Citigroup Inc.’s plans to exit retail banking in 13 markets, including India, could put its lucrative Indian credit card portfolio up for grabs, brokerages said a day after the global bank announced its decision.
Citi intends to operate its consumer banking franchise from four wealth centres in Singapore, Hong Kong, the UAE and London, it said in a statement on Thursday. In markets that it is exciting, Citi will continue to offer products to its institutional clients’ group, it said.
Citi intends to look for buyers for its India business, a person familiar with the matter told BloombergQuint on the condition of anonymity.
“Citi’s exit from India will be an opportunity for players in India to either acquire the existing stock of clients and/ or gain market share in segments like credit cards, deposits and retail loans,” said Jefferies in a report on Friday. Private banks and credit card companies like SBI Cards can be key beneficiaries of market share gains in the credit card segment, it said.
According to data from Macquarie Research, Citi has 2.7 million cards outstanding and is the sixth-largest card issuer as of January 2021. The bank’s credit card base has grown at a compounded annual rate of 1.6% over the last 10 years, slower than the Indian credit card market. As such, Citi’s market share in term of spends has fallen from 20% to 5% over a 10-year period, Macquarie said.
“Given Citi’s higher mix of premium cards and corporate salary account cards, we believe there may be a lot of interest among both large players like SBI Cards & Payment Services, ICICI Bank and Axis Bank looking to increase their share of premium cards as well as smaller issuers like RBL, IndusInd Bank, DBS Bank and IDFC First Bank,” Nishant Shah and Suresh Ganapathy, analysts at Macquarie, said in the report.
According to the brokerage, Citi has consistently had 15–25% higher spend per card against the industry average, indicating higher spending power of its card holders.
Jefferies, too, sees interest emerging for the cards portfolio.
“Some smaller private banks might be interested buyers of India portfolio as they are looking to scale-up in the segment. 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 — other large foreign banks in India are HSBC and StanChart,” analyst Prakhar Sharma said.