In a step to fuel its ambitions to boost its retail division, Yes Bank has decided to launch its credit cards by the end of the fiscal 2010-11.
The bank will also enter into home and car loan divisions by March 2012, Rana Kapoor, founder, MD and CEO of the bank said.
Presently, the bank has 150 branches throughout 26 states in India. It intends to add another 100 branches this fiscal. Mr. Kapoor said, “We will take our branch count to 250 by end of March 2011″.
The bank has a retail clientele of 2, 10,000 and about 500,000 of corporate clients (as on March 2010.
The bank also intends to foray into lending to small and medium enterprises (SMEs), unsecured lending to small businesses, home loans and car loans to expand its retail business.
Kapoor said “We have enough headroom to rise around Rs 1,500 crore of hybrid capital, which will be raised domestically. In a rising interest rate environment, it is better to raise money”.
The bank has reported a net profit increase of 75percent this year.
The net interest margin of the bank has displayed a small increase to 3.2percent for the 4th quarter of the fiscal previous year from 3percent in the same period previous year. Kapoor said “We should be able to keep our net interest margins at the three-plus-level in coming year too”.
Friday, April 30, 2010
Friday, April 16, 2010
Credit card records decline by almost 50 lac in a year
Even as the economy is back on track and consumer confidence up, the number of credit cards in the system continues to dip. In the last one year, the total number of credit cards in use has dipped by almost 50 lakh.
According to the latest data released by RBI in its monthly bulletin, the number of credit cards dipped to just about 2 crore as of end February 2010 from around 2.5 crore a year ago. The data also indicates that average monthly card spends both in terms of value as well as volume have still not touched the pre-crisis (prior to Lehman collapse) levels.
Average monthly spend in FY10 has fallen to Rs 5,100 crore against Rs 5,400 crore in FY09. While average monthly volumes in the current year has been just 1.94 crore a month compared with 2.16 crore a month in FY09. Even peak festival spending through cards in the current fiscal is less than the previous year’s levels. ICICI Bank, the largest card issuer had around 8.5 million cards outstanding at its peak, which has now fallen to around 5 million. While for SBI credit card, the number has dipped from 3.5 million to 2.8 million.
The fall in cards is surprising as banks have started disbursing unsecured loans like personal loans, post crisis, in the past few months. Even credit cards outstandings are treated as unsecured lending by banks. Some large credit card issuers like ICICI Bank, SBI Card, Citi and even smaller issuers like ABN Amro and Barclays have either slowed down or cut their outstanding cards. Only few players like HDFC credit Card and Standard Chartered have seen a nominal growth in their numbers.
Pralay Mondal, country head (retail assets & credit cards), HDFC Bank, said: “Lot of attritions are happening in the system as loss ratios had gone up. Banks are not adding as much new customers. As new customer acquisitions are lower than attritions, the overall numbers are falling. Previously, the number of new customers were higher. We are currently doing around 80,000-90,000 new credit cards a month and our losses are much lesser than industry.” Currently, HDFC Bank has close to around 5 million credit card customers while StanChart has around 1.4 million customers.
Adds Shyam Srinivasan, Country Head — Consumer Banking, Standard Chartered Bank: “StanChart has kept its numbers flat for a while now. We have increased our share in the business. Some of them had overdone themselves and now they are letting go of customers. It’s a normal process. As they were hit by high credit losses, they are trying to clean up.”
According to Abizer Diwanji, executive director of Corporate Finance, KPMG India, “Today, nobody is expanding on the card portfolio except in the debit card space. The cost of merchant acquisition is tremendously high. The maintenance of delivery of credit card is high compared to a personal loans. It’s a far more cumbersome job.”
One of the biggest problems facing the industry has been the rise in bad debts in the past few years. However, this seems to have stopped and bankers say there has been a drop in bad debts in the past few months. Sources said the overall credit card losses for the industry have now come down to 15-16% against around 18% earlier. However, even at these rates, most issuers are still making losses.
According to the latest data released by RBI in its monthly bulletin, the number of credit cards dipped to just about 2 crore as of end February 2010 from around 2.5 crore a year ago. The data also indicates that average monthly card spends both in terms of value as well as volume have still not touched the pre-crisis (prior to Lehman collapse) levels.
Average monthly spend in FY10 has fallen to Rs 5,100 crore against Rs 5,400 crore in FY09. While average monthly volumes in the current year has been just 1.94 crore a month compared with 2.16 crore a month in FY09. Even peak festival spending through cards in the current fiscal is less than the previous year’s levels. ICICI Bank, the largest card issuer had around 8.5 million cards outstanding at its peak, which has now fallen to around 5 million. While for SBI credit card, the number has dipped from 3.5 million to 2.8 million.
The fall in cards is surprising as banks have started disbursing unsecured loans like personal loans, post crisis, in the past few months. Even credit cards outstandings are treated as unsecured lending by banks. Some large credit card issuers like ICICI Bank, SBI Card, Citi and even smaller issuers like ABN Amro and Barclays have either slowed down or cut their outstanding cards. Only few players like HDFC credit Card and Standard Chartered have seen a nominal growth in their numbers.
Pralay Mondal, country head (retail assets & credit cards), HDFC Bank, said: “Lot of attritions are happening in the system as loss ratios had gone up. Banks are not adding as much new customers. As new customer acquisitions are lower than attritions, the overall numbers are falling. Previously, the number of new customers were higher. We are currently doing around 80,000-90,000 new credit cards a month and our losses are much lesser than industry.” Currently, HDFC Bank has close to around 5 million credit card customers while StanChart has around 1.4 million customers.
Adds Shyam Srinivasan, Country Head — Consumer Banking, Standard Chartered Bank: “StanChart has kept its numbers flat for a while now. We have increased our share in the business. Some of them had overdone themselves and now they are letting go of customers. It’s a normal process. As they were hit by high credit losses, they are trying to clean up.”
According to Abizer Diwanji, executive director of Corporate Finance, KPMG India, “Today, nobody is expanding on the card portfolio except in the debit card space. The cost of merchant acquisition is tremendously high. The maintenance of delivery of credit card is high compared to a personal loans. It’s a far more cumbersome job.”
One of the biggest problems facing the industry has been the rise in bad debts in the past few years. However, this seems to have stopped and bankers say there has been a drop in bad debts in the past few months. Sources said the overall credit card losses for the industry have now come down to 15-16% against around 18% earlier. However, even at these rates, most issuers are still making losses.
Monday, April 5, 2010
LIC launches credit card protection service
LIC credit card holders can now report loss any of their cards from anywhere in the world to a 24-hour helpline launched by LIC Cards Services.
"LIC Cards Services Ltd has launched Card Protection Plan for its credit card customers in partnership with CPP Assistance Services... and it safeguards all of the LIC cardholder's payment cards - credit, debit and ATM cards," the company said in a statement.
It said members will also be able to register their non-financial cards such as store cards, loyalty and membership cards.
Besides, customers will be able to retrieve important details on lost/stolen documents like passport, PAN and driving licence.
CPP said, meanwhile, that to avail of the new service, customers would need to purchase a membership plan offered by LIC and register their cards.
It said membership plans have two offerings with annual fee of Rs 995 and Rs 1,295. "The difference between the two is in the Assistance services limits and fraud protection limits provided to the consumer," it added. People can also opt for a joint membership plan.
"LIC Cards Services Ltd has launched Card Protection Plan for its credit card customers in partnership with CPP Assistance Services... and it safeguards all of the LIC cardholder's payment cards - credit, debit and ATM cards," the company said in a statement.
It said members will also be able to register their non-financial cards such as store cards, loyalty and membership cards.
Besides, customers will be able to retrieve important details on lost/stolen documents like passport, PAN and driving licence.
CPP said, meanwhile, that to avail of the new service, customers would need to purchase a membership plan offered by LIC and register their cards.
It said membership plans have two offerings with annual fee of Rs 995 and Rs 1,295. "The difference between the two is in the Assistance services limits and fraud protection limits provided to the consumer," it added. People can also opt for a joint membership plan.
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