SBI Cards expects to capture a market share of 15% of total customer spending by next year, says Pallav Mohapatra, chief executive officer in an interview with Vishwanath Nair. He also spoke on the key trends in customer spending, asset quality of the company and the growth expectations this year. Excerpts:
What kind of growth have you seen so far this year? What kind of growth do you expect before March?
In the last calendar year, the industry slowed down 3% and there was a clean-up of portfolio by other issuers. We grew about 9% year-on-year in this period. In the last financial year, the company had registered a profit of Rs 136 crore. In the first nine months of the current financial year, we have registered a profit of Rs 231 crore. We believe we will end this year at Rs 278-280 crore.
What was the major contributor to this growth?
The factor that really contributed to this growth was a significant growth in spending that we saw in our portfolio. Spending is the point from which revenue is driven. In the industry, the spends have grown around 27-28% in the first nine months this financial year, which in our company was around 42%. The base factor too worked in our favour. Last year, our share in the total spends in the industry was about 9%, now we are at 11%. The rate at which we are growing, we are sure that by next financial year we should be closer to 15% of total industry spends.
What are the key trends in customer spending that you see this year?
The growth was very high in the first six months of the current financial year. The consumer spending was growing at 40%. But in the third quarter, we observed a dip in the consumer spending in apparels and jewellery. The spending trend was almost flat compared with last year in other sectors like aviation and hospitality. We were expecting a 30-35% growth in the third quarter on account of the festive season spending, but the growth was only 20-25%, much below our expectation.
What would you attribute this growth to?
One thing is that the economy has not grown much, while customers have been saving more than what they have been spending. This has not only hurt the credit business but also the various consumer-oriented businesses across the country.
What is the asset quality situation currently?