SBI Card Shares Rise as July Spend Growth Outpaces Industry
Key Takeaways
- •SBI Cards' July card spends rose 21.6% year-on-year, outpacing overall industry growth.
- •The company's shares gained nearly 2% following the July business update.
- •SBI Card added 183,000 new cards in July, taking total cards outstanding to 22.8 million.
- •Investors track the monthly updates as an early indicator of growth in unsecured lending and consumer spending trends.
- •Sustainability of spend growth is in focus as RBI rules on credit card defaults and unsecured credit risk-weighting affect issuers' growth and profitability.
Shares of SBI Cards and Payment Services gained nearly 2% after the company's July business data showed a 21.6% year-on-year rise in card spends, significantly ahead of overall industry growth.
SBI Card, the credit card arm of State Bank of India and one of India's largest card issuers, discloses monthly operational updates on spends and card additions, which investors track closely as an early indicator of growth momentum in the unsecured lending business.
The credit card issuer added 1.83 lakh (183,000) new cards during the month, taking its total cards outstanding to 2.28 crore (22.8 million). Monthly business updates of this kind are watched as a pointer to broader consumer spending trends, since credit card spends tend to reflect household discretionary consumption. Investors will be watching whether the spend growth momentum is sustained in the coming months, particularly as the RBI has in recent years tightened norms around credit card defaulters and risk-weighting on unsecured consumer credit, which affects issuers' growth and profitability.
Source: CNBC-TV18
