This is one of the easiest NBFC comparisons to misunderstand because a credit-card company reports several large numbers that mean different things.

Spends are transaction flow.

Receivables are balance-sheet credit.

Cards in force are customer-account scale.

These should never be merged into one concept.

For live market data, see SBI Cards and Payment Services, Bajaj Finance and Bull Run's NBFC sector dashboard. Bajaj's operating model can also be compared with other diversified NBFCs in Bajaj Finance vs HDB Financial Services.

₹1 of card spend is not ₹1 of lending

Suppose an SBI Card customer spends ₹20,000 and pays the full statement balance by the due date. SBI Card records payment-network activity and can earn interchange or other fees, but it does not keep ₹20,000 outstanding as a long-duration loan.

A second customer may revolve part of the balance. A third may convert a purchase to EMI. Those balances remain in receivables and generate interest income.

That is why Q1 FY27 spending grew 27% year on year while receivables grew only 3%.

The 27% spend growth shows network engagement. The 3% receivable growth shows balance-sheet lending.

Bajaj Finance has no equivalent spending-flow number because most of its core economics begin when a loan is booked.

Q1 FY27: two very different consumer-credit engines

The credit-card economics waterfall

This waterfall explains why SBI Card's 10.8% NIM cannot be read as if it were automatically superior to Bajaj's lending economics.

The card business generates very high yields. It also incurs high rewards, servicing, acquisition, technology, fraud-management, operating and credit costs.

SBI Card's revenue is much more than interest

The Q1 FY27 presentation showed the company's revenue composition at approximately:

This is one of SBI Card's most important structural advantages.

A pure lender needs loan assets to create most of its income. SBI Card can monetise customers who pay in full because transaction activity generates interchange and other spend-linked revenues.

That makes cards a hybrid business: part lender, part payment network participant, part subscription-and-rewards platform.

Bajaj is broader in products, but its economics are more directly tied to lending balances.

High card yields come with high credit cost

SBI Card reported a Q1 FY27 yield of 16.0%, cost of funds of 6.5% and NIM of 10.8%.

Those numbers look extremely attractive until the loss line is added.

Gross credit cost was 6.5%. Net credit cost after recoveries was 5.5%.

Gross write-offs were ₹1,013 crore during the quarter. Recoveries were ₹157 crore.

This is not evidence of a broken business. It is evidence of the economics of unsecured revolving credit.

Card issuers charge high yields partly because the loss distribution is much wider than in mortgages or gold loans. There is no house, vehicle or jewellery securing most card balances.

Credit cost is improving — and that is why SBI Card PAT recovered

SBI Card's gross credit cost fell from roughly 9.5% in Q1 FY26 to 6.5% in Q1 FY27, a 301-basis-point improvement.

Sequentially it improved from 7.7% in Q4 FY26.

That movement was the main driver of stronger profitability. PAT increased 20% year on year even though revenue from operations grew only 3%.

The quarter also included provision-model movements. SBI Card reported a ₹65 crore provision write-back, while the company noted that part of the additional provision held at March 2026 had been utilised during the annual ECL-model review and refresh.

Therefore the most useful signal is not one quarter's exact provision rupee amount. It is whether gross write-offs, recoveries and annualised credit cost keep improving over several quarters.

Asset quality is moving in the right direction

SBI Card's GNPA fell to 2.04% from 3.06% a year earlier. NNPA fell to 0.83% from 1.42%.

Stage 3 receivables represented approximately 2.0% of the portfolio, while Stage 2 was 3.6%.

Provision coverage on Stage 3 increased to approximately 59.9%.

This is a meaningful repair.

Bajaj still reports the cleaner numbers: GNPA 0.96% and NNPA 0.39%.

The key distinction is that Bajaj achieves those ratios across a diversified book containing unsecured personal and consumer loans alongside secured lending.

Bajaj's consumer-finance model has more ways to earn from one customer

SBI Card's customer relationship begins around a card account. It can cross-sell EMI, balance conversion and other card-linked products, but the relationship remains centred on payments and revolving credit.

Bajaj's customer graph is wider.

A customer can enter through consumer durable finance, then take a personal loan, vehicle loan, SME facility, gold loan, mortgage or deposit product.

Bajaj added 5.10 million customers during Q1, taking the total franchise to 124.43 million. It booked 16.13 million new loans in three months.

That scale makes customer acquisition economics one of Bajaj's strongest advantages.

The company does not need every product to have identical margins. The economic value comes from repeatedly monetising a large database with known repayment history.

SBI Card's market-share moat is real

At June 2026, SBI Card reported approximately:

• 18.6% market share of cards in force,
• 19.5% share of credit-card spending,
• 18.0% share of transactions.

The spend-share number is particularly useful because it exceeds cards-in-force share.

That suggests the average SBI Card relationship produces competitive transaction activity rather than the company simply accumulating dormant cards.

SBI Card also sourced more than 10 lakh new accounts during Q1 and reported broad-based retail-spend growth.

The challenge is converting that strong franchise activity into receivable growth without sacrificing underwriting.

The receivables-growth paradox

Why did spends grow 27% while receivables increased only 3%?

There are several benign possibilities.

Customers may be transacting more while continuing to pay balances in full. EMI conversion can change. New accounts may take time to season. Management may also choose not to aggressively expand revolving balances when risk-adjusted returns are unattractive.

The presentation's receivables mix was roughly 45% transactor, 22% revolver and 33% EMI in Q1 FY27.

That mix is economically important.

Transactors support fee and interchange revenue but usually contribute less interest income. Revolvers generate high interest yield but also carry higher credit risk. EMI balances provide more predictable amortisation and pricing.

The best card portfolio is therefore not necessarily the one with the most revolvers. It is the one that maximises lifetime risk-adjusted customer value.

Cost-to-income is SBI Card's hidden Q1 weakness

SBI Card's cost-to-income ratio increased to 58.7%, up 846 basis points year on year.

Operating cost increased 23% to ₹2,620 crore.

This deserves as much attention as improving credit cost.

Credit losses can normalise after a bad consumer-credit cycle. A structurally high operating-cost ratio can be harder to fix if customer acquisition, rewards and servicing costs remain elevated.

The Q1 earnings bridge was therefore mixed:

• credit cost improved strongly,
• PAT improved,
• spends grew strongly,
• cards in force grew,
• but operating efficiency weakened.

Future earnings quality will be stronger if credit cost falls without requiring permanently higher operating expense.

Bajaj's credit cost is structurally lower

Bajaj reported ₹1,993 crore of loan losses and provisions in Q1 FY27, including a ₹296 crore management and macro-economic provision.

The reported loan-loss-to-average-AUF ratio was 1.54%. Excluding the separately disclosed overlay, it was 1.31%.

Those numbers should not be treated as perfectly equivalent to SBI Card's gross-credit-cost methodology.

SBI Card annualises gross write-offs plus incremental provisions against average receivables. Bajaj reports loan losses against average assets under finance.

But the magnitude difference is economically instructive.

SBI Card charges much higher yields because its portfolio accepts much higher credit-loss intensity. Bajaj's diverse mix produces lower average losses and therefore requires less yield to deliver a strong ROA.

Capital: SBI Card has ample room to absorb volatility

SBI Card's capital adequacy ratio was 25.6% at June 2026.

Bajaj's consolidated capital adequacy ratio was 20.90%, with Tier 1 at 20.01%.

Both are comfortably capitalised in headline terms.

SBI Card's larger capital ratio is valuable because unsecured credit losses can move quickly. A card issuer should not be managed to the minimum regulatory capital level simply to maximise ROE.

Bajaj uses its capital across a broader range of credit risks and secured/unsecured products.

Market valuation: SBI Card is cheaper, but not dramatically cheaper

SBI Card traded at 26.8x earnings versus Bajaj at 31.3x.

The earnings-multiple discount is therefore only about four-and-a-half turns despite a larger gap in current ROA and ROE.

On book value, SBI Card traded at 3.88x versus Bajaj at 5.58x.

The valuation suggests the market still assigns significant value to SBI Card's scarce pure-play exposure to India's growing credit-card market, high market share and ability to monetise spending beyond interest income.

But the stock has also experienced a major de-rating, with the Bull Run snapshot showing a roughly 21% negative one-year return.

What expectations are embedded in SBI Card's valuation?

At 26.8x earnings, SBI Card is not priced like a distressed unsecured lender.

The valuation appears to assume that:

• credit cost continues normalising from FY26 peaks,
• new-account growth eventually lifts receivables growth,
• spending market share remains close to 20%,
• cost-to-income improves from Q1's elevated level,
• ROAA can remain around 4% or move higher.

If those improvements happen simultaneously, earnings can grow faster than receivables because credit losses are coming down from an elevated base.

If receivables remain near low-single-digit growth while operating costs stay high, the current multiple becomes more demanding.

What expectations are embedded in Bajaj's premium?

Bajaj's 31x P/E and 5.58x P/B require a different type of execution.

The company must sustain high returns on a balance sheet already approaching ₹5.5 lakh crore of AUM.

Its long-term framework calls for roughly 23–25% AUM growth, 23–24% profit growth, 4.3–4.7% ROA and 19–21% ROE.

Q1 FY27 sat comfortably within that operating corridor.

The main risk is therefore not turnaround failure. It is the valuation consequence if an exceptional franchise begins producing merely average NBFC economics.

SBI Cards vs Bajaj Finance: which wins each category?

Which is stronger in 2026?

Bajaj Finance currently has the stronger overall consumer-lending economics. It earns higher returns, carries lower impaired-asset ratios and operates at vastly greater lending scale.

SBI Card has a differentiated and valuable franchise rather than an inferior copy of Bajaj. Its 2.26 crore cards generate payment activity, fees, revolving interest and EMI income through a business model that Bajaj does not replicate directly.

The decisive variable for SBI Card is credit-cost normalisation.

If gross credit cost continues moving toward more normal levels while spends remain strong and operating efficiency improves, profit can recover even without Bajaj-like receivable growth.

The decisive variable for Bajaj is persistence.

Its valuation assumes that high growth, high ROA and low NPAs can continue on an increasingly enormous balance sheet.

What to monitor over the next four quarters

• SBI Card gross credit cost: whether 6.5% continues declining without weakening underwriting.
• SBI Card write-offs: more useful than provision volatility when judging underlying borrower stress.
• SBI Card receivable growth: activity growth becomes more valuable if it eventually produces healthy balance-sheet growth.
• SBI Card cost-to-income: Q1's 58.7% is too important to ignore.
• SBI Card market share: especially whether its 19.5% spending share remains above its cards-in-force share.
• Bajaj loan-loss ratio: separate ordinary credit cost from explicitly identified management overlays.
• Bajaj AUM growth: sustaining mid-20s growth on the current scale remains central to valuation.
• Bajaj ROA: the premium multiple depends on staying near the company's long-term 4.3–4.7% framework.

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