Home / News / India /  Credit card spends in June likely to soften but to stay over 1 lakh cr mark: Report

Industry-wide credit card spends stayed above 1 lakh crore mark for the third consecutive month in May to 1.14 lakh crore registering a growth of 8% on a month-on-month basis. With that, the industry's credit card spends is at an all-time high. HDFC Bank and SBI Card credit card spends more than doubled in the month and dominated the overall industry. In June, the spends are likely to soften, however, can maintain more than 1 lakh crore mark.

Data from ICICI Securities showed that HDFC Bank credit card spends more than doubled to 31,500 crore in May 2022 compared to 14,800 crore in the same month last year. SBI Card followed with spends of 21,200 crore in May 2022 against 10,000 crore in May last year. Axis Bank also witnessed strong growth in credit card spends to 9,600 crore versus 4,300 crore in May last year.

Further, RBL Bank credit card spends stood at 4,600 crore in May 2022 versus 2,700 crore in May last year. While Citibank's spends stood at 4,500 crore compared to 2,600 crore in May 2021, while American Express' spends rose to 3,000 crore against 1,700 crore in May last year. HSBC credit card spends picked up slightly to 700 crore against 500 crore of May last year. Others recorded a spend of 16,700 crore against 6,000 crore in May last year.

In May 2022, in terms of market share, the data revealed that HDFC Bank saw its market share in spends declining to 27.7% (versus 28.4% in May 2021). The case was similar for SBI Card whose market share dipped to 18.7% (versus 19.2% in May 2021). However, Axis Bank's market share inched up to 8.4% against 8.3% in May 2021.

Research Analysts at ICICI Securities in their note said, SBIC’s improved marginally to 18.7% in May’22, up 9 basis points MoM. SBIC’s FY22 spends market share stood at 19%. HDFC Bank’s market share also improved 11.3 basis points MoM to 27.7%.

According to the analysts, receivables are picking up with credit card outstanding ‘per card in force’ (CIF) at the industry level improving from the average Rs18,000 as of December 2021, to Rs20,000 for Jan-March 2022; Apr’22 inched up to Rs20,400 while May’22 retraced to Rs20,000. This was consistently ~7% higher in each of 3 the successive years (FY19/FY20/FY21 (end basis)).

Accordingly, the ratio of ‘credit card to debit card’ spends was 1.74x as of May’22, which is the highest since Apr’19, when it was 1.0x, the analysts pointed out.

Furthermore, the analysts explained that the ratio of UPI spends to credit card spends has continued to gradually increase from 3.24x in Jan’20 to 6.97x in Mar’21 and 9.2x in May’22. In volume terms, UPI transactions grew 135% YoY in May’22. The ticket size of payments to merchants grew 11% YoY to Rs842 and overall ticket size declined 9% YoY to Rs1,749. Within UPI, the value market shares of Google Pay and PhonePe remain at 34.6% and 48.3%, respectively, as of May’22.

Going forward, the analysts said, as per trends, June 2022 spends are likely to see some softness compared to May’22 level but may remain above the 1 lakh crore mark. They added, "revival in air travel, hospitality sector, as well as increasing inflation outlook set a positive backdrop to credit card spends as well as receivables."

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