Axis Bank has started to reap the benefits of its strategy to grow organically alongside strong partnerships to fuel growth in the credit cards business, raking in the highest ever acquisition in the March quarter, a top official said.
Buoyed by the growth, the bank is eyeing capturing one-fifth of the credit card market in the medium term, the official said. With Citi's consumer business to be merged with itself going ahead, the bank will not lose sight of delivering quality services, Sanjeev Moghe, President & Head - Cards & Payments, at Axis Bank, said.
The fourth-largest private sector bank clocked the highest ever quarterly growth with over 1.1 million credit card acquisitions in the March quarter of 2021-22.
''We split our business into two segments, one is organic which is based on our own sourcing and another vertical is all kinds of partnerships that we have. Both of these opportunities are growing, we did 1.1 million credit cards in Q4FY22. We believe we can hit this momentum of a million cards now in every quarter. What I am saying is that for the next couple of quarters, I will see a run rate of this number.
''Then onwards we expect our momentum to grow further as long as the economy stays stable. We have our learnings from COVID what not to do. Post-COVID, we launched new kinds of sourcing capabilities including digital which has made our acquisition more efficient,'' Moghe told PTI in an interview.
Moghe said that the average spending by credit card users has gone up and the bank's partnership businesses are delivering results. ''Frankly, some partnerships are still in the growth stage. Google partnership will acquire more momentum. So all of this, plus our organic business will take our momentum further. Our capabilities are now much better than a few years back, the level we have reached basis the fact that our partnerships are now on a better footing and many of the partnerships still have to acquire momentum,'' the official added.
The lender has co-branded partnerships with Flipkart, Google, LIC, Airtel, UPI, and others. It recently tied up with SpiceJet with the launch of two variants of co-branded cards.
The partnership with the airline aims to expand the credit card business to tier II and III markets. The lender closed FY22 with over 9 million (90 lakh) credit cards on its fold.
Moghe said the consumer sentiment has nearly reached the pre-COVID level in terms of their spending behaviour, except for the expenses related to overseas travels. Non-discretionary spending comprising travel, entertainment, and dining is back to almost pre-COVID levels. In fact, fuel expenses are also back now that fuel is much costlier than it was earlier, Moghe said.
The lender also witnessed the highest number of net cards issued in the industry in February and March while its flagship product 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 sense is that in the last two quarters if you have to look at it, we are leading the market. We want to continue to do that so that our market share goes up, right now we are number four in terms of the market share at over 12 percent.
''In the medium term, for say in the next three years, we would want that share to start hitting 17-20 percent, Citi will be in our fold by then. We believe we can get to these numbers,'' Moghe added.
Currently, HDFC Bank is the number one player in the credit cards business followed by SBI Card and ICICI Bank. Talking about the quality of its credit cards business, the official said that the lender has reached a phase where its book is better than it used to be earlier, the NPA levels are very low and the spend share in the retail category has gone up.
''We are very bullish about our spend share going up, standalone and obviously Citi will add to it. The balance sheet part, the growth has been pretty healthy for us, we continue to see that playing out. Our medium-term goal is to be seen as a bank of very decent capabilities on acquisition and servicing our customers, that's an important medium-term goal for us. We monitor it very very rigorously internally,'' he said.
With regards to competition from the NBFCs and also the newer players like buy now pay later (BNPL) platforms, he said the Indian market is large enough to leave room for competition. All of these can co-exist in the Indian market given the sheer size and depth of the market. Moghe said Axis Bank has its own BNPL version through its freecharge platform.
''We have some of the largest partnerships in the market and any new partnerships which are coming up potentially, we are happy to look at it, but if it doesn't come to us, we are happy to compete, no issues,'' the official said further.
On Tata group's recently launched digital shopping platform Tata Neu, he said: ''We would like to see how it pans out.''
Replying to a question on Citi's consumer business, he said the works related to regulatory approvals are going on in tandem. At the end of March, Axis Bank announced to acquire Citigroup's consumer business in India including credit cards, retail banking, wealth management and consumer loans, for Rs 12,325 crore as the US-based lender is exiting as many as 13 markets on the retail front.
(With PTI inputs)