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 India's SBI Cards and Payment Services Ltd reported a smaller-than-expected rise in quarterly profit, as higher costs offset robust consumer spending, sending shares to a seven-month low.

Profit for the three months ended Dec. 31 rose about 32% to 5.09 billion rupees ($62.42 million) from the previous year, but fell short of analysts' expectations for a profit of 5.77 billion rupees, according to Refinitiv IBES data.

Shares of the company, backed by the country's top lender State Bank of India, tumbled 4.6% to its lowest level since lowest since June 23.

Rising interest rates pushed the cost of funds at the credit card issuer up 91 basis points to 6.3% from last year, while net interest margins, a key measure of profitability, compressed 67 basis points to 11.6% in the quarter.

Additionally, finance costs surged nearly 68% to 4.64 billion rupees.

While consumer spending and demand for credit have held up amid an economic rebound, interest rates have climbed as the central bank moved to curb surging inflation.

Total spends on the company's credit cards grew 24% to 688.35 billion rupees, while total revenue from operations rose 21.4% to 35.07 billion rupees from a year earlier.

Card-in-force, or the number of cards issued and outstanding, grew 21% to 15.9 million as of quarter-end, the company said in an exchange filing.

Gross bad loans as a percentage of gross advances - a measure of asset quality – deteriorated slightly to 2.22% at the end of December, from 2.14% at the end of September.

($1 = 81.5425 Indian rupees)