Citigroup exits 13 global consumer banking markets, including China

Citigroup will focus its global consumer banking business on four markets.
Citigroup will focus its global consumer banking business on four markets.PHOTO: REUTERS

NEW YORK (AFP, REUTERS) - Citigroup announced on Thursday (April 15) that it will exit 13 international consumer banking markets, shifting its focus to wealth management and away from retail banking in places where it is small.

Citigroup will focus its global consumer banking business on four markets: Singapore, Hong Kong, London and the United Arab Emirates.

But Citigroup will depart China, India and 11 other retail markets, where "we don't have the scale we need to compete", said Citi chief executive Jane Fraser.

The other 11 markets affected by the decision are: Australia, Bahrain, Indonesia, South Korea, Malaysia, the Philippines, Poland, Russia, Taiwan, Thailand and Vietnam.

Ms Fraser, who moved into the CEO role in March, described the pivot as part of an effort to "double down" on wealth management, where the growth opportunities are better.

Most of the markets being exited are in Asia, where Citigroup's global consumer banking business at the end of 2020 had US$6.5 billion (S$8.7 billion) in revenues, 224 retail branches and US$123.9 billion in deposits.

Mr Amol Gupte, Citi's Asean head and country officer for Singapore, said: “As a leading international financial centre, Singapore is a critical hub for Citi, serving as a global gateway for our clients in Asia and across the world. Our business strategy recognises the important role that the country plays for our consumer and wealth management businesses, as well as our institutional business.

"With a 120-year history in Singapore, we will also remain as a significant operational and technology hub serving our businesses internationally.”

Citi is one of the largest foreign banks in Singapore, hiring about 8,500 people there - including contract staff. In 2015, the bank was designated as a Domestic Systemically Important Bank by the Monetary Authority of Singapore. Such banks are assessed to have a significant impact on the stability of the financial system and functioning of the broader economy in the country.

The move came as Citigroup reported first-quarter profits of US$7.9 billion, more than three times the level in the year-ago period. Revenues fell 7 per cent to US$19.3 billion.

As with other large banks, Citigroup's profits were bolstered by a strong performance in its investment banking and trading businesses, as well as the release of reserves set aside for bad loans.

These benefits were offset somewhat by a drag from low interest rates.

Citi also felt the impact of cash-flush consumers paying off loans and using debit cards more for purchases.

“As elsewhere, trading and banking were a bit stronger than expected and net interest income a bit weaker but it was basically all pretty close to expectations,” Oppenheimer analyst Chris Kotowski said in a note to clients.

Net interest revenue, the difference between interest the bank earns and what it pays on deposits and borrowings, was US$10.17 billion, down 12 per cent from a year earlier.

Total revenue fell 7 per cent to US$19.3 billion on low interest rates and a 10 per cent decline in loans, largely due to lower consumer credit card loan balances.

Overall card purchase sales were up 1 per cent, even as total card revenue fell 18 per cent.

JPMorgan Chase & Co said on Wednesday spending on its consumer debit and credit cards together rose 9 per cent from a year earlier.

Partially offsetting the drag from interest revenue, investment banking revenue at Citigroup surged 46 per cent on stronger equity underwriting fees. The bank has been a Wall Street leader in raising money for the so-called blank-check firms or special purpose acquisition companies.

Citi shares were up nearly 3 per cent in trading before the bell.

Additional information from The Straits Times