The downgrade follows the company’s Q1 FY26 results, which revealed a sharp rise in credit costs, higher than the broker’s estimates. Credit costs jumped to 9.6% — the highest in 16 quarters — raising concerns about stressed asset creation.
The company also reported higher operating expenses, which rose 17% year-on-year to Rs 2,123 crore, alongside a 6% increase in finance costs. These pressures have weighed on profitability, with both Return on Average Assets and Return on Average Equity slipping from last year’s levels.
According to the brokerage, elevated credit costs remain a structural challenge and could hinder earnings recovery.
As of Q1 FY26, the company held a 19.1% share in cards-in-force, up from 18.5% a year earlier, and a 16.6% share in spends, compared with 15.9% in Q1 FY25. It ranked second by card base and third by spends in the Indian credit card market.
For the quarter, SBI Card reported a 6% year-on-year decline in net profit to Rs 556 crore in Q1 FY26, as rising impairments and costs offset topline growth. Total income rose 12% YoY to Rs 5,035 crore in Q1 FY26, aided by an 11% increase in interest income to Rs 2,493 crore and a 13% rise in fee and commission income to Rs 2,384 crore.
SBI Card, a non-banking financial company, offers a wide range of credit cards spanning lifestyle, rewards, travel, fuel, co-branded partnerships, and corporate cards, catering to diverse customer segments across income groups.