Credit card spending plummeted in January thanks to Omicron

Bombay : Credit card spending fell in January as consumer spending took a hit after states imposed restrictions to contain the spread of the Omicron strain of coronavirus.

Spending in January fell 6% on a monthly basis (mom) to 87.7 trillion, according to data from the Reserve Bank of India (RBI). Credit card spending amounted to 93.9 trillion in December last year.

Also on an annual basis, credit card spending growth slowed to 35% from 47% in December.

That said, January spending continues to be higher than last year, when it was 64.7 trillion.

The slowdown in spending comes after the industry saw $1 trillion spent in October due to holiday season. Spending momentum has slowed, but this is a temporary blow, analysts say.

“Credit card spending is higher than pre-pandemic days. January data shows a monthly decline, which occurred because of Omicron. That said, consumer confidence is back on track and the data will show an improvement from the second half of February when restrictions were eased,” an analyst at an overseas brokerage said.

Among banks, HDFC Bank, ICICI Bank and SBI Cards saw lower credit card spending in January.

HDFC Bank saw an almost 8% decline in spending for 21.7 trillion, while ICICI Bank saw a 5% mom fall to 18.8 trillion. Axis Bank was the outlier, as spending rose in January. He saw a 10% mom go to 7.6 trillion, while SBI cards saw 2% growth in spending for 19 trillion.

In terms of cards issued, banks added 130,000 new credit cards on a net basis in January, led by issuers such as ICICI Bank, Axis Bank, HDFC Bank and SBI Cards.

Among the top four banks, ICICI Bank was the most aggressive. It added 240,000 credit cards in January, bringing the total number of credit cards to 12.5 million. ICICI Bank’s co-branded credit card with Amazon was a huge market success, helping the bank gain 17.9% market share.

Axis Bank also gained market share to 11.9%, adding 219,000 new cards over the same period. Its co-branded credit card with Walmart-backed e-commerce giant Flipkart also performed well.

HDFC Bank added 209,000 credit cards in January, but lost market share for the second consecutive month at 22.8%. SBI Cards also added fewer credit cards, which led to a decline in market share.

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