SBI cards and payment services (SBI Card) announced on Monday that it plans to raise up to Rs 2,000 crore by issuing non-convertible debentures (NCDs). The company has called a board meeting on March 12 to review and approve the fundraising, which will be raised in one or more installments over a period of time, he said. This will be a second fundraising announcement via NTM in a month, after raising Rs 550 crore in February.
Last month, SBI Cards reported that it had raised Rs 550 crore by issuing NTMs on the basis of a private placement. NTMs have a three-year term with a coupon rate of 5.9% per annum. The company had announced a fundraising after the new CEO and CEO Rama Mohan Rao Amara took office in January 2021.
The company had reported a 52% year-over-year drop in net income to Rs 210 crore in the December quarter (Q3FY21). His total income stood at Rs 2,540 crore in the quarter, up from Rs 2,563 crore the year before. The capital adequacy ratio stands at 23.7%, against the minimum regulatory requirement of 15%. On a pro forma basis, gross non-performing assets (NPA) stood at 4.51%, compared to 7.46% in the September quarter. The Supreme Court previously ordered lenders not to report new NPAs after August 31, 2020. As a result, lenders disclosed NPAs on a pro forma basis to reflect the true picture of asset quality.
In a recent report, Credit Suisse said asset quality stress for SBI Card has peaked. The company has seen increased stress after Covid-19, with a pro forma 8% and 10% slide in loans being restructured, Credit Suisse said. “Taking into account the strong profitability before provisioning, while it provided 65% on the pro-forma NPAs as well as 35% on the restructured loans, the RoA FY21E (return on assets) should be around 4%”, did he declare.
Credit Suisse also expects strong growth from the SBI Card. “We expect growth to remain strong (> 30% of spend) as it increases penetration among SBI clients,” Credit Suisse said.