BackNo concerns over Citi’s portfolio; deal on track, says Axis Bank’s Sanjeev Moghe
Axis Bank has filed for approvals and once those come in, the integration process will pick up pace, said Moghe
PremiumMUMBAI : Axis Bank’s plan to buy Citibank’s consumer business in India is on track and there are no concerns surrounding portfolio attrition or bad loans in the credit card business of the foreign bank, said Sanjeev Moghe, president and head of cards and payments at Axis Bank.
“We are pretty confident of what we have done diligence on; the price that we have bid on. We are pretty confident also that we will be able to deliver value on the price that we have paid for. Those parameters do not change," Moghe told reporters on Wednesday.
He was responding to a question on whether Axis would revalue the deal after the reported attrition in Citi’s retail portfolio in India. Axis Bank, he said, has filed for approvals and once those come in, the integration process will pick up pace.
“We are pretty confident of the fact that we will be able to integrate fairly smoothly over the next 18-24 months. One process will be the legal merger and the other will be the businesses coming together. This is going to take time," said Moghe.
After the ₹12,325-crore deal was announced on 30 March, analysts had pointed out risks emanating from churn in the existing portfolio and staff of Citibank. Axis Bank’s management had indicated that the deal has clawback arrangements if the churn is greater than what was factored into the pricing. Apart from a reduction in number of active Citibank credit cards, there has been a decline in spends per card.
“The Citi portfolio was de-growing for quite some time and it did not change with the sale announcement. On the cards side, the acquisitions may be a little slower than what they would want it to be for various factors, like covid-19," said Moghe.
Moghe added that Citi has clear strengths in terms of the portfolio being more affluent than the average market. The process of reaching over to Citi customers is yet to start, he said.
“[On bad loans] my understanding is that separately Citi is also under control and ours is also under control. If both entities separately are under control, when you merge it will also be under control," he said, adding that credit card businesses typically have a non-performing asset (NPA) ratio of 4-5% and while Axis does not disclose the number, it is well under control.
On Wednesday, Axis Bank partnered table reservation, food discovery and restaurant payment platform EazyDiner, to launch Dining Delights, a dining experience for the bank’s customers. The program will offer benefits such as the option to choose from over 10,000 premium restaurants across India and Dubai, instant confirmation on table reservations, and exclusive offers on dining reservations made through the EazyDiner app.
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