I personally have only few worried is not taking bold steps to have higher growth.
As a investor we should always need to know sbi card will rarely outperform the credit card market will loose market share at a very slow rate.
The biggest competition according to me is hdfc and axis as incase of icici the overall numbers can be huge but just talk to any credit card enthusiast other then amazon credit card other mid to premium cards are not competitive and people rarely prefer them and most just have there basic credit card that affect there average bill per card.
Just looking at sbi cards the only reason I personally Invested is that there is no better alternative for credit card stock.
We should accept around 1-2% less growth in revenue of sbi cards against credit card average that would be more realistic but it still more then 20%.
RBI discussion paper on digital payments have wide ramifications for credit card companies. Currently the rally in price seems to be over. Better to be cautious in this counter.
will increase compition, henceforth performance will matter.
SBI cards made a very aggressive move with this launch of cash back credit card. ICICI earned so many customers due to its Amazon pay cash back card now it’s the time for the SBI to show its might and acquire large number of customers to its fold with this 5% cash back. And they priced it perfectly. The annula fee from second year is 999. With this they will get huge fee income and there is only 1% cash back in offline payments which will give boost to mdr fee.
And there might not be any competition as it’s more targeted towards middle class and the class between upper and middle class with the cap of 10000 per billing cycle. The incumbent large credit card players like hdfc and ICICI might not launch a competitive card as ICICI has Amazon pay and hdfc has its own good card portfolio the ground is open for the SBI card to make a splash and issue millions of new cards.
I have one fundamental question here, how credit card companies are able to afford these higher cashback. I understand for specific cases like partner with some merchants, but in here it is vanilla cashback on all transactions right, say 1.5% on flipkart axis card on all transaction, now in SBI 5% on all online merchants. Who is really bearing this cost?
When I compare this card with Amazon ICICI or Flipkart Axis , only advantage is 5% cash back from all the online purchases. Disadvantage is 10 k / month limit and 999 per year annual fee , which is not there in both the cards. One must purchase approx 20 k/ year online to compensate for annual fee. I would prefer to have both Amazon ICICI and Flipkart Axis and avail unlimited 5% cash back on 3 main e-commerce portals without paying any annual fee. Also, from investment perspective , though I like credit card business , I have not invested in SBI Card as it is consistently losing market share. Management change has also been frequent and abrupt in the past.