Card additions pick-up MoM, spends moderate: IIFL Capital Services

8 Aug 2022 , 01:37 PM

Key trends observed in the credit card data put out by the RBI for June 2022 are:

i)                    Net credit card additions in June 2022 stood at ~1.85 million, ~8% higher MoM versus ~1.71 million cards added in May 2022 (card additions for Q1FY23 were ~9% higher than the Q4FY22 monthly average of 1,560k)

ii)                   Incremental sourcing was particularly strong for Kotak Mahindra Bank, Axis Bank, and IndusInd Bank, which gained market share. Sourcing also picked up MoM for HDFC Bank and RBK, with higher net card additions in June 2022; however, overall market share decreased, while ICICI Bank/SBIN saw a decline in sourcing

iii)                 Monthly spends per card decreased by 7% MoM in June 2022 (3.5% lower adjusted for number of days), but were ~9% higher than the Q4FY22 average

iv)                 Spends/card witnessed MoM decrease for all major domestic players, barring Axis Bank

v)                   Axis Bank and ICICI Bank were the major gainers in terms of total spends market share MoM

vi)                 Total industry spends were 73% higher YoY in June 2022

vii)               Of the total card spends in June 2022, ~63% were online.
 
Card additions increase MoM

The total cards in force increased 2.4% MoM in June 2022 to 78.7 million, as net card additions increased in June 2022 to ~1.85 million cards (monthly average of ~1.70 million cards over Q1FY23). Net card additions (as a % of opening cards in force) were the highest for Kotak Mahindra Bank at 6.8% and for IndusInd Bank at 2.8% which captured a high incremental market share. Key foreign players − AMEX, STANC — witnessed further market-share loss while CITI arrested its decline. The top-10 players added ~75% of the incremental cards in June 2022.

Spends/card lower MoM in June 2022

Spends per card decreased 7% MoM in June 2022 to ~Rs13,900. However, spends per card for Q1FY23 grew ~9% over Q4FY22 average of ~Rs12,800. Most large domestic players a saw MoM decrease of 2-12%, in line with the overall industry, barring Axis Bank which witnessed an increase of 3.0% MoM. Total card-spends for the industry stood at Rs1.09 trillion, down 4% MoM and up 73% YoY.

Credit-card spend per month per card decreased 7% MoM in June 2022

Source: RBI, IIFL Research; Note: Spend per card is calculated using the closing cards base