August credit card spending drops by 3.4 pc despite 0.9 pc growth of cards in force: Report

New Delhi [India], September 30 (ANI): The Indian credit card market witnessed a slowdown in August 2024, with industry-wide spending per card decreasing by 3.4 per cent month-on-month (MoM) according to a report by Elara Securities.

This comes alongside a deceleration in the growth of receivables per card, which rose by only 0.2 per cent month-on-month.

However, in August, the total number of cards-in-force (CIF) grew by 0.9 per cent MoM to 105.5 million, marking a yearly growth of 15.6 per cent.

But this was a decline from July’s growth rate of 16.4 per cent and a significant drop from 20.7 per cent in January 2024.

SBICARD’s share of the cards outstanding market slipped slightly to 18.4 per cent from 18.5 per cent in the previous months, reflecting its cautious approach toward new account sourcing due to heightened credit quality risks.

HDFC Bank (HDFCB) and ICICI Bank (ICICIBC) continued to gain traction, with HDFC Bank maintaining a dominant 20.8 per cent share in August, up from 20.4 per cent in May.

ICICI Bank saw steady growth, holding 16.6 per cent of the market, though down slightly from July’s 16.7 per cent. Axis Bank (AXSB) also held a stable position, contributing 14.0 per cent to the overall market share.

The growth in credit card receivables, though strong at 23 per cent year-on-year (YoY) in the first quarter of FY25, lagged behind unsecured loan growth, which posted a 26 per cent YoY increase.

However, it continued to outpace systemic credit growth, which was recorded at 17 per cent YoY during the same period.

The overall industry spending grew 13.2 per cent YoY in August but saw a 2.6 per cent MoM decline, largely attributed to subdued post-election market conditions.

SBICARD was one of the biggest losers, registering a 3.4 per cent YoY drop in spends and a 1.5 per cent MoM decline. This underperformance was largely driven by a fall in corporate spending and changes in regulatory norms, which adversely impacted business-to-business (B2B) payments.

HDFC Bank and ICICI Bank performed better in terms of spends, with ICICI Bank’s spending per card increasing by 22.3 per cent YoY. Conversely, Kotak Mahindra Bank (KMB) and SBICARD tumbled, registering negative growth in spending traction.

SBICARD’s market share in terms of spends fell to 15.7 per cent in August from 15.6 per cent in July, reflecting a consistent decline since the start of FY24.

In contrast, HDFC Bank held the largest share of industry spend at 25.8 per cent, while ICICI Bank’s market share remained strong at 19.3 per cent.