MNCs Lift Citi Bottom Line

CITI INDIA, a part of U.S.-based Citigroup Inc., reported 96% growth in earnings and 26% in profit after tax, excluding one-time gain from sale of consumer banking business in the country to Axis Bank, in FY23. This is not surprising. Citi India accounts for just 2.3% of Citigroup’s revenue ($78.5 billion in FY23), but its MNC business is a top franchise servicing more than 1,000 clients in the country and 200-plus Indian corporates in nearly 90 countries. “Citi has been in India since 1902 and is a banker of choice for India’s large and mid-sized corporates, financial institutions and multinational companies. Our strengths are aligned with Corporate India and the country’s economic priorities. Citi punches above its weight in attracting growth and investment capital into the country,” says Ashu Khullar, CEO, Citibank India.

Khullar, responsible for India, Bangladesh and Sri Lanka businesses, says Citi is aligned with various government initiatives and is working with clients to channelise foreign capital under PLI (Performance-Linked Incentive) schemes as well as FII/FPI flows (8% share). “Citi has helped corporate clients raise over $54 billion equity and over $38 billion debt in last five years and played a crucial role in GoI meeting its divestment targets,” says Khullar.

For full financial year ended March 31, 2023, Citibank India logged a PAT of ₹13,614 crore, which included a post-tax one-time gain on sale of consumer banking business of ₹8,914 crore. Excluding this, underlying profit was ₹4,700 crore, versus ₹3,727 crore in previous financial year. Gross non-performing asset (GNPA) ratio was 0.41% as against 1.07% in previous year. Net NPAs were nil compared to 0.39% at the end of last financial year. Khullar attributes the bank’s performance to disciplined execution, leveraged capabilities in Institutional Clients Group business and judicious expense management.

As of March 31, 2023, Citi India held a 4.1% share in electronic fund transfers and 8% in merchandise and software services trade flows. It intermediated around 10% FDI flows, amounting to $30 billion, in FY23. Citi is the only international bank in India with a full-service institutional platform across investment banking, advisory, capital markets, trade and transaction services, markets, securities services and risk management. In April 2023, it launched a branch at Gujarat International Finance Tec-City International Financial Services Centre. The aim is to recreate an international banking experience.

Ratings Reaffirmed

In March 2024, CRISIL Ratings reaffirmed ‘AAA’ and ‘A1+’ ratings on debt instruments of Citibank India with stable outlook, citing comfortable capitalisation, healthy resource and earnings profile, as well as funding, strategic and management support from its parent, Citibank N. A. Citibank India had a comfortable Tier-I capital ratio of 18.7% and capital adequacy ratio (under Basel-III) of 20.7% as on March 31, 2023, as against 15.7% and 17.4%, respectively, a year ago.

According to CRISIL, the bank has a healthy resource profile, with deposits growing 10.4% in first half of FY24 to ₹1.63 lakh crore, from ₹1.47 lakh crore on March 31, 2023. Current account savings account ratio was 47% on March 31, 2023, helping the lender maintain lower deposit costs than the industry average. Citi India holds “sizeable excess investments” in government securities in line with the global parent’s requirement, which can be utilised during short-term stress, CRISIL said. Average liquidity coverage ratio for quarter ended March 31, 2023, stood at 165.9%.