ICICI Bank has reported a gross credit loss of 4.4% in its credit card portfolio for the fiscal year 2024, according to a study by Macquarie based on the bank’s filings. This loss was 3.2% at the end of FY23 and 4.5% at the end of FY22.
In comparison, SBI Cards, which focuses solely on credit cards, recorded a higher gross credit loss of 7.4% for FY24, up from 6.2% in FY23 and 8.4% in FY22. Macquarie’s Suresh Ganapathy pointed out that ICICI’s losses are 300 basis points lower than SBI Cards, even though ICICI was actively growing its lending during this time.
When looking at net losses, HDFC Bank reported a credit loss of 3.2% in its credit card and personal loan portfolio for FY24. ICICI Bank’s net credit loss stood at 2.2%, while SBI Cards reported a net credit loss of 6.3%.
Macquarie indicated that default rates for credit card portfolios in banks could be approaching 5-6%, a level not seen in a while. Ganapathy noted that many young millennials are using their full credit limits and defaulting without paying off any part of their loans.
There has been an increase in stress on unsecured loans, especially personal loans, prompting the central bank to raise risk weights on some retail exposures. This was intended to slow down lending in areas that might threaten the overall financial system if delinquencies rise. The regulator has been warning about the growing stress in personal loans and credit cards.
In August, the central bank mentioned that credit growth had moderated in sectors where it had introduced pre-emptive regulatory measures last November. However, some areas of personal loans continue to grow rapidly, which requires careful monitoring.
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