Buoyed by robust growth in fee-based income from investment banking operations and distribution of products such as insurance and mutual funds, Citigroup India announced a 39% growth in its net profit for the year ended March 2007.
The group’s net profit grew to Rs1,566 crore, up from Rs1,127 crore in March 2006. It invested $1.8 billion (Rs8,280 crore then) in the India operations during the year and is committed to bringing in more capital to support the growing business as and when needed, said Sanjay Nayar, CEO, Citi India and area head, Sri Lanka, Bangladesh and Nepal.
Much of the group’s profit— about Rs900 crore—came from the bank, while Citifinancial, the non-banking finance arm that focuses on consumer finance activities, contributed Rs 225 crore.
Global market activities such as investment banking contributed Rs265 crore to the profit, while the outsourcing business contributed Rs150 crore.
Citigroup is the third banking conglomerate to announce its India results after Standard Chartered and Deutsche Bank. Standard Chartered reported a 51% rise in its net profit to Rs1,364.3 crore for the fiscal 2006-07 against Rs904.8 crore in the previous year. Deutsche Bank posted a 73% increase in net profit to Rs218.22 crore in FY07, up from Rs125.92 crore in FY06.
Investment banking is an important revenue-earner for Citigroup; the group was involved in some large merger and acquisitions deals such as Tata Steel Ltd’s acquisition of Anglo-Dutch steel maker Corus and UB Group’s acquisition of the UK-based White & Mackay Ltd. Its investment banking division financed M&As worth $15 billion last year apart from earning fees through advisory activities.
The balance sheet of the group grew to Rs84,469 crore, up 46% from Rs57,983 crore, riding on business from small- and medium-sized enterprises, as well as mortgages and personal loans, senior officials of Citigroup said. Its mortgage disbursal grew by 25% and personal loan disbursals grew 35% during the year.
“We have had an exciting year in corporate investment banking and client acquisitions in both the mid-sized corporations and retail customers. Going ahead, we have aggressive plans in financial inclusion, both as a bank and our non-banking finance arm. We will continue with our focus on client acquisition,” Nayar said. “We will also continue to focus on wealth management, supported by retail brokerage and private banking. At the same time, we will be on the hunt for distressed assets,” he added.
The group is actively looking for partnerships and alliances to support its plan of extending banking services to customers in rural India.
It plans to partner self-help groups, microfinance institutions and companies that are involved in the agricultural sector.