Yes Bank, a private lender, is considering an offer for Citibank’s Indian retail properties, joining the list of suitors vying for the international bank’s local operations in 13 countries. According to Yes Bank CEO Prashant Kumar, the bank would consider buying Citi’s retail properties in India, such as credit cards and wealth management.
On which Kumar said in an interview “We’d certainly look into it I believe they’re in the middle of something. Once all of the information is available to the public, we’d like to look at not only credit cards, but also asset management and shopping. We’d then make a call based on our appetite,”
Citibank India has 35 locations and 2.9 million retail customers, including 1.2 million bank accounts and 2.2 million credit card accounts. In India, it has a 6 percent market share of retail credit card spending. As of March 31, Yes Bank had a credit card base of 947,000 customers, with spending totaling Rs 2,288 crore.
Kumar has been working to restore the bank over the last year, despite the challenges faced by covid. In fiscal 2021, the bank announced a 33 percent increase in retail term deposits over the previous year, a 60 percent increase in corporate term deposits, and a 50 percent increase in current and savings accounts (Casa).
Though its loan book shrank by 3 percent in 2020-21, Kumar expects a 15 percent credit growth in FY22. “Even if you look at this year, there was credit growth. It is not seen in the number because we have made accelerated provision,” Kumar said, adding that the bank disbursed 15,000 crore in loans in the March quarter, with 3,500 crore going to corporates. He also mentioned “We should comfortably be able to achieve a growth of 50,000 crore (in FY22). After the recovery, we expect a net growth of 30,000 crore, or just under 20 percent”.
The bank’s asset quality, however, remains a concern, with gross non-performing assets as a percentage of total loans hovering around 15 percent. The bank’s attempt to set up an asset rehabilitation company to clean up its sour loan book has hit a snag after the Reserve Bank of India (RBI) rejected the proposal. Kumar believes the bank will be able to weather the second covid wave, thanks to the reserves it has put in place to deal with potential impacts. It currently has a provision coverage ratio of 78.6 percent.
“”he said .
The Yes Bank has a much better capital position, with a capital adequacy ratio of 17.5 percent as of March 2021. Kumar claims he now has a better understanding of the bank and can therefore provide an outlook, something he couldn’t do last year when he was brought in to save the private lender. Giving advice last year would have been a guessing game. “”, added Kumar.
