SBI Cards Introduction
About: SBI Cards & Payment Services Ltd. Is the second-largest credit card issuer in India. The company is involved in the credit cards and other payment solutions business. The company started in October 1998 as a joint venture between India’s largest bank SBI and GE Capital.
Business Model: There are three major sources of earning for credit card companies; Interest, Annual Credit Card Subscription Fee, and finally Transaction fees paid by merchants that accept credit cards. Other than
these three operations, revenue may also be generated from other sources. In FY 19 SBI Cards had a total income of Rs. 72,868.34, out of which Rs. 69,991.11 was revenue from operations and Rs. 2,877.23 was other income.
Shareholding Pattern: State Bank of India held a 60% share in SBI Cards and GE Capital 40%. In 2017, the joint venture ended with GE Capital exiting the financial service sector, as a part of GE’s global strategy. With GE exiting, its 40% stake was divided. SBI increased its stake by 14% and ended up owning 74%. The Carlyle Group invested in the remaining 26%.
| Shareholding Pattern Pre-IPO | ||
| Shareholder | Number of Equity Shares of the face value of ₹ 10 each held | Percentage of Equity Share Capital held (%) |
| State Bank of India | 689,927,363 | 74.00 |
| CA Rover Holdings | 242,406,915 | 26.00 |
| Total | 932,334,278 | 100.00 |
SBI Cards Market Presence
Credit Card Industry: The current situation of the credit card industry in India is that for every 100 people in India, there are only 3 credit cards. To compare, in the United States it is 320. Although, the figures do suggest a rise. From 2015 – to 2019, the number of credit cards has risen from 24.5 million to 48.9 million. The total number of transactions was 800 million in 2015-16, in 2018-19, the number stood at 1.7 billion.
Similarly, the amount transacted between 2015-2019 has also increased from Rs. 2.4 lakh crore to 6.07 lakh crore.
| Number of Credit Cards (in Millions) | |
| Year | Number of Credit Cards (in Millions) |
| 2015 – 2016 | 24.5 |
| 2016 – 2017 | 29.8 |
| 2017 – 2018 | 37.4 |
| 2018 – 2019 | 48.9 |
| Number of Transactions (in Billions) | |
| Year | Number of Transactions (in Billions) |
| 2015 – 2016 | 0.8 |
| 2016 – 2017 | 1.09 |
| 2017 – 2018 | 1.4 |
| 2018 – 2019 | 1.7 |
| Amount Transacted (in Lakh Crore) | |
| Year | Amount Transacted (in Lakh Crore) |
| 2015 – 2016 | 2.4 |
| 2016 – 2017 | 3.3 |
| 2017 – 2018 | 4.6 |
| 2018 – 2019 | 6.07 |
According to the research done by CRISIL, credit card spending has registered robust growth, growing at a CAGR of 32 percent during 2015-2019 to reach Rs 6 lakh crore in Fiscal Year 19. It is expected to grow at a healthy rate to reach Rs 15 lakh crore in FY24.
It is important here to acknowledge the rise in new Fintech-led payment methods like UPI and mobile wallets. Online shopping is one of the places where credit cards
are used the most. Amazon and Walmart-owned Flipkart both have their own mobile wallets as well as UPI payment services. Google Pay, PayTM, PhonePe, and Amazon Pay may act as some of the biggest competitors of the credit card industry.
Market Share: 5 companies hold the 79% market share in the credit card industry. HDFC Bank, SBI Cards, ICICI Bank, Axis Bank, and Citi Bank. SBI Cards is the second-largest credit card issuer in India. HDFC holds the first position. Below are some tables to explain the market share in the credit card industry in India:
| Number of credit cards in force (in million) All | ||||||||
| Card Issuers | FY14 | FY15 | FY16 | FY17 | FY18 | FY19 | Market share as of FY19 | CAGR |
| HDFC Bank | 5.1 | 6.0 | 7.3 | 8.5 | 10.7 | 12.5 | 27% | 19% |
| SBI Card | 2.9 | 3.2 | 3.6 | 4.6 | 6.3 | 8.3 | 18% | 24% |
| ICICI Bank | 3.2 | 3.3 | 3.7 | 4.3 | 5.0 | 6.6 | 14% | 16% |
| Axis Bank | 1.4 | 1.7 | 2.4 | 3.3 | 4.5 | 6.0 | 13% | 34% |
| Citi Bank | 2.4 | 2.4 | 2.4 | 2.5 | 2.7 | 2.7 | 6% | 2% |
| Number of transactions (in million) | ||||||||
| Card Issuers | FY14 | FY15 | FY16 | FY17 | FY18 | FY19 | Market share as of FY19 | CAGR |
| HDFC Bank | 161 | 198 | 253 | 333 | 405 | 486 | 27% | 25% |
| SBI Card | 65 | 78 | 110 | 155 | 212 | 280 | 16% | 34% |
| ICICI Bank | 72 | 91 | 109 | 150 | 189 | 241 | 14% | 27% |
| Axis Bank | 27 | 41 | 59 | 88 | 128 | 168 | 9% | 44% |
| Citi Bank | 96 | 112 | 131 | 173 | 219 | 239 | 13% | 20% |
| Total spend (Rs million) | ||||||||
| Card Issuers | FY14 | FY15 | FY16 | FY17 | FY18 | FY19 | Market share as of FY19 | CAGR |
| HDFC | 4,57,408 | 5,77,599 | 7,49,981 | 9,74,749 | 13,24,039 | 17,04,208 | 28% | 30% |
| Bank | ||||||||
| SBI Card | 1,64,928 | 2,12,845 | 2,93,324 | 4,38,545 | 7,70,232 | 10,38,353 | 17% | 44% |
| ICICI Bank | 1,72036 | 2,15,646 | 2,68,101 | 3,62,055 | 5,15,331 | 6,73,006 | 11% | 31% |
| Axis Bank | 88,487 | 1,36,023 | 1,83,862 | 2,87,305 | 4,43,288 | 6,20,827 | 10% | 48% |
| Citi Bank | 2,67,476 | 3,08,629 | 3,55,839 | 4,25,583 | 4,88,652 | 5,32,185 | 9% | 15% |
| Average spend per transaction | ||||||||
| Card Issuers | FY14 | FY15 | FY16 | FY17 | FY18 | FY19 | Market share as of FY19 | CAGR |
| HDFC Bank | 2,847 | 2,918 | 2.964 | 2.929 | 3,273 | 3,504 | – | 4% |
| SBI Card | 2,520 | 2,726 | 2,669 | 2,835 | 3,635 | 3,713 | – | 8% |
| ICICI Bank | 2,376 | 2,380 | 2,454 | 2,409 | 2,724 | 2,795 | – | 3% |
| Axis Bank | 3,2.43 | 3,350 | 3,098 | 3,257 | 3,453 | 3,695 | – | 3% |
| Citi Bank | 2,785 | 2,764 | 2,716 | 2,458 | 2,236 | 2,227 | – | -4% |
| Average spend per card in force (₹) | ||||||||
| Card Issuers | FY14 | FY15 | FY16 | FY17 | FY18 | FY19 | Market share as of FY19 | CAGR |
| HDFC Bank | 84,252 | 1,03,964 | 1,14,485 | 1,19,356 | 1,35,181 | 1,44,770 | – | 11% |
| SBI Card | 60,458 | 71,547 | 86,011 | 1,07,737 | 1,40,975 | 1,44,813 | – | 19% |
| ICICI Bank | 56,543 | 65,685 | 77,555 | 90,611 | 1,12,042 | 1,17,203 | – | 16% |
| Axis Bank | 72,304 | 88,227 | 90,193 | 1,00,167 | 1,12,877 | 1,21,220 | – | 11% |
| Citi Bank | 1,11,642 | 1,2.8.731 | 1.4941 | 1,74,225 | 1,87,045 | 1,99,881 | – | 12% |
| The average outstanding per card in force (₹) | ||||||||
| Card Issuers | FY14 | FY15 | FY16 | FY17 | FY18 | FY19 | Market share as of FY19 | CAGR |
| HDFC Bank | 23,853 | 27.044 | 28,180 | 30,428 | 33,781 | 35,909 | – | 9% |
| SBI Card | 15,311 | 18,125 | 20,431 | 22,490 | 23,281 | 22,398 | – | 8% |
| ICICI Bank | 10,377 | 12,103 | 14,989 | 17,511 | 18,563 | 18,514 | – | 12% |
| Axis Bank | 12,713 | 12,889 | 17,218 | 20,078 | 18,408 | 20,622 | – | 10% |
| Citi Bank | NA | NA | NA | NA | NA | NA | – | NA |
Promotions and Promoters: SBI Cards is promoted by SBI one of the largest banks in India. The benefit to SBI Cards comes from the fact that it has access to a network of around twenty-one thousand branches and 44.5 crore customers.
SBI Cards has the highest number of credit cards to offer to its individual as well as corporate customers. Cards offered include shopping, fuel, travel, lifestyle, etc.
| SBI Card | HDFC Bank | ICICI Bank | Axis Bank | |
| The total number of cards offered | 46 | 20 | 33 | 21 |
| % of premium cards offered | ~40% | ~20% | ~45% | ~25% |
| Range of fees for paid cards | 500-5,000 | 500-10,000 | 200-10,000 | 250-10,000 |
With the rise in digital and online payments, Co-branded cards can act as an important way to offer additional value to customers. Almost all the credit card companies have and offer co-branded cards. These also act as a way to widen the array of services and increase the customer base. SBI Cards offers the highest number of Co-branded credit cards, followed by ICICI Bank, RBL Bank, and HDFC Bank.
| Number of co-branded partners | Travel | Shopping / Entertainment | Payments | Lending | Healthcare | Others | |
| SBI Card | 18 | 7 | 3 | – | – | 1 | 7 |
| ICICI Bank | 12 | 8 | 1 | – | – | – | 3 |
| RBL Bank | 8 | 1 | 1 | – | 2 | 1 | 4 |
| HDFC Bank | 6 | 3 | 1 | – | 1 | – | 1 |
| Axis Bank | 4 | 2 | 1 | 1 | – | – | – |
| Citi bank | 3 | 1 | 1 | 1 | – | – | – |
| Amex | 1 | 1 | – | – | – | – | – |
| IndusInd Bank | 1 | 1 | – | – | – | – | – |
IPO Details
Size: 6,622,517 Eq Shares
Date: Mar 2, 2020 — Mar 5, 2020
Issue Price: Rs.750 to Rs.755 Per Equity Share
Lot Size: 19 shares per lot
Reservation:
- 1.3 crore shares (about 10%) are reserved for SBI shareholders. For this, SBI shareholders should have had SBI shares as on Feb 18, 2020.
- 18.4 lakh shares are reserved for SBI and SBI Cards employees. Also, an employee discount of ₹75 per equity share is also available.
Fresh Issue and OFS:
- The proceeds from the fresh issue are planned to be directed towards augmenting the capital base in order to provide for the company’s future capital requirements.
- The company will not receive any proceeds from the Offer For Sale (OFS).
Around 130,526,798 equity shares will be put out for sale.
SBI Cards Financials
| SBI Cards Income, Expenses and Profits (in ₹ Million) | |||
| For the year ended March 31, 2019 | For the year ended March 31, 2018 | For the year ended March 31, 2017 | |
| Total Income | 72,868.34 | 53,701.92 | 34,710.38 |
| Total Expenses | 59,552.35 | 44,508.47 | 28,994.15 |
| Profits after Tax | 8,627.19 | 6,011.43 | 3,728.59 |
Revenues and profits of SBI Cards have more than doubled over the past 3 years. Revenue rose from 34710 crores in FY 2017 to 72868 crore in FY 2019. Net profit rose to
862 crores in FY 2019 from 372 crores in FY 2017. SBI Card’s total assets have also risen from 1.07 lakh crores in March 2017 to 2.44 lakh crores in September 2019.
