YES SECURITIES Updates on Banks & Life Insurance Monthly - September 2021

Banks - Sector Update on Credit cards - Rising spend per card is the underlying driver for ICICI

We continue to examine acutely the critical credit cards market since success in growing a credit cards'' franchise can materially move the needle in terms of overall bank RoA. We incorporate data for August 2021 into our long-term monthly database, which dates back to December 2016 and we present all key data and conclusions in this report. The key findings are as follows: (1) ICICI''s market share in credit card spends continued to inch up in August 2021 to 19.6%, while that of HDFCB continued to move lower (2) The market share for ICICI in net credit cards added continued to remain outsized in August 2021 at 42.1% (3) Spend per credit card for ICICI improved to Rs 13,314 during August 2021, up 4.3% MoM, generally improving at a faster pace than HDFCB across time periods (4) Average ticket size per transaction for ICICI for the month of August 2021 amounted to Rs 4299, inching up 0.3% MoM, also generally improving at a faster pace than HDFCB across time periods. We most prefer SBI, FED, ICICI, AXSB and CSB in the banking space. Our earlier key note on credit cards can be accessed at the following link.

ICICI''s market share in credit card spends continued to inch up in August 2021 to 19.6%

ICICI''s market share in credit card spends inched up to 19.6% in August 2021 compared with 19.2% in July 2021 and 17.9% in H1CY21. In comparison, HDFCB''s market share moved lower to 26.5% in August 2021 compared with 27.8% in July 2021 and 28.9% in H1CY21. RBI had lifted the ban on credit card addition for HDFCB on 17th August 2021. The market share for SBI (via SBI Cards) at 18.7% was somewhat lower than the 19.2% registered in July 2021 but marginally better than 18.5% seen during H1CY21.

The market share for ICICI in net credit cards added continued to remain outsized in August 2021 at 42.1%

The market share for ICICI in net credit cards added during August 2021 amounted to as much as 42.1%. HDFCB was still seeing depletion in credit card count during this month and so was RBL, among other key players. SBI contributed 31.3% to the net credit addition for the month. AXSB seems to be making a material return to card addition, contributing a 15.9% share, after 15.5% in July 2021. This is after net credit card count reduction in H1CY20, a 1.9% share in H2CY20 and a 10.9% share in H1CY21. Also, notably, the share for BoB spiked to 8.4% in August 2021.

Spend per credit card for ICICI improved to Rs 13,314 during August 2021, up 4.3% MoM

Notably, the spend per card for ICICI in August 2021 was 27% higher than the monthly average observed over H1CY21 and 48% higher than the monthly average observed over the 4-year period of CY17-20. In comparison, the average monthly spend per card for HDFCB clocked Rs 13,969, declining -1.0% MoM, but up 16% over the monthly average during H1CY21 and up 20% over the 4-year monthly average observed over CY17-20. In other words, the average spend per credit card has moving up in a more robust fashion for ICICI compared with HDFCB. This was anticipated in our key note on credit cards earlier, authored on 21st Aug 2021.

Average ticket size per transaction for ICICI for the month of August 2021 amounted to Rs 4299, inching up 0.3% MoM

Notably, the average ticket size per transaction for ICICI in August 2021 is 8% higher than the average observed over H1CY21 and 55% higher than the average observed over the 4-year period of CY17-20. In comparison, the average ticket size per transaction for HDFCB was Rs 4231, declining -3.8% MoM, but up 4% over the average during H1CY21 and up 23% over the 4-year average observed over CY17-20. In other words, average ticket size per transaction has been moving up more meaningfully for ICICI compared with HDFCB.

IPRU, SBIL deliver better growth than HDFL, MLI, with LIC also lagging

• Commentary on Total APE: Total APE growth was healthy for ICICI Pru on both MoM and YoY basis at 14% and 41%, respectively. Total APE growth was also healthy for SBI Life on both MoM and YoY basis at 11% and 49%, respectively. Total APE growth for HDFC Life on MoM basis was faster than IPRU/SBIL at 20% but lagged on YoY basis at 26%, though reasonable in the absolute sense. Total APE growth for Max Life was healthy on MoM basis at 11% but relatively slow on YoY basis at 8%. LIC''s total APE growth was relatively slow on both MoM and YoY basis at 5% and 12%, respectively.
• Commentary on Individual APE: Individual APE growth was healthy for ICICI Pru on both MoM and YoY basis at 14% and 41%, respectively. Individual APE growth was also healthy for SBI Life on both MoM and YoY basis at 9% and 56%, respectively. Individual APE growth for HDFC Life was relatively slow on MoM and YoY basis at 7%% and 20%, respectively, though the YoY growth was reasonable in the absolute sense. Individual APE growth for Max Life was healthy on MoM basis at 11% but relatively slow on YoY basis at 7%. LIC''s individual APE growth was relatively slow on both MoM and YoY basis at 7% and 22%, respectively, though the YoY growth was reasonable in the absolute sense.

Source : Equity Bulls

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Updates Banks LifeInsurance BFSI September2021 @YESSecurities