Festivals to aid credit card spends
₹1.45 trillion in July, reporting a 25% and 5.5% year-on-year and month-on-month growth, respectively. This was mainly aided by better consumption driven by growth in the tier 2 and tier 3 cities. This is encouraging for pure-play credit card company SBI Cards and Payment Services Ltd.
Also, with the branch expansion undertaken by some banks, the consumption improvement bodes well for the credit card business, too. Among large players, ICICI Bank Ltd’s month-on-month spends growth was strongest at about 12%, followed by Kotak Mahindra Bank Ltd at 10.5%. Here, SBI Cards has lagged with its sequential spends growth at 3.9%, though year-on-year growth was strong at 34%.
“The increase in credit card spending is mainly on account of improvement in discretionary spends and to an extent, revival in corporate spends. Also, the co-branded partnerships by the banks, where they partner with well-known brands like Amazon and provide offers, have helped in the recent months," said Shweta Daptardar, VP, institutional equity research, Elara Securities (India). Here, most have been able to maintain their market share, but some have seen an increase.
For instance, ICICI Bank’s market share inched up to 18% in July from 17% in June. SBI Cards’ market share has been steady at about 18%. As such, attractive offers and deals on credit cards are likely to increase with the upcoming festival season, point out analysts.
Thus, the outlook on spends in H2FY24 is favourable, which may bring market share gains for some. Meanwhile, the industry’s credit card issuance also picked up month-on-month in July. In general, a healthy environment in the industry bodes well for SBI Cards.
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