. And so what kind of receivables loan growth can we build for the next year? And what do you think?
Girish Budhiraja
So as you are aware that for last almost six to seven quarters, we have been very selective in our new customer acquisition and that asset is building up. And as you can see that the receivable growth has not — has slowed down. So what we are looking at this point of time is that on a year-on basis for this quarter, you have seen a 12%, but next year, what we are looking at is it in the range of somewhere around 12% to 15% as a receivable growth.
Mahrukh Adajania
Got it. Okay. Thanks a lot. Thank you.
Operator
Thank you. Before we take the next question, we’d like to request participants to please limit your questions to two per participant. Should you have a follow-up question, we request you to rejoin the queue. The next question is from Krishnan ASV from HDFC Securities. Please go-ahead.
Krishnan ASV
Yeah, hi. Many thanks for taking this. As Girish just mentioned, it’s been nearly two years since our origination has been tweaked, improved just to kind of get better at this quality of sourcing, right? Despite that, the write-offs or the overall credit costs seem to be hitting a record-high almost every quarter. So it’s fairly evident that the — I mean, collection environment is — I mean, has been fairly tight, has been fairly — has been fairly difficult both for both in banks and NBFCs. In this, I just wanted to understand what is with that SBI cards is able to control other than sourcing because you do a fab job in-sourcing now. But other than sourcing, is there anything else in your control because that’s what the franchise gets it put value for. What is it that you are able to control in the rest of the variable?
Rashmi Mohanty
So basically, if you look at our portfolio, so the market to identify customers who are likely to go through some stress. So we’ve seen and even the market reports suggest that because of the rapid buildup of the retail lending going through a boom, especially personal loans. The leverage has built-up in the portfolio. So what we have done is, of course, is to understand customers who have that increase in leverage or who will display tendency to increase leverage basis their behavior, basis their transaction packing and take prompt actions so that we can at least reduce our exposure to these customers. So we are able to do that and we have talked about limit degrees in the past as well. And we continue to enhance our early warning framework so that we continue to identify and take action before these customers go into delinquency because once they go into delinquency, as you rightly said, the environment is tough. And if there are too many — so basically, we have to cut our losses before if we identify the right set of customers, we managed to do that successfully over the last few quarters.
Girish Budhiraja
And the success of these actions is being felt in the performance metrics that we track. So for example, for the first time in several quarters, the 30-day delinquency and the 90-day delinquency have come off appreciably by-20 basis-points. And also you see similar trends in the industry. And also the performance metrics around our flows into delinquency, as MD sir mentioned, they have been improving. They’ve been improving consistently over the last one year and this takes time to show-up in results and we are seeing the beginnings of that right now. At the same time, the other half of the equation, which is the flows from delinquent pool into write-off pool, that also for the first time in several quarters has started improving.
Krishnan ASV
Okay. Okay, understood. Just one other question, this was majorly to do with what proportion of your customers have actually been defaulting. I mean, I just — so one is obviously the value that you tend to report every quarter. But what proportion of these customers are actually reflecting in that credit cost of 9% last quarter, 9.4% this quarter? And how many of these customers are still there in the pool who can spring a surprise only?
Rashmi Mohanty
We don’t disclose these numbers, Krishnan, first of all. And two, in case of a product like a credit card which is revolving where customers can come and pay you anytime of the day, anytime of the month, it’s very difficult to track and at a point in time, measure as to how many have defaulted and how many have not defaulted.
Krishnan ASV
No, what I mean what I mean to ask are these
Girish Budhiraja
So if you are the asset, if the average asset is INR27,000, you can calculate when the customer is defaulting on an overall basis, it’s over close to INR1 lakh or so, okay. So you can estimate what is the number of customers.
Abhijit Chakravorty
Yeah, that’s correct, Girish. I was just wondering whether these are customers who have leverage even more than the average balance. That’s what I’m trying to get at. Is that the reason why they are defaulting?
Rashmi Mohanty
Yeah. Yeah, that is the fact. Obviously, they have leverage over the — they have high leverage, yes. But they will not go above balance now.
Krishnan ASV
Okay, fine. Thank you. Thanks, I’m done. Thank you. Thank you all the best.
Operator
Thank you. Next question is from Piran Engineer from CLSA. Please go-ahead.
Piran Engineer
Yeah, hi. Thanks for taking my question. Firstly, just a clarification on the previous thing. Did you mean that the average
Rashmi Mohanty
Average — sorry, we didn’t get the question, Piral?
Piran Engineer
The ticket size is one, is that what you meant in the answer to the previous question?
Abhijit Chakravorty
So your voice —
Rashmi Mohanty
Your voice is breaking, Piran, you repeat that?
Piran Engineer
One second. Am I audible now? Is it better?
Rashmi Mohanty
Yeah.
Piran Engineer
So just a clarification on what you said in — as an answer to the previous question, what was INR1 lakh rupees? Is it the average ticket size of an NPA account?
Girish Budhiraja
No, no, no, no, no. So hey, this is close to — so 1 lakh is you have to take it, it’s not an exact number, it’s in that range. This is the average, what we would say balance of a defaulting customer. When the customer gets into a write-off or becomes a defaulter, that is the kind of balance that it is. Otherwise the average asset is around close to 27,000 which you can see from the statement.
Piran Engineer
Yeah, so correct. So the NPL average is INR1 lakh. The average NPA customer has INR1 lakh with you.
Girish Budhiraja
So there’s not the exact number that it isn’t brought around in that range.
Piran Engineer
Okay, fair enough. Sir, my first question really is on — you all have spoken about how the new customers have lower delinquency trends, the cards that you sourced in the last one or two years. How are the revolve trends versus earlier vintages that were sourced?
Abhijit Chakravorty
Typically, the revolve trends are — we are able to see after three to four quarters, we see the revolve rates as of for the — let’s say, vintages more than six to nine months which we have sourced acquired as of now are slightly lower than what is the average of the portfolio. We would continue to view them over a period of time and see how it — how they develop further, but they are — they are at slightly at the lower-end of the set.
Piran Engineer
Okay, fair enough. And just secondly, in terms of what happens when an NPL customer pays you back? Do you reinstate the same limit or how does it work? Or is this credit card just cut-off
Rashmi Mohanty
So if the customer pays back his entire dues and becomes current for some set of customers who we feel to be now credit-worthy, we will reinstate, but we may not reinstate at the same limit.
Piran Engineer
Okay. Okay, fair enough. That answers my questions. Wish you all the best. I’ll get back-in queue.
Operator
Thank you. The next question is from from Elara. Please go-ahead.
Shweta Daptardar
Thank you, sir, for the opportunity. Sir, I recall last quarter you were mentioning the strong repayment history led customers also were facing slight difficulties in repayments. And second, the stress was also apparent for customers with higher credit card limits. So how is the scenario now?
Abhijit Chakravorty
The scenario is what we see in our NPA pool continues to be almost the same. We see the mix continuing. So when you — when we see that our write-offs have gone up, the composition remains varied. And as we see, so as we saw earlier, even the mix with will be an older voltage also, our customer doing well and being a transactor or being turning to revolver, again turning to transactor, having a good history, then are defaulting that trends we have seen. And since our NPA pool continues to have this kind of a mix, we will continue to watch them and having a close look at them after having taken whatever actions, portfolio actions which Kobi could have taken them on them. But. But as I said that based on whatever portfolio actions we have taken somewhere, the delinquency inflows are lower. So overall, the mix continues to be on a better side. Probably people are able to manage with whatever limits they have, they are transacting within what the limit we give. So it will, it will depend what the NPA pool behaves over the next quarter.
Shweta Daptardar
Sure. So fair point. The second revolver — revolver portfolio, although marginal — marginal has seen marginal spike and given the current scenario, shall we negatively into this revolver, I mean, potentially this could be in NPA customer or how are the indications for the revolver customer behavior?
Girish Budhiraja
No,, at the end of September quarter, we had very clearly stated that the numbers there because of festival season having started somewhere around, 19th of September, you would — there was a lot of transactor MEA, which got built-up. Hence, the ratios were looking slightly different and we had stated in September quarter itself that this would normalize by end of December. So this revolver has been stable as of now for last four, five quarters.
Shweta Daptardar
Sure, thank you. I’ll come back-in the queue.
Operator
Thank you. Before we take the next question, a reminder to participants that you may press star and one to join the question queue. The next question is from Nishant Shah from Millennium. Please go-ahead.
Nishant Shah
Hi, sir. Thank you for the opportunity. So just a couple of questions from me. Just a follow-up question first of question. That this quarter we’ve seen like a 40 bps rise and you’re saying categorically that this is the peak. But how should we think about modeling for credit costs going ahead? You’ve answered this a bit qualitatively that it depends on the macro-environment. But initial — any initial kind of like guidance or even a range that you can give that is this something which is like a peak and a plateau or is it a peak and a reversal? Like will the normalization be much sharper given the kind of sourcing we’ve done? How should we think about like the downward normalization of these credit costs, like say for FY ’26 or ’27, more like longer-term, if you could give some guidance about how we should think about where these credit costs should settle at? So that’s question one. I’ll ask my next question later.
Girish Budhiraja
Yeah. Yeah. So very difficult — I will repeat, very difficult to give a firm number of credit costs, considering what uncertainties we have seen over a period of time. As I said, as I said that the customer behavior has been changing very sharply over a period of time. And there is a segment of customer which and I have stated it earlier also, there is a segment of customer which was flowing into write-off straight away without paying me a single penny. Now with all that taken together and on one-side and on the other side, whatever portfolio actions we have taken, whatever collection efforts that we continue to make on early into the buckets, all that taken together has already given us the — this has brought us to a stage where we are seeing the Stage 1, Stage 2 composition significantly better, even the Stage 3 composition has come down. Now this should not be related to the present credit cost. When we are saying if there is a improvement in the asset quality and the stages, definitely it will translate to the credit cost. How much to what extent it will depend when we would like to see it over a period of time ourselves. And very difficult to give a guidance for entire FY ’26 at this stage.
Nishant Shah
Okay. Fair enough. And the second question also on the piece. So like around before COVID, we used to operate at a much higher-level of revolver. And with the new sourcing that we’ve done, it’s come like understandably at like a different revolver mix. How should we think about as like the delinquencies start to come off, hopefully. Should the revolver mix start to inch up from here or is this like the new level of revolvers that we should kind of like model in that 25% or thereabouts is what like the new normal for the industry or for you guys is. Any thoughts around that would be helpful? Because initially, if I recall like a lot of like the reduction in revolvers was also attributed to fintech players doing a lot of STPL and short small loans, that market seems to have slowed down significantly. So is there — is there something to think about that like revolver mix starts slowly kind of inching up from here.
Girish Budhiraja
Yeah. So Nishant, as I was stating earlier, in fact, some of the new vintages that we are getting are as of now showing a slightly lower revolving behavior, then the average spectrum that we have. We don’t expect the revolve rates to inch up from here at all. If they remain stable or a percentage point down, that would be a good place to be in. We are, however, trying to work more at the point-of-sale EMI conversion and the other product, which is we call as FlexiPay, which is where the customer can convert the spends before the payment due date or into installments. So that is the portion on which we are working at and more activity is being done there. We are not trying to induce the customers to revolve at this stage at all.
Nishant Shah
Got it. Sure. I have more questions, but I’ll come back-in the queue. Thank you so much.
Operator
Thank you. Next question is from Pranav from Bernstein. Please go-ahead.
Pranav Gundlapalle
Hey, good evening. Thanks for taking my question. I just had one question on your sourcing shift that you have done. I think you look-back pre-COVID, you had a certain model for sourcing, which hasn’t helped on the underwriting front, but it will allow you to grow or maintain a certain market-share. Now that you have tightened your sourcing strategy. Do you think the growth will be a lot lower versus the industry or is it more we have now throttled down because of the environment. But even with these new approach, will we grow — you’ll be able to grow at the same pace as you did pre-COVID, let’s say.
Girish Budhiraja
I’m wanting to ask if whether we will continue to keep growing our market-share?
Pranav Gundlapalle
Sourcing better customers, can you still grow at the same pace?
Girish Budhiraja
Yes,
Pranav Gundlapalle
As what you used to do in the past.
Girish Budhiraja
So growth rate at this point of time will be slightly — because in the near-future, in next three to four quarters, what we are looking at is that the growth rate will slightly come down. So it will not be maybe at the rate of 30% or so, which was happening earlier, but it spends would — we are looking at around 18% 20%. So this is how we are looking at the growth rates as of now in the near-future, but we will continue to add new customers and maintain market-share or grow market-share.
Pranav Gundlapalle
Understood. Thank you thank you.
Operator
Thank you. The next question is from Roshan from ICICI Prudential Mutual Fund. Please go-ahead.
Roshan Chutkey
Yeah. Wanted to understand how the minimum due paying customers, just about minimum due paying customers, not necessarily the entire revolver pool, but just the minimum due paying customers, how has that been trending for us in the past few quarters
Girish Budhiraja
That data is will not be available.
Rashmi Mohanty
We don’t share that data.
Roshan Chutkey
No, I don’t want that data, just a trend of it, if you can talk a little bit about it.
Rashmi Mohanty
Yeah, that is improving. So we can just share that the number is improving.
Roshan Chutkey
Okay. And you — I guess
Girish Budhiraja
The combination, see, look at — you have to look at the combination, it’s where-is the minimum due being paid or entire dues being paid, all that together has contributed to the improvement that we are seeing now. It’s not a standalone it’s not a standalone, it’s not a standalone activity result that where only a minimum due is being paid out. It’s a combination of both the entities, minimum dues as well as the total dues being paid, all that taken together has contributed to the improvements, what we are seeing.
Roshan Chutkey
That’s why answer the question was essentially because if the customer is — the pool of customers are just about paying minimum due, that means probably they are stressed, right? That is an indication of stress in some sense. Right? So that is the reason why I asked this question. But if you’re saying that things are encouraging, then it’s good to hear, sir.
Girish Budhiraja
Not necessarily, not necessarily. They also get converted over and the EMIs also.
Roshan Chutkey
Right. Understood. Understood. Okay. Okay. And the other question I had is, I just sir mentioned that the written-off — the pool of — incoming pool into the written-off bucket is improving. But when I look at the data, data 22% increase sequentially, right, what was 90 plus for us at the end of Q2 has probably been written-off at the end of this 3rd-quarter now, right? If that is an increase of 22%, how are we saying that the write-off pool is also improving?
Girish Budhiraja
Yeah. So the metric we spoke about earlier, there were four metrics that we wanted to allude to. One was the flow into delinquency. The second was delinquency to write-off. So the first has been coming down sequentially month-on-month, almost for the past 12 months. But the second part of the equation, which was the flow from into delinquency into write-off, that flow had not been coming down, it was actually increasing for the better part of the last 12 months. In the last three months, however, it has been coming down. So that reversal or that change in trend has happened about three months ago. And that is what is contributing to the outlook that we’re giving to you right now. It’s also measured by two other metrics, which is 30 plus and 90 plus, both have been coming down for us and also for the industry over the last quarter.
Roshan Chutkey
Sure. Thank you so much. That’s all from me.
Operator
Thank you. The next question is from from DSP. Please go-ahead.
Dhaval Gada
Yeah, hi, sir. Thanks. A couple of questions. First is on the credit cost. So if you look at the sort of normalized level of credit cost for the business was about 6%, 6.5%. And if you look at the Nine-Month number is about 8 odd percent net credit cost. Do you think based on the current metrics that we are seeing, next year credit cost should be around the nine-month level or you think there is scope that it can fall even further from where we are? Like qualitatively, if you can just think about when should we normalize basically, that’s the eventual question. So that’s the first one. And the second is relating to cost-to-income. Any thoughts that you have on where the business is headed with this change in the underwriting that we’ve done, what’s the cost-to-income sort of steady-state that one should think about for the current underwriting that we are doing? Yeah.
Abhijit Chakravorty
So the first one, I already stated that it’s very difficult to give a number and predict a number. We are seeing — I mean, we will see how it goes. But then as I said, we are seeing a gradient — an inflection point reached and then it should improve here onwards. But then giving able to where it’s very difficult to give a credit cost number. The aspiration can be anything, but then having seen so much happening in the market and in our portfolio impacting our portfolio over the last three — almost four to five quarters, it will be unfair to give a number without really seeing the — how the gradient takes shape.
Dhaval Gada
And what should one look at in terms of like confidence, if I may ask like what are — what as an external investor, what should one look at to get confidence that we’ll be closing to 8% for next year or 6.5%, like what is that one or two metrics that you think we should look at so that you get — you can give comfort to investors. Just sort of very important question when you say peak is understandable, but it can be like 100 bps reduction and thereafter stabilization like Nishant and it can be like a sharp fall. So that’s what we’re trying to get through.
Abhijit Chakravorty
No, but when you have to go back to couple of quarters when early into the year, when we had later stated that it will not be a sharp fall. We are on record on that because it can never happen that anything can happen — improve overnight, then if something improve overnight, then something was wrong in the entire system. So no. What we are saying is we’ll wait to see how it happens and then we will together see how it improves. But then we are projecting an improvement. That’s what we will continue to say as of now.
Dhaval Gada
Got it. Got it. Thank you. And on cost-income there.
Rashmi Mohanty
Some double, this quarter, obviously the numbers — I mean the last two quarters, the number have been around a 53.5%. So expect somewhere — in fact, this was a — these two was a festive quarter. So the number was higher. Quarter-four number on the cost-to-income will be lower. So on an average, as we said earlier as well, the number should be around that 50 to 50 — 50-55 in a very broad range, but around 52 kind of a number for the year.
Dhaval Gada
Perfect. Yeah, thank you. All the best.
Operator
Thank you. Before we take the next question, I request to participants to please limit your questions to one per participant so that the management is able to address questions from all participants. We take the next question from Manan Agarwal from ICICI Securities. Please go-ahead
Unidentified Participant
Yeah, I want to ask about the collection for the last one of this number.
Rashmi Mohanty
So we don’t disclose the number Manan as I think a lot of data points otherwise we have been sharing between MD sir and Shantru and have shared a lot of other data points which indicate that the collection trends are improving
Unidentified Participant
And I attended all the con-calls of micro loans, microfinance companies so they were it is estimated that Q4 will peak out for the microfinance industry for credit cards and all. So what’s the — what’s your take on FY ’26, in particular about the credit cost credit cost and ROA.
Rashmi Mohanty
So credit cost and ROA both.
Unidentified Participant
Yeah.
Rashmi Mohanty
So I think, Manan, as we’ve been saying and I’ll repeat whatever has been said by the speakers earlier that we are saying that an inflection point and I think we’ll have to wait for the last — for the quarter for results to come out to be able to give you any direction for FY ’26. The indications from whatever metrics that and Nandani have shared, they are showing a positive trend, but the quantum, etc is something which we still will have to wait for the full-quarter results to come out.
Unidentified Participant
Okay, fine.
Operator
Thank the next question is from the line of Bhavik Dave from Nippon Mutual Fund. Please go-ahead.
Bhavik Dave
Yeah, hi. Good evening. Sir, just a question. Again, I’m circling back to the credit cost or like the write-off comment that you’re trying to address here. So if I do a very simple math where I take your gross write-offs and if I divide by 3, I get a number of INR450 odd crores that we may be doing. Obviously, it is not like exact, but that will be the number that be clocking monthly and we were like doing INR crore odd crores previously in the previous quarters is what I see if I divide the gross write-off number by INR3, right? Very, very basic math. Are we saying that this INR450 odd crores monthly that we were maybe writing-off, that number has significantly come off — like because without data points just like qualitatively talking about this number going down makes little sense, right, because if you give us a trend-line that this number is like coming back to that INR300 odd crore levels and that’s the way to think about it. It will be great if you could just help us with this that where are we going-in terms of monthly write-offs because unfortunately, we’re not seeing any like good trends in terms of slippages, because when I see your slippage numbers that are still like on the higher side. So just wanted to get a sense on this one here.
Abhijit Chakravorty
So again, I will repeat. See, it’s too early to give any numbers, too early to predict what will be the reduction. We have to see a scenario where there is a segment of customers who are sitting in an NPA pool and proceeding towards write-off unless we are able to collect from them and-or and/or hold-on to them wherever they are. So it’s a combination of all these actions taken together, which define how much will be — how much of — how many of them will get written-off and what will be the amount. So it varies a quarter-over-quarter, but as we said that since we have seen a lesser inflow into Stage 3 altogether, somewhere, it will result into a lower write-off.
Girish Budhiraja
Also on the performance metrics, sippages have actually improved in this quarter and so has the PCR rate and the ECL rate and also the GNP rate, although marginally
Operator
Thank you. Next question is from Nitin Agarwal from Motilal Oswal. Please go-ahead.
Nitin Aggarwal
Yeah, hi. Thanks for the opportunity. I have two questions, sir. Firstly, if I look at the proportion of salaried customer like this quarter in terms of new sourcing has come down. So while you mentioned that we are pretty much close to the peak in terms of credit cost and things should likely improve. So how do you really compare between the self-employed and salaried in terms of their repayment behavior? That’s one. And secondly, wherein you said that revolve rate, we are not expecting any improvement from here. I just wanted to like check on as to how is the revolver rate difference between UPI and non-on UPI because UPI is something which — while it is small today, but it is growing fairly fast. So how should one look at it in the medium-term?
Rashmi Mohanty
So in terms of salaries versus self-employed, so in self-employed, definitely the focus more is to look at the cash flows and whatever sourcing we do, we do look at their bank account information, whether it is from the account aggregator channel or if the sourcing is from the banca channel and the sourcing from the banker channel has increased in this quarter. So basically, it’s an underwriting which understands the profile, understands the credits and debits in the account. And accordingly we give a car and give a limit
Nitin Aggarwal
Right, but
Abhijit Chakravorty
Sorry your voice down
Nitin Aggarwal
Sorry am I audible?
Rashmi Mohanty
Yeah.
Nitin Aggarwal
Yeah. So I was saying just that because this number has trended down, but still we are just saying that things are likely kicking on-call and it should get better from here. So what’s the reason why I was asked this question because the general notion is that salaried segment performs better than self-employed. So now with this mix coming down, should this not cause — like continue to cause worries as such in terms of incremental delinquencies.
Rashmi Mohanty
No, because you see when you’re underwriting, you’re looking at the customer profile in general as well as like I mentioned, is cash-flow information. So this should not result in an increase in delinquency and through the account aggregated channel, we are able to see the transactions in the bank account and assess the cash-flow of the customer. So I don’t think that is a worrying signal. A lot of these customers come with their bank statement you.
Operator
Thank you. Before we take the next question, we request participants to please limit your questions to one per participant. Next question is from Jignesh Yal from InCred Research. Please go-ahead.
Jignesh Shial
Yeah, hi. Thanks for the opportunity. Basically, I have one data keeping question quickly. We are seeing a surge in investment sequentially. Anything to read into it?
Rashmi Mohanty
This is in-line with the regulatory requirement. There was a graded increase in the requirements for keeping HQLA, which is highly-liquid assets for LCR purposes and we’ve been adding on to that number based on the requirements.
Jignesh Shial
Okay. And my basic question,
Rashmi Mohanty
Liability book is also growing. So there are two reasons to that. It’s a function of how your liability book is growing. And the second one was the regulatory requirement. So our liability book is growing as well as the regulatory requirement requires us to — required us to keep adding about 10% up on a regular basis in a phased manner and that’s the reason.
Jignesh Shial
Understood. And just a trend on fee income side, I’m guessing it’s more or less flat if you see sequentially and overall trend had been consistently been declining if I see on Y-o-Y basis. So how do you see it up with more co-lending cards coming up together along with it, obviously online spends coming up which basically needs visually take a little lesser cut on it. So how do you see the fee income trend going-forward? Do you see that improvement can come up or what’s the view?
Rashmi Mohanty
So the fee income actually is made-up of three parts. And as a composition that we put out in the investor deck as we’re on Page 11, which talks about actually it is — so the spend base instance based on subscription-based is where you see the split on the fee income side. There has been some bit of a moderation on the fee income, one because on account of the number of cards that we are doing that obviously you know factors is an important factor as to what makes up the subscription-based fee income. The spend base has a seasonality attached to it. I would think that as we do more cars and as the amount of spend that we increase, this number should go up where we might see a bit of a moderation would be in the instance based. That could see some bit of a moderation, but the other two-line items should see it growing with the business growth.
Jignesh Shial
So as your issuances increases, your fee income will also be — will be increasing going-forward. That’s a fair assumption, right?
Rashmi Mohanty
That’s right. Yeah. And of course, the spend will also grow. So that part of the fee income will also increase.
Jignesh Shial
Perfect. Sounds great. Thank you so much.
Operator
Thank you. Thank you. The next question is from Rohan Mandora from Equirus Securities. Please go-ahead.
Rohan Mandora
Good evening. Thanks for the opportunity. Sorry to touch upon that flow rate question again. See, if I look at your Stage 2 plus Stage 3 in 4Q FY ’24 as a percentage of absolute amount and in 3Q, 3Q is still higher and the commentary that we gave in 2Q was still that in the first-half of current financial year, the flow rates have improved. So what you said in the call today also is that the flow rates into delinquencies is lower, delinquencies to write-off is higher, but this is not reflecting in the Stage 2 numbers that we are seeing right now. So if you can share what is the 30 plus, how has it moved in the last two, 3/4? And also, what is our share of exposure in say very-high risk and high-risk category of bureau rating customers. Something around that would help to get some sense on how the improvement is happening.
Girish Budhiraja
Yeah. So the 30 plus and 90 plus numbers as we mentioned earlier, they have come off significantly in the last quarter, quarter-ending December versus quarter-ending quarter.
Rohan Mandora
For these numbers, it would help.
Girish Budhiraja
But we can’t — we don’t disclose those numbers in that level of decision.
Rohan Mandora
Okay.
Rashmi Mohanty
Sorry, can I first Roman, ask you a clarification before we further answer your question. You’ve just mentioned that the Stage 2 and 3 put together, you’re not seeing an improvement. And where have you taken the numbers from
Rohan Mandora
On the presentation data that comes out. So I’m comparing 4Q versus 3Q, 4Q ’24 versus 3Q ’25, right?
Rashmi Mohanty
Yeah.
Rohan Mandora
So if you look at the numbers was 5.7 plus 2.8%
Rashmi Mohanty
Is the 4Q number, sorry. See, if you look at — if you look at the third — the quarter two FY ’25 and quarter three FY ’25 and you calculate the percentages to the any year number given at the top and you add the Stage 2 and Stage 3, you will see a reduction in the stock of Stage 2 and Stage 3 for quarter three as compared to quarter two.
Rohan Mandora
Yeah, then there is a margin improvement from
Rashmi Mohanty
That 10 basis — sorry,
Rohan Mandora
This marginal improvement on 2Q even in absolute amount from 2Q through 2Q to 3Q, but what I’m saying is, see, in the previous quarter also the commentary was that flow rates into delinquencies have been coming down. So if I’m comparing and this was the commentary for the first-half as well of current financial year. So if I’m trying to look at from the 4Q FY ’24 numbers, your Stage 2 and Stage 3 were 5.7 and 2.8 respectively and if you look at Stage 2 plus Stage 3 combined, it was around INR4,300 crores. That thing has now gone up to INR4,900 crores. So that flow rate coming down does not match with the data fair comparing with the year-end number and the nine-month number for the current financial year.
Rashmi Mohanty
So Ron, I don’t think — and we’ll probably have to go back and check, but I don’t recall that we’ve ever said that the flow rates have been improving in the last two quarters. We’ve just said if there was a mention made on the delinquency numbers, it was to do with the sourcing that has been done in the recent past. There we said, yes, we are seeing a better performance compared to the older portfolio. But this time we are calling out and saying that our 30 plus and the 90 plus numbers are looking better. As I mentioned, if we do a total of our Stage 2 and Stage 3, even that number is lower. And as we mentioned earlier as well that what flows into write-off is nothing but the Stage 1, the Stage 3 flowing into write-off. And this is a number which is improving and the flow rate in addition for the earlier buckets are improving, which is — which is where we’ve been able to make a comment saying that we think we are at an inflection point.
Girish Budhiraja
Just to clarify, last quarter, there was a specific question around this point and the answer we gave was that while into X delinquency is improving, the next leg which is delinquency to write-off, that was worsening. And that is mentioned very clearly in the SAU from last — from the Q&A transcript from last-time. And this time there has been a reversal. But the first time we’re saying the second-half of the equation also has behaved properly, which means improvement.
Rashmi Mohanty
So while the Into X continues to improve, where we are now seeing is an improvement in the Stage 2, Stage 3, which is where we are now saying that the write-off number should be lower and therefore the credit cost should be moderating.
Rohan Mandora
Got it, got it. Thanks. And just to reconfirm, for FY ’26, any guidance that we gave on our receivable growth or spend growth?
Rashmi Mohanty
We just.
Girish Budhiraja
So we just stated we’re looking at somewhere around 12% to 15%.
Operator
Thank you. Next question is from Vishra from PhillipCapital. Please go-ahead.
Shubhranshu Mishra
Hi. So the first question is around the management position. So we’ve got quite a few people as directors from the parent SBI. Why do we need someone at the MDA who would — who may or may not have requisite professional experience in cards business? Why don’t we hire a professional MD CEO from the credit cards industry to run the business, whereas we can have a Board member representation from the parent. That’s the first. Second is, through cycles, what has been the recovery from write-off accounts in year-one, year two and year three? And the third is the number of customers who have two cards, number of customers who have three cards and number of customers who are four-plus cards. Thanks.
Abhijit Chakravorty
No, first one, I think we don’t need not comment. Yeah.
Rashmi Mohanty
The second one. You asked for to granular information. We don’t disclose that at that kind of a level where we cannot disclose as to how many customers have three cars, four cards and five cars. I don’t think anybody in the industry discloses that number and we will not do so as well in the future. We haven’t done that and will not do it as well. On the recovery, as you asked the question that how much are we recovering from the written-off pool, we did see a bit of a dip in the recovery from the written-off pool in the last one or two years. There is some again green shoots. Again, we do not share the exact numbers, but the recovery numbers, as you can see for this quarter were higher from the previous quarter. So the company numbers did get impacted as per the overall environment that was there for the last 12 to 18 months, but we have seen a higher recovery number for this quarter compared to the previous quarter.
Shubhranshu Mishra
No, what I’m asking is that through cycles, what percentage have we recovered from the written-off pools, not in the last 12 18 months through cycles, what is that number?
Rashmi Mohanty
We don’t share that number,.
Shubhranshu Mishra
Okay.
Girish Budhiraja
What we do share is that we do get recoveries for a long-time after write-off, and that’s been the case.
Rashmi Mohanty
We — and we’ve said that as well in the past and we will maintain that, that we do continue to get recoveries for a longer period from the written-off pool. But in-full transparency, we have shared as to what the number — the recovery number has been quarter-on-quarter.
Operator
Thank you. Before we take the next question, a reminder to participants to please limit your questions to one per participant. The next question is from Pranuj from JPMorgan. Please go-ahead.
Pranuj Shah
Hello. Thank you for taking my question. Sir, one thing you mentioned was that you constantly manage — monitor the leverage levels of the customers and take corrective actions if you see increase in stress. So just a clarification, is the corrective action that you can take only in terms of limiting the spend limit that the customer has or limiting the credit limit that you give to the customer? And second is on the frequency of scrub, I think previously you guys issued a monthly. Will you be shifting to Fortnitely now that the regulations allow for that? Thank you.
Rashmi Mohanty
Yeah. So basically the actions, yes, are reducing the credit limit, reducing certain kinds of spend, doing early blocking. So all these actions are taken. And secondly, with respect to the bureau pool, so we did a — we do a — we get a bureau trigger product we have subscribed to, which basically means that whenever the information is updated in the bureau, for a certain set of accounts, we get information on T plus one. So if there is an increase in leverage or inquiries or there is payment, et-cetera happening, so we get to know and we accordingly plan our actions. With respect to the 15-day window, so while everybody has started the process, since we subscribe to this product we will anyway get the information but yes we are looking at how we can reduce our zero pull period with the new updates which are happening for
Operator
Thank you. We’ll be able to take one last question. We take the last question from Rohit Jain from Tara Capital Partners. Please go-ahead.
Rohit Jain
Yeah, hi, can you hear me?
Abhijit Chakravorty
Yeah, please.
Rohit Jain
Yeah, my question. Yeah, my question is that this guidance of loan growth for next year 12% to 15%, given that we are now incrementally sourcing better vintage customers and a lot of poor quality customers would automatically get weeded out a — because of the stress over the last two years. Is it fair to say that this now seems like more sort of a medium-term trajectory and this is how it would be for the next one or two years?
Abhijit Chakravorty
So this projection is for the period of next 12 months in nine to 12 months, things can change. If we see that the credit cost trajectory is very different, things are different on a macroeconomic perspective, things can change both either way. It will depend on how we see the macro-environment and our portfolio behaving over a period of next three to six months. This is a growth trajectory as of now, looking at the future environment being suggested?
Rohit Jain
And I have just one more question. On the cost-to-income, you said for the next year, the broad range is 52 to 55, but in an environment where, let’s say, growth picks up, would it be fair to assume that cost-to-income would also go up?
Rashmi Mohanty
Yes. Yes, it’s a function of how many cars that we do. So if growth picks up absolutely. And by the way, that number that I gave you about 50 to 53 was for this year, but you’re absolutely right. The growth will determine the cost-to-income ratio.
Rohit Jain
Got it, got it. Thank you. Thanks a lot.
Operator
Thank you very much. We’ll take that as the last question. I would now like to hand the conference over to Mr for closing comments.
Abhijit Chakravorty
Thank you,, and thank you everyone for your continued trust and confidence in SBI Card and have a year ahead. Thank you.
Operator
Thank you much. On behalf of SBI Cards and Payment Services Limited, that concludes this conference. Thank you for joining us. Ladies and gentlemen, you may now disconnect your lines