Credit card swipes slowed down in January 2022 post the festival frenzy. Total credit card spends fell nearly 7% to Rs 88,038 crore in January 2022 as against average monthly spends of Rs 94,975 crore in Q3FY22, during the festive season. But credit card spends still rose about 35% on a YoY basis compared to January last year.

Overall, nearly 13 lakh new credit cards were issued in January 2022 as against 13.66 lakh cards in December 2021. Among the top seven banking players,  ICICI Bank saw the highest credit card additions at 2.41 lakh. In terms of the total spends on credit cards, only Axis Bank and Kotak Mahindra Bank witnessed a MoM rise in the same in January 2022. 

While the RBI lifted restrictions on HDFC Bank w.r.t. new credit card issuances in August last year, little has changed on the ground as far as the market share of the bank is concerned. In fact between August 2021 and January 2022, the bank lost around 170 bps of market share in the total credit card spends.

HDFC Bank’s loss was clearly ICICI Bank’s gain. ICICI Bank climbed steadily to the No.2 spot, overtaking     SBI, and held 21.4% market share in total credit card spends in January 2022.

Recently, HDFC Bank’s management asserted that it would take atleast 3-4 quarters for it to return to the pre-embargo growth levels in the credit card segment. Notably, the RBI also eased the remaining restrictions on new digital issuances by HDFC Bank from March 11, 2022. It will be interesting to see if HDFC Bank is able to post a healthy core fee growth in the quarters ahead. 

Notably, for the 10 months ended FY22, IndusInd Bank replaced Citi Bank as the new No. 5 (credit card spends) as the latter looks to sell its consumer banking business present in India.

With the waning of the third Covid wave from the second half of February, Axis Securities expects the credit card spends and new customer sourcing for the banks to improve. The effects of the same should be visible from March 2022 onward.