HDFC Bank eyes 300,000 credit cards a month

Bank looks to reclaim credit card market share in 3-4 quarters

HDFC Bank is planning an aggressive comeback in the credit cards space, following the lifting of the Reserve Bank of India (RBI) ban on sourcing new credit card customers. The lender is now looking to get back to its preembargo run rate of issuing 300,000 credit cards per month in the next two to three months. Its next milestone will be to issue 500,000 credit cards every month, starting February 2022.

HDFC Bank is expecting to reclaim credit-card market share in the next three to four quarters. At the end of last November (pre-embargo), HDFC Bank had 15.38 million outstanding credit cards in the market. This number dropped to 14.82 million at the end of June this year.

While HDFC Bank has held on to its spending market share, despite the embargo, its market share in outstanding cards dropped 200 basis points (bps) to 23.6 per cent, from 25.6 per cent. Other credit card issuers have gained market share at the expense of HDFC Bank over the last few months.

ICICI Bank has been the biggest gainer. It has gained 140 bps in outstanding credit card market share and has become the second-largest credit card issuer in terms of spends.

Because of the ban, HDFC Bank lost 558,545 credit cards between December and June. Its rivals ICICI Bank, SBI Cards, and Axis Bank gained 1.3 million, 748,707, and 252,145, respectively.

Addressing the media, Parag Rao, group head–payments, consumer finance, digital banking & information technology (IT), HDFC Bank, said, “In the last eight-nine months, we sat back and introspected our products and services, looked at our back-end processes, looked at what is happening in the marketplace, relooked at some of our strategies, and prepared for what’s going to happen in the payments space in the next two-three years.” A significant portion of new acquisitions will come from the bank’s existing liability base. The bank had ramped up its liability acquisition in the past eight-nine months. It was sourcing in excess of 400,000 accounts every month on the liabilities side. Add to that, the bank has a 60-million base available to it that it can readily tap into.

“We have significant headroom to grow. Our strategy will continue to be largely focused on internal customers. We have always maintained that a large portion of our credit card portfolio will always be our internal customers. This strategy will continue,” said Rao.

The bank management has said it will work closely with its alliance partners in the ecosystem, cutting across segments, to ensure they can offer a good value proposition to the partner’s database.