ICICI Bank outpaces rivals in growing credit card biz

ICICI Bank, the largest private sector lender in the country, has outpaced its rivals in growing its credit card base during financial year 2013-14 (April-March). The lender, which had reduced its unsecured lending following the global financial crisis, has now started offering credit cards selectively to individuals who did not have a prior banking relationship with it. But its primary focus remains offering cards to its existing customers.

ICICI Bank net added a net of 0.3 million cards to its portfolio during the year — more than any other lender in the country.

This is in sharp contrast to HDFC Bank, the largest issuer of credit cards in India. HDFC Bank trimmed its credit card base by 1.39 million during this period, as the lender cleaned up inactive and dormant cards in its portfolio. The country’s largest lender, State Bank of India (SBI), and Citibank (the largest credit card issuer among foreign banks in India) expanded their credit card portfolios by 0.26 million and 0.05 million, respectively.

ICICI Bank — with a base of 3.21 million cards at the end of April, 2014 — is now the second largest credit card issuer in India. However, the bank continues to maintain its stance that it remains cautious while offering unsecured credit. ICICI Bank's unsecured portfolio of credit cards and personal loans were at Rs 7,270 crore at the end of March, 2014, and was only 2.1 per cent of the bank's overall loan book. “The growth rate is high due to the low base,” N S Kannan, executive director of ICICI Bank had told analysts following the bank's earnings announcement in April, 2014.

Industry analysts believe that the improving standards of credit bureau and healthy credit behaviour of retail borrowers have given banks the confidence to grow their unsecured retail loan business even in the current uncertain macroeconomic environment. Also, lenders are not going for unbridled expansion and offering credit cards mostly to individuals who already have prior banking relationships with them.

But despite lenders like ICICI Bank, Axis Bank and SBI expanding their credit card portfolios, the total number of outstanding credit cards in the country continues to shrink. According to the Reserve Bank of India (RBI) data, there were 19.23 million credit cards in the country at the end of April, 2014, compared with 19.55 million a year earlier. Bankers and industry analysts claim that this was because lenders were now focusing on encouraging their customers to use their credit cards frequently and cleaning out inactive cards.

They point out that the move has resulted in higher spends on credit cards. In April, 2014, the amount of credit card transactions at POS (point-of-sale) terminals was estimated at Rs 14,577 crore, compared with Rs 12,418 crore a year ago.