Credit cards-in-force higher, spends remain healthy: IIFL Capital Services

30 Nov 2022 , 02:08 PM

Key takeaways:

• Net credit card additions in October 2022 were positive at 1.67 million versus a net decline over the preceding 2 months, driven by closure of inactive cards, as per the RBI Circular (applicable from Jul 01, 2022).
• Incremental sourcing was strong for KMB, AXSB and SBIN, all of which gained incremental market share.
• Monthly spends per card increased 3% MoM in October 2022, on a higher base of cards-inforce.
• HDFCB & IIB were major gainers, in terms of total spends market share MoM, with AXSB & ICICIBC losing share.
• Monthly spends/card saw a sharp increase for HDFCB/RBK, while it declined for other large banks.
• Total industry spends were 28% higher YoY in October 2022.
• Of the total card spends in October 2022, ~58% were online (versus 63% in September 2022).

With the one-time impact of the RBI Circular largely behind, card additions momentum is expected to remain strong driven by focus on the unsecured retail segment. Card spends would be aided by the onset of the festive season.
 
Card base increases MoM

Total cards-in-force increased 2.1% MoM in October 2022 to 79.4 million; net card base grew by 1.67 million in October 2022 (monthly average additions of 0.68 million cards over April-September 2022). Net card additions (as a % of opening cards-in-force) were the highest for KMB at 5.1%, followed by AXSB at 3.0%. Of the key foreign players — STANC saw an attrition of 113k cards in October-2022, while CITI & AMEX saw marginal increases. The top-10 players added ~76% of the incremental cards in October 2022.

Industry spends higher; spends/card up too

Total card spends for the industry remained healthy at >Rs1 trillion for the eighth consecutive month – at Rs1.30 trillion, up 5.5% MoM / +28.1% YoY (total spends were higher than the average of Rs1.13 trillion over April-September 2022). Spends per card increased 3% MoM in October 2022, to ~Rs16,300, and were ~8% higher than the Q2FY23 average of ~Rs15,100 as well. HDFCB and RBK saw a strong increase MoM in monthly spend/card at 14/12% respectively as against a decline for other large domestic banks.