Whalesbook
Credit Card Growth Outpaces Spending
Credit card trends diverged sharply in February 2026. Consumer spending via credit cards dropped 11% from January to ₹1.78 lakh crore. Year-on-year growth slowed to 6%. This spending slowdown signals a more cautious consumer sentiment, possibly due to economic uncertainties like geopolitical tensions affecting commodity prices and currency stability.
In contrast, new credit card additions surged 21% to 1.05 million in February, the highest monthly total in six months. Major private banks are leading this aggressive customer acquisition. HDFC Bank added 155,000 net new cards, holding its dominant 22% market share as of February 2026. Axis Bank also added 155,000 new cards, with ICICI Bank adding 140,000. These three banks alone added nearly 447,000 new cards, highlighting intense competition for market share. This strategy suggests banks are prioritizing building customer relationships and future spending potential over immediate transaction volumes.
Bank Valuations and Performance Amid Market Swings
India's banking sector shows stability despite market volatility in March 2026. While the Nifty Bank index faces pressure from a weakening rupee and rising yields, major banks like HDFC Bank, ICICI Bank, and Axis Bank maintain stability with double-digit credit and deposit growth.
Investor interest varies across bank valuations. Axis Bank trades with a P/E ratio of about 14.1 and a market capitalization around ₹3.7 lakh crore. HDFC Bank, a market leader with a 22% credit card share, trades at a P/E of roughly 16.1 with a market cap of ₹1.23 lakh crore. HDFC Bank's stock price fell about 15% in March 2026 following its chairman's resignation.
ICICI Bank holds a 16% market share and trades at a P/E ratio around 16.6 with a market cap near ₹8.97 lakh crore. SBI Cards, a major player, trades at a higher P/E of approximately 31.3 with a market cap around ₹65,000 crore and has seen recent stock price declines. SBI Cards' higher P/E ratio suggests market expectations for growth in its specialized segment, while lower valuations for larger banks like Axis and HDFC may point to more mature growth profiles or current market concerns.
RBI Regulations and Shifting Competitive Landscape
The credit card industry is adapting to new RBI regulations. The RBI introduced stricter rules from 2026 covering billing transparency, customer consent for credit limit changes, penalty structures, and data security via tokenization. These rules aim to protect consumers and promote responsible lending, affecting how all issuers, including HDFC Bank and Axis Bank, manage their portfolios. The growth of UPI-linked credit cards and RuPay is also changing the payment landscape.
Despite moderating spending growth, the steady rise in new card additions by HDFC Bank, Axis Bank, and ICICI Bank signals a competitive push for market share and future revenue. This strategy unfolds as the banking sector faces economic pressures and tighter liquidity due to tax outflows and central bank actions. Analysts expect spending growth to stay moderate, potentially limited by a cautious credit environment and tighter lending standards. Issuers seem focused on optimizing existing customer relationships and profitability, alongside acquiring new customers.