With the end of the festive season, InCred Equities said, credit card spending witnessed moderation in November 2024, after a strong demand in October 2024, thereby posting a drop of around 16.1 per cent on month-on-month basis to approximately Rs 1.7 trillion. Spending through Point-of-Sale (PoS) transactions dropped by around 14 per cent on-month whereas online spending declined by about 17.5 per cent on month-on-month basis. This, the analysis report by the brokerage firm stated, was largely on expected lines, given the high base due to festive demand.
Performance by major players
While HDFC Bank gained market share by 30 bp on-month, SBI Cards lost market share by 90 bp MoM. ICICI Bank and Axis Bank witnessed a drop in market share by 20 bp and 120 bp MoM, respectively. IndusInd Bank, meanwhile, gained market share by 50 bp. The top five credit card players, comprising HDFC Bank, SBI Cards, ICICI Bank, Axis Bank & IndusInd Bank, witnessed MoM market share drop to approximately 77.4 per cent vs around 78.8 per cent in Oct 2024, stated the report.
Card issuance
Per the analysis by InCred Equities, total credit card issuance (Cards in Force or CIF) continued to remain moderate at around 107.2 million (+0.3 per cent MoM) due to stricter scrutiny by the Reserve Bank of India (RBI). Here as well, HDFC Bank secured the top position, issuing new credit cards at a more intense pace than the other players. Despite being the market leader, HDFC Bank witnessed an expansion in market share by only around 10 bp on-month to approximately 21.3 per cent whereas SBI Cards had market share gain of 20 bp at 18.7 per cent. “We remain optimistic about the presence of credit cards improving across new geographies. However, considering the recent track record, the overall trend in NPAs is likely to remain volatile as mis-selling of credit cards has been a common phenomenon,” stated the InCred Equities report.
Further, it stated that the asset quality trend seems to be weak, as seen in caution over new cards issuance by most players. Per TransUnion CIBIL India, there are heightened concerns about asset quality stress building in with the rise in 90+ dpd by 14 bp on-quarter to 1.8 per cet. Also, there has been rising defaults by new-to-credit (NTC) customers who are facing difficulty in paying their dues on time, specifically from Tier-2 cities and beyond. Consequently, InCred Equities is observing a higher focus on premium cards by select players.
To conclude, the brokerage firm said, “We expect SBI Cards to continue to lose market share in overall spending due to its weak capital adequacy ratio and tighter risk weights. We expect the cost of funds for SBI Cards to increase, despite probable monetary easing, amid an increase in risk weights.”