Credit card spending eased in January as consumer spending took a hit after states imposed restrictions to contain the spread of the Omicron strain of coronavirus.
Spending in January fell 6% on a month-on-month (m-o-m) basis to ₹87.7 trillion, according to Reserve Bank of India’s (RBI’s) data. Credit card spending stood at ₹93.9 trillion in December last year.
On a year-on-year (y-o-y) basis too, the growth in credit card spending slowed down to 35% against 47% in December.
That said, the spending in January continues to be higher than last year when it stood at ₹64.7 trillion.
The slowdown in spending comes after the industry saw ₹1 trillion worth of spending in October because of the festive season. The spending momentum has dropped, but this is a temporary blip, analysts said.
“Credit card spends are higher than the pre-pandemic days. The January data shows a monthly decline, which happened because of Omicron. That said, consumer confidence is back on track, and the data will show an improvement from the second half of February when the restrictions eased,” said an analyst with a foreign brokerage firm.
Among banks, HDFC Bank, ICICI Bank and SBI Cards saw a drop in credit card spending in January.
HDFC Bank saw a nearly 8% m-o-m fall in spending to ₹21.7 trillion, while ICICI Bank saw a 5% m-o-m fall to ₹18.8 trillion. Axis Bank was the outlier, with spending growing in January. It saw a 10% m-o-m rise to ₹7.6 trillion, while SBI Cards saw a 2% growth in spending to ₹19 trillion.
In terms of cards issued, banks added 130,000 new credit cards on a net basis in January, led by issuers such as ICICI Bank, Axis Bank, HDFC Bank, and SBI cards.
Among the top four banks, ICICI Bank was the most aggressive. It added 240,000 credit cards in January, taking the total credit card base to 12.5 million. ICICI Bank’s co-branded credit card with Amazon has been a huge success in the market, helping the bank gain market share to 17.9%.
Axis Bank, too, gained market share to 11.9%, adding 219,000 new cards during the same period. Its co-branded credit card with Walmart backed e-commerce major Flipkart has also performed well.
HDFC Bank added 209,000 credit cards in January, but it lost market share for the second straight month to 22.8%. SBI Cards, too, added fewer credit cards, resulting in a drop in market share.