Credit card additions lower MoM, spends increase: IIFL Capital Services

5 Sep 2022 , 12:50 PM

Key highlights include:
·         Net credit card additions in July 2022 stood at ~1.53 million, ~17% lower MoM versus ~1.85 million cards added in June 2022 (card additions for July 2022 were ~10% lower than the Q1FY23 monthly average of 1.70 million cards).

·         Incremental sourcing was particularly strong for Kotak Mahindra Bank, Axis Bank, RBK and HDFC Bank, which gained market share. Sourcing also picked up MoM for SBI and ICICI Bank, with higher net card additions in July-2022; however, overall market share decreased, while Indusind Bank saw a net attrition of ~207k cards in the month – driven by closure of inactive cards as per the RBI Circular (applicable from July 01, 2022).

·         Monthly spends per card rose by 4% MoM in July 2022, and were ~1% higher than the Q1FY23 average

·         Spends/card witnessed a MoM increase for all major domestic players, barring Axis Bank.

·         HDFC Bank was the major gainer in terms of total spends market share MoM.

·         Total industry spends were 55% higher YoY in July 2022.

·         Of the total card spends in July 2022, ~64% were online.

Card additions momentum is expected to remain strong, going forward, as banks keep a higher focus on the unsecured retail segment.

Card additions decrease MoM

The total cards in force increased 1.9% MoM in July 2022 to 80.3 million; net card additions decreased in July 2022 to ~1.53 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 4.5%, and for Axis Bank/RBK at 2.3% – each of which captured a high incremental market share. The key foreign players (AMEX, CITI, STANC) witnessed further market-share loss. The top-10 players added ~67% of the incremental cards in July 2022.

Spends/card higher MoM in July 2022

Spends per card increased 4% MoM in July 2022 to ~Rs14,500, and were ~4% higher than the Q1FY23 average of ~Rs13,900 as well. Most large domestic players a saw MoM increase of 1-9%, in line with the overall industry, barring Axis Bank which witnessed a decrease of 3.0% MoM. Total card-spends for the industry stood at Rs1.16 trillion, up 6.5% MoM / 54.7% YoY.