SBI Card May spending market share grows; stock declines

SBI Card shares traded weak Wednesday’s trade (June 26) after the release of the May credit card spending data. In May, SBI Cards spending market share logged 27 bps rise month-on-month (MoM) to 16 per cent.

At the last count, shares traded lower by 0.28 per cent at Rs 729.95, while at day’s low it hit levels of Rs 725.7.

The credit card industry added around 0.76m cards in May’24 (~0.74m in Apr’24 and ~1.2m in Mar’24). Among large players, HDFC Bank witnessed highest growth, followed by Axis Bank, SBI Card. IDFC First Bank and ICICI Bank. The outstanding credit card base has thus increased to 103m, up 18% YoY, added MOFSL's digital payments tracker report.

Card spending grew 17 per cent YoY to Rs 1.65 lakh crore. Among key players,Kotak Mahindra Bank, ICICI Bank, SBI Card and HDFC Bank witnessed 43 per cent, 31 per cent, 11 per cent, and 3 per cent YoY growth, respectively. IDFCF and FB reported faster growth of 52 per cent and 43 per cent YoY, respectively, added the report.

In the previous day’s trade, shares of the credit card company ended marginally higher at Rs 732 even as Nifty Financial Services clocked decent gains of around 2 per cent.

What brokerages make of credit card spending data for May 2024?

Global brokerage Jefferies said that during May 24, the industry’s spending growth moderated to 17 per cent on-year as compared to 18 per cent in the previous month. It added that for SBI Cards, the spending growth improved to 11 per cent on-year. Further, the company’s share of spending inched higher by 30 bps MoM to 16 per cent. Nevertheless, the growth in cards in force stayed relatively subdued reflecting caution in new issuances.

Meanwhile, Morgan Stanley remained equalweight (EW) on the stock with a target of Rs 750. Its YoY growth at 11 per cent was higher sequentially (+1 per cent YoY in April), but remains below 17 per cent for the industry, reflecting the impact of RBI’s recent notification on corporate card spending.