SBI Card sees growth in premium credit cards; aims to top market share in 3 years – Money Perception

SBI Card, country’s second largest credit card issuer, aims to topple HDFC Bank in the card space in the next 2-3 years with an aggressive focus on the affluent young customer segment.

SBI Card is a joint venture between State Bank of India (SBI) and GE Capital, in which SBI owns 60 percent and the balance is held by the US-based GE Capital, which recently announced plans to exit the business.

Once GE exits, SBI plans to hike its stake to 74 percent. GE is looking for buyers to sell the balance 26 percent.

Vijay Jasuja, MD and CEO of SBI Card said, “Today, we have observed that 50 percent of our premium customers are in the age group of 25-35 years, these are urban young affluent customers and have a different lifestyle and are more aspirational who spend more on travel, vacations, leisure, entertainment, hanging out. They contribute 50 percent to the premium segment.”

As at the end of April, HDFC Bank had the largest number of credit cards in the industry at 87 lakh followed by SBI at 46.8 lakh and ICICI Bank at 42.8 lakh cards.

Jasuja said with a 15 percent market share, SBI Card climbed to second spot toppling ICICI Bank in number of cards while in the average spends category, SBI card jumped to the second spot from the fifth spot a year ago.

The total spend per card for the month of April for SBI stood at Rs 1,065 while for HDFC Bank it was at Rs 1,127. For ICICI Bank it was much lower at Rs 869.

Our overall growth in the total spends last year was 35-40 percent. Of which, the premium segment contributes more to the growth. The premium segment is about 15 percent of the total portfolio of 48 lakh (4.8 million) cards (latest numbers) and contribution to the business is over 25 percent, he added.

The average spend per year is Rs 120,000 for mass cards, Rs 175,000- Rs 200,000 for SBI Platinum Cards and Rs 375,000 – Rs. 400,000 for SBI Card Elite category.

Given the potential growth, SBI Card launched its ‘Prime’ card targeting the new age premium segment – the urban, young affluent professionals of 25-35 years of age with a disposable income of over Rs 40,000.

With an annual fee of Rs 2,999 along with a welcome voucher of the same amount and a credit limit of Rs 40,000- Rs 10 lakh, SBI Card has a target to acquire half a million (50 lakh) ‘Prime’ customers over the next two years.

In 2016-17, the government-backed credit card player witnessed a growth of 35-40 percent growth adding 1.2 million cards (12 lakh) last year.

Jasuja said he wants SBI Card to be the market leaders as soon as possible. “We want to penetrate the entire SBI customer base from 35 percent at present. But we should be market leaders in the next 2-3 years’ time.”

Also, given the way markets are evolving, we will look at tie-ups with fintech (financial technology) players as well. We are at present only in the cards business but we can look at new payment instruments…why should we not be present in other businesses. There is no solid plan yet but we may look at it, he added.