Tag: sbi cards

Credit card spends jump 60% in September, set for further festive push, BFSI News, ET BFSI

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Another option, if you are unable to make payments by the due date, is opting for a loan against your credit card. Various credit card companies offer pre-approved loans to customers, these can actually come in handy in this scenario. However, be mindful of the costs as the interest rate and other charges may be steeper. If you have multiple credit cards, compare interest rates and processing fees on each and go with the one that has least total cost for your preferred loan tenure.

Credit card spends jumped 60 per cent year-on-year (YoY) in September, helped by the onset of the festive season.

On a sequential basis, the growth slowed down to 3 per cent at Rs 80,500 crore, according to various research reports.

The festive season, opening up of the economy and rising consumer confidence is set to keep the credit card spends buoyant, experts say.

Kotak Mahindra Bank reported the highest growth (27% MoM) in September, followed by IndusInd Bank and ICICI Bank (13% each). Other major players reported growth in the +-4% range. On a two-year CAGR basis, spends for ICICI Bank grew 58%, IndusInd 33%, Kotak Mahindra Bank 29%. HDFC Bank and SBI Cards posted growth of 10–15% and Axis Bank and SCB 2–3%. While, Citi and Amex saw a decline of 8% and 26%, respectively. ICICI Bank surpassed SBI Cards to become the second-largest player in spends, with market share of 19.3% over 6MFY22.

Outstanding credit cards up 10.8%

The total number of outstanding credit cards in the system grew 10.8% YoY to 65 million in September 2021 – the highest in the past 11 months.

Among the major players, ICICI Bank reported strong growth of 26.1% YoY, followed by IndusInd Bank (15.6%), SBI Cards (14.3%). Foreign players such as American and Citi witnessed declines of 10% and 5% respectively. SBI Cards and ICICI Bank continued to perform strongly, resulting in a 59–218 bps YoY increase in market share to 19.3% and 18.0% respectively in September.

ICICI Bank added close to 2 million new cards in the past 10 months, taking its credit card base to 11.6 million as of September.

Despite a 247 bps year on year decline, HDFC Bank remained the largest player with a market share of 23.0%.

10.91 lakh card adds

Around 10.91 lakh new cards were added to the system in September with HDFC Bank being the largest acquirer at 2.44 lakh cards. ICICI Bank added 2.34 lakh, Axis Bank added 2.03 lakh, while SBI Cards added 1.75 lakh cards in September, while, Standard Chartered Bank, AMEX and Citi posted a decline of 13,000, 11,000 and 4,500, respectively, in the card base. IDFCF Bank also posted a strong performance with 39,000 new credit card additions in September.

Higher spends per card

Monthly spends per card for the industry increased to Rs 12400, from an average of Rs 10,700 over the past six months (higher v/s pre-Covid levels). This was attributable to an increase in the ticket size to Rs 4,300, the highest in the past several years.

Conversely, the number of transactions per card declined to 2.8 v/s 3.0 in August (3.1 in March). IndusInd and Kotak Mahindra Bank saw a higher increase of Rs 2,400 and Rs 2,200, respectively, followed by ICICI Bank with Rs 1,400.

IndusInd (Rs 9,700) and Amex (Rs 5,900) had the highest ticket sizes, followed by Kotak Mahindra Bank (Rs 5,100) and ICICI Bank (Rs4,900). All other players were in the range of Rs 3,900–Rs 4,300 – barring Citi and SCB, which were lower at Rs 3,000–3,200.



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HDFC Bank sets ambitious target for card issuance, source says, BFSI News, ET BFSI

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India’s most valuable lender HDFC Bank has set out an ambitious plan to more than double monthly card issuance from September after the central bank lifted a temporary ban imposed on HDFC in December, according to a source.

“The sales teams have been asked to meet a target of issuing 500,000 cards a month starting September for the next few months,” said the source with direct knowledge of the matter.

HDFC Bank, which in September 2020 had issued nearly 200,000 cards, did not immediately respond to a request seeking comment.

The latest target is a big jump from a year ago but some analysts said it was achievable given the number of “liability” or savings accounts it has opened this year. Savings account holders are typically sold credit cards and loans by lenders.

“Having added close to 3.65 million liability accounts from Jan 2021 to June 2021, it can easily capture market share in the credit card space,” Macquarie said in a research note.

Earlier the bank said in a regulatory filing that India’s central bank had relaxed restrictions placed on it last year on issuing new credit cards, following outages in the bank’s digital payment services.

The relaxation was welcomed within the company.

“All the preparations and strategising that we have put in place to ‘come back with a bang’ (on credit cards) will now be rolled out,” HDFC Bank Chief Executive Sashidhar Jagdishan said in an internal email to employees, a copy of which was seen by Reuters.

“In the coming months, we will aggressively go to the market with not just our existing suite of credit cards but also new offerings in the form of co-brands and partnership,” Jagdishan said in the email.

With nearly 15 million credit cards in issue, HDFC Bank is the largest lender in the segment with nearly 24% market share. Yet over the last eight months peers such as ICICI Bank and SBI Cards have gained ground.

As of June, ICICI Bank had 11 million credit cards, up from about 10 million in January.

“Lifting of RBI (Reserve Bank of India) restrictions before the festive season augurs well and we expect HDFC bank to turn more aggressive on credit cards over the next few months,” brokerage Motilal Oswal said.

HDFC Bank is the seventh most valuable lender in Asia-Pacific with a market capitalisation of 8.37 trillion rupees ($112.7 billion).



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What HDFC Bank re-entry means for the credit card market, BFSI News, ET BFSI

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HDFC Bank‘s return to issuing new credit cards is likely to shake up and start a war, which may see customers showered with new offers and discounts.

The credit card market is already subdued with the American Express still under ban, Citi looking to sell its credit card business and MasterCard ban hitting new card issuances

HDFC Bank plans

HDFC Bank’s managing director and chief executive Sashidhar Jagdishan has already sounded the bugle by saying that said the largest private sector bank will be aggressive and “come back with a bang” as it seeks to win back lost market share in the credit card segment.

“With the lifting of the restriction on cards acquisition, all the preparations and strategising that we have put in place to ‘come back with a bang’ will now be rolled out,” Jagdishan said in an email to its over 1.2 lakh employees.

Conceding that the bank has lost customer market share in the over nine months of the ban, Jagdishan said it will go aggressively to the market with its existing products and also launch new ones in the form of co-brands and partnerships.

“I am confident that we will regain and grow our customer market share and revenue market share in the time to come. We have the resources and plans in place to further reinforce our pole position in the credit card segment,” he said.

The bank is likely to be aggressive in its upcoming annual Festive Treats for retail customers, wherein it offers discount, cashbacks, reward points, and reduction in processing fees and foreclosure charges. “Overall, lifting of RBI restrictions before the beginning of festive season is a positive development as HDFC Bank has usually been aggressive during festive season and offers various discounts on consumer products,” Motilal Oswal Securities said.

The number game

HDFC Bank had the highest 14.8 million outstanding credit cards as of June 30, which was down by 558,545 from November 30 figures, when the RBI banned new card issuances.

Since then State Bank of India‘s outstanding credit cards have increased by 748,707 to 12 million, while those of ICICI Bank rose by as much as 1.3 million to 11 million. Axis Bank has added 0.3 million cards during the same period. ICICI Bank and SBI Cards have sharply ramped up their incremental market share at 49% and 28% during this period.

According to Macquarie Capital Securities (India) HDFC bank added close to 3.65 million liability account in January-June and hence, it could easily capture market share in the credit card space. It added that HDFC Bank roughly used to add 1.5-2 lakh credit cards per month before the pandemic, which translates into 1.4-1.8 million loss of credit card addition due to the ban. “There is a large customer base to which it can cross-sell,” Macquaire Capital said.



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Will be “back with a bang” on credit card rollout, says HDFC Bank, BFSI News, ET BFSI

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Private lender HDFC Bank on Tuesday said that all preparations are in place to be back with a bang on credit cards and new schemes will be rolled out soon. The bank had earlier stated that it has lined up a series of new card launches in anticipation of RBI lifting its ban.

Eight months after a ban was imposed, in a letter to the HDFC Bank board on Monday, the RBI communicated that it has decided to lift restrictions on launching new credit cards while the restrictions on launching new projects under digital 2.0 was still in place. Last month the lender’s chief Sashidhar Jagdishan had stated that the bank has complied with 85% of the requirements of RBI on the technology front.

“All the preparations and strategies that we have put in place to ‘come back with a bang’ on credit cards will be rolled out in the coming time,” the lender said in a press statement. “We would like to inform all that the Reserve Bank of India has lifted the restriction placed on sourcing of new credit cards. We thank the regulator for this. The board has taken note of the same and the bank is committed to full compliance of the regulatory directions.”

The bank added that it will continue to engage with the regulator and ensure compliance on all parameters, so that the restrictions imposed on new launches of the Digital Business generating activities planned under Digital 2.0 could be lifted soon.

The RBI has asked the bank to submit a board-approved letter indicating continued compliance with its IT examination report.

“The ban has come before the festive season which starts from September onwards in India, so the juggernaut can roll with full force and launch credit cards, attractive schemes within their ecosystem partners and be a force to reckon with,” said Suresh Ganapathy, associate director, Macquarie Capital.

As per Macquarie’s analysis, HDFC Bank lost nearly 180 basis points of market share as of May 2021 since end of November 2020 when the ban on launch of new credit cards came into effect. Their market share slipped to 24% while ICICI Bank and SBI Cards gained 130bps and 37bps to 17.4% and 19.2%, respectively.

The lender also has vast ground to gain and can easily capture back the space it lost after it added 36.5 lakh liability accounts from January to June 2021,1.5-2 lakh credit cards per month pre-Covid.

“Overall, lifting of RBI restrictions before the beginning of festive season is a positive development as HDFC Bank has usually been aggressive during festive season and offers various discounts on consumer products,” said Nitin Aggarwal, research analyst, Motilal Securities.



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RBI partially lifts ban on HDFC Bank, allows it to sell new credit cards, BFSI News, ET BFSI

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Eight months after barring the country’s largest private sector lender HDFC Bank from selling new credit cards, the Reserve Bank of India (RBI) has lifted the ban.

However, the ban on launching new technology initiatives remains.

In December last year, the RBI had come out with an unprecedented action implementing both the bans, after repeated instances of technological outages at the lender, which is the market leader in the credit cards segment.

Rivals ICICI Bank and SBI Cards seized the opportunity to narrow the gap with HDFC Bank.

The bank’s existing users were not impacted by the ban and it had 1.48 crore credit card customers as of June.

The impact

On July 17, the bank’s Chief Executive and Managing Director Sashidhar Jagdishan had said it has complied with 85 per cent of the RBI’s requirements on the improvements desired, and the ball is now in the regulator’s court to re-allow the bank.

Earlier, its technology and credit card vertical had said the time off the market has been utilised to re-draw processes and the teams are raring to go.

Jagdishan had said a technology audit is also over and the RBI will now be “independently” taking a view on when to lift the penal actions taken against the bank.

“We have given a milestone to the regulator in terms of what are the things we are doing on technology, complying with their advisories and directives.

The progress

“We have covered a significant portion as we speak. Almost 85 per cent of what we had to do has been covered,” Jagdsihan, who has been with the lender for over two decades and worked as the ‘change agent’ in the years leading to his elevation, said.

He added that the ball is in the regulator’s court. “As they deem fit, as they see that we are on the right track, I am sure at some point of time, they will lift the embargo.”

Acknowledging that the bank has lost market share in the credit card segment due to the ban, Jagdsihan said tech outages are a global phenomenon but it is the time taken to recover from a setback where the bank erred, leading to the “rap on the knuckles” from the regulator.

The action against HDFC Bank has been followed with a ban on card companies Mastercard and American Express from selling any new cards because of a failure to adhere to data localisation rules.

Also read : HDFC Bank episode shows that digital banking is not easy



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Blockbuster week with Rs 14,000 crore mop-up in IPOs, BFSI News, ET BFSI

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Mumbai: The IPO frenzy on Dalal Street continued with four offers together this week trying to mobilise about 14,600 crore, making it one of the busiest weeks for IPOs in several years. The previous week saw 3,614 crore, while during the week of July 12-16, 9,375 crore was raised from just one IPO — Zomato, data from exchanges and merchant bankers showed.

The previous large week for an IPO mobilisation was March 2-6, 2020 when SBI Cards raised 10,355 crore. A combination of easy availability of funds globally, a stock market that is recording a new peak on a regular basis and strong listing gains have combined to prompt promoters, merchant bankers and private equity investors to take companies public, industry players said. During the current week, Nuvoco Vista Corp is raising 5,000 crore through its IPO, which is the first such offer from a cement company in the last one and half decades. Nuvoco Vista is majority owned by Karsanbhai Patel who is also the owner of Nirma detergent. Its aim to raise 5,000 crore would make it the second-biggest IPO this year after Zomato’s. The last IPO of a cement company was launched in 2006 when JK Cement went public.

Nuvoco Vista is the fifth largest cement company in India and the biggest in eastern India. The shares are being offered at a price band of 560-570 per share. The IPO will close on August 11. According to a report by IIFL Securities, “given NVCL’s size, strong brand ownership, leadership position in the fast-growing eastern Indian market, availability of limestone mines for future expansion, and scope for improving profitability & deleveraging balance sheet, we believe valuations are reasonable. We recommend subscribing to the IPO.” Along with Nuvoco, three other IPOs are also open now. The IPO for CarTrade is for a tech-enable auto listing company while for Chemplast Sanmar, a speciality chemical company, it’s the second coming to be publicly listed after being delisted about 10 years ago. The IPO for Aptus Value Housing is for a mortgage finance company serving mid- and low-income segments.



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Credit card spends limping back to normalcy, but stay lower in Q1, BFSI News, ET BFSI

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If you thought that the over 20% discount offered on credit for your Swiggy offer is exceptional, you may expect more.

Credit card spends are likely to be lower in the first quarter despite a recovery in June. Analysts see credit card spends dropping 8% in the first quarter of June 2021 over the fourth quarter of the last fiscal.

At Rs 54,700 crore, credit card spends in May 2021 were still higher than the monthly spends between April and September 2020.

In April 2021, credit card spends totalled Rs 59,200 crore, higher than the monthly spends witnessed between April and September of 2020.

Going by the trend of UPI transactions in June, credit card spends are also likely to be high in June.

UPI June transactions

UPI enabled digital transactions surged 11.6 per cent month-on-month to Rs 5.47 lakh crore in June this year, according to the NPCI data.

In May 2021, the UPI (unified payments interface) transactions stood at Rs 4.91 lakh crore.

In terms of numbers, there were as many as 2.80 billion (280 crore) transactions during the month under review, as against 2.53 billion (253 crore) in May, according to the data.

NPCI’s other digital payments channels—such as Bharat Bill Payment System (BBPS), National Electronic Toll Collection (NETC), Aadhaar Enabled Payment System (AePS) and Immediate Payment Service (IMPS)—all recorded monthly growth in June.

The number of transactions on BBPS, primarily used for automated bill payments, grew nearly 16% sequentially to 45.47 million transactions in June. For Fastag, the growth was even sharper—at 35.34% to 157 million transactions—indicating an increase in mobility.

Similarly, IMPS grew to 303.7 million transactions in June from 279.8 million in May while AePS — which is used for cash withdrawals at micro ATMs, subsidy payouts and domestic remittance—grew to 87.5 million transactions from 84.2 million.

Card companies

Despite a ban on issuing new credit cards, HDFC Bank retained the largest market share at 27 per cent in spends in May while SBI Cards held 18 per cent.

Credit card spends limping back to normalcy, but stay lower in Q1

In December 2020, the Reserve Bank of India (RBI) barred HDFC Bank from making new digital launches and issuing new credit cards following repeated outages on the bank’s digital channels.

HIt by the ban on HDFC Bank issuing credit cards and economic slowdown, the number of credit cards outstanding grew just 1.9 per cent 622.6 lakh, as against a growth of 2.2 per cent during April-June 2020 to 5.74 lakh, according to RBI data. The number of new cards issued has been falling every month since January 2021 and was down to 21 lakh in April from 70 lakh in January, with most card issuers seeing slow growth. Monthly spends per card for the industry declined to Rs 9,500 in April from an average of Rs 10,500 over the past six months, according to analysts.



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SBI Card sees over 50 percent of its transaction from online payments, says CEO, BFSI News, ET BFSI

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SBI Cards and Payment Services (SBI Card) has been seeing over 50 per cent of its transactions via online payments such as on groceries, utility bills, insurance premium, and hopes the trend to go up further as point of sale purchases are yet to pick up, top company executive said. Keeping a watch on the recent coronavirus resurgence in the country across some key locations, SBI Card MD and CEO Rama Mohan Rao Amara said it would be too early to say whether it will have any bearing on people’s purchasing behaviour.

However, online payments is a trend which is going to go up further, he added.

“Particularly within SBI Card, now, more than 53 per cent of the spends actually come from online payments which used to be around 44 per cent earlier. Almost 9 percentage points improvement is there mainly in terms of the categories like for groceries, apparel, utility bill payment, insurance premium, online education,” Amara told in an interview.

He added that for these kind of categories, suddenly the company has seen kind of an increase in spends online. “We believe (it) will remain online because once people get used to the comfort of it, they will continue with that. So, COVID or no-COVID, it will not impact that.”

However, he said the point of sale (PoS) locations have not opened that well, as and when the footfall increases, there will be a pick-up there also.

The pure-play card company is also seeing an emerging trend of securing more customers from non-metro locations. It is also banking on its parent company SBI’s huge customer base to expand further.

Maybe till 5-6 years ago, tier-I locations were contributing majorly to the credit card industry growth.

“But, if you look at our recent performance, around 58 per cent of our incremental sourcing is actually coming from non-tier cities that is tier II, III and IV.

“These are contributing more to our new credit card acquisitions, that is basically we have a piggyback of our parent bank (SBI) customer base,” he added.

The company’s card-in-force grew 15 per cent to 1.15 crore in the third quarter of the fiscal ended March 2021, against one crore in the year ago same period. The spends were higher by 8 per cent to Rs 37,797 crore from Rs 35,135 crore.

And, the new accounts volume increased 8 per cent to 9,18,000 accounts in the third quarter of 2020-21, compared with 8,48,000 in the third quarter of 2019-20.

Under the company’s pre-approved programme, wherein it looks towards the customer base of the parent bank and the cardable population, it has helped SBI Card immensely in terms of adding to the new card base, Amara added.

“It started around 2017, it has now reached a good volume. It contributes well but if you look at our disclosures, more than 50 per cent is coming from our bank channel which you essentially call kind of a SBI sourcing,” Rao said further.

He added that particularly, during the first and second quarters of FY21, when open market locations were closed and when sourcing were limited, the company’s banking channel helped it in terms of ramping up. “We were able to come back to almost 10,000 accounts per day, that was the usual run rate in best of the best times. So, we were able to get back to that trend by Q3.”

And, majorly, this growth has come from tier-II, -III and -IV cities, he added.

Amara also said the company will continue to work with its parent bank.

“If you look at the customer base of our parent bank, it is more than 400 million. We have hardly explored the base of around 20-22 per cent. So, there is a plenty of runway left,” Rao said.

However, he said the company will always look forward to forge new tie-ups and recently joined hands with Jio Payments also.

On the company’s tie-up with various airline companies, which were hit the most during the lockdown period and are running below the capacity off-take of passengers, Amara said the business has been impacted on that front, but exuded confidence that it will be back to track once things normalise.

In the nine-months ended December 2021, SBI Card witnessed a flat growth in its income at Rs 7,245 crore. And, the net profit was down by 30 per cent to Rs 809 crore during the April-December period of 2020-21.

Rao said the company had already reached to the pre-COVID-19 level business by third quarter and expects to post decent numbers for the overall fiscal.

The company is expected to declare the financial results for the fourth quarter of 2020-21 within the end of this month.



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SBI Card plans to raise Rs 2,000 crore via NCDs

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Credit Suisse also expects strong growth for SBI Card. “We expect growth to remain strong (> 30% in spends) as it raises penetration within SBI customers,” Credit Suisse said.

SBI Cards and Payment Services (SBI Card) on Monday said it was planning to raise up to Rs 2,000 crore by issuing non-convertible debentures (NCDs). The company has called a meeting of the board of directors on March 12 to consider and approve raising of funds, which will be raised in one or more tranches over a period of time, it said. This will be a second announcement of fund-raising via NCDs within a month, after it had raised Rs 550 crore in February.

Last month, SBI Cards had informed that it had raised Rs 550 crore through issuing NCDs on a private placement basis. The NCDs have a tenure of three years with a coupon rate of 5.9% per annum. The company had announced fund-raising after new MD and CEO Rama Mohan Rao Amara took over in January 2021.

The company had reported a 52% year-on-year fall in its net profit to Rs 210 crore during the December quarter (Q3FY21). Its total income stood at Rs 2,540 crore during the quarter, against Rs 2,563 crore in the year-ago period. The capital adequacy ratio was at 23.7%, compared to the minimum regulatory requirement of 15%. On a proforma basis, gross non-performing assets (NPAs) stood at 4.51%, compared to 7.46% in the September quarter. The Supreme Court had earlier directed lenders to not declare any fresh NPAs after August 31, 2020. Therefore, lenders had disclosed NPAs on a proforma basis to reflect the true picture of asset quality.

In a recent report, Credit Suisse said the asset quality stress for SBI Card had peaked. The company has seen an increase in stress post Covid-19, with proforma slippage of 8%, and 10% of loans being restructured, Credit Suisse said. “Given strong pre-provision profitability, while it has provided 65% on pro-forma NPAs as well as 35% on restructured loans, FY21E RoAs (return on assets) are likely to be around 4%,” it said.

Credit Suisse also expects strong growth for SBI Card. “We expect growth to remain strong (> 30% in spends) as it raises penetration within SBI customers,” Credit Suisse said.

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