Brokerage firm Jefferies in a report said Citi Group’s decision to exit 13 markets, including India, may open opportunities for Indian private banks.

"Exit from the retail business in India may open opportunities for Indian private banks, credit-card players and foreign banks in India," the brokerage stated in a note.

Citi said that it will exit from the consumer banking business in 13 markets spread across Asia and the Europe, Middle East, and Africa (EMEA) regions. The sub-scale operations are the key reason for this exit, it added.

Citi's CEO Jane Fraser highlighted the exit plans. "The business is profitable, but sub-scale operations limit the return on equity (ROE) for the market and the parent. So, the exits could include a gamut of segments like credit cards, deposit accounts, retail loans, and other retail operations (like bancassurance, etc.). In these markets, Citi will continue to focus on commercial, corporate, and strengthen its presence in wealth management."

The brokerage firm noted that the bank’s presence in India is through branch operation and in the country it has $29 billion in balance sheet assets and another $135 billion in off-balance-sheet business (derivative business) as of March 2020.

In India, Citi had $4.1 billion of retail assets that formed 1.5 percent of the total market. It has a good 6 percent share in total spending and a presence in housing loans (40 percent of retail loan exposures). Its market share in savings deposits of 1.5 percent is much higher than its market share in branches and debit card clients.

In the fiscal year 2020, Citibank had reported a profit of $658 million in India and segmental reporting shows that retail formed 14 percent of total pre-tax profit. Asset quality has been stable with the overall gross non-performing loans ratio in December 2020 at 1 percent for India and retail 90-day delinquency at 1.9 percent.

Jefferies said Citi's exit will be an opportunity for players in India to either acquire the existing stock of clients and/or gain market share in segments like credit cards, deposits, and retail loans.

Private banks and credit card companies can be the key beneficiaries of market share gains in the credit card segment. Some smaller private banks might be interested buyers of India's portfolio as they will be able to scale up in this segment. This might also be a good opportunity for foreign banks to expand their presence; DBS had already acquired branches of Lakshmi Vilas Bank to expand its presence in India.

(Edited by : Pranati Deva)

First Published:Apr 16, 2021 1:33 PM IST