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Quality concerns: Citi India fails to cap growth of bad assets

Quality concerns: Citi India fails to cap growth of bad assets
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First Published: Sat, Apr 18 2009. 12 23 AM IST

Rising woes: A Citibank branch in Mumbai. The bank is going slow on the unsecured business in personal loans and credit cards in India. Santosh Verma / Bloomberg
Rising woes: A Citibank branch in Mumbai. The bank is going slow on the unsecured business in personal loans and credit cards in India. Santosh Verma / Bloomberg
Updated: Sat, Apr 18 2009. 12 23 AM IST
Mumbai: The India operations of Citibank NA continue to register a rise in non-performing loans, according to first quarter numbers released by the bank on Friday.
The bank follows a calendar fiscal.
Rising woes: A Citibank branch in Mumbai. The bank is going slow on the unsecured business in personal loans and credit cards in India. Santosh Verma / Bloomberg
Citibank’s Asia operations saw a 17% fall in revenue to $3.81 billion (Rs18,936 crore) in the first quarter of 2009, against $4.59 billion in the corresponding period last year.
Citigroup Inc. said rising credit cost (non-performing loans) in Asia is largely on account of continued deterioration of asset quality in India. The Asian consumer finance portfolio also has higher bad loans largely on account of deteriorating credit environment in India, the bank said.
“In Asia, the 69% increase in credit costs was a result of higher net credit losses, up 31% or $42 million, and a $68 million incremental net loan loss reserve build,” said Citi in a media release. “Higher credit costs reflected continued deterioration, primarily in India, and were partially offset by the impact of foreign exchange.”
The net credit-loss ratio increased 145 basis points to 4.62%.
One basis point is one-hundredth of a percentage point.
Citigroup reported a net income for the first quarter of 2009 of $1.6 billion and a loss per share of $0.18, based on 5,385 million shares outstanding. Results also include $7.3 billion in net credit losses and a $2.7 billion net loan loss reserve build.
Consumer banking business revenue in Asia is down 28% to $1.12 billion, compared with $1.55 billion in 2008.
“Credit costs in the consumer finance business have increased 22% due to higher net credit losses, up 45% or $57 million.,’’ the bank said.
“The net credit loss ratio increased 81 basis points to 1.79%. Net income declined 47% to $152 million,’’ it added.
The bank’s non-banking finance arm Citifinancial has also been reeling under bad debts and losses. In December, the parent had infused $200 million to meet its capital adequacy requirements.
The US-based bank has also reduced Citifinancial outlets bringing to 118 branches from over 300. It is also going slow on its unsecured book, which includes personal loans and credit cards.
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First Published: Sat, Apr 18 2009. 12 23 AM IST