SBI Cards and Payment Services Ltd (NSE: SBICARD) Q4 2025 Earnings Call dated Apr. 24, 2025
Corporate Participants:
Salila Pande — Managing Director & Chief Executive Officer
Shantanu Srivastava — Chief Risk Officer
Rashmi Mohanty — Chief Financial Officer
Girish Budhiraja — Chief Sales & Marketing Officer
Analysts:
Anuj Singla — Analyst
Anand Dama — Analyst
Shweta Daptardar — Analyst
Rohan Mandora — Analyst
Zhixuan Gao — Analyst
Mahrukh Adajania — Analyst
Punit Bahlani — Analyst
Hardik Shah — Analyst
Himanshu Taluja — Analyst
Tanuj — Analyst
Mohit Jain — Analyst
Piran Engineer — Analyst
Anirban Sarkar — Analyst
Krishnan ASV — Analyst
Zhixuan Gao — Analyst
Vikram Subramanian — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to SPI Cards and Payment Services Limited Q4 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 conference call, please signal an operator by pressing star then zero on your touchstone form. Please note that this conference is being recorded. I now hand the conference over to Ms Salila Pande, Managing Director and CEO, SBI Cards and Payment Services Limited. Thank you, and over to you, Ms Pande.
Salila Pande — Managing Director & Chief Executive Officer
Thank you,. A very good evening to all. On behalf of the Board members and the management of SBI Cards, I extend a very warm welcome to you. At the outset, on behalf of SBI, I would like to place on record our gratitude to all the stakeholders for their continued support and confidence in the company as we navigated through uncertain times in the financial year ’24-’25. I’m pleased to share that SBI Card continues to contribute towards India’s growing digital payments ecosystem. Looking at the digital payments ecosystem, India’s digital economy is a powerful growth engine and according to reports, it is expected to contribute to almost 20% of the GDP by 2026 and surpass US dollar one trillion by 2028. With UPI and QR, the nation is fast transitioning into cashless economies. In this environment, credit cards remain a vital component of the payment landscape. With nearly 109 million cards in-force as of February of 2025, the credit card industry continues to witness robust adoption among aspirational consumers. As far as SBL card is concerned, with an 18.9% card and source market-share, we remain India’s largest pure-play credit card issuer. In December of 2024, we crossed the INR2 crore cards and force milestone, reflecting our customers’ trust and a well-calibrated acquisition momentum. We are committed to expanding our core card portfolio with a focus on premium segments and co-brand portfolio as well as accelerating digital onboarding to deliver seamless and secure experience to our customers. We see immense potential in Tier-2 and 3 cities and digitally native consumers. In the coming year, we will continue to deepen our partnerships and invest in technology augmentation to enhance efficiency. Coming to the SBI business performance, I’m pleased to announce that the company has successfully navigated through financial year ’25 with a robust business performance, reflecting the resilience and sustainability of its business model. We have undertaken many key customer-centric initiatives during the year. For instance, with integration of SBI Card Sprint, a good percentage of banca new account acquisition is now being initiated digitally. This in-turn has significantly improved the customer onboarding experience. In our endeavor to provide a diversified suit of products, we have launched key products like SBI Card Miles, a travel-focused credit card and a SBI card in partnership with Singapore Airlines. Hundreds of national and regional offers have been rolled-out across all key spend categories in partnerships with reputed brands to increase spends and engagement. As we have mentioned in our earlier earnings calls, SBI Card has launched hyper personalization platform to enhance customer lifetime value through personalized customer engagement. Our focus now is to scale-up and augment existing capabilities and achieve higher levels of personalization and one-on-one communication through SBI Card mobile app. I’m pleased to share that SBI has recently reached the 4 million BPCL SBI card milestone, making it one of the fastest-growing and largest fuel co-branded credit card partnerships. We continue to take various measures to further strengthen our collection capabilities and expand capacity across digital and physical channels to guide customers through timely repayments and provide effective hardship solutions wherever required. We have also refreshed our risk management framework, including policies, procedures, practices, systems and tools in-line with the latest industry best practices and regulatory guidelines. This also includes constant fine-tuning of our models, processes and analytical capabilities. These improvements in the underwriting, portfolio management, collection, fraud risk management and provisioning have enhanced our capability to support prudent business growth and protect our customers. During the year, we also kept focus on ESG initiatives. We have further reduced paper usage through digital enhancements and actively engaged in pre-plantation rights and beach cleanup activities in different geographies, reinforcing our focus on environmental and social responsibility. We remain committed to creating value for all our stakeholders, and I am delighted to share that for the fiscal year ’24-’25, the company declared an interim dividend of INR2.50 per equity share. Continuing with the business performance, we remain the second-largest credit card issuer in the country. In-line with our strategy, new account acquisition has been steady at around 1 million cards per quarter. And we added more than 1 million new accounts in Q4 as well as registering 8% Y-o-Y growth. Our focus on leveraging the end-to-end digital onboarding platform Sprint is showing positive results. Our share of new accounts sourcing from banca and open markets channel in financial year ’25 stands at 51% and 49% respectively. Overall, we added more than 4 million new accounts during the year. In terms of spend, according to RBI 5th 25 data, our spends market-share is 15.6%. Overall, spends were INR88,365 crores in March quarter with 11% Y-o-Y growth. Retail spends have shown consistent growth due to the increasing popularity of digital payments and the expansion of payment infrastructure. This trend is expected to continue. In Q4, retail spends were around INR80,000 crores with a healthy 15% Y-o-Y growth. Overall, retail spends crossed INR3 lakh crores mark in the year ’24-’25 with a Y-o-Y growth of around 18%. Our corporate spends have also started to come back steadily. In Q4, the spends reached around INR8,600 crores, witnessing over 60% Q-o-Q growth. Our strategy to diversify our corporate portfolio has proven successful and we anticipate continued growth. Our retail spend active rate continues to be healthy at around 51% in March ’25 quarter. During the quarter, we have seen momentum in all categories across points of sale and online, especially consumer durables, furnishings and hardware, apparel and jewelry. Online — stems have witnessed strong growth with around 58.9% share in retail spends. UPI spends on credit cards have also grown fourfolds in March ’25 quarter as compared to March ’24 quarter. Department stores and grocery utilities, fuel, apparel and restaurants continue to be among the top-five categories for UPI spends. The ability to use cards and UPI acceptance terminals through QR code is becoming quite popular in Tier-2 and Tier-3 markets, leading to uptick in spend. Receivables have grown by around 10% to reach INR55,840 crores in March quarter versus INR50,846 crores in March ’24 quarter. IDNEA is at around 59% and EMI receivables are at 35% during Q4 of financial year ’25. Our continued robust business momentum also helped us to register healthy financials in Q4 and in the year ’24, ’25. Total revenue in Q4 is INR4,832 crores and have grown by 8% Y-o-Y. Total revenue has reached INR18,637 crores during the year, registering a 7% Y-o-Y growth. Our revenue from operations in Q4 is INR4,674 crores with 8% Y-o-Y growth. Revenue from operations during the whole year was INR18,072 crores with a 7% Y-o-Y growth. Profit-after-tax in March ’25 quarter is INR534 crores with a 39% quarter-over-quarter growth. In financial year ’25, profit-after-tax is INR1,916 crores versus INR2,408 crores in financial year ’23-’24. Cost of funds during the 4th-quarter decreased to around 7.2%. Net interest margin has improved to more than 11% in Q4, aided by better yield and lower-cost of funds. We expect cost of fund to be on a gradual downward trend in financial year ’25-’26, benefiting from the RBI rate action and expect the NIM to be steady. OpEx for March ’25 quarter has been lower compared to the previous quarter, owing to Q4 being a non-festive quarter. In terms of asset quality, as we have mentioned in the last two quarters, the macroeconomic environment continues to witness headwinds, leading to stress in the unsecured lending ecosystem. At Card, owing to several steps taken over the last five to six quarters to strengthen our new acquisition, underwriting and portfolio management framework, our asset quality has started to improve. Gross credit cost improved by-40 bps to 9% from 9.4% in the previous quarter, marking the first-quarter of GCC reduction after several quarters of increase. Gross NPA for the quarter improved by 16 basis-points to 3.08% from 3.24% in the previous quarter. In absolute terms, Stage 3 balances reduced by INR59 crores to INR1,718 from INR1,77 crores in the previous quarter. Similarly, Stage 2 balances have reduced by INR282 crores to INR2,801 crore from INR3,083 crores during the previous quarter, effectively 5% from 5.6% in Q3 of 2024. The 30 plus and 90 plus delinquencies have continued to reduce in this quarter as witnessed in the previous quarter. As we continue to refine and calibrate our underwriting standards, portfolio management and collection strategies, we expect the credit cost to moderate in the coming days. As mentioned in the previous quarter, the rate of moderation will depend on the changes in the unsecured lending ecosystem and the macroeconomic scenarios. In terms of liquidity and capital adequacy, with diversified sources of funding, our liquidity position continues to be strong. Our capital adequacy ratio for the year is robust at 22.9% and common equity — Tier-1 ratio at 17.5% reflects adequate capital to grow. We also enjoy high the highest credit rating of AAA and E1+ from the rating agencies. In the end, in the coming financial year, our focus will be to remain on profitable growth path, prudent risk management and long-term consistent value-creation for all our stakeholders. With that, we may now open the call for questions.
Questions and Answers:
Operator
Thank you. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and 1 on a 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 a question. Ladies and gentlemen, we’ll wait for a moment while the question queue assembles. Once again a reminder to all participants that you may press star and 1 to ask a question once again, a reminder to all the participants that you may press star and one to ask a question. The first question comes from the line of Singla with Bank of America. Please go-ahead.
Anuj Singla
Average for the Stage 1 to 3. So there has to be — there has been a significant change on a quarter-on-quarter basis. Stage 1 and 3 have been risen have actually come down where stage two has risen. So can you just run us through the thought process and what is driving this thing
Shantanu Srivastava
The ECL rate changes are an outcome of the model refresh that we do every year. The overall ECL rate has remained within the range that we’ve seen in the last two years. It’s changed from 3.6% in the previous quarter to 3.4% now. So the 3.4% now is a result of full-year changes. If you look-back at our ECL rate over one year-ago or two years ago, you’ll see it moving between 3.2% and 3.6%. So this number has to be viewed in that context. And this is the overall ECL rate. As you already know, the ECL rate is an output of our ECL model, which is based on IFRS-9 and 9, which has international and domestic standards for financial accounting. These model that we follow is validated through external expert every year. It has got oversight over our internal governance mechanisms and is also subject to scrutiny by several external stakeholders, reviewers, auditors and regulators. So what we’re producing here has gone through that level of scrutiny and oversight. As we also told you in the past, this model consumes data over a long period of time and therefore changes are gradual. And the changes are based on rolling averages wherein data from a recent period gets added on and data from a prior-period gets reduced from the calculations. So what you see is an outcome of all of that. Coming to the specific question that you asked about what is the logic of the changes. We had noticed last year that we had significant challenges in Stage 2 balances. These are called FIPR significant increase in credit risk. And as per India standards and also IFRS standards, there’s meant to be significant differentiation between our Stage 1 assets and Stage 2 assets. Until last year, this differentiation was in the region of about 1.25% for Stage 1 and about 4% for Stage 2, roughly 3.5 times delta. This we have increased significantly given the challenges that we’ve seen. So it’s gone from to now about 1% and 20%, 1% or thereabouts for Stage 1 to maybe 20% for Stage 2. This is on account of the experience that we’ve seen and also because of the requirement to follow in that guidelines in spirit and letter. The changes that you see in Stage 3 are on account of better recognition of the recoveries that we are doing. Earlier, we were capping some recoveries in cases where customers would pay more than 100%. That cap has been made more prudent. We first do the discounting of recoveries to arrive at value and then apply the capping. We were doing the reverse earlier. That is what has called the change in the provisions. Okay. So going-forward, we should see it as a steady-state from here on. So such changes happen only once a year. So firstly, for the next one year, there be more model changes.
Anuj Singla
Okay, got it. And the second question relates to the opening remarks, I ma’am. So two things. One is, if I understood it correctly, you said the NIMs are going to be steady from here on. So should not the lower-cost of funding drive a NIM expansion during the course of the year? So that’s one. And the second, while you mentioned the credit cost normalization will be — will reflect the macroeconomic, how the macro plays out. But when we, let’s say, roll-forward, let’s say, six, seven quarters down the line, when can we look at a sustainable level credit cost, what would that number be?
Salila Pande
So the first question about the debt, I think the thing is that, see, there are two factors involved over here, as you would know that we also have to be mindful of the kind of yields that we are going to see and what kind of cost of funds we are going to see. So cost of funds, normally we read the benefits after a certain amount of lag. And in terms of the yields also, as the interest rates have been declining, there will definitely be some kind of an impact on the yield side as well going-forward. But our endeavor definitely will be to continue to ensure that the NIM remains steady and going-forward, after a certain period of time, we start seeing improved NIM as well. Your second question was about credit cost. So credit cost five, six quarters, I think would be too far away to predict at this point of time. We have — we are seeing improvement as I mentioned during my call speech, but there are a lot of unknowns right now in the environment. Environment we will keep a close watch and see that we continue to stay on the right path
Operator
Mr Singler, are you done with your question? MR. Singler, are you done with your question? Since there is no reply from the line of Mr Singler, to the next participant. The next participant is Anand Thama with Emkay Global. Please go-ahead.
Anand Dama
Thank you for the opportunity. Ma’am sorry for being linked — joining late. Sir, my question again is on the margin front. I think which was a question of the previous as well. So in case of margin side, you are saying that the cost of funds will come down, whereas runner typically fixed-rate asset book and that the interest reversals on the NPAs also should come down as you see any asset quality improvement. Then why shouldn’t we have an exit margin in FY ’26, which should be far better as compared to what we see in FY ’25?
Rashmi Mohanty
So you’re right that we have a fixed-rate book, but our borrowings are largely short-term in nature, given the nature of our asset book as well. As ma’am said earlier, that the benefit of any market rate cuts come to us with a lag as our — as our liabilities mature once they come for a repricing. So for example, if we were to take the rate cut that happened in February, we didn’t get the benefit of that rate cut in-quarter four FY ’25. You will get the benefit of that as the liabilities that come for maturity in-quarter one get repriced at a lower rate. So which is why there is a lag in getting the benefit on cost of funds and that’s exactly what ma’am said. And as the first-rate has happened, we’ll get some benefit. And as more rate cuts happen, we’ll continue to get that benefit during the year with a lag only. At the same time, there are two points around the yield as well. Number-one, that we may also be required to pass-on some of these benefits on the rate to our customers as well. And number two, we’ll also have to see the mix of our NEA in-between IBNEA and the transactor volume as well. So given all that, we are saying that it will be our endeavor to keep the NIM stable with an upwards?
Anand Dama
Sure, sure, sure. Secondly, the corporate spends have actually gone up during the quarter. Is there any reason why there is some lumpiness in terms of corporate spend or it’s more seasonal in nature? And secondly, your depreciation is a negative during the quarter. Any reason for that?
Salila Pande
So I will request Girish to supplement my response on this. But overall, yes, we have basically repurposed and repositioned our corporate and card strategy in the last few months and quarter. And this is not a one-time lumpiness. I will request Girish to supplement.
Girish Budhiraja
So we are — as we’ve been saying earlier, we are endeavoring to continuously increase the corporate card spends. There is some seasonality, which is during the March, people end-up paying their tax — large corporates pay their taxes. So some amount of seasonality is there, but not much. On an overall basis, you will see a growth trend quarter-on-quarter on the corporate sides.
Salila Pande
Yeah, your question on the depreciation, the number is negative or negligible for quarter-four because we did one lease modification and that impacted the depreciation line, which is why you see a dip compared to quarter three. It’s a one-time, it’s a one-off modification that we had done in-quarter four.
Anand Dama
And lastly, if you can tell us like what’s the share of our card portfolio in our overall CIF?
Girish Budhiraja
So we have not declared that, but we are in the mid-20s.
Anand Dama
Thanks a lot thank you.
Operator
Thank you. Next question comes from the line of with Elara. Please go-ahead.
Shweta Daptardar
Thank you for the opportunity. Couple of questions. So ma’am, the gross write-off tool continues to remain elevated. Could you just throw light on what is the customer cohort behavior and profiling here? And also I remember last quarter you sort of alluded on minimum due balanced customers. So has there been any sort of curtailing of movement from this pool towards write-off or say delinquency pool? That’s question number-one. And just related to that. So I understand you explained quite an elaborate fashion. But still while this kind of significant spike in Stage 2 ECL, I mean, has it got to do also with any sort of customer behavior that might potent risk potential risk in future. So yeah, that’s my first question.
Shantanu Srivastava
Yeah, I’ll take it. So I’ll start with the point about the ECL Stage 2 provisions. As I mentioned earlier, the increase that we are doing in the provision is an exercise in accelerating our provision efforts. So we try to take provisions early rather than later. That is why we’re increasing the rate of provision for Stage 2 and decreasing the required provision for Stage 3. You can see the impact of all of this in the overall stock of provisions, which last quarter were about 110.5% of our NPA and now it is 110.9% of our NPA. So the overall provision coverage is actually improving. With regard to cohorts, which cohort is causing this. We spoke about cohorts only once and that was in June to September quarter of ’23. After that, we have not pointed out any cohorts that are causing any significant stress. As and when we identify pockets requiring special attention, we take the appropriate portfolio management actions around those. And this also informs our collection strategy around how to move to different pockets, different segments, different geographies. So we are using data and analytics to identify our strategy both for portfolio management and collections.
Shweta Daptardar
Okay, just a follow-up there. So are you satisfied with the new customer acquired portfolio behavior?
Shantanu Srivastava
Yes, our early delinquency for a new sourcing continues to get better. It’s better than our previous hoursing vintages and we’ve spoken about that in our previous quarters as well. We can measure this in multiple through multiple metrics, delinquencies flows into delinquency and we see improving trends on both fronts.
Shweta Daptardar
And any color on minimum do balance paying customers?
Shantanu Srivastava
Yes, we mentioned that last quarter. This is a new metric that we’ve been tracking based on feedback from the RBI, and we see improvements there as well. We Call-IT collection efficiency, that’s what RBI calls it, and we see improvements there as well.
Shweta Daptardar
Okay. And my second question is, so is the opex benefit on sequential basis is coming from scaling back of rewards and benefits that has happened 1st April onwards?
Shantanu Srivastava
No, no. This is essentially because of less cashback spends that we have done in last quarter-over the festival quarter.
Shweta Daptardar
Sure. Thank you so much.
Operator
Thank you. A reminder to all the participants, please restrict yourself to two questions. Next question comes from the line of Rohan Mandora with Equirus Securities. Please go-ahead.
Rohan Mandora
Good evening, sir. Thanks for the opportunity. Sir, just on the asset quality piece, wanted to understand any quantifiable pool that you have in terms of the stress assets as we speak as of 4th-quarter — 4Q end? Like how should one look at it on — say that the potential stress that we come into FY ’26, if we have to get some sense on that, if you could give some color around that.
Shantanu Srivastava
So to give you more color on asset quality, I can point you towards the metrics that we normally track and you can see them in our financials. If you notice write-off has come down, our NPA stock has come down, NPA percentage has come down. Our Stage 2 stock has come down, our Stage 2 percentage has come down. Our delinquency numbers are improving and our flow rates are also improving. So pretty much all performance metrics are improving between last quarter and this quarter. This comes on the back of similar improvement seen in the previous quarter as well, although write-off did not come up in the previous quarter. So this is two quarters worth of sustained improvement in virtually all performance metrics with regard to asset quality.
Rohan Mandora
But sir, maybe on the floor rates, if you can qualitatively give from the peak level, how much would have improved?
Shantanu Srivastava
So I can talk about 30 plus and 90 plus, you don’t give the exact number, but they have — we have seen improvement between September and December, both for 30 plus and 90 plus, again repeated between December and March.
Operator
Thank you. MR. Mandora, please rejoin the queue for more questions. Next question comes from the line of Shinghuan Gao with Seanfeld. Please go-ahead.
Zhixuan Gao
Hey, thank you so much for the opportunity. Just on your comment on that, you know, we are talking about margin may be stable because on the yield side, there may be some changes in mix on the revolver — EMI and transactor. So just want to understand on your new sourcing, what’s the difference between the EMI percentage or revolver percentage on your new source customers in the last one year versus your average portfolio. Any rough quantification on the gap?
Salila Pande
Yeah. So I will ask Girish to supplement this further, but I would say that the composition has remained more or less the same, but we are definitely — if you look at the numbers and the IBNEA has declined from last year to 59%. But overall in terms of the composition of the revolver and you’ll know it’s more or less similar to your composition. Girish, you want to add?
Girish Budhiraja
Yeah. In terms of vintages, as we stated last-time also, the — what we have acquired in last one or two years, we see a slightly downward bias on the revolving behavior of those customers. While that asset in weightages term has to yet come up and we have increased the interest rates in last year November, so there are counter forces which are working at this point of time. As of now, overall portfolio remains at 24%, but yes, latest vintages have a downward buyers.
Zhixuan Gao
So is the downward buyers, let’s say, below 20% or any understand
Girish Budhiraja
No not that much. At this similar point, if I look at earlier vintages, which have matured to 12 months-to 18 months, we see a I would say 10% to 15% lower in the new vintages, but as you are looking at the asset, it’s an overall asset. So are also very important.
Operator
Thank you. MR., please reach-out the queue for more questions. Next question comes from the line of Maruk Adjania with Nuvama. Please go-ahead.
Mahrukh Adajania
Hello.
Salila Pande
Yeah, hi, Mahruk.
Mahrukh Adajania
Yeah, hello. So my question, hello. Yes. Yes, yes. Hi. So my question — I have two questions. Firstly on growth. When do you see it improving to say mid-teens, right, because I guess a bit of discussion on this happened last quarter as well. But what is your view now? When do you see it improving to mid-teens? And there has been already a lot of discussion around margins. But all I want to know is that will you — I mean, usually credit card yields are quite sticky. They don’t fall much and they don’t fall very steeply like, say, our home loans on our other rates. So are you — are you expecting to cut yields? I mean, how does it — I know that the investment book can reprice, but just in terms of card yields, are you — would you be doing major cuts as the rate cut cycle progresses or how do we use it?
Salila Pande
To your first question,, I would say that we are expecting that we will continue to grow by — in a calibrated fashion going-forward. There are still some unknowns in the economy and we don’t — at this point of time, unless we are sure and we are stable, we will continue to grow at a pace of around 1.1 million per quarter as we have been growing for the last one year. And in terms of the NIM, as you mentioned, that rate action is definitely going to give us a benefit with the lagged effect. Yields, again as you heard earlier as well that there are components relating to how the IBME grows, what is the component of revolver there. So we will keep a watch. And if you want to add something to that question.
Rashmi Mohanty
The ROP, while of course, you are right that the book is sticky in terms of the revolver, yield is not changing frequently, but we do achieve the yield on our EMI book based on our cost of funds and there are other parameters as well that go into fixing the benchmark for our EMI book. So if that benchmark changes as a result of the cost coming down, then in that case, automatically, there could be some marginal pricing difference that can happen. I was just making a general comment that we’d have to be watchful, mindful of how the coffe behaves and how that impacts the benchmark and therefore the yield on the EMI book. I agree that on the revolver, yes, it strictly doesn’t change, but on the EMI book, which is why I then clarified that we expect the NIMs to be stable, but with an upward buy.
Mahrukh Adajania
Got it, got it. And just one clarification. So there is no regulatory large on credit card yields as such, right?
Rashmi Mohanty
No. Okay. Thank you. As I said, I will repeat what I said earlier on the EMI book. The regulator requires us to calculate the benchmark of which our EMI book gets priced, but there is no regulatory gap.
Mahrukh Adajania
Okay. Perfect. Thanks so much. And congratulations.
Operator
Thank you. Next question comes from the line of Puneet Balani with Macquarie Capital. Please go-ahead.
Punit Bahlani
Hi, thanks for taking my question. Just on the new sourcing mix, the 4Q mix towards banca is like 63%. Hello, am I audible?
Salila Pande
Yeah,
Punit Bahlani
The 4Q towards bancast 63% and it’s like the highest-ever seen. So is this like a new strategy where we are shifting towards a more banca mix or is this like this quarter we took a break from our sourcing or something like that? Any comments on that?
Salila Pande
Yeah. First of all, if you look at our overall acquisition for the year, almost 51% of the acquisition has happened through banca channel and 49% has happened in the open-market. And yes, we have seen an uptick during the last quarter because we got some filip from the — our digital acquisition strategy of Banca. And the endeavor going-forward will be to continue to have a mix of around 50% to 55% on either side and acquired high-value profitable customer. So that’s the strategy.
Punit Bahlani
Got it, got it. That’s it from my side. Thank you.
Salila Pande
Thank you thank you.
Operator
Thank you. A reminder to all the participants that you may press star and one to ask a question. Next question comes from the line of Hartik Shah with Goldman Sachs. Please go-ahead.
Hardik Shah
Thank you. Thank you for the opportunity. I have two questions. First is on the — on the cost side, why is the opex on an absolute basis higher in 4Q versus 3Q? I understand cost-to-income is lower, but on an absolute level, why is it higher
Rashmi Mohanty
Okay which state are you looking at and what number are you looking at in regard to numbers? Because I have some numbers that showing the downward trend only.
Salila Pande
So operating cost for Q4 is INR2,73
Rashmi Mohanty
That’s the management number thinking about the numbers now?
Hardik Shah
I am looking at so it’s crores versus 2058 crores. This is from your update that you have given out.
Rashmi Mohanty
So the numbers come down from quarter three to quarter-four
Hardik Shah
Okay. This could be maybe because of restatement, okay. That’s okay. On my second question is that’s okay and this could be because of restatement. I will look into this. Second question
Rashmi Mohanty
Earlier,, that in-quarter three, it’s the festive quarter. We do a lot of cashback campaigns and that is — that always takes our cost operating expense higher in-quarter three, always year, just because of that. And then of course, the chips in-quarter four because there are no such large cashback capitals that we have.
Hardik Shah
Understood. Okay. And my second question is on the Stage 3 coverage being lower. So I understand the logic of increasing the Stage 2 coverage, but what’s the logic of reducing the Stage 3 coverage?
Shantanu Srivastava
I’ll explain that. So in the computations earlier, we were not reckoning our recoveries in the right way in the sense that we were capping them artificially at 100% and then discounting them to arrive at present value. We’ve changed that to first do the discounting and then do the capping, which is the more correct way of doing it. And that is what is driving this change in number. The overall product year rate has not moved as much. If you can see it’s not moved from 3.6% to 3.4%, which is within the range. And you can also see overall provisions as a percentage of NPAs increasing from 110.5% to 110.9%.
Operator
Thank you. MR. Shah, please rejoin the queue for more questions. Next question comes from the line of Talucha with Aditya Birla Sun Life AMC Limited. Please go-ahead.
Himanshu Taluja
Hello. Thanks for the opportunity. Sorry, I joined the call a bit late. There is another company. Just if you have already indicated, can you just repeat your comments, since you have mentioned that our slippages have improved, floor rates are showing improvement, Stage 2, there is an improvement in the Stage 2 numbers as well as well as some bit of the pace of write-offs is also showing by when — so how do you expect the credit cost to behave in the coming quarters? And second, by when do you expect you can reach a normalized credit cost between 6% to 7%? So that’s my first question.
Rashmi Mohanty
Himanshu, on the credit cost, we looking — as you mentioned several metrics since all of them are looking good, we expect the credit cost to moderate in the coming quarter. And for answering to your second question and supplementing the first question, there are still several unknowns in terms of the macros. So we will keep a very close eye and see in the coming days, 5% I think you mentioned 7%, right, 6% to 7%.
Himanshu Taluja
Yeah.
Rashmi Mohanty
Yeah, that is still far. We are looking at calibrated moderation going-forward in the credit cost in terms of the kind of strategy we are following right now?
Himanshu Taluja
Sorry, ma’am, I’m not expecting 6% to 7% credit cost in, but to give some color, can we expect the similar trajectory around this trajectory in FY ’27.
Rashmi Mohanty
So as Mam said earlier as well, I think it’s too early to predict a number for four or five quarters from now. At this point in time, we’ve seen the credit cost come down quarter-on-quarter. I’ll repeat what Shantom said as a reply to the earlier question that the metrics are looking good, but there are still certain unknowns that we’ll have to see. So I think it’s too early for us to give out any indication as to what that number is going to be for FY ’27?
Himanshu Taluja
Fair. Sir, second question is, since you’re acquiring customers around 1 million new card addition or the new accounts addition every quarter, how do you expect this trajectory going ahead? And lastly, how do you expect that where — how should you expect the cost-to-income ratio to settle around? Thanks.
Rashmi Mohanty
So we expect in the near-term to continue with a similar acquisition and as we ramp-up going-forward, we might see higher because last year we saw lower acquisition and spend cost as the acquisition and spends increase, we are expecting our cost-to-income to be in the range of around 55% to 56%. We’ve always mentioned that our yearly number would be between 55% to 57%. You will obviously see some seasonality given that we spend a bit more around the festive quarter. But for the year, the number should stay around 55% to 57%.
Himanshu Taluja
Okay, sure. Thanks.
Operator
Thank you. Next question comes from the line of Pranuj with JP Morgan. Please go-ahead.
Tanuj
Hi, thank you for the opportunity. So I would just want to circle back to the — an earlier question, where you said your revolve rates on your newer vintages are around 10% to 15% lower. So like if we take that to be at around 20.5% to 21.5% revolve rate, so should we see this 24% slowly inching up to that particular level? If your tightening underwriting standards that you have had over the last one year remain? And do you see any reason why the tightened underwriting standards would reverse going ahead? That’s my first question.
Girish Budhiraja
So in this, that estimation is not correct, essentially because what I said was this is the early vintage behavior that you see at between 12 to 18-month period, okay. The portfolios for revolve maturity starts happening between 24 to 30 months. These segments that we have acquired in last four to six quarters have not reached those levels as yet. That is point number-one. Second thing is even in these — in these vintages, while we see some bit of lower, but we see slightly more inclination of term lending behavior in this portfolio, okay. The mix is also dependent on the kind of weightages that works at. So the — while we said that it is with a lower bias, but not as much buyers as you mentioned, you I would say that in the next three to four quarters at — I have always stated that it can be either 23 or 25 depending on that month ends transactor if this is seasonality or if there is some changes. But for the last almost I think six quarters or so, we have been constant in ’24 apart from couple of quarters where it has again — it went down to ’23, but again stabilized to ’24. So that is the way to look at it about the revolving behavior from here onwards?
Tanuj
Okay, understood. So as the vintage of these newer acquisitions increase, you still expected your revolver to settle between that 24% mark-on average over-time.
Girish Budhiraja
It would be slightly lower than ’24. We see those newer vintages slightly lower than ’24, but ultimately, we are interested in overall interest income, okay. So we are trying to get those guys to take term asset, term loans. However, that said, last six quarters new acquisition as was being mentioned by Shantanu also is showing better behavior. And when you look at better behavior, there is a slightly more transactor bias in that portfolio compared to a revolving buyers.
Tanuj
Okay, understood. And just one thing. My second question is, I think your spend based income, which is largely interchange has seen a strong increase Q-o-Q. So is the primary reason for that is that you have higher intake change on your corporate spend relative to your retail spend?
Salila Pande
You’re right. And higher corporate spend contributed to a higher spend base.
Girish Budhiraja
Correct.
Operator
Thank you. MR. Pranuj, please rejoin the queue for more questions. Next question comes from the line of Mohit Jain with Para Capital Partners. Please go-ahead.
Mohit Jain
Hello, can you hear me please? Hello. Hello.
Salila Pande
Hello. Yes, you are audible.
Mohit Jain
Yes. Hi. Aman, just wanted to ask regarding the growth we are expecting in our receivable balance considering that the revolver may be slightly lower and we’ll continue. So what kind of growth we spent sir and
Salila Pande
It’s not very audible. Your voice is not clear.
Girish Budhiraja
Are you asking about yeah, can you repeat? Crore. Got very clear.
Salila Pande
Mike, it’s your question about the growth in the receivables number?
Mohit Jain
Yeah, yeah, no. This one. I was asking as to what is the rate we can expect in terms of the receivable growth for the next year. So considering the fact that revolver rate is slightly lower and the credit card addition rate is going to be at the same rate of 1.1 million. So what kind of a growth should we expect?
Girish Budhiraja
So as you have seen, receivables last year has grown by close to 10%, the growth rate has moderated. This year, we expect it to grow anywhere between 12% to 14%.
Mohit Jain
Okay. Thank you, sir. Thanks.
Operator
Thank you. Next question comes from the line of Rohan Mandora with Equirus Securities. Please go-ahead.
Rohan Mandora
Hello. Yes, sir. Thanks for the opportunity again. And this was more on the spend growth at an industry level. So if you look at the first-nine, 10 months, it’s been around 15% overall. And our spend growth is also at around 15-odd percent if you look at it. I just wanted to understand with some players going through on credit cards, is there a likelihood of regaining spend market-share? And second, over the next two to three years time-frame, what kind of spends growth are you enviging for the industry?
Salila Pande
So you’re right, that the spend growth has been at slightly lower than last year at around 15%. If you look at our numbers, if you look at the retail spend, we have grown almost 18% in terms of the retail spend. Corporate, we saw a slowdown during this year and we anticipate that we will grow in the range of — similar range for the next year as well. And overall, they for the industry, yes, the bigger market players are seeing an uptick in terms of the spend. And there’s a little bit of a caution at the — by the smaller players because of which we are seeing lower spend at the end. Anything you want to add here.
Girish Budhiraja
So our estimate for our growth we are looking at is 18% to 20% or so. As you would have noticed, we lost some market-share when we — when the corporate card spend went off in last year, February, we are hoping to regain that back slowly in a in a cautious manner, we want to get it in a profitable manner also. So we are on that path. We should continue to — as we — as the corporate card spends gets to closer to the normal number that we used to have earlier, we will gain that share back.
Rohan Mandora
Sure, sir. And sir, second was on what was the share of UPI-based spend and total retail spends?
Girish Budhiraja
Can you just repeat that?
Rohan Mandora
UPI, UPI spends on in total retail spends, share of UPI.
Girish Budhiraja
Now we have not given that number, but what I would say is that at least for our portfolio, it is now coming close to double-digit number.
Operator
Thank you. MR. Mandora, please rejoin the queue for more questions. Next question comes from the line of Piran with CLSA. Please go-ahead.
Piran Engineer
Hi, thanks for taking my question. I just had one simple question. Out of our loan book of INR55,000 odd crores, how much would come from customers acquired in FY ’25?
Girish Budhiraja
FY ’23, you said,
Piran Engineer
No, not 25 this year in the last 12 months?
Girish Budhiraja
No. So as I was mentioning earlier, the asset — usually what happens is that the asset growth starts to happen only after 12 months or somewhere around nine months onwards in because till that point of time, what the customer does is initially when the customer comes in, they will spend on the card and they will pay-back almost fully. It’s slowly that they start becoming comfortable with the product, they start utilizing it either for revolving or loan or a term asset book. So there is an evolution in which the — how the customer life-cycle moves over a period of time. So as a percentage for the last year, the assets out of that could be fairly low. We don’t declare vintage-wise asset percentages, but that would be low. It builds over a period of time.
Piran Engineer
Okay. But let’s say something acquired two years back, that would be — would have reached its sort of steady-state in terms of say spends per month and revolve share translating to loans per car.
Girish Budhiraja
To three years is what you can look at. So typically, I would say anywhere between 24 months-to 36 months, that becomes stable.
Piran Engineer
And is there a way I can think about let’s say drop-off rate or rate that say five years later people switch to another card. And I’m just trying to back-calculate what percentage of your book comes from what vintages? That’s my exercise. So for example, something you acquired in 2015, if you acquired 1 million cars in 2015, for example, how many of them would still be with you and how many would have dropped off?
Girish Budhiraja
Okay. So typically, the attrition rates, you can calculate through the numbers that we give you it they are anywhere between 10% to 13% in the range. Some of that is voluntary. However, some of it is involuntary. Involuntary is where we have — all the write-off numbers that you see essentially is those involuntary attrition numbers, okay. So customers do drop-off their asset also drops off there. However, when we are — we will not be able to do that on unless until that number is declared by us.
Operator
Thank you. MR. Engineer, please rejourn the queue for more questions. Next question comes from the line of Anil Ban with MLP. Please go-ahead.
Anirban Sarkar
Hi, sir. What is. Yes, yes. Can you hear you,?
Salila Pande
Yeah. We can hear you.
Anirban Sarkar
Yeah, hi. Okay. Thank you. Thank you,. So just one question. You have joined the call-in team suppositions have — this has been answered earlier, but you disclose the next number for 4Q and how is it for this 3Q?
Salila Pande
We are not —
Girish Budhiraja
Your voice is not clear.
Anirban Sarkar
Yeah, sir, I’m asking, have you disclosed this number as to how has net slippages moved in 4Q versus 3Q.
Shantanu Srivastava
Yeah, slippages numbers have given. They’ve improved from 2.2 odd percent to 2.1%.
Anirban Sarkar
This we are talking about net slippages or gross slippages
Shantanu Srivastava
Say that again
Anirban Sarkar
No, are you talking about net slippages or gross slippages?
Shantanu Srivastava
These are slivisions that are NPA number. They are not adjusted for provisions
Anirban Sarkar
No, I am asking. We have scheduled sorry
Shantanu Srivastava
There across slippages.
Anirban Sarkar
Yeah, yeah. So I am asking net of recoveries, net of recoveries and upgrades, what would be the slippages number for 4Q versus 3Q?
Shantanu Srivastava
We don’t disclose that. Yeah, we just — we don’t disclose net-debt of provision slippages.
Anirban Sarkar
Net of and
Girish Budhiraja
Recovery number is given separately.
Shantanu Srivastava
We disclosed recoveries that you can see. Oh, this a few line change okay. Thank you. Thank you.
Operator
Thank you. Next question comes from the line of ASV with HDFC Securities. Please go-ahead.
Krishnan ASV
Yeah, hi thanks. I had a couple of queries. One, what are the levers available, Girish, to improve corporate card profitability? When, when the mix does replay, what are the levers available with SBI card to be able to pull-back or lift your IRR there
Girish Budhiraja
So Krishan, corporate card spends typically happen in three categories. One is the category of travel and entertainment, which your company gives you for usage and hotels and airlines. There usually the profitability is very decent. So the second category is when the company uses it to pay its vendors or yet their partners with the expenses have happened, there you get interchange, but a large majority of that interchange is passed back as a passed back. So — and there is a cost of fund arbitrage also, which needs to be taken care of. So there are those plays. And there is a third category where the companies these days also pay their statutory payments like tax pays, utility bills and all that stuff, they can pay through the card business. Then the profitability is there, but it is marginal. So it is a mix thing that people work with. Profitability is low. As I would say, absolute profit would be lower, but profitability is high because there is usually no asset here. So ROE would be fairly high, yeah. But you know you’re not lending in this scenario, you are only essentially making it through from a payments perspective.
Krishnan ASV
No, the reason I’m asking that, Nirish, is you said you voluntarily let go of some market-share there because you were trying to recalibrate your own approach and strategy as well.
Girish Budhiraja
No, no, no, we didn’t really. I said we said RBI came out with a guideline, which was a BPSP guideline, okay, which is business partner solution provider. So there what used to happen was, for example, company A wants to pay its vendor and there were in-between there were some of third-parties through which the payments used to happen. That model was stopped by RBI, correctly, okay. So once that got stopped, we have stopped that immediately. That’s it. So it was because of that and we took that opportunity to start looking at rebuilding our business in a more profitable fashion you.
Operator
Thank you. MR. ASV, please rejoin the queue for more questions. Thank you. Next question comes from the line of Shah with Goldman Sachs. Please go-ahead.
Hardik Shah
Yeah. Thank you for the opportunity again. My next question is on the fee income growth, given your corporate spends growth has increased and even cards in-force growth has increased, what explains stepid fee income growth of 5% Y-o-Y? And how should we think about that in the next year?
Girish Budhiraja
So there are some headwinds there also. One is the late fee is not — is not growing that with that rate. So that is one part. Second is, we have seen on the rental spends also, we had levered a fee last year. So rental spends have also started to moderate. So both the fee elements from these two have started to moderate. This year, from a fee income growth perspective, have you given any guidance?
Rashmi Mohanty
You don’t give a guidance on the individual
Girish Budhiraja
And individual revenue
Hardik Shah
Understood. Okay. And one clarification again on the previous question that I asked. So with the Stage 3 coverage going down, does that imply your loss even default was lower with this ECL refresh?
Shantanu Srivastava
Yeah. So the Stage 3 ECL rate is your portfolio loss given default rate. And as I mentioned earlier, we were not reckoning our recoveries in a more realistic and appropriate fashion. As I mentioned earlier, we were capping the recoveries at 100% and then discounting them to arrive at present value. We’ve reversed that sequence to first discount and then capped. That is what is driving the change in our ECL rate for Stage 3, which is the portfolio.
Salila Pande
So in summary,, you’re correct
Operator
Thank you. Thank you. MR. Shah, please rejoin the queue for more questions. Next question comes from the line of Sishuan Gao with. Please go-ahead.
Zhixuan Gao
Thanks. Just a couple of follow-up questions. Number-one is the cost of income 55% to 57% you’re talking about for FY ’26, because for FY ’25, we are at 52%, right? So why would there be such a big jump?
Rashmi Mohanty
So we are — this year, if you look at our card, the new acquisition that we did, we actually ramped-up the number only in the second-half of the year. The first-half of the year, the new acquisition number was lower. We’re expecting a higher — and we’ve already shared with you earlier, Girish has talked about the business growth and ma’am has spoken about the growth of about at least 1.1 million new cars that we’re going to be doing, which is why we expect the cost-to-income to go up for FY ’26.
Girish Budhiraja
So one is that
Rashmi Mohanty
Corporate will go up, yeah. The corporate spends also impact the cost-to-income. We expect that the corporate spend are going to be higher than what we have achieved in FY ’25.
Zhixuan Gao
Thank you. And next one is, you know, you say you’re not giving quantum of improvement from a Q-on-Q basis in terms of 30-day flow rates or 90 day flow rates. So — but in terms of the rate of improvement, if you compare this quarter’s rate of improvement versus last quarter’s Q-on-Q rate of improvement, how does that compare? Is the rate of improvement accelerating improve — getting faster or is it swimming or is she diminishing?
Girish Budhiraja
So in the previous quarter, we had shown improvement in our NPA stock and our Stage 2 stock, both in absolute terms and percentage terms. We had shown improvement in flow rates, we had shown improvement in delinquencies. That overall trend continues and this time apart from these, write-offs have also come down. So in a sense, what we’re seeing this quarter is an accumulation of what happened in the previous quarter as well as this quarter. Thank you. Thank you. MR. Kao, please rejoin the queue for more questions. The next question comes from the line of with HDF Securities. Please go-ahead.
Krishnan ASV
Yeah, hi, thanks. This one is on cost of funds. Last-time around when we saw low-interest rates in the system as VI cards has had benefited disproportionately. I’m just wondering structurally, has anything changed between then and how in terms of in terms of elasticity on cost of funds.
Girish Budhiraja
No there is structurally nothing has changed we remain it’s — I think what has changed is the percentage of revolver mix has changed. The percentage of our asset mix has changed. Otherwise structurally, we were giving fixed interest term-loan rates earlier. We are still doing that. Our revolve — revolver used to be at a fixed interest-rate. That still continues to be there. The rate has increased, but
Rashmi Mohanty
That increase happened in November of 2024,
Girish Budhiraja
But otherwise structurally, there is nothing else against us.
Krishnan ASV
And and on the liability side, then versus now there is not much of a structural change, right, because you just — you benefited immensely in that stage of the cycle then. I’m just wondering is there any reason why you may be?
Salila Pande
No, no structural change in the liability side as well, nothing.
Krishnan ASV
Okay. Thanks.
Operator
Thank you. The last question comes from the line of Vikram Subramanian with Marshall Base. Please go-ahead.
Vikram Subramanian
Hello. Hi, am I audible?
Salila Pande
Vikram, you are.
Vikram Subramanian
Yeah, thanks. Thanks for taking my question and to gross Stage 2 and gross Stage 3, basically, if I look at the trajectory of gross Stage 2 from first-quarter, it’s been — it’s been going down steadily and in fact, we have had a reasonably significant improvement in this quarter. This is on gross Stage 2, but Stage 3 is just kind of sticky. So how should we look at this? What could be the outlook? Should we expect Stage 3 to remain at deep levels, but Stage 2 could continue to reduce at the pace?
Salila Pande
You’re right, Phase-2, we are seeing — we have been seeing improvement. And as you mentioned, yes, there is a much more tougher collection environment right now and we have experienced that they have seen some in terms of collections and there has been a bigger flow from Stage 3 to write-off. But it’s — right now, as I mentioned earlier also, it’s very difficult to predict. There are a lot of unknowns right now in the — even going-forward to the next quarter. So we will stay vigilant and the metrics look positive, but difficult to predict right
Shantanu Srivastava
Stage 3 is also coming down between the six-month period that we’re reporting right now from June to now, there has been steady improvement in Stage 3 as well. 1821 was the number in June, 17 177 in September and 18 now.
Vikram Subramanian
My question properly. My question was this reduction in Stage 2, is it is there also some non-business reason meaning some kind of reclassification?
Shantanu Srivastava
No. The definition of list is remain unchanged.
Vikram Subramanian
Okay. Okay. Got it. That’s it from my side. Thank you.
Operator
Thank you. Ladies and gentlemen, we have reached the end of question-and-answer session. I would now like to hand the conference over to Mr Salil for closing comments.
Salila Pande
Thank you,. I’m grateful to all our shareholders, customers, partners and employees for their unwavering trust and support in SBI Card. And as we close this call, I wish all who are on this call a very successful financial year 2026. Thank you very much.
Operator
Thank you. On behalf of SBI Cards and Payment Services Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.