HDFC Bank Still Losing Credit Card Market Share: Brokerages


HDFC Bank Ltd., India’s biggest private bank which is also the largest issuer of credit cards in the country, is still losing market share even though regulatory curbs on issuing new cards have been lifted.

Credit card data for the month of January, released by the Reserve Bank of India, shows that the lender is still losing ground, said Macquarie Research in a note dated March 8.

“[Credit card] spend market share for HDFC Bank has come down from 31% (pre-embargo in November 2020) to 25% as of January 2022,” Suresh Ganapathy, analyst at Macquarie said in the note.

Frequent digital outages had led to the Reserve Bank of India barring HDFC Bank from sourcing new credit cards in December 2020. The embargo was lifted in August 2021.

“Even after the embargo on cards for HDFC Bank was lifted in August 2021, HDFC Bank’s market share in terms of spend is actually down 170 basis points. On the other hand, SBI Cards and Payment Services Ltd. and ICICI Bank Ltd. have gained 130 basis points and 180 basis points of spends market share, respectively, over the same period,” Ganapathy said.

Macquarie Research said it remains watchful of HDFC Bank’s performance in this regard. “This is especially important since HDFC Bank reported a 30% year-on-year decline in card fees in the third quarter, which was not seen in other card players.”

Overall, private banks continued to dominate the credit card market with a market share of 67.3% as of January 2022 in terms of cards in force, said Axis Securities in a note dated March 8. In terms of spends, private banks have gained market share by 110 basis points over a year ago, taking it to 69.1% in January 22.

“ICICI Bank has been instrumental in improving the market share both in cards in force and spends, while HDFC Bank witnessed marginal moderation in January 22 as spends growth and new customer addition tapered month-on-month,” Siji Philips, senior research analyst at Axis Securities said in the note.

ICICI Bank’s ‘Amazon Pay Credit Card’ has been a key growth driver for spends growth as consumer preference shifts towards online and e-commerce purchases, added Philips.

SBI Cards’ market share remained stable at 18.9% in terms of cards in force while its share of credit card spends improved 127 basis points over a year ago, Axis Securities said.

Across the industry, credit card spends moderated in the month of January. The third wave of Covid-19 infections may have impacted the discretionary and recreational spends, said analysts.

Credit card spend declined nearly 7% on a monthly basis in January, said Macquarie. “However, the card volumes grew at 15% yearly, which bodes well for spends going forward.” Point of sale machines also rose 21% over a year ago in January 2022.

New customer additions also decelerated on a monthly basis, said Axis Securities. “It remained at a healthy level of 13 lakh customers (vs 13.7 lakh customers in December 2021), translating into card-in-force growth of 15% yearly, which is at a 19-month high.”

Axis Securities added that credit cards remained the preferred instrument over debit cards. “This trend was set due to the pandemic and continues as the credit card to debit card ratio, a key indicator of increased acceptance of credit cards, has improved significantly to 7.5% in January 2022 from 6.9% in January 2021.” The credit card to debit card spends ratio improved to 1.5 times in January 2022 from 1 time in January 2021, the report added.


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