Credit card spending in June expected to decline but stay above ₹1 lakh cr: Report

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Industry-wide credit card spending remained higher 1 lakh crore mark for the third consecutive month in May at 1.14 lakh crore registering a growth of 8% on a monthly basis. With that, industry credit card spending is at an all time high. Spending on HDFC Bank and SBI Card credit cards more than doubled during the month and led the entire industry. In June, spending is likely to soften, but may remain above 1 lakh crore mark.

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

In addition, RBL Bank credit card spending amounted to 4600 crore in May 2022 against 2,700 crore in May last year. While Citibank’s expenses amounted to 4,500 crore compared to 2600 crore in May 2021, while American Express spending increased to 3,000 crore against 1,700 crores in May last year. HSBC credit card spending increased slightly for 700 crore against 500 crore from May last year. Others recorded an expense of 16,700 crore against 6,000 crore in May last year.

In May 2022, in terms of market share, data revealed that HDFC Bank saw its spend market share decline to 27.7% (from 28.4% in May 2021). The case was similar for SBI Card whose market share fell to 18.7% (from 19.2% in May 2021). However, Axis Bank’s market share increased slightly to 8.4% from 8.3% in May 2021.

Research analysts at ICICI Securities said in their note that the SBIC improved slightly to 18.7% on May 22, up 9 basis points MoM. SBIC’s FY22 spend market share was 19%. HDFC Bank’s market share also improved by 11.3 basis points month-on-month to 27.7%.

Analysts say receivables are increasing with industry-wide “per card in force” (CIF) credit card outstandings rising from the average of Rs 18,000 in December 2021 to Rs 20,000 for January-March 2022 ; April 22 went up to 20,400 rupees while May 22 went back to 20,000 rupees. This figure was consistently higher by around 7% in each of the 3 successive years (FY19/FY20/FY21 (end)).

As a result, the credit card/debit card spending ratio was 1.74x as of May 22, the highest since April 19, when it was 1.0x, analysts pointed out.

In addition, analysts explained that the ratio of UPI spending to credit card spending continued to gradually increase from 3.24x in January 20 to 6.97x in March 21 and 9.2x in May 22. In terms of volume, UPI transactions increased by 135% YoY on May 22. Merchant payments ticket size increased by 11% YoY to Rs 842 and overall ticket size decreased by 9% year-over-year to reach Rs. 1,749. 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, according to analysts, according to trends, June 2022 spending is expected to see some softness from the May 22 level, but could remain above the 1 lakh crore mark. They added that “the recovery in air travel, the hospitality sector, as well as a growing inflation outlook have created a positive backdrop for credit card spending as well as receivables.”

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