Slip In Credit Card Issues May Boost Holder Profitability, Says HSBC

Some may have gotten their first credit card in hopes of buying the Coldplay concert tickets, but the industry’s net credit card issuances have slipped, according to an HSBC report.

Ideas like retail therapy and Buy Now, Pay Later are growing faster than ever, and a credit card becomes the perfect vehicle that facilitates this. Thanks to the easy access a credit card gives, the holder can buy products they can or cannot afford.

Despite the increased traction, credit card spending growth dipped to 13% in August, compared to 32% growth in the same period last year.

The net card issuance for August this year stood at 0.9 million. The issuance is at a healthy amount, but it is lower than the net card issuance of 1.4 million cards in August 2023.

The net card issuance for HDFC Bank Ltd. was strong at 2,40,000 in August 2024 and this accounted for 26% of the total card issuances in July 2024.

The lender also had a strong contribution in the Cards-In-Force market, with a 20.8% share. Cards-In-Force is the total number of credit or debit cards issued by a financial institution that are presently active and in use by cardholders.

For the industry, cards-in-force of 105.5 million have seen a growth of 15.6%, compared to last year and 0.9% compared to the previous month.

This month, HDFC Bank, ICICI Bank Ltd., Axis Bank Ltd., and IDFC Bank have gained market share in CIF. Institutions like SBI Cards & Payment Services Ltd., IIB, KM Bank lost shares.

SBI Card’s issuance, which stood at 1,10,000, remained muted as they continue to calibrate their underwriting, the HSBC report showed.

The softening of new credit card issuances could mean better rationalised costs. This is achieved through different measures like devaluation of rewards and offers and introducing charges for certain kinds of spends, according to the report.

The lowering of marketing spending and the slowing of new card issuances could boost profitability of card holders.

The lower competitive intensity and cost rationalisation should allow card issuers to improve the profitability of their credit card verticals, HSBC said.