Organic growth, mergers are starting to bear fruit, aims for a 20% share in credit cards in 3 years: head of Axis Bank

Axis Bank on Thursday announced a 49.77% increase in its consolidated net profit for the March quarter to Rs 4,434 crore. / Representative image |

Axis Bank has begun reaping the rewards of its organic growth strategy alongside strong partnerships to fuel growth in the credit card industry, achieving the highest-ever acquisition in the March quarter, a senior said. responsible.

Buoyed by growth, the bank plans to capture a fifth of the credit card market in the medium term, the official said. With the merger of Citi’s consumer business with itself, the bank will not lose sight of providing quality services, said Sanjeev Moghe, President and Head – Cards and Payments, Axis Bank.

The fourth-largest private sector bank posted the highest quarterly growth on record with more than 1.1 million credit card acquisitions in the March quarter of 2021-22.

”We have split our business into two segments, one is organic which is based on our own sourcing and the other vertical is all kinds of partnerships we have. Both of these opportunities are growing, we made 1.1 million credit cards in Q4FY22. We believe we can achieve that momentum of one million cards now every quarter. What I’m saying is that for the next two quarters, I’ll see a run rate of that number.

“Secondly, we expect our momentum to continue to grow as long as the economy remains stable. We have learned from COVID what not to do. Post-COVID, we launched new types of sourcing capabilities, including digital, which made our acquisition more efficient,’ Moghe said. PTI in an interview.

Moghe said average spending by credit card users has increased and the bank’s partner companies are delivering results. ”Frankly, some partnerships are still in the growth phase. Google’s partnership will gain more momentum. So all of this, plus our biological activity, will accelerate our momentum. Our capabilities are now much better than a few years ago, the level we have reached is based on the fact that our partnerships are now on better footing and many partnerships still need to gain momentum,” added the manager.

The lender has co-branded partnerships with Flipkart, Google, LIC, Airtel, UPI and others. It recently partnered with SpiceJet with the launch of two co-branded card variants.

The airline partnership aims to expand the credit card business into Tier II and Tier III markets. The lender ended FY22 with over 9 million (90 lakh) credit cards under its belt.

Moghe said consumer sentiment has almost reached pre-COVID levels in terms of spending behavior, except for spending related to overseas travel. Non-discretionary spending including travel, entertainment and meals has returned to near pre-COVID levels. In fact, fuel expenses are also back now that fuel is much more expensive than it used to be, Moghe said.

The lender also witnessed the highest number of net cards issued in the industry in February and March, while its flagship product, the Flipkart Axis Bank credit card, crossed over 2 million customers, making it one of the fastest growing co-brand portfolios since its launch in July. 2019.

”My feeling is that over the last two quarters, if you have to look at it, we’ve been leading the market. We want to keep doing this to increase our market share, right now we are number four in terms of market share at over 12%.

“In the medium term, for example in the next three years, we would like this share to start reaching 17-20%, Citi will be in our fold by then. We believe we can get to those numbers,” Moghe added.

Currently, HDFC Bank is number one in the credit card industry, followed by SBI Card and ICICI Bank. Speaking about the quality of its credit card business, the official said the lender has reached a stage where its book is better than it was before, NPA levels are very low and the share of spend in the retail category has increased.

”We are very optimistic about increasing our share of spending, on a stand-alone basis and obviously Citi will add to that. The balance sheet part, the growth has been pretty healthy for us, we continue to see that happen. Our mid-term goal is to be seen as a bank with very decent capabilities in acquiring and serving our customers, this is an important mid-term goal for us. We monitor it very, very rigorously internally,” he said.

Regarding competition from NBFCs and new players like Buy Now Pay Later (BNPL) platforms, he said that the Indian market is large enough to leave room for competition. All of these can co-exist in the Indian market given the size and depth of the market. Moghe said Axis Bank has its own BNPL version through its free platform.

”We have some of the biggest partnerships in the market and any new partnerships that potentially come along, we’re happy to look into it, but if it doesn’t come to us we’re happy to compete, no problems,”” , added the official.

On Tata Group’s recently launched digital shopping platform, Tata Neu, he said, “We’d like to see how it goes.”

Responding to a question about Citi’s consumer business, he said work related to regulatory approvals was continuing in tandem. In late March, Axis Bank announced the acquisition of Citigroup’s consumer business in India, including credit cards, retail banking, wealth management and consumer lending, for Rs 12,325 crore so that the US-based lender is leaving up to 13 markets on the retail front. .

(With PTI inputs)

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