Credit card spend sees steady recovery

With the gradual lifting of lockdown restrictions, credit card spends have continued to improve over the months of June, July and August. The total credit card spends rose 20 per cent month-on-month in June 2021 after declining 18 per cent and 12 per cent in April and May 2021.

In June 2021 credit card spends came in at Rs 62,700 crore, largely in line with average spend of around Rs 65,000 crore seen during H2FY21. The average credit card spend per day is seeing steady improvement in August year-to-date. The credit card per day has improved from Rs 1,380 crore/1,270 crore/1,590 crore/1,810 crore in AprilJuly to Rs 1,920 crore in August till date.

Sumit Bali, retail lending head at Axis Bank, told FC, “With the economy picking up and the Covid lockdown restrictions being eased, we are seeing an improvement in credit card spends month-on-month. Credit card is an important business for us and on a standalone basis it is profitable, so we will continue to grow it. The ban on Mastercard platform would result in 17 per cent impact on new issuances but by September we hopefully would be back to normal.”

In terms of credit card spend market share, Citibank, American Express and HSBC witnessed a sequential dip while SBI Cards saw a 30 basis points increase to 19.5 per cent in June 2021.

Among other Indian banks, HDFC Bank and RBL Bank credit card spends market share stood at 27.9 per cent and 4.8 per cent, down 43 basis points and 36 basis points monthon-month, respectively, while that of Axis Bank stayed stable at 8.3 per cent.

“Based on the trend witnessed in August 2021 year to date and factoring in a 2 per cent month on month growth for September 2021 estimates... on an estimate the Q2FY22 credit card spends could be 35 per cent higher than in Q1FY22,” said ICICI Securities.