Citi's losses on Indian consumer finance business drop 38%

Citicorp has managed to pare net credit losses (NCL) from its Indian consumer credit business, comprising cards and consumer banking, by over 38 per cent to around Rs 400 crore by June-end compared with Rs 653 crore in the previous quarter.

The US financial services firm, which announced its second quarter (April-June) results today, said in a presentation that India’s share in the global NCL on the consumer business, estimated at $1.1 billion, had dropped to 7.6 per cent, from 8 per cent at the end of the previous quarter when NCL in this segment was $1.7 billion.

India continued to figure among the markets which had the highest NCL ratios. The ratio had dropped to 5.4 per cent by June 2009 compared with 7.1 per cent three months earlier, the presentation said. In a press release, Citi said that in the credit card business, India and Korea were two markets where“credit deterioration was particularly apparent in the card portfolios”.

Last month, Citi CEO for South Asia Mark T Robinson told Business Standard that losses on the consumer finance portfolio had started dropping, while they had peaked in the credit-card segment with a turnaround expected soon. Following a steep rise in delinquency levels, Citi had initiated a slew of measures including stricter lending norms and sale of a part of its portfolio to keep losses under check.

Citibank’s Indian operations, which included 40 branches and subsidiaries including non-banking finance company Citifinancial, reported 20.45 per cent increase in net profit to Rs 2,173 crore during the year-ended March 2009, despite 53 per cent increase in non-tax provisions.

Provisions for non-performing assets and net loan write-offs rose 2.6 times to Rs 1,607.20 crore for the year-ended March, while gross NPAs went up 2.3 times to Rs 1,805.7 crore.

In terms of contribution to Citi’s consumer credit business, based on annualised net revenues ($99.6 billion), India ranked fourth with a share of 6.3 per cent, or $6.27 billion (around Rs 30,100 crore). Compared to the previous quarter, when India’s share was 6.4 per cent, or $7.8 billion (around Rs 37,400 crore), it has fallen 19.52 per cent in rupee terms.