Delinquencies in the credit card industry improved by 5 bps in 2019

Private banks put up a better show than other card financiers

The overall volume delinquency (90-day) in the credit card industry improved by 5 basis points (bps) in 2019 and stood at 0.8 per cent, with private banks improving their performance compared to other card financiers.

According to a report by credit bureau CRIF High Mark, “Volume delinquency 30+ (30-day) or private banks improved by two basis points over the previous year while volume delinquency 90+ improved by seven basis points as of Dec 2019. Volume delinquency 30+ for other card financiers remained high, increasing by 14 bps Y-o-Y in Dec 2019, while volume delinquency 90+ remained stable but above 1 per cent in Dec 2019”.

As of December 2019, there were more than 50 million credit cards in circulation, clocking a 25 per cent growth over the preceding year, with 69 per cent of them issued by private banks and the rest 31 per cent by public sector banks and foreign banks. The outstanding portfolio of private banks in the credit card space has increased by 59 per cent year-on-year while other issuers saw a 20 per cent growth in 2019 over 2018.

The portfolio of the credit card industry stood at Rs 1.24 trillion as of December 2019, growing at 44 per cent over the previous year.

The credit bureau expects credit card sourcing to increase by 1 million over the next 5-6 quarters. “An assessment of credit card quarterly sourcing projected till Q4FY21 shows an increase of one million cards over the next 5-6 quarters. The projected growth is steady through the quarters, except a dip in Q1FY21, in line with the historical trend in sourcing,” CRIF High Mark said in its report.

Currently, the incremental credit card sourcing is of lower ticket sizes. According to the report, in the last four years, share of less than Rs 10,000 segment has more than doubled to reach 45 per cent in FY20 (till December).

While 60 per cent of the active card base is in the metros however the tier II cities are seeing faster growth.