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Citi's exit from retail banking an opportunity for Indian banks: Analysts

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Citi’s exit from retail banking business in India is likely to pave the way for consolidation in the Indian financial sector with private players, including ICICI Bank, Axis Bank and Kotak Bank, vying for an increased market share across business verticals, say analysts. SBI Cards, they believe, could be another beneficiary.

Those at Jefferies, for instance, suggest opportunities could open up either to acquire the existing stock of Citibank's clients and / or gain market share in segments like credit cards, deposits and retail loans.

“Private Banks and credit card companies like SBI Cards can be key beneficiaries of market share gains in the credit card segment. Some smaller private banks might be interested buyers of India portfolio as they are looking to scale-up in the segment. Foreign banks might also look to expand their presence,” wrote Prakhar Sharma, Parameswaran Subramanian and Bhaskar Basu of Jefferies in an April 16 note.

While announcing its quarterly results on Thursday, Citigroup said it will exit its consumer franchises in 13 countries that includes India, Australia, Bahrain, China, Indonesia, Korea, Malaysia, Philippines, Poland, Russia, Taiwan, Thailand, and Vietnam. Citi, however, will continue to focus its global consumer bank presence across Singapore, Hong Kong, the UAE, and London.

Citi's presence in India is via branch operation (of the global bank). Citi in India has $4.1 billion in assets in the retail segment, which is 1.5 per cent of total assets under management (AUM). In fiscal 2019-20 (FY20), Citi had reported profit of $658 million in India. Retail segment, according to reports, formed 14 per cent of total pretax profit. Asset quality has been stable with overall gross non-performing loan (NPL) ratio, according to the Jefferies note, in December 2020 at 1 per cent for India and retail 90-day delinquency at 1.9 per cent.

“In India's retail segment, Citi has built stronger presence in credit cards where it has 6 per cent share in total spends and it also has presence in housing loans (40 per cent of retail loan exposures) and its market share in savings deposits at 1.5 per cent is much higher than its market share in branches/ debit card clients,” Jefferies said.

The total number of cards in circulation in India, as per a Worldline India Digital Payment report for 2020, stood at 946.81 million as of December 2020. As of December 2020, the average ticket size of credit cards was Rs 3,653, while that of debit cards was Rs 2,568, Worldline said.


Credit card volume and value in 2020 stood at 1.79 billion and Rs 6.13 trillion, respectively. The number of credit card transactions at point of sale (POS) accounted for 901.95 million, while ecommerce was 891.52 million. In terms of value, consumers transacted Rs 2.86 trillion at POS and Rs 3.27 trillion at ecommerce via credit cards in 2020,” said Deepak Chandnani, managing director, Worldline South Asia & Middle East at Worldline.

Eye on credit card biz

Among its various business verticals, analysts say Citi’s credit card business will be most sought after by suitors. This business vertical in the retail segment of Citi, they believe, should get them premium valuation.

“Citi’s credit card business is big and draws a lot of affluent people. There will be many suitors, especially the Indian private banks like ICICI Bank, Kotak Bank and Axis Bank who will move aggressively to acquire Citi’s credit card business. SBI Cards, too, could be in fray but may not pursue it aggressively as the private banks. HDFC Bank could be out of the race (as things stand) due to a regulatory order that prohibits it from issuing fresh credit cards,” says G Chokkalingam, founder and chief investment officer at Equinomics Research.

At the bourses, SBI Cards jumped over 5 per cent in intra-day deals on Friday to Rs 954 levels.

Citibank India had 6 per cent market share of credit card spends in December 2020, the latest available data suggests. HDFC Bank (at 31 per cent) was the leader, followed by SBI (19 per cent), ICICI Bank (15 per cent) and Axis (8 per cent).

Source: Worldline trend report 2020

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