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Coronavirus Outbreak May Affect SBI Cards’ Business, Says CEO Hardayal Prasad

SBI Cards expects a minor blip in terms of overall spends due to restrictions on travel and mall visits amid coronavirus outbreak.

An employee prepares to tear off a receipt from a payment terminal at a supermarket in the Kurla area of Mumbai, India (Photographer: Dhiraj Singh/Bloomberg) 
An employee prepares to tear off a receipt from a payment terminal at a supermarket in the Kurla area of Mumbai, India (Photographer: Dhiraj Singh/Bloomberg) 

SBI Cards & Payment Services Ltd., India’s second-largest card issuer, expects its business to take a hit as several states ordered closure of malls and multiplexes and restricted travel to contain spreading of the pandemic coronavirus in the country.

“Departmental store spends is a strong category for us, followed by travel and entertainment, which will see a slowdown, thereby affecting business. It’s also important to monitor whether the slowdown sustains,” Hardayal Prasad, managing director and chief executive officer at SBI Cards, told BloombergQuint in an interview. “We could see a minor blip in terms of overall spends.”

India has reported 110 confirmed novel coronavirus cases, including two deaths due to Covid-19. Globally, the virus outbreak has killed over 6,400 people and infected 166,000. The spike in coronavirus cases in the world’s second-most populous nation has prompted several states to take necessary precautions.

And as the novel virus rapidly spreads across the world, threatening to stall economic growth, the stock markets have taken a beating. Indian indices, tracking their global peers, have entered bear territory. That also impacted SBI Cards’ listing performance on Monday. The stock began trading at a discount of 12.5 percent to the issue price of Rs 755 apiece on the National Stock Exchange.

Still, Prasad said he was not disappointed with the listing performance. “Contrary to the way markets have performed in the past few days, we have strongly responded,” he said. “The markets believe in a strong company, and with a fundamentally strong company like us with strong capacity and corporate governance standards, markets will definitely respond.”

WATCH | SBI Cards MD & CEO Hardayal Prasad On His Company’s Listing

SBI Cards’ Outlook

The company is focused on increasing merchant acquisition channels as it is the source of fee based revenue, Prasad said.

“We have a good mix of customers, and penetration of premium customers is very important. The way we have put our models in place, and the way delinquencies are working, we will show a significant reduction in the non-performing assets and delinquencies as well,” he said.

SBI Cards, according to Prasad, has registered a 4 percent return on assets and a 28 percent return on equity since 2017. “We will continue to grow at these levels.”