What kind of growth have you seen so far this year What kind of growth do you expect before March
In the last calendar year, the industry slowed down 3% and there was a clean-up of portfolio by other issuers. We grew about 9% year-on-year in this period. In the last financial year, the company had registered a profit of Rs 136 crore. In the first nine months of the current financial year, we have registered a profit of Rs 231 crore. We believe we will end this year at Rs 278-280 crore.
What was the major contributor to this growth
The factor that really contributed to this growth was a significant growth in spending that we saw in our portfolio. Spending is the point from which revenue is driven. In the industry, the spends have grown around 27-28% in the first nine months this financial year, which in our company was around 42%. The base factor too worked in our favour. Last year, our share in the total spends in the industry was about 9%, now we are at 11%. The rate at which we are growing, we are sure that by next financial year we should be closer to 15% of total industry spends.
What are the key trends in customer spending that you see this year
The growth was very high in the first six months of the current financial year. The consumer spending was growing at 40%. But in the third quarter, we observed a dip in the consumer spending in apparels and jewellery. The spending trend was almost flat compared with last year in other sectors like aviation and hospitality. We were expecting a 30-35% growth in the third quarter on account of the festive season spending, but the growth was only 20-25%, much below our expectation.
What would you attribute this growth to
One thing is that the economy has not grown much, while customers have been saving more than what they have been spending. This has not only hurt the credit business but also the various consumer-oriented businesses across the country.
What is the asset quality situation currently
In the industry, overall there is a stress which is mainly on account of external factors. I would rather link it to the economy. Our asset quality as on date is around 1.75%, which is calculated by dividing the net credit loss by the receivables. This is about 10 basis points higher than last year. So far, the stress is under control, but if this continues for two or three years or more, it may be alarming.
What changes have you seen in customer behaviour this time compared with 2008
From what I had seen back in 2008, it was not the customer behaviour which affected the credit card industry. It was the approach of the issuers. All the issuers were so aggressive in growing their business that they could not do the credit underwriting, sourcing or acquisition of new customers in a prudent manner. After having learnt that lesson and the credit bureaus having matured, quality and behaviour of customers have undergone a significant change.