The Exit & Beyond
The exit from retail banking in India isn’t entirely surprising given many peer foreign lenders have chosen to wind down or completely shut retail operations while focusing on the more profitable wholesale business.
Citi’s India business had reported total revenue of Rs 17,701 crore as per regulatory disclosures, where the retail banking business contributed Rs 5,420.63 crore for the financial year ended March 31, 2020. The corporate banking business had reported total revenues worth Rs 8,795 crore during the period. Net profit for the year stood at Rs 4,918 crore, as per the disclosures.
A person familiar with the matter said that Citi will look for a buyer for its Indian operations. Timelines for the exit have not been specified.
“There is no immediate change to our operations and no immediate impact to our colleagues as a result of this announcement. In the interim, we will continue to serve our clients with the same care, empathy and dedication that we do today,” Citi India CEO Ashu Khullar was quoted as saying in an emailed statement.
Analysts expect at least Citi’s card portfolio will be coveted.
As of January 2021, Citi had a credit card portfolio of 26.45 lakh cards, where the monthly spends stood at over Rs 3,000 crore, as per data available with the Reserve Bank of India. “Given Citi’s higher mix of premium cards and corporate salary account cards, we believe there may be a lot of interest among both large players like SBI Cards And Payment Services Ltd., ICICI Bank and Axis Bank Ltd. looking to increase their share of premium cards as well as smaller issuers like RBL Bank Ltd., IndusInd Bank Ltd., DBS Bank and IDFC First Bank Ltd.,” Macquarie Research said in a report.
Macquarie also estimates mid-sized to large private banks could consider bidding for the wealth management business. Lenders like IndusInd Bank which have been growing their own wealth management business could be interested in buying the business from Citi.
There is also the retail lending book of over Rs 20,000 crore in loans and a gross NPA of 2.56% for the non-priority lending portfolio.
According to Singhvi of ICAN Investment Advisors, the state of foreign banks in India in general and specifically Citi is the outcome of their own business practices, which never let them become sizeable banks in the country.