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Citibank India’s consumer banking operations could be an attractive proposition for a number of domestic private sector banks, many of which are keen to shore up their retail book, especially credit cards.
Market share
With over 26.45 lakh credit cards as on February-end, Citibank India commands over six per cent of the country’s credit card market. In its annual results for 2019-20, the bank had said “average spends per card is 1.4 times higher than the industry average”.
The lender also has 16.56 lakh outstanding debit cards as on February-end.
Citi, in fact, brought the concept of credit cards and ATMs into the country in 1980s. Brokerage firm Jefferies, in a note, said Citi’s exit from the retail business in India may open opportunities for Indian private banks, credit-card players, and foreign banks in the country.
Siji Philip, Senior Research Analyst, Axis Securities, said Citi’s credit card segment will find many suitors owing to its affluent client mix. “SBI Cards will be a key beneficiary on improved visibility of market share gains. We expect top private banks like ICICI, Kotak to reach out to acquire client stock in this segment,” said Philip, adding that overall it is a positive event for the domestic banking industry.
While private sector lender HDFC Bank, which is the top credit card issuer in the country with 1.51 crore outstanding cards as on February 28, has been directed by the Reserve Bank of India to temporarily halt sourcing of new credit card customers, others such as SBI Cards, YES Bank and RBL Bank have been working to ramp up issuances.
“It will be interesting to see who acquires Citi’s business in India. In terms of credit cards, it could possibly be a smaller or mid-sized private bank or if the whole consumer banking business is divested, it could even be taken by a foreign bank keen on expanding its India operations,” noted a former banker who did not wish to be named on the issue.
As on March 31, 2020, Citi had 29 lakh retail customers and has nearly three dozen branches in the country.
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