SBI Cards and Payment Services Ltd

NSE:SBICARD

Q1-2026 Earnings Call

[Operator]

Ladies and gentlemen, good day, and welcome to the SBI Cards and Payment Services Limited Q1 FY '26 Earnings Conference Call. [Operator Instructions]. I now hand the conference over to Ms. Salila Pande, MD and CEO, SBI Cards. Thank you, and over to you, ma'am.

[Salila Pande, executive]

Thank you, [ Rio ]. A very good evening to all. On behalf of the Board and management of SBI Cards, I extend a warm welcome and sincere thanks for joining us today for the first quarter earnings call for the financial year [Technical Difficulty]

I have SBI Cards leadership team with me, and I would also like to introduce Mr. Krishna Kant Bishnoi, who has recently joined us as the Chief Risk Officer. Mr. Bishnoi has an FRM certification from GARP, along with an MBA in Banking and Finance. He comes with an experience of around 31 years in the banking sector, in India and international markets across all key facets of financial industry and especially credit risk management.

Speaking about the macroeconomic and industry overview first. As you all know, in April of 2025 as RBI MPC lowered the GDP growth estimates for the financial year '26 to 6.5% from 6.7% and adjustment amid external uncertainty but also underlining the strong domestic anchors. India's payment ecosystem is undergoing a transformation powered by a rapid scaling of digital infrastructure, real-time rails like UPI and now RuPay credit card on UPI.

India has emerged as a global front-runner in digital transaction volumes, setting benchmarks in adoption, affordability and accessibility. As per report, by 2030, India's digital economy is projected to contribute almost 1/5 of the country's overall economy, outpacing the growth of traditional sectors.

The convergence of credit and digital is creating a new model, one, where credit cards are no longer just a plastic instrument, but digital financial tools integrated into mobile apps. Credit cards today are serving more nuanced tools, powering high-ticket EMI-led and reward-driven spending for an increasingly aspirational and digitally savvy customers. However, owing to the prevailing environment the industry is currently trading carefully.

For instance, while India has around 111 million credit cards in circulation. As per the RBI June 2025 data, net card additions for the first quarter has just been 13,13,000 compared to 20,10,000 during the same period last year. At the same time, the Indian credit card industry continues to offer immense growth opportunities in the long term. Industry forecasts expect cards to double to almost 200 million by the year '28, '29.

As per RBI data, credit card spends in the first quarter rose 16% to around INR 5.57 trillion versus INR 4.8 trillion during the same period last year.

Coming to SBI Cards strategy and outlook. We see -- looking at the [ opposite ] development, we see a lot of opportunity for SBI Card to grow. Today, SBI Card is India's largest pure-play credit card player commanding a strong position with 19.1% market share in terms of cards in force and 16.6% in card spends as per the RBI June 2025 data.

We remain focused on further strengthening our position by focusing on strategic priorities, which include expanding our credit card portfolio, including premium and co-branded cards to meet the evolving lifestyle needs of customers, bolstering digital onboarding and servicing capabilities to ensure a seamless, secure and intuitive customer experience, deepening our ties on Tier 2 and Tier 3 markets, where rising affluence and digital penetration presents significant growth headroom and leveraging data intelligence to sharpen customer insights and credit decisions.

At the same time, we are curating offerings for digitally native aspirational consumers seeking convenience, flexibility and rewards. In parallel, we continue to focus on launching contextual and curated offers to enhance customer engagement.

Let us now look at SBI Cards business performance for the financial year -- first quarter of '25, '26. As far as the new accounts are concerned, cards in force have grown to almost INR 2.12 crores, witnessing a 10% Y-o-Y growth. We added around 8,73,000 new accounts in the first quarter of '25, '26 as we continue to be selective in new card acquisition for the time being.

In line with our strategy, forcing distribution remains balanced, with Banca contributing 56% and open markets, the remaining 44%. As far as the spends are concerned, our spends market share has grown to 16.6% compared to 15.9% during the first quarter of financial year '24, '25.

Total spends reached INR 93,244 crores in the first quarter, which is 21% growth Y-o-Y. Retail spends saw sustained growth and reached INR 82,404 crores, witnessing a 15% Y-o-Y growth. We have seen good growth in both cost and online spends across most discretionary and nondiscretionary categories.

Key ones include departmental stores, utilities, education, consumer durables, furnishing and hardware, apparel and jewelry, among many others. The travel and entertainment category witnessed strong online spend. Online spends continued to be strong and contributed around 61% of the total retail spend.

Corporate spends have also grown steadily and reached INR 10,840 crores during the quarter, aided by our continuous focus on diversification of [ fuel ] schemes. UPI on credit card usage continues to grow 20% quarter-over-quarter, especially in department stores, groceries, utilities, fuel, apparel and restaurants, driven by QR acceptance expansion.

We continue to forge strategic partnerships and roll out new products to offer diverse and valuable options to our customers. In partnership with Tata Digita, we launched a powerful co-branded product, Tata Neu SBI Card. This card combines the scale of Tata ecosystem with SBI Cards credit expertise. We launched Apollo SBI Card, first of its kind, wellness-focused credit card in collaboration with Apollo HealthCo. This card is aimed at fulfilling needs of India's growing health-conscious consumers.

We have also signed an MOU with Bank of Maharashtra to expand co-branded credit card offerings for banks who want to do credit cards for their customers. We have bolstered our digital initiatives to further strengthen customer acquisition and servicing capabilities for enhanced consumer experience. Whether it is using digital innovation to improve customer experience, building a more sustainable workplace or strengthening our governance framework, we are taking consistent steps to create lasting impact.

SBI Cards varied initiatives have been recognized and distorted Prestigious awards, including the CRIF High Mark Data Excellence Awards for 2025 and Economic Times HR Silver Training Award. SBI Cards has also won 2 Silver Abbys at the Abby South Asia Awards 2025, among others.

Now coming to the financial performance. Total revenue in the first quarter reached INR 5,035 crores, registering 12% growth Y-o-Y and 4% quarter-over-quarter. This increase has been driven by an increase in both interest income and fees. In the first quarter, our profit after tax was INR 556 crores which is lower by 6% Y-o-Y and higher by 4% quarter-over-quarter.

In terms of the receivables, in line with the strong spend growth rate, our receivables have seen a steady growth. Receivables during the quarter reached INR 56,607 crores, witnessing a 7% Y-o-Y growth. Interest-earning assets were around 60% with revolver rate steady at 24%.

Our cost of fund on our borrowings for Q4 FY '25 was 7.3% if we remove the onetime benefit that we got from lease modification. For the current quarter, we benefited from the repo rate cuts and the cost of funds for the quarter is at 7.1% versus 7.3% for the last quarter. We expect the cost of funds to be further lower in the next quarter. With portfolio yields holding steady at 17% and lower costs, the NIM for the first quarter was higher at 11.2% compared to the same period last year.

In terms of the asset quality, at SBI Card going to steps taken over the last 6 to 7 quarters to strengthen our new acquisition, underwriting and portfolio management framework we have seen improvements in the key portfolio metrics, including gross NPA ratio, gross write-offs and Stage 2 stock. Gross write-offs have shown improvement in this quarter as well. GNPA for the quarter was stable at 3.07% versus 3.08% for the last quarter.

Stage 2 balances, which is the portfolio has significant increase in credit risk, have reduced by INR 128 crores quarter-over-quarter and INR 569 crores year-over-year to INR 2,673 crores. The ECL rate -- it has stayed range bound at around 3.5% for the first quarter, increasing by 8 basis points quarter-over-quarter. However, the gross credit cost has seen an increase of around 60 basis points to 9.6% from 9% for the previous quarter.

Credit costs increased quarter-over-quarter by INR 107 crores from INR 1,245 crores in Q4 FY '25 to INR 1,352 crores in Q1 of FY '26, contributed by an increase in provisions of almost INR 131 crores quarter-over-quarter and a decrease in gross write-off of INR 24 crores. The increase in provision is due to higher ECL rates, on account of periodic data refresh and also due to increase in NIM.

As we define and calibrate our underwriting standards, portfolio management and collection strategies, we expect the credit cost to stay range bound in the near term, depending on the changes in the unsecured lending ecosystem and macroeconomic factors.

In terms of the liquidity and capital adequacy, our liquidity position continues to be strong. Our capital adequacy ratio was at a healthy level of 23.2%. ROA for the quarter was 3.4%, lower by 67 basis points Y-o-Y and higher 4 bps quarter-over-quarter. ROE for the quarter was 15.8%, lower by 335 basis points Y-o-Y and higher 24 basis points quarter-over-quarter.

In the -- in conclusion, our near-term strategic priorities are clear and focused which are driving profitable and sustainable growth and safeguarding asset quality through proactive portfolio management and advanced risk controls. This continues to shape our cautious yet confident outlook for the quarters ahead.

With that, I would now like to open the floor for questions. Thank you.

[Operator]

[Operator Instructions]. The first question is from Mahrukh Adajania from Nuvama.

[Mahrukh Adajania, analyst]

My first question is on credit cost. Your ECL reset happened in the first quarter and the fourth quarter credit costs were lower. So when you say range bound up because the reset is done, do you think it reverts to the fourth quarter level or range bound at the first quarter level?

[Salila Pande, executive]

So Mahrukh, when I'm saying range bound. I'm saying that it will be -- whatever reset has happened for this quarter has 2 or 3 factors which have played into the ECL computation. One, and because of the model refresh, then we have also seen an increase in the net earning assets. And -- so we expect, of course, its still early days, but we expect that the credit cost will be somewhere between what we saw. The ECL rates will be somewhere between what we saw in the last quarter and what we have seen in the current quarter.

[Mahrukh Adajania, analyst]

Okay. And in terms of receivable growth, it's down to 7%. So we're still confident of 13% to 15% for the year. Maybe 13-ish or early teens?

[Salila Pande, executive]

Again, here, Mahrukh, if you look at the overall industry, there's a little bit of a muted growth, which is happening on the retail segment. So although the receivable growth is 7%, but our IBNEA has grown almost 8%. So although we might see growth higher than what we saw in the first quarter because the first quarter is typically a slightly lesser demand weaker in the quarter. The festive seasons are still coming up where we will see an uptick in the receivables. But maybe it will be in the range of around 10% to 12%.

[Mahrukh Adajania, analyst]

Okay. Got it. And then one last question on margin. So the last repo rate cut of June is pending to be passed on by banks? Is that the reason why margins would have stable Q-o-Q?

[Salila Pande, executive]

So margin has improved actually because see, 2 things are here. If you look at the cost of fund, as I mentioned, the cost of funds for the last quarter, if we remove the one-off adjustments, which happened during the last quarter. We have been around 20 basis points of improvement already in terms of the cost of funds. But yes, we will see further benefits during the quarter for 2 reasons.

One is that mainly for the reason that the benefits are still getting reset. We are seeing lower rates as compared to what we had witnessed last quarter. And number two, we have also tried to change a little bit in terms of our borrowing mix, which is also benefiting us. Rashmi, do you want to add something?

[Rashmi Mohanty, executive]

So Mahrukh, the June repo rate cut is something which still we will get the benefit of that in this quarter. It came towards the end of the quarter. There has been a conscious effort on our part to ensure that we want to negotiate lower on our WCDL rates. We've also started doing some CPs as well this quarter. So that has helped us in bringing down the cost of funds in quarter 1. The full benefit of all the rate cuts, specially the one in June, which is a bigger one would be -- we will get that only in quarter 2, which is why if you recall, ma'am guided that we expect the cost of funds to be lower in quarter 2 by about 25 to 30 basis points, which is where the benefit will come in.

[Mahrukh Adajania, analyst]

Sure. And there will be no change in yield. Of course, the proportion of IEA can change, but then -- you're not planning to cut rates or something, right?

[Rashmi Mohanty, executive]

We've also mentioned in the past that the customer rate is a function of benchmark plus margin. There is a very clear formula that RBI has prescribed to have to how the benchmark rate has to be obtained. Unless, as you said rightly, I don't see a big change happening in that. But yes, the IBNEA can determine what the portfolio is.

[Girish Budhiraja, executive]

Mahrukh, even if the change happens, it will happen only on the new asset existing asset continues to be at the same price.

[Rashmi Mohanty, executive]

Although the yields should stay steady.

[Mahrukh Adajania, analyst]

Got it. Got it. And just one clarification, what was the one-off in fourth quarter, sorry?

[Salila Pande, executive]

So we had mentioned that in the last call and given an explanation as well. There was one lease modifications that we had done and the reclassification of some of our leases resulted in a benefit in the expense line on the interest and related items, and we got a 10 basis point benefit on that.

[Operator]

[Operator Instructions]. The next question is from Shweta Daptardar from Elara.

[Shweta Daptardar, analyst]

I have 2 questions. So you mentioned that ECL reset is outcome of data refresh. So can you just give some color on new account acquisition or the new portfolio behavior? That's question number one. Question number two, also, if you can provide some color on, if at all, you're facing or witnessing intensities -- competitive intensities in the EMI portfolio?

[Salila Pande, executive]

So Shweta, for the first question, see, -- as I mentioned earlier, we have become very cautious in terms of our underwriting standards. And if we look in the medium to long term, we can see that the delinquency rates have been declined. So that is basically because we are extremely cautious in onboarding new customers. So definitely, the risk profile has improved.

And speaking of the competition in the EMI portfolio, I would say that it's a vast market. We have our own captive markets. And we have seen an uptick in our EMI portfolio, which we are building consciously also. But I think there's adequate opportunity for the market players to grow. Anything you want to add, Pradeep?

[Unknown Executive]

No.

[Salila Pande, executive]

Right. Shweta, anything else?

[Shweta Daptardar, analyst]

Yes. So just a follow-up on the first question. So while the new portfolio acquisition of behavior is in line with your expectations. So it's fair to assume that the increased credit cost is still getting impacted because of the legacy or the past customer cohort. So while you definitely guided the range bound kind of a number -- but -- then are we going to see this parameter sort of peaking out in future?

[Salila Pande, executive]

Number one, what you mentioned is very correct. See, if you look at the credit cost, which has increased for the company in the last few quarters, as the model refresh happens and the new data, which is more recent, where we have seen more higher credit costs. It basically inches the ECL rates up, and we are dropping off the better periods. And we are bringing in the newer periods, which have seen witnessed more stress.

And that is one reason where we are seeing the ECL rates going up and also resulting in the higher credit costs. However, if you look at our numbers, if you look at our stocks in terms of the Stage 2, you will see that there's been a mark to decline this quarter and even in the previous quarter. So in terms of stocks, I would say we have been able to maintain the portfolio in terms of the new acquisitions. We have been prudent not that -- we have been cautious, I would say.

Yes, as we have mentioned earlier also, there is leverage in the market, which keeps on translating into the stress and write-off. We have -- as I mentioned earlier, we are expecting that the credit cost will remain somewhere in the range between what we saw in the March quarter and what we are seeing now, because -- mainly because of the ECL refresh. Write-offs this quarter, I would again say we consistently have been reducing the write-off numbers and that will continue in the days to come.

[Operator]

The next question is from Abhishek M. from HSBC.

[Abhishek Murarka, analyst]

Hope I am audible?

[Salila Pande, executive]

Yes.

[Abhishek Murarka, analyst]

So my first question is, can you give some sense of the delinquency trends. So we can see write-offs coming off, cross Stage 2 coming off. But if you can talk a little bit about forward flows into maybe PAR 30, PAR 90 creation and how that has been trending over the last, let's say, 3, 4 months, 5 months?

[Salila Pande, executive]

Delinquency is coming down.

[Abhishek Murarka, analyst]

So can you share some maybe more qualitative color or the speed of delinquency coming off, is that increasing by any chance?

[Salila Pande, executive]

We don't share, we do track, as we mentioned earlier as well in the call, we do track our 30-plus, 90-plus, all the flow metrics internally. And what we can tell you, and this is something which we said last time as well that for the last 3 quarters, we are seeing an improvement in the flow metric.

[Abhishek Murarka, analyst]

Right. But the pace of improvement is that higher now? Or it's just the way it was? I mean it will take it's time...

[Salila Pande, executive]

It's the same. At this point in time, it's still the same.

[Abhishek Murarka, analyst]

Understood. The second question is this ECL refresh. So it's done, right? So now the PCR or the coverage for individual stages that should remain where it is at the end of 1Q? Or it's something ongoing that every quarter there is going to be a creeping increase in those numbers?

[Salila Pande, executive]

So a couple of factors will play in. Number one is that since it's a refresh of the data -- as I mentioned, the new quarters are seeing more delinquency as compared to the old quarters, which are being getting dropped off from the model. So we are seeing some deterioration in the credit cost because of that.

Number two, there will always be an impact as we grow the asset book, the NA grows, there will be an impact on that. However, we will also get the benefit as the mix improves because as Stage 2 goes down or Stage 3 goes down and the current or the Stage 1 portfolio increases in terms of the proportion, we will get a benefit from that as well.

So there are a couple of factors which are playing in, but there are some dominant factors there, the biggest one being that the current quarters have seen more stress as compared to the 8-year-old data, which gets dropped off.

[Abhishek Murarka, analyst]

Okay. Okay. Got it. The third thing is in terms of corporate spends. Now we've seen it go up for the past couple of quarters. But this quarter, your cost ratios didn't go up actually. And typically, with higher corporate spend, the cost ratio should go up because you're paying out a lot of that revenue anyway. So is there any particular big cost saving that is also there in the OpEx line, which is masking that?

[Salila Pande, executive]

For the last quarter was also a big spending quarter for us, Abhishek. We did a lot of campaigns, end of the year, we usually run a lot of campaigns, so it was instated because of that. That's number one. So as you compare quarter 4 cost-to-income ratio to quarter 1 cost-to-income ratio, that's a very important factor.

Because in quarter 1, typically, we don't do that kind of campaign spend. So that is one reason. Two, yes, because of lower cost, our sales cost or acquisition cost is lower. So that also is a factor of the cost to income being lower this quarter compared to the previous quarter.

[Operator]

[Operator Instructions] We take the next question from Anand Dama from Emkay Global.

[Anand Dama, analyst]

So is it possible for you to spell out what would be the overall credit cost for the full year? I believe you said that it will be somewhere between what we have seen in this quarter and our fourth quarter but still like it could be around the 9% that you're expecting for the full year despite the flow rates coming off and the sale impact largely been taken care of.

[Salila Pande, executive]

So for the full year, I would not like to give a guidance at this point because there are certain external factors as well, especially the leverage that we are seeing. But as I mentioned, that for the next quarter in the middle -- in the -- we are anticipating that it will be somewhere between what we saw last quarter and this quarter.

[Anand Dama, analyst]

Sure. So is it basically the higher leverage levels, basically, which is the reason why you're not so confident on the credit cost coming down meaningfully at this point of time? Or there are many other things at play?

[Salila Pande, executive]

So as you know, there are 2 factors involved here. One is the ECL. So ECL, as I have already elaborated for several reasons. Even if we grow the asset book, we will see the ECL growth happening over there. In terms of the other factor, which is the gross write-off, definitely, it's a function of leverage.

And although in terms of the early delinquencies and in terms of the new onboardings that we are doing, we are being cautious, but we are also seeing that there are customers who have been with us for many, many years, who also get stressed and that happens due to some lifetime events happening in there, which is happening, which we are witnessing and we have that in our portfolio. When we look at our Stage 3 and Stage 2, we have many of those customers sitting in that portfolio. So although we are working on resolution but those are -- that is the portfolio at risk, which we are working on.

[Anand Dama, analyst]

You've done very well on the RuPay cards on UPI cards, so to say. I think which is basically about 20%, 25% of your overall cards in force. Is it possible for you to spell out what's the spend share of RuPay card or basically spend for card that you're having over there? Because I think the retail spend for you is about INR 17,000-odd. So what would be the spend per card for RuPay cards? If you can give some more details on that?

[Girish Budhiraja, executive]

So on the RuPay cards, the spend per card is marginally higher than the average. I would put it anywhere between INR 3,000 to INR 5,000 higher.

[Anand Dama, analyst]

Okay. And how the profitability metrics look for that? Because now I think NPCI has given some additional incentives also on RuPay card. I believe fee also over -- will be relatively better over there. If you can spell out like what's the profitability metrics over there, in terms of receivables, fees and the cost?

[Girish Budhiraja, executive]

So as of now, what we see is that the profitability is broadly similar. There is some amount of interchange which -- lower interchange, which we received. We have not declared how much is there, but it is in the range we -- on a normal card, we would get INR 100 as an interchange. On the same spend on RuPay card, we are getting anywhere between 70% to 80%. That is one. So interchange is a bit lower, but that gets compensated with higher spends. So in absolute value on profitability perspective, broadly, it is similar.

[Anand Dama, analyst]

And do you expect it to improve going forward as the book seasons?

[Girish Budhiraja, executive]

Yes. Yes.

[Salila Pande, executive]

Yes. So we are seeing good traction there, and we will continue to work on that. You will definitely see...

[Operator]

Next question is from Rohan Mandora from Equirus Securities.

[Rohan Mandora, analyst]

The computed basis, the interchange that we are earning is coming to around 1%. So I just want to check, is that correct number? And in the last quarter, it has seen a meaningful decline?

[Girish Budhiraja, executive]

Rohan, your question is not clear. Can you just come closer to the...

[Rohan Mandora, analyst]

Hello. Is this better, sir?

[Girish Budhiraja, executive]

Yes, better.

[Rohan Mandora, analyst]

So I was saying on the interchange revenues that we own, on a computed basis, it was coming closer to 100 basis points. So I just wanted to reconfirm that number? And in the last 2 quarters, what -- it seems to have declined meaningfully. So just if you can explain, is it largely this is the RuPay card or something else is a factor here?

[Girish Budhiraja, executive]

No, no, I think we will get somebody to sit separately with you. The interchange has not gone down. And in any case, as the corporate card spend goes up, the interchange actually goes up because corporate card is at the higher interchange levels. So on a percentage basis, it is either similar or higher.

[Rohan Mandora, analyst]

So if you can quantify what is the interchange that we have earned in 1Q? Percentage?

[Girish Budhiraja, executive]

No, we have not declared that, and it is dependent on 2, 3 things. It is dependent on what kind of card which is being used in the market. The second dependency is also the which interchange category, in which the card is used. So it can range anywhere between -- let's say, 0.75% on utilities to go as high as 2.1%, 2.2%. So there is a range. Usually, it falls anywhere between 1.35% to 1.45% it will fall into that category.

[Rohan Mandora, analyst]

Sure, sir. Sir, secondly, on the originations that we're doing incrementally, the mix of CAT B salaried seems to be increasing. So just trying to understand the customer profile there and what gives us the confidence that in the medium term, this portfolio quality will hold up well. Because a lot of pain we are seeing is in the CAT A salaried segment. So how does -- how do we correlate these 2 numbers? These 2 profiles?

[Salila Pande, executive]

Rohan, will be -- basically onboarding, as I mentioned earlier also is that we will have -- we will look at a particular customer profile. And we have our own metrics in terms of the underwriting standards, which definitely a customer have -- will have to qualify for. And not -- that there's not opportunity in the CAT B segment or any other segments.

Only thing is we will have to ensure that we are right -- reaching out to the right customer and having the necessary insights to know whether this is a customer within my risk appetite. I will request Nandini to elaborate. We have also increased how we are looking at the customer in terms of account aggregators. And also while we do sourcing from the Banca channel.

So definitely for the purpose of -- looking at what is the profile of the overall customers, we do this slicing and dicing, but we also make sure that whichever customers unloaded is as per my -- the company's risk appetite and satisfies the scorecards, whatever have been put in place in respect of a particular customer. Nandini, you want to add something?

[Nandini Malhotra, executive]

Like ma'am rightly said, we have our internal models, which leverage the bureau based -- bureau data as well as any other data source that the customer did that. So account aggregator is a good method of assessment because we are able to see the cash flows over a period of time and that gives us greater confidence in underwriting.

So that has been -- we started leveraging it 2 years back, and we have increased the proportion of sourcing going through the account aggregator channel. And also the advantages that they are based with the customer consent. We can do a periodic refresh. It also helps us in portfolio management. So like ma'am rightly said, the underwriting is done looking at the customer and all facets of the customer are considered by taking a decision and also by managing the portfolio.

[Operator]

Next question is from M.B. Mahesh from Kotak Securities.

[M. B. Mahesh, analyst]

Just a couple of questions. One, on the new account acquisition, just what -- why are we in a sense seeing this slowdown here in terms of acquisition? Is it because there is a lack of demand for fresh cards? Or is the filters becoming even more tighter than before?

[Girish Budhiraja, executive]

So Mahesh, demand is not a concern. There is more than enough demand. Quality acquisition is primary for us at this stage. So -- we have done both the things. We have taken off some more areas where we were not finding the quality applications coming in. So there is some reduction in the number of applications that we have sourced and some part of it is also some bit -- some more tightness or some more selectiveness that we are putting into our portfolio acquisition. So this is -- these are ongoing practices. It will continue.

However, we will -- as we have stated earlier, we will try to continue to deliver between 900,000 to 1 million cards and while keeping an eye at the market also at the same time.

[M. B. Mahesh, analyst]

In the sense that at one point of time, we were looking at 1. Now we're looking at the number 0.921. Do you say that even the recent origination of cards is not kind of coming through the quality that you would want for?

[Girish Budhiraja, executive]

The recent origination, which as was pointed out by MD ma'am, that is as per the standard and fulfilling the requirements. However, what we are looking at is that we have to do even better because if the results, where we want to be in from the future perspective, we want to be even in a better state. So some of those criteria, and I'll give you an example.

For example, we are now focusing on at least getting an account aggregator access from most of our customers. Now this is not going to help us today it's going to help us even in future because if we get a consent from the customer, we will be able to access the customer account even 2 years, 3 years down the line and helps in portfolio management. So some of those long-term thinking processes are also being put into acquisition today.

[Salila Pande, executive]

And one more thing I just want to add to Girish point, Mahesh, is that ultimately, see, I agreed that we had initially given a guidance where we have gone a bit slow in the first quarter, but ultimately, we are also a function of the industry and our market share has grown despite growing slow this quarter. We are hopeful in the coming quarters, as the festival season kicks in, we will see the kind of customers we want having more demand. And definitely, these numbers should go up in the coming quarters.

[M. B. Mahesh, analyst]

And sorry, one clarification to this question, this newer cards that is being issued. It's still a very large product base that you're still targeting as new customers or the action on completely new to credit card is better today.

[Nandini Malhotra, executive]

New to credit out, what is the proportion? I think it's...

[Girish Budhiraja, executive]

So Mahesh, proportion, which Nandini is mentioning is broadly the same of both carded and new to card segment. And I think the way to look here is that our sourcing, mostly as we have stated earlier, from Banca tends to be new to card because that is where we are able to look at the -- so if that remains 56% to 60% in that range, yes, 50% to 60% in that range. The mix will broadly remain so.

[M. B. Mahesh, analyst]

Okay. Second question is on the spend. Have you started seeing slowdown even in -- by customers who have a larger credit balance with you? Does that explain a bit of a slowdown that you are seeing in overall spend for, is there something that we need to worry less about this issue?

[Salila Pande, executive]

So spends, I would -- I don't think we are seeing any -- of course, it's not what it was 2 years back. But I think we are standing around and for the -- not seeing a slowdown there.

[Girish Budhiraja, executive]

No, not at all. Mahesh, if you see actually, we have SIP has grown by almost 10% or so. Spends have increased by around 21%. But if I take out -- look at only retail, it is still 15%. And even in that, so there is spend per card is still increasing.

And secondly, there is a play within the spends, which is happening. Rental payments have been -- we have been cautiously bringing it down. So that has come down, and that is still -- if I take off that rental, the growth is it will be early 20s, okay? So hopefully, by second half of the year, when this base effect also will go away, you will see that kind of impact. We saw last -- a couple of programs which we have done with large e-commerce players, the growth has been very recent.

[Operator]

Next question is from Kaitav Shah from Anand Rathi.

[Kaitav Shah, analyst]

Number one question was on the reset of credit cost, ECL norms. So this will happen again next year? And if you can give us some sort of guidance of whether we use a 5-year, 3-year, 7-year, 10-year kind of framework for ECL if that is possible to share?

[Salila Pande, executive]

So reset of credit costs, data refresh happens quarterly, Kaitav. And the period for which we look at the data is 8 years.

[Operator]

Next question is from Aditya Vikram from [ Digital B. Securities ].

[Unknown Analyst]

Am I audible?

[Salila Pande, executive]

Yes, Aditya, you are.

[Unknown Analyst]

It seems like quarter-on-quarter sequentially, the performance is good. I just wanted to clarify or understand. Number one question is why the finance cost has increased by 6% when our cost of funds are going down?

[Salila Pande, executive]

Aditya, the cost of funds have increased because, number one, our liabilities have increased. There is one additional day in the quarter as compared to previous quarters. And of course, we also got the benefits of lower rates, but because of higher requirements for higher borrowings and one additional day being there, there is a nominal increase, how much -- around INR 18 crores is the impact on the finance count. Do you want to add something? Yes, that's it.

[Unknown Analyst]

And ma'am, what would be the timeline you are -- in the previous quarters, you've suggested that the growth would be in mid-teens. If I heard to one of the participants, you said that the growth could be 10% to 12%. Is that correct understanding, are we reducing our growth guidance? Or you're just saying it for now and probably again increase it as we go down the line?

[Salila Pande, executive]

So yes, initially, last quarter, we had given a guidance of looking at 12% to 14% in terms of the receivables. Looking at the offtake and what we have seen in overall credit growth during the quarter, especially in the retail lending and our own experience, we are looking at 10% to 12% growth. However, there are festive seasons ahead, and we will be working on the strategy. It's -- we see opportunity, we will definitely grow.

[Unknown Analyst]

And ma'am, one last question, if I may. The interest income has increased again, right? But is there any other levers barring the repo rate cut, which will aid it? Or do you see any sort of new area you will dwell into to increase this? Or it will be just the repo rate cut, which will help?

[Salila Pande, executive]

So on the -- if you're talking of the NIM, yes, basically, the benefits we will see will be on the NEA growth, which will increase the interest income and the cost which will -- which we are anticipating further reduction in the cost of fund for the coming quarter.

[Operator]

The next question is from Meghna Luthra from InCred Equities.

[Meghna Luthra, analyst]

Ma'am, I have 3 quick questions. One is what is your medium-term outlook on when would ROEs return to, say, mid-20s or an early 20s sort of a level? And second, what proportion of your book have you tightened the limits like the upper limit spending limit? And three, what proportion of the book is co-branded, like other theory?

[Salila Pande, executive]

Mid-20, not this year, definitely, that I can say. Tightens the limit -- we would say that -- I don't know whether we tell this number? Around 25% to 26%...

[Girish Budhiraja, executive]

Early teens portfolio percentage.

[Salila Pande, executive]

And on the co-branded, do you have the number?

[Girish Budhiraja, executive]

Yes. Co-brand is between 25% to 30%.

[Meghna Luthra, analyst]

And so mid-20s, would you say next year or -- I mean, I know it's too early, but any triggers would keep that you would look up to?

[Salila Pande, executive]

Mid-20s, I don't see immediately that I can tell you because -- that's what I can comment on right now. Yes.

[Operator]

[Operator Instructions]. Next question is from Suhas Phalke from ARJ Securities.

[Suhas Phalke, analyst]

While all the financing and operational metrics have been covered by my peers, I had a quick question on the ESG approach. What is your ESG agenda? And how do you think about the sustainability from an ESG standpoint? At present the disclosure seems more like a check box exercise and rather than a conscious outcome-driven effort. So do you see ESG being tracked and disclosed more rigorously going on?

[Salila Pande, executive]

So it's not a check box at all for us that I can tell you, Suhas. We are very mindful of our contributions to the community and to the environment. And it's -- ESG per se has a very active oversight from the Board members.

Even the projects that we work on, the outlay of funds which is done, there is a lot of thoughts, discussion, which goes by the management team as well as by the Board. And the metrics are also, I would say, tracked very closely over there. In fact, we speak not just about, as we mentioned, ticking the box, but also looking at whatever outlays we are doing, how sustainable those impacts are going over year-over-year. So respectfully, I would say that we don't -- we do take ESG very seriously.

[Suhas Phalke, analyst]

Just to follow-up, are there any defined ESG KPIs or frameworks that you're planning to adopt either internally or in line with the global standards like GRI or BSE?

[Salila Pande, executive]

Yes. Obviously, we continue to benchmark ourselves with the best in the industry, especially and it's difficult to kind of get a lot of ideas in terms of what an NBFC can do and not a manufacturing company. Yet we do have medium-term and long-term growth both on ESG initiatives across the 2 worlds...

[Suhas Phalke, analyst]

Thank you, ma'am. I hope to see that in the presentation as well.

[Salila Pande, executive]

Part of our annual report, you can pick up our annual report for the year FY '25 when it gets published soon. And the details of all our ESG initiatives, along with the metrics, et cetera, is all part of the annual report. The BRSR report is there. You can read that. It's very detailed.

[Operator]

We'll take that as a last question. I would now like to hand the conference over to Ms. Salila Pande for closing comments.

[Salila Pande, executive]

Thank you, [ Rio ]. I would like to express my sincere gratitude to our shareholders, customers, partners and employees for their continued trust and unwavering support. Thank you once again, and we look forward to your continued support in the journey. Thank you.

[Operator]

Thank you very 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.