July Credit Card Data Analysis: India's credit card spending growth lost momentum in July even as transaction volumes continued to rise sharply, pointing to a shift towards smaller-ticket, more frequent transactions.
At the stock level, SBI Cards & Payment Services continued to post strong spending growth, but its share of industry spends declined sequentially, highlighting the mixed signals in the latest card data.
The divide has caught the attention of brokerages. Morgan Stanley flagged the widening gap between spending and transaction growth, while Jefferies highlighted SBI Cards' strong 22% YoY spending growth alongside a 140-basis-point monthly decline in its spending share.
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Credit Card Spending Growth Slows In July
Morgan Stanley analysts Subramanian Iyer, Kushan Parikh, Sakshi V Chaplot and Lavish Porwal said monthly industry credit card spending growth has been on a broad decelerating trend, falling from 22.5% YoY in March 2025 to 8.9% in March 2026 and 7.4% in July 2026.
Jefferies analysts Bhaskar Basu, Kamal Mulchandani and Prakhar Sharma, meanwhile, put July industry credit card spending growth at 7.1% YoY, compared with 9.7% in June.
The difference in the reported July growth rates likely reflects differences in the underlying datasets or calculation methodology, so the broader takeaway remains the same i.e. credit card spending growth moderated in July.
Morgan Stanley also highlighted a split between card additions and spending. Industry cards-in-force grew 10% YoY in July, faster than spending growth of 7%.
That resulted in a 2.4% YoY decline in spending per card, extending a trend that has now persisted for 10 months.
Transactions Surge, But Ticket Sizes Shrink
The more notable signal in the data is the sharp difference between transaction and spending growth.
Morgan Stanley said credit card transaction growth remained strong at 24% YoY in July, substantially ahead of spending growth.
The brokerage said the trend points to a shift towards smaller, more frequent swipes. In other words, consumers are using their cards more often, but the increase in transaction frequency is not translating into a proportionate increase in overall spending.
This could keep spending-per-card growth under pressure even as banks continue to expand their card bases.
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Morgan Stanley said card usage on a current cards-in-force basis has averaged just 0.1% YoY growth over the past 10 months. The brokerage also noted that newly issued cards typically take one to two years to ramp up spending.
SBI Cards Spending Grows 22%, But Share Falls
SBI Cards stands out for its spending momentum despite the broader moderation.
Jefferies said SBI Cards' spending grew 22% YoY in July, although growth moderated from 34% in June.
At the same time, its share of industry credit card spending fell 140 basis points MoM to 19% from 20% in June.
Jefferies said the decline could have been linked to moderation in corporate spending. SBI Cards' share of point-of-sale spending, however, remained stable at 18%.
The brokerage also noted that SBI Cards' share of online spending declined to 20% from 22% in June, even as the industry's online spending mix increased by 100 basis points MoM to 64%.
Jefferies has retained its 'Hold' rating on SBI Cards.
Why The SBI Cards Data Looks Mixed
The sequential decline in SBI Cards' spending share should be viewed alongside its longer-term performance.
Morgan Stanley said SBI Cards gained 2.2 percentage points in monthly spending market share on a YoY basis, with the brokerage noting the low corporate base. HDFC Bank gained 1.2 percentage points.
By comparison, ICICI Bank and IndusInd Bank each lost 2.3 percentage points of monthly spending market share on a YoY basis.
The two data points — SBI Cards losing 140 bps of share MoM while gaining 2.2 percentage points YoY — are not contradictory. They measure different periods.
The key takeaway is that SBI Cards continues to show strong YoY spending growth, but its sequential share performance has softened.
HDFC Bank Leads Card Additions
Card issuance remains healthy across the industry.
Morgan Stanley said that in YTD FY27, SBI Cards and HDFC Bank each accounted for 16% of industry net additions, followed by ICICI Bank at 15%, Federal Bank at 10% and IDFC First Bank at 8%.
Axis Bank accounted for 6% of industry net additions despite having more than 13% share of cards-in-force.
July data showed HDFC Bank adding 2.30 lakh cards, the highest absolute addition among peers. SBI Cards added **1.83 lakh cards, or 0.18 million, during the month.
SBI Cards' share of industry net additions was around 16%, while its net additions were up 2.7x YoY, according to Jefferies.
Industry cards outstanding rose around 1% MoM and 9.9% YoY to 12.29 crore in July, based on the broader July credit-card data.
ICICI Adds Cards, But Spending Remains Weak
ICICI Bank continued to expand its card base, with cards outstanding rising 9% YoY, the strongest growth among major issuers in the July data.
However, spending growth has remained comparatively weak. Morgan Stanley's YTD FY27 data showed ICICI Bank's spending declining 6% YoY.
The contrast underscores an important trend in the industry: card additions are not necessarily translating into proportionate spending growth.
Morgan Stanley said industry spending per card has remained under pressure, with the two-year lag basis showing average growth of -9% YoY, while the 11-year lag basis showed average growth of -1% YoY.
Which Banks Are Seeing Stronger Spending Growth?
Morgan Stanley's YTD FY27 data showed strong spending growth at several issuers.
HDFC Bank spending increased 14% YoY, while SBI Cards grew 26%, Yes Bank 20%, IDFC First Bank 20%, Federal Bank 57% and AU Small Finance Bank 31%.
In contrast, ICICI Bank's spending declined 6% YoY, while IndusInd Bank recorded a much sharper 47% decline.
The figures suggest that spending momentum remains uneven across issuers, even as overall card penetration continues to rise.
Digital Spending Continues To Shift
The industry's spending mix also continues to move towards online transactions.
Morgan Stanley said the online spending mix increased 100 bps MoM to 64% in July. For SBI Cards, however, the online mix moderated by 100 bps MoM.
Retail digital spending, excluding NEFT, grew 18% YoY to Rs 44.7 trillion in July, compared with 19% growth in June.
Credit cards accounted for 4.7% of retail digital spending, excluding NEFT, down 40 bps YoY but broadly stable sequentially.
What Investors Should Watch
The July data presents a mixed picture for credit card companies.
The positive signals are clear: card additions remain healthy, transaction growth is strong and asset-quality trends have stabilised, supporting continued expansion in the card base.
But spending growth is not keeping pace with either card additions or transaction volumes. Morgan Stanley's observation that transactions are growing much faster than spending points to smaller ticket sizes, while its spending-per-card data suggests that the pressure has persisted for several months.
For SBI Cards, the picture is similarly mixed. A 22% YoY increase in July spending is strong, but the 140-bps sequential decline in its industry spending share gives investors a reason to watch whether the slowdown is temporary or marks a broader moderation.
The key metric going forward will therefore be whether higher transaction frequency eventually translates into stronger spending per card. Until that happens, the industry's growth story could remain more volume-led than value-led.
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