Covid-19: Average card spend falls 25% as shopping, travel take back seat

Average card spends have taken a hit during the lockdown, with discretionary spending in malls as well as travel coming to a halt. Axis Bank and HDFC Bank have reported an over 25 per cent dip in average credit card spends in March 2020, compared to January and February.
 

With malls and shops closed, spending avenues are practically non-existent. Further, saving money for essentials and the general inclination towards conserving cash led to lower discretionary spending in March, a trend that continued in April. This is not expected to change even after lifting of the restrictions, with priorities now changing, said bankers.
 

Axis Bank, in its presentation after the FY20 results, said average credit card spends in March were down 25 per cent, compared to January and February, of which online transactions were down 18 per cent and offline down 29 per cent. Average debit card spends for the whole of March were down 22 per cent, against average spends in January and February, of which online transactions reduced by 13 per cent and offline by 28 per cent.

HDFC Bank also saw a fall in average card spends in March. The card spending trends saw a Rs 100-crore decline in credit card advances from Rs 57,678 crore at the end of December to Rs 57,575 crore at end of March.
 

The private lender, in an analyst call, said the card spend was lower in March by 21 per cent than the trend in January and February. The second half of March was particularly hit as card spends declined by 35 per, cent compared to the average of January and February 2020.

Vikramaditya Singh Khichi, executive director of Bank of Baroda, said that during the lockdown, the use of cards (credit) for discretionary spending has reduced. Use of cards for utilities and insurance premiums, however, has maintained a steady trend — an industry-wide phenomenon.

SBI Cards in a statement last week said existing retail customers continue to use its cards during the lockdown, in certain merchant categories. The daily average run rate of retail spends for last 15 days of March was lower by 31 per cent, as compared to the first 16 days.

With the extension of the lockdown, average daily retail spends are lower by 60 per cent, compared to the first half of March. Online and utility spends have continued to show resilience.
 

The company is keeping a close watch on its portfolio, and drawing up plans to mitigate the impact after the lifting of the lockdown, with special focus on online spends.
 

Repayments from retail customers are higher than retail spends, leading to a decrease in receivables. Corporate card spends have also declined at similar rates, it added.