Credit card's spending growth rate slows down further in Sept; card issuance picks up

The growth rate of credit card spending has slowed down further to 3.2 percent month-on-month (MoM) in September 2021 against 3.8 percent month-on-month growth seen in August 2021. Spends per card growth rate has slowed down to 1.47 percent month-on-month in September 2021 against 2.96 percent month-on-month growth seen in August 2021.

Overall, the number of credit cards increased by 1.71 percent month on month in September 21 as against 0.82 percent month on month in August 2021.

The per card spend slowdown has been significant for SBM Bank India (-42.1 percent MoM) and Federal bank (-26.1 percent MoM), followed by City Union Bank (-18.6 percent MoM), IDBI Bank (-12.6 percent MoM), Indian Bank (-9.3 percent MoM) and Yes Bank (-7.36 percent MoM).

Strong momentum was seen for Standard Chartered Bank (+52.9 percent MoM), Kotak Mahindra Bank (+26.2 percent MoM), followed by ICICI Bank, IndusInd Bank, Union Bank of India, AU SFB, to name a few.

Surprisingly, the spends growth rate has come down massively for the second consecutive month. Looks like, people spent post opening up of the economy and are back to conserving cash. The trend of spends may have increased during the festive season or in the October-November period.

A 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 business for any lender.

Credit cards form 6.6 percent of total cards issued by lenders i.e. debit cards and credit cards.

HDFC Bank’s market share loss momentum has continued for 10 months in a row, but the rate of decline has been arrested. The market share decline in September 2021 vs August 2021 was seen for ICICI Bank, SBI, Canara Bank, Kotak, etc

The biggest beneficiary of HDFC Bank’s loss has been ICICI Bank followed by SBI. Axis Bank was the surprise of September 2021, where it has gained market share by 12 basis points (bps), its highest monthly market share gain in last 10 months.

Top market share loss was seen for Citi Bank, Standard Chartered Bank, SBI, American express, Kotak Bank, YES Bank and HSBC

Top market share gain was seen for Axis Bank, RBL Bank, ICICI Bank, IDFC First Bank, Bank of Baroda and AU SFB

Well, the credit card market leader in India is HDFC Bank, while the highest rise in credit cards issued (in September 2021 vs August 2021, MoM gain percent) was by AU SFB followed by South Indian Bank, Federal Bank and Bank of Maharashtra.

Few players have lost out on credit card business in September 2021 vs August 2021 like Tamilnad Mercantile Bank, DCB Bank, City Union Bank, Bank of America, Karur Vysya Bank, etc.

Largely, the market share decline for HDFC Bank is now getting arrested. HDFC Bank continues to remain the dominant force in the market with a market share of 23.05 percent, followed by SBI at 19.35 percent and ICICI Bank at 17.98 percent. The top four players have a huge market share of 71.93 percent in the Indian credit card market. All others, i.e., 28 lenders/banks, have a market share of <5 percent each.

Average ticket size has not increased massively in September as it did in July; dominance in rise in ticket sizes is with Kotak Mahindra Bank (For September 2021 vs August 2021).

The most important point in credit card is per card spend! The dominance w.r.t. highest ticket size continued with Karur Vysya Bank, whose average ticket size is now at Rs 27,826.6, which is 2.38x of the industry average and 2.06x HDFC Bank’s average.

Kotak Mahindra Bank has gained massively on per card spend (ticket size) in September 2021 vs August 2021. The MoM increase in its per card spend was at 26.2 percent, while that of ICICI Bank was at 10.8 percent, IndusInd Bank at 10.7 percent, Union Bank of India at 7.1 percent and AU SFB at 6.64 percent. At the industry level, the average per card spend was at a mere 1.47 percent in September when compared to a 3 percent rise in August 2021.