Wave of mass market credit cards erodes foreign majors’ base

Mumbai: The combined credit card base of American Express, HSBC India, Standard Chartered Bank, DBS Bank India and SBM Bank India declined 7.1% on-year to 3.99 million as of the end of June. The five issuers collectively lost 304,000 cards in a period when the industry added 10.6 million cards.

Consequently, their share of cards outstanding fell by about 59 basis points to 3.29%, from 3.88% a year earlier. India's overall credit card base expanded 9.6% to 121.6 million during the period.

"The moderation in foreign banks' card share is consistent with the portfolio rationalisation and premium segment focus observed across preceding months, reflecting their continued emphasis on profitability and premium customer segments over expanding card volumes," said Saurabh Bhalerao, associate director, BFSI research, at CareEdge Ratings.


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Higher-income customers typically exhibit stronger spending behaviour, allowing issuers to sustain elevated spending per card despite operating smaller portfolios, he added.

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For Prakash Agarwal, partner at Geofin Capital, the decline indicates foreign banks are ceding the volume-led credit card market to domestic lenders. The latter "have larger retail customer bases, wider distribution networks, and increasingly aggressive digital and cobranded card acquisition strategies," he said.

Standard Chartered and DBS Bank India recorded the sharpest contractions. The former's card base fell 28% to 581,000, a fall of 227,000 cards, while expenditure fell nearly 18% to ₹693 crore in June. DBS' India portfolio contracted 29% to 310,000 cards, while expenditure fell 18% to ₹338 crore.

Amex cut its outstanding cards by 7.5% to 1.301 million. However, card spending grew over 16% to ₹5,927 crore. It accounted for only 1% of outstanding cards but had 2.94% of industry credit card expenditure.

HSBC expanded 3.5% to 980,000 cards, although expenditure fell nearly 10% to ₹1,729 crore. SBM Bank India's card base grew 17.6% to 828,000, while spending declined about 14% to ₹53 crore.