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Citibank’s India consumer retail business is up for grabs as the global lender has announced it will exit its consumer business in 13 countries. The Indian retail basket includes credit cards, deposit accounts, wealth management and its mortgage portfolio.

For the US-based bank that entered India in 1902, the Indian consumer banking business wasn’t contributing much to its overall profit. The retail book contributed not even 20% to the overall operating profit of India operations in FY20. On a global scale, this was even more negligible. In fact, the entire Indian asset book is just 1.8% of the global portfolio. Ergo, chief executive officer Jane Fraser’s argument of exiting sub-scale business is valid.

Citibank’s deposit franchise too is not chump change, with total deposit book at  <span class='webrupee'>₹</span>1.6 tn as of Mar 2020
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Citibank’s deposit franchise too is not chump change, with total deposit book at 1.6 tn as of Mar 2020

But what could be sub-scale for Citibank is a lucrative opportunity to gain market share for local banks. Analysts believe that aggressive smaller private banks keen to expand their footprints may find Citibank’s portfolio a good buy. “Some smaller private banks might be interested buyers of India portfolio as they are looking to scale-up in the segment," said a note by Jefferies India Pvt. Ltd. “Foreign banks might also look to expand presence, and we note that DBS had recently acquired branches of Indian bank (LVB) to expand presence in India," they added.

Indeed, the most enticing part of Citibank’s retail business here is its credit card portfolio. The foreign lender has 2.7 million credit cards outstanding as of January 2021 which makes it the sixth largest card issuer in the country. While it has lost market share to large competitors such as HDFC Bank and SBI Card over the past decade, there has been a steady 15-20% growth in spends per card. This is a sign of strong spending power of its customers, according to analysts at Macquarie Capital Securities Ltd.

Spends per card in Citi’s portfolio have been consistently 15-20% higher than peers, the broker points out. That makes it a profitable portfolio to acquire for even large firms such as SBI Cards and Payment Services Ltd, ICICI Bank and even Axis Bank.

Of course, it all comes down to valuations and the details of its exit are yet to be finalised. Those at Macquarie believe that Citibank would sell its consumer banking piecemeal rather than as a single basket, and indeed news reports also suggest this course of action.

Citibank’s deposit franchise too is not chump change. Its total deposit book was 1.6 trillion as of March 2020 with more than half made up of low cost current and savings account deposits. For perspective, this is larger than RBL Bank’s CASA pile of 20894 crore and IDFC First Bank’s 40,563 crore as of December. “Its market share in savings deposits at 1.5% is much higher than its market share in branches. Asset quality has been stable with overall gross NPL ratio in Dec-20 at 1% for India," analysts at Jefferies point out. Besides, it also has a retail loans portfolio with products such as housing loans. Given the high level of competition in the banking space, analysts expect considerable interest for the various Citi retail businesses.

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