Banks Expect Credit Card Defaults To Taper From Second Half of This Fiscal
Lenders such as ICICI Bank,Yes Bank and RBL Bank said that they have consciously chosen the strategy to grow in profitable loan segments while slowing down from risky unsecured segments: Reports
MUMBAI: Even as banks continued to report higher slippages to non-performing assets in unsecured loans such as credit cards and personal loans for the April to June quarter of (Q1FY26), bankers said that they expect improvement over the next two quarters.
Lenders such as ICICI Bank,Yes Bank and RBL Bank said that they have consciously chosen the strategy to grow in profitable loan segments while slowing down from risky unsecured segments.
Yes Bank's managing director and chief executive officer said that the bank continues to exercise caution on unsecured retail loans but has started observing improving trends in delinquencies in segments like personal loans and credit cards.
"Credit cards slippage fell to Rs 182 crore in Q1FY26 compared to Rs.185 crore in Q4FY25. Across credit cards and personal loans we are seeing considerable improvement in the resolution rate, and the floor rate which is the beginning of cheque bouncing."
“In retail, we’re not chasing growth for the sake of it. We’re focusing only on those products where the yield-risk trade-off makes sense,” Kumar added.
R Subramaniakumar, managing director and chief executive officer at RBL Bank said, "We should start seeing both growth coming back in second half (H2) as well as the asset quality slippages related
metrics also improve as we progress towards the second half. Just to add up to the points, we have migrated everything (underwriting, debt collection) internally. Now the monthly card issuance has scaled from 6,000 to 7,000 a year back to75,000 to 100,000 per month."
Private lender RBL saw a 46 per cent year on year decline in net profit at Rs 200 crore in the June quarter due to high slippages from credit card and microfinance sectors, weaker interest income, and a rise in bad loans and expenses. RBL bank recorded net slippages of Rs 918 crores in Q1FY26, versus Rs 730 crores in Q4FY25. Slippages were highest in credit cards and microfinance segments.
Sandeep Batra executive director at ICICI Bank said that the bank's credit card and personal loan portfolio has grown by just a little over one percent.
"Specifically, on the NPA numbers on the unsecured portfolio side, as we have mentioned, there has been a marginal increase in the last 12-15 months over a very small base. The personal loan growth has moderated from about 25 per cent in Q1 2025 to about 1.4 per cent year-on-year during the current quarter, and has also declined sequentially. Hence, the asset quality trends in unsecured portfolio have stabilized over the quarter, and we do hope that portfolio will sort of start increasing from here on."
