At a time when banks are engaged in a fierce battle to realize market share within the bank card section, Citibank India has been dropping its share, each when it comes to excellent playing cards and spends in the previous few years.
Nonetheless, common spends on Citi playing cards are larger than another Indian financial institution.
Final yr, the worldwide banking behemoth introduced exit from its shopper banking franchises in 13 markets throughout Europe, Center East and Asia, together with India, citing lack of scale.
On Wednesday, Axis Financial institution introduced that it’s going to purchase the retail enterprise of Citibank India in an all-cash deal of Rs 12,325 crore.
In a span of virtually 4 years, Citibank has misplaced 600-basis factors (bps) in spends market share. As of FY18, the financial institution commanded a market share of 10.6 per cent, with solely HDFC Financial institution, State Financial institution of India, and ICICI Financial institution having the next market share.
However regularly, the spends’ market share has come all the way down to 4.6 per cent, in line with the most recent information launched by the Reserve Financial institution of India (RBI).
Throughout the identical interval, ICICI Financial institution has gained 900 bps in spends’ market share and SBI Playing cards gained 260 bps.
HDFC Financial institution, which was beneath embargo, couldn’t difficulty contemporary playing cards for nearly 9 months. It has misplaced 230 bps in spends market share throughout this era.
Axis Financial institution, which initially gained market share in FY19 and FY20, noticed its spends’ market share decline by 100 bps between FY18 and FY22 (as of February). That is in line with information compiled by Motilal Oswal.
Citibank’s market share in excellent bank cards has additionally seen a decline of 350 bps between FY18 and FY22 (as of February). In consequence, Citi now has solely 2.55 million bank cards as of February 2022.
In keeping with a Motilal Oswal Institutional Equities report, over the previous 5 years, Citi’s excellent playing cards grew at a muted 0.4 per cent compound annual development price (CAGR) whereas the business noticed a 20 per cent CAGR.
Additionally, since FY21, incrementally, the financial institution has been dropping bank cards. Nevertheless, excellent bank cards on an business degree have been rising over 20 per cent between FY18 and FY20. The expansion then dipped to 7.5 per cent in FY21 as HDFC Financial institution was barred by RBI from issuing new bank cards. In FY22, the expansion has once more picked up and is over 16 per cent as of February.
Citibank had a market share of 13 per cent in excellent playing cards and 19.5 per cent in spends again in 2019. There was a gradual decline in its market share since then.
Suresh Ganapathy, affiliate director, Macquarie Capital, and Param Subramanian — of their analysis be aware — have mentioned, “Citi’s bank card enterprise has seen steady decline in spend market share from 10 per cent to 4 per cent during the last 4 years. It additionally noticed a decline in spend per card from Rs 16,000 to Rs 14,000. Citi has been dropping floor to bigger gamers in driving spend and engagement.”
Nevertheless, Citi nonetheless enjoys a premium clientele — its spend per card at Rs 14,000 is above each business common (Rs 12,000) and Axis Financial institution (Rs 9,000).
Additionally, Citibank’s playing cards clock the best variety of month-to-month transactions per card. In FY22, it was 4.6 per card in a month versus the business common of two.8.