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finance | IST

Credit card business in August slows after robust growth rate in July

Mini

The credit card spends growth rate has slowed down to 3.8 per cent month-on-month growth in August 2021 against 19.3 per cent month-on-month growth seen in July 2021.

The growth rate of credit card spends has slowed down to 3.8 percent month-on-month in August 2021 against 19.3 percent month-on-month growth seen in July 2021. Spends per card growth rate has slowed down to 2.96 percent month-on-month growth in August 2021 against 18.18 percent month-on-month growth seen in July 2021.
Overall, the number of credit cards has increased by 0.82 percent month-on-month in August against 0.95 percent month-on-month growth seen in July.
Month-on-Month growth, %Aug 2021July 2021
Credit cards0.820.95
Total Spends3.819.3
Avg ticket size2.9618.18
The per card spend slowdown has been significant for City Union Bank (-4.88 percent MoM) followed by Canara Bank (-3.43 percent MoM), Union Bank of India (-2.58 percent MoM), Karur Vysya Bank (-1.05 percent MoM), HDFC Bank (-0.99 percent MoM).
Strong momentum continues for Federal Bank for the second consecutive month in terms of per card spend, followed by Dhanlaxmi Bank, Axis Bank, Kotak Mah Bank, IndusInd Bank and AU SFB to name a few.
Per Card Spend, RsAug MoM Growth, %July MoM Growth, %
BANK OF AMERICA                           38.91                      69.94
FEDERAL BANK LTD                           27.43                      77.60
DHANALAKSHMI BANK LTD                           16.78                      23.61
AMERICAN EXPRESS                           12.99                      25.46
HSBC                           10.49                      13.82
TAMILNAD MERCANTILE BANK LTD                           10.00                      27.11
AXIS BANK LTD                              9.66                      17.09
KOTAK MAHINDRA BANK LTD                              9.44                      20.44
INDUSIND BANK LTD                              8.12                      27.46
AU SMALL FINANCE BANK LIMITED                              6.94                      16.80
IDBI LTD                              6.48                      17.65
CITI BANK                              6.35                      19.87
INDIAN BANK                              5.04                      29.39
ICICI BANK LTD                              4.35                      18.44
DCB BANK LTD                              4.05                      18.41
INDIAN OVERSEAS BANK                              4.01                      35.25
BANK OF BARODA                              3.97                        1.82
JAMMU AND KASHMIR BANK                              3.87                        5.31
BANK OF MAHARASHTRA                              3.28                      28.65
Industry                              2.96                       18.18
RATNAKAR BANK LIMITED                              2.70                      15.81
SBM Bank India                              2.69                      24.79
IDFC Bank Limited                              2.64                      10.86
STANDARD CHARTERED BANK LTD                              2.11                      19.79
BANK OF INDIA                              1.38                      15.09
YES BANK LTD                              1.30                      17.99
PUNJAB NATIONAL BANK                              0.18                      13.50
SBI                              0.14                      15.50
HDFC BANK LTD                           (0.99)                      19.31
KARUR VYSYA BANK LTD                           (1.05)                      24.36
UNION BANK OF INDIA                           (2.58)                        9.14
CANARA BANK                           (3.43)                        4.77
CITY UNION BANK                           (4.88)                      67.82
Surprisingly, the spending growth rate has come down massively. Looks like, people spent after the opening up of the economy and are back to conserving cash. The trend of spends may increase during the festive season or in the October-November period.
The credit card is the most profitable business for any bank or lender. The interest rates are very high over there, at and above 30 percent, which makes it one of the most profitable businesses for any lender.
Credit cards form around 6.54 percent of total cards issued by lenders i.e. debit cards and credit cards.
Market share movement, MoM
HDFC Bank’s market share loss momentum has continued for 9 months in a row. The biggest beneficiary of HDFC Bank’s loss has been ICICI Bank followed by SBI.
Axis Bank has also lost market share by 2 bps in the last 9 months but has lost market share by 13 bps from April 2021 to Aug 2021.
BankAug'21 July'21 June'21 May'21 April'21 March'21 February'21 January'21 December'20 November'20
HDFC Bank        23.06       23.28      23.61        23.81          23.96                24.15             24.65                   24.97                    25.35              25.60
ICICI Bank        17.92       17.72      17.57        17.43          17.23                17.06             16.83                   16.66                    16.41              16.15
SBI        19.40       19.31      19.17        19.16          19.16                19.05             19.05                   19.05                    19.02              18.79
Axis Bank        11.44       11.40      11.36        11.42          11.57                11.52             11.41                   11.35                    11.38              11.45
Market share momentum
August 2021 vs July 2021 is as follows:
  • Top market share loss was seen for HDFC Bank, RBL Bank, HSBC, Citi Bank, Standard Chartered Bank, American Express & Yes Bank
  • Top market share gain was seen for ICICI Bank, SBI, Bank of Baroda, Union Bank of India, IDFC First Bank & Axis Bank
  • Well, the credit card market leader in India is HDFC Bank, while the highest rise in credit cards issued is by South Indian Bank.
    Despite the ban from RBI for HDFC Bank in the last 9 months (of data reported from November 2020 to August 2021), HDFC Bank continues to remain the dominant force in the market with a market share of 23.06 per cent followed by SBI at 19.4 per cent and ICICI Bank at 17.92 per cent. The top 4 players have a huge market share of 71.82 per cent in the Indian credit card market. All others, i.e., 28 lenders/banks, have a market share of less than 5 per cent each.
    Mkt Share, %Aug'21July'21June'21
    HDFC BANK LTD        23.06        23.28               23.61
    STATE BANK OF INDIA        19.40        19.31               19.17
    ICICI BANK LTD        17.92        17.72               17.57
    AXIS BANK LTD        11.44        11.40               11.36
    RATNAKAR BANK LIMITED          4.70          4.84                  4.90
    CITI BANK          4.06          4.10                  4.15
    KOTAK MAHINDRA BANK LTD          3.78          3.77                  3.75
    INDUSIND BANK LTD          2.53          2.51                  2.50
    AMERICAN EXPRESS          2.28          2.32                  2.36
    STANDARD CHARTERED BANK LTD          2.20          2.24                  2.29
    YES BANK LTD          1.56          1.58                  1.57
    CANARA BANK          1.38          1.38                  1.35
    HONGKONG AND SHANGHAI BKG CORPN          1.27          1.34                  1.31
    BANK OF BARODA          1.06          1.00                  0.99
    UNION BANK OF INDIA          0.80          0.75                  0.75
    IDFC Bank Limited          0.71          0.67                  0.62
    PUNJAB NATIONAL BANK          0.49          0.49                  0.49
    SBM Bank India          0.28          0.26                  0.27
    BANK OF INDIA          0.26          0.26                  0.24
    INDIAN BANK          0.21          0.21                  0.21
    JAMMU AND KASHMIR BANK          0.13          0.13                  0.14
    INDIAN OVERSEAS BANK          0.10          0.10                  0.10
    BANK OF MAHARASHTRA          0.10          0.10                  0.09
    IDBI LTD          0.06          0.06                  0.06
    TAMILNAD MERCANTILE BANK LTD          0.06          0.05                  0.05
    AU SMALL FINANCE BANK LIMITED          0.05          0.04                  0.04
    BANK OF AMERICA          0.04          0.04                  0.03
    FEDERAL BANK LTD          0.03          0.03                  0.02
    DHANALAKSHMI BANK LTD          0.01          0.01                  0.01
    DCB BANK LTD          0.01          0.01                  0.01
    KARUR VYSYA BANK LTD          0.00          0.00                  0.00
    CITY UNION BANK          0.00          0.00                  0.00
    SOUTH INDIAN BANK          0.00          0.00 NA
    Average ticket size has not increased massively in August as it did in July, but dominance in the rise in ticket sizes is with Federal bank.
    Federal Bank has gained massively on credit card business post the opening of the economy or relaxation of movement in the economy. In July’21, it saw ~78 per cent increase in average ticket size MoM vs industry average of 18.18 per cent rise. In Aug’21, the average ticket size increase was 27.43 per cent MoM vs the industry average of 2.96 per cent rise MoM.
    The most important point in credit cards is per card spend. You would be surprised as to who leads the per/card spend (credit card) in India. The highest ticket size continued with Karur Vysya Bank, whose average ticket size is now at Rs 26,717.5, which is 2.19x of industry average and 1.91x HDFC Bank’s average.
    Avg Ticket Size, RsAugJulyJune
    BANK OF AMERICA        4,707.13                   3,388.67                   1,994.05
    FEDERAL BANK LTD     12,596.20                   9,885.04                   5,565.85
    DHANALAKSHMI BANK LTD        7,823.24                   6,699.25                   5,419.76
    AMERICAN EXPRESS     17,196.54                 15,218.87                 12,130.72
    HSBC        8,358.21                   7,564.45                   6,645.89
    TAMILNAD MERCANTILE BANK LTD        8,805.14                   8,004.63                   6,297.30
    AXIS BANK LTD        9,366.65                   8,541.25                   7,294.45
    KOTAK MAHINDRA BANK LTD        8,468.29                   7,737.58                   6,424.56
    INDUSIND BANK LTD     22,632.18                 20,932.01                 16,421.92
    AU SMALL FINANCE BANK LIMITED     10,840.34                 10,137.07                   8,679.31
    IDBI LTD        8,713.44                   8,183.14                   6,955.47
    CITI BANK     14,852.17                 13,964.97                 11,649.70
    INDIAN BANK        4,506.17                   4,290.15                   3,315.57
    ICICI BANK LTD     13,327.79                 12,772.23                 10,784.02
    DCB BANK LTD        8,407.36                   8,080.40                   6,823.97
    INDIAN OVERSEAS BANK        2,596.60                   2,496.50                   1,845.83
    BANK OF BARODA        7,936.83                   7,633.77                   7,497.59
    JAMMU AND KASHMIR BANK     13,356.40                 12,858.67                 12,209.98
    BANK OF MAHARASHTRA        3,605.66                   3,491.06                   2,713.51
    Industry     12,197.06                  11,845.87                  10,023.75
    RATNAKAR BANK LIMITED     11,580.34                 11,275.77                   9,736.67
    SBM Bank India     13,024.58                 12,682.86                 10,163.24
    IDFC Bank Limited     17,555.70                 17,103.81                 15,427.88
    STANDARD CHARTERED BANK LTD        7,639.82                   7,481.68                   6,245.66
    BANK OF INDIA        4,887.12                   4,820.62                   4,188.55
    YES BANK LTD        7,383.45                   7,289.00                   6,177.87
    PUNJAB NATIONAL BANK        5,052.73                   5,043.62                   4,443.85
    SBI     11,754.44                 11,738.51                 10,163.24
    HDFC BANK LTD     14,007.30                 14,147.87                 11,857.97
    KARUR VYSYA BANK LTD     26,717.52                 27,001.62                 21,712.59
    UNION BANK OF INDIA        3,709.33                   3,807.40                   3,488.45
    CANARA BANK        2,428.27                   2,514.44                   2,400.06
    CITY UNION BANK       3,087.11                   3,245.46                   1,933.91