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Citibank announces exit from the Retail business in India

Credit Cards remain the most lucrative business opportunity for suitor Banks

* Citigroup recently announced its exit from the Retail Banking business in India along with 12 other countries. While the details are not yet known, media reports suggest that the bank is looking to sell its entire Retail Banking business.

* The bank has had a long presence in India, with total deposits/advances of INR1.6t/INR665b in FY20. It also has a considerable presence in the Credit Cards business. It is the sixth largest player with a total cards base of ~2.7m and a market share of 4.3%.

* In this note, we present a brief overview of the Citibank’s business in India along with key metrics around the Credit Cards business.

Balance Sheet size stands at INR2.2t, asset quality ratios pristine

Citibank India serves ~2.9m Retail customers, with ~1.2m bank accounts, and caters to ~3k Corporate clients. The bank has 35 branches and employs over 20k people. Bulk of its employees are part of Citicorp Services India, an outsourcing center that caters to different geographies of the US-based bank. As of FY20, it had total assets of INR2.2t and a net profit of INR49.2b. GNPA/NNPA ratio stood at 1.43%/0.56%.

Market share of ~15.4% among foreign Banks; retail book ~31% of loans

Total loans for Citibank India stood at INR665b in FY20, with a market share of 15.4% in loans among all foreign Banks in India, trailing Standard Chartered Bank and HSBC. Total deposits stood at INR1.57t, including deposits from customers and other Banks, within which savings deposits comprise INR317.3b. While deposits grew at 12%/11% CAGR over the past five/10 years, total loans grew at 2%/6% CAGR. CASA ratio stood ~56%, while Retail loans comprise ~31% of total loans, primarily dominated by Credit Card and Home loans.

Mix of Retail revenue/PBT is constantly declining; forms 31%/14% of the total

Over the past few years, Citibank India has been increasing its weightage towards the Wealth Management business, while lowering its dependence on the Retail business. As a result, the contribution of segmental PBT from Retail banking has fallen to 14% in FY20 v/s ~24% in FY15. Segmental PBT from Retail banking before taxes and unallocated expenses stood at INR12.2b, with shrinking gross profit margin. The mix of revenue from Retail banking has declined to 30.6% in FY20 v/s 40.5%/43.2% in FY15/FY10. Total revenue from retail banking was INR54.2b in FY20.

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