Citibank India has been losing market share in the credit card segment in recent years, both in terms of outstanding cards and expenditures, at a time when banks are battling for market share.
Citi cards, on the other hand, have the highest average spend of any Indian bank.
Due to a lack of scale in these markets, the world’s largest bank announced earlier this year that it would close its consumer banking franchises in 13 markets across Europe, the Middle East, and Asia, including India.
On Wednesday, Axis Bank announced that it will pay Rs 12,325 crore in cash to acquire Citibank India’s retail business.
Citibank has lost 600 basis points (bps) in spending market share in nearly four years. After HDFC, State Bank of India, and ICICI, this was the fourth-highest market share of any Indian bank in FY18.
According to data from the Reserve Bank of India, market share has steadily declined to 4.6 percent in recent years. (RBI).
During the same time period, ICICI Bank’s market share increased by 900 basis points, while SBI Cards’ market share increased by 260 basis points.
For nearly nine months, HDFC Bank was unable to issue new cards due to a government embargo. During this time, its share of the spending market has shrunk by 230 basis points.
As a result, between FY18 and FY22, Axis’ market share in spending decreased by 100 basis points (as of February). The data from Motilal Oswal backs up this claim.
Citibank’s credit card market share fell by 350 basis points between FY18 and FY22 (as of February). As a result, as of February 2022, Citi had only 2.55 million credit cards.
According to a report from Motilal Oswal Institutional Equities, credit cards issued by Citi have grown at a 0.4 percent CAGR over the last five years, while the industry has grown at a 20 percent CAGR.
Since FY21, credit card losses have been steadily increasing. On a global scale, however, the number of unpaid credit cards increased by more than 20% between FY18 and FY20. When the Reserve Bank of India prohibited HDFC Bank from issuing new credit cards in FY21, the growth rate fell to 7.5 percent. Growth in FY22 has resumed and now stands at more than 16 percent as of February.
Citibank had a 19.5 percent market share in credit cards in 2019 and a 13 percent market share in 2018. In the years since, its market share has steadily declined.
According to Suresh Ganapathy, an associate director at Macquarie Capital, and Param Subramanian, Citi’s credit card spend market share has decreased from 10% to 4% in the last four years. As a result, spend per card fell from Rs 16,000 to Rs 14,000 rupees. In terms of driving spending and engagement, Citi has been losing ground to larger players.”
Citi’s card spend per customer is Rs. 14,000 higher than the industry average (Rs. 12,000), while Axis Bank’s card spend per customer is lower (Rs 9,000).
As a result, Citibank’s credit cards have the most monthly transactions for a single card. It was 4.6 cards per month, compared to the industry average of 2.8 cards per month in FY22.