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The second wave of Covid is likely to impact credit card expenditures, new card sourcing, according to a report by Axis Securities.

The 'Credit Card Business Monitor' noted that Citi Bank's exit from the credit cards business and domestic corporate loan cycle yet to pick up, credit cards will remain a growth avenue, especially for the major players such as SBI Cards, ICICI Bank.

"Given the challenges posed by COVID 2.0, we expect the spends, new sourcing, and business volumes to remain impacted in the near term," it said.

The report said in Q4FY21 the credit card industry registered a spend growth of 10% YoY and cards-inforce (CIF) growth of 8% YoY. This was partly aided by a low-base effect with Covid induced lockdowns impacting March 2020 performance.

On a sequential basis, the industry witnessed the growth of 4% QoQ in spends and 3% QoQ in CIF, although Q3FY21 is generally a strong quarter on account of the festive season. The business volumes witnessed contraction of 6% YoY in Q4FY21 as PoS (point of sale) spends remained impacted.

For FY21, the overall industry spends de-grew by 14% YoY. The first half of FY21 was particularly weak on account of nation-wide lockdowns. However, a strong rebound was visible in H2FY21 with spends and new customers sourcing inching towards pre-Covid levels. H2FY21 spends accounted for 61% of the total spends and grew by 3% YoY against

H1FY21.

"A large part of the hit on the spends was mainly due to lower travel, entertainment, and discretionary spends, which we believe will remain impacted in the near term due to COVID 2.0," it said.

In Q4FY21, the private banks continued to dominate the credit card market with a market share of 66% (against 65.9% in Q4FY20) and 66.6% (against 63.4% in Q4FY20) in terms of CIF/spends respectively. Public sector banks led by SBI Cards gained market share which stood at 23.2% and 21.2% in terms of CIF/spends. 31%

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