Citi expects revenue from India corporate business to grow 10% a year

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MUMBAI (Reuters) – Citigroup expects annual growth in its corporate banking business in India to accelerate to 10% in the next few years as it focuses on its institutional business after recently selling its consumer banking business, a top executive said.

“Conservatively, we expect India corporate banking business revenue to grow at around 10% (a year) in dollar terms in (the) next three-four years, which translates to 16-17% in rupee terms considering the depreciation,” K Balasubramanian, head of corporate banking, South Asia, told Reuters on Thursday, noting Citi has been ramping up hiring.

Growth of 10% would be “200 basis points” higher than annual growth seen in the last few years and faster than several other countries in which the bank has a presence, he said.

In the year ended March 2021, Citi India’s revenue form corporate banking totalled 85.13 billion rupees ($1.07 billion), the biggest contributor to its business surpassing revenue from treasury, retail and other banking.

Revenue from corporate banking includes interest and fees earned on loans to customers and income from trade and transaction services, according to the regulatory filing.

Volatility in global markets amid the conflict between Russia and Ukraine has boosted business with commodity-linked hedging in the last six to nine months reaching the highest level the bank has ever done in India, said Balasubramanian.

India is a leading contributor to corporate banking revenue in Asia Pacific, he said.

Despite pandemic disruptions, India remains one of the fastest-growing major economies, with growth forecast to average 7.2% this fiscal year.

Earlier this year, Citi sold its consumer franchise business in India to Axis Bank. It is winding down its consumer business in 12 other markets as well to refocus on its more lucrative institutional and wealth management businesses.

In India, the bank has increased its front-end headcount in corporate banking by 10% in the last two quarters, said Balasubramanian.

If business momentum keeps pace, the lender may look at increasing headcount further in another 12-18 months’ time, he added.

Citi is focused on channelling credit flows to offshore subsidiaries of Indian companies and capturing flows on trade corridors between India and neighbouring countries.

“More capex growth is expected in 2023-24 and with that the GDP numbers will pick up. We may see even better growth because we expect to grow at double (the pace of) GDP (in rupee terms),” he added.

($1 = 79.8100 Indian rupees)