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We closely examine the critical credit cards market since success in growing a credit cards’ franchise can materially move the needle in terms of overall bank RoA. We consider monthly data dating back to December 2016 and up until May 2023 and we present all key data and conclusions in this report. The key findings are as follows: (1) BOB continues to gain market share in credit card spends in structural fashion, albeit from a low absolute base (2) AXSB has been able to win market share in credit card spends even without factoring in Citi’s business (3) HDFCB, ICICI and SBI are the 3 largest players in this market but they do not seem to be winning market share. We most prefer BOB, INBK, AXSB, FED, SBI and ICICI in the banking space, in that order.

BOB continues to gain market share in credit card spends in structural fashion, albeit from a low absolute base

The market share for BOB in credit card spends has inched up to 1.3% in 5MCY23, which is ~10 bps higher compared with H2CY22. This is also significantly higher than the 0.5% share registered in H2CY20. While the market share is still low in the absolute sense, there is a clear structural uptrend in BOB’s market share in credit card spends. This is a clear example, like AXSB, of a bank that has decided to punch equal to its heft in the banking system, in general. Its market share in net credit cards added was 3.5% in 5MCY23, which is higher than its market share in spends. This augurs well for spends market share given that that spends tend to improve with maturation of cards.

AXSB has been able to win market share in credit card spends even without factoring in Citi’s business

AXSB’s market share in credit card spends has moved up from a low of 8.3% in H2CY20 to 9.2% in H2CY22 and this has been achieved before the amalgamation with Citi. Its market share stood at 8.8% in H1CY22, which implies that the traction has been consistent and there hasn’t been a recent plateauing of the trend. In 5MCY23, the market share jumped to 10.9%, which is, of course, a function of Citi’s credit card business now being housed within the merged entity. It may be noted that, while the market share of AXSB has increased 170 bps in 5MCY23, that of Citi has declined 220 bps. It needs to be understood whether some acquired customers did not transact due to being in a transition phase or whether they have switched to making another bank’s credit card their primary one. Even so, our broad conclusion is that credit cards are a key focus area for AXSB and the bank has been able to win spends market share via organic means. Unmerged AXSB had closed a number of credit cards, on net basis, in H2CY22, likely mainly due to RBI’s non-usage rules but is back to adding cards in 5MCY23 and its market share in net credit cards added, net of Citi, was 10.7% in during this period.

HDFCB, ICICI and SBI are the 3 largest players in this market but they do not seem to be winning market share

While HDFCB remains the largest player in the credit cards market, there is no clear uptrend in spends market share for the bank. Its market share in credit card spends stood at 28.0% in 5MCY23, which is ~30 bps lower than in H2CY22. For ICICI, the spends market share stood at 17.2% in 5MCY23, which is ~50 bps lower than in H2CY22. For SBI, the spends market share stood at 18.1% in 5MCY23, which is stable compared with H2CY22. The market share in net credit cards added for HDFCB, ICICI and SBI stood at 16.9%, 17.6% and 19.1%, respectively for 5MCY23.

Among other key players, KMB is winning market share relatively materially whereas, share is inching up slowly for RBL and IIB

Spends market share for KMB has improved to 3.6% in 5MCY23, up ~30 bps from H2CY22. RBL’s market share has inched up ~10 bps to 4.3% and IIB’s is up ~10 bps to5.1%

We most prefer BOB, INBK, AXSB, FED, SBI and ICICI in the banking space, in that order

On the other hand, we least prefer DCB, CUB, IDFCFB, KMB and HDFCB in our coverage universe, in reverse order (i.e. DCB is the least preferred).

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