The Hindu Business Line : Citibank India to retain profits for expansion, upgradation

CITIBANK India has posted a 46 per cent jump in net profit at Rs 571.62 crore for the year ended March 31, 2004, up from Rs 391.48 crore the previous year.

The bank plans to retain the entire profits in the country for investment for branch expansions and technology upgradation.

"India is one of the priority countries and as a reaffirmation of this, we will be retaining the entire earnings for 2003-04 as capital in India to support growth,'' said Mr Sanjay Nayar, CEO, Citigroup India.

For the first time in the recent past, the bank announced its annual results to newspersons.

"There is intense competition in the Indian market across product segments. The profit figures are satisfactory when compared with the other foreign and private banks... India's numbers are small when compared with other markets. It occupies fourth position in Asia. But the rate of growth and the potential of the market is immense," he added.

India's largest foreign bank, Standard Chartered Bank's profits for the year ended December 2003 were significantly higher at Rs 837 crore (Rs 747 crore).

For Citibank, net interest income for the year soared by 42 per cent to Rs 1,355.8 crore (Rs 949.8 crore). Other income went up by 17 per cent to Rs 887.1 crore (Rs 755.6 crore).

The bank's loan book of Rs 15,259 crore consists of Rs 8,136 crore of corporate loans and Rs 7,123 crore of retail loans.

The retail loan book consists largely of mortgage loans at Rs 2,500 crore, personal loans at Rs 2,300 crore and credit cards at Rs 1,500 crore.

The capital adequacy ratio was 11.1 per cent and net NPAs were 1.4 per cent.

Provisions for bad loans increased to Rs 165 crore (Rs 130 crore) on account of adopting the more stringent 90-day norm for NPA recognition.

The bank expects a 30-35 per cent increase in topline as it expands its footprint to 37 branches in 22 cities by year-end. Total expenditure moved up to Rs 2,343.6 crore (Rs 2,343.6 crore) and total income increased to Rs 3,166.6 crore (Rs 2,735 crore).

Awaiting RBI norms on subsidiary

CITIBANK is awaiting more clarity before opting for the subsidiary route and is in dialogue with the Reserve Bank of India (RBI) on the same.

"We have been giving our inputs to the RBI. We want some clear guidelines on what a subsidiary will mean, some clarity on what a subsidiary will be able to do," said Mr Nayar.

The path for conversion and implications in terms of income-tax, stamp duty, capital gains and valuation were also not clear, he added.

Recently, Standard Chartered Bank had expressed interest in converting its existing branch set-up into a subsidiary with more flexibility being the objective.

Citibank has plans to set up a recovery arm for non-performing loans. It is also in discussion to pick up stake in Asset Reconstruction Company of India Ltd.

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Citibank India to retain profits for expansion, upgradation