Credit card additions reduce MoM, spending increases: IIFL Securities
Key highlights include:
Credit card net additions in July 2022 were ~1.53 million, approximately 17% lower compared to ~1.85 million cards added in June 2022 (card additions for July 2022 were around 10% below the monthly average of 1.70 million cards in Q1FY23).
· Additional supply was particularly important for Kotak Mahindra Bank, Axis Bank, RBK and HDFC Bank, which gained market share. Supply also picked up MoM for SBI and ICICI Bank, with higher net card additions in July 2022; however, the overall market share declined, while Indusind Bank recorded net attrition of around 207,000 cards during the month – due to the closure of inactive cards in accordance with the RBI circular (applicable from 1st July 2022).
Monthly card spend grew 4% per month in July 2022 and was about 1% above the Q1FY23 average
· Spending/cards saw a monthly increase for all major national players except Axis Bank.
· HDFC Bank was the main gainer in terms of total MoM spend market share.
Total industry spending increased 55% year-on-year in July 2022.
· Of total card spend in July 2022, approximately 64% was online.
The momentum for card additions is expected to remain strong going forward as banks focus more on the unsecured retail segment.
Map additions decrease MoM
The total number of cards in force increased by 1.9% MoM in July 2022 to reach 80.3 million; net card additions decreased in July 2022 to ~1.53 million cards (monthly average of ~1.70 million cards during Q1FY23). Net card additions (as % of active open cards) were highest for Kotak Mahindra Bank at 4.5% and Axis Bank/RBK at 2.3% – each of them grabbing high additional market share. The main foreign players (AMEX, CITI, STANC) have again lost market share. The top 10 players added approximately 67% of the additional cards in July 2022.
MoM higher spend/card in July 2022
Card spend grew by 4% per month in July 2022 to reach ~Rs 14,500, and was also around 4% above the Q1FY23 average of ~Rs 13,900. Most major domestic players saw their MoM increase 1-9%, in line with the broader industry except Axis Bank which recorded a 3.0% MoM decline. Total card spend for the industry stood at 1.16 trillion rupees, up 6.5% per month / 54.7% from the previous year.