RBL Bank has 3 million credit cards in force (31.3.21), with 5% market share in cards outstanding and spends, with number of cards growing 11% YoY in FY21. On the other hand, pure-play listed peer SBI Cards has 12 million credit cards in force, up 12% YoY and commands 19% market share.

Despite one-fourth the number of cards, RBL Bank’s credit card advances of Rs. 12,700 cr are nearly half of SBI Cards’ Rs. 25,100 cr advances. Moreover, the mix is better with 73% of advances interest bearing over only 57% for SBI Cards. Besides, quality of RBL Bank’s credit card business advances is much better, with 0.43% net NPA as against 1.15% for SBI Cards.

SBI Cards current market cap stands at Rs. 92,000 cr, 25% of which is Rs. 23,000 cr, while RBL Bank’s current market cap is only Rs. 11,000 cr, with historic PBV multiple of 0.87x.

While RBL Banks’ higher provisioning and bearish outlook on mid-sized banks is weighing on the stock currently, is the market ignoring long term potential in the credit cards business?

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