Citi India has capital buffer to last 2 years after retail exit: K Balasubramanian

Citigroup's exit from retail banking in India has helped it strengthen its corporate operations in the country, K Balasubramanian, the bank's head for the India subcontinent, told Joel Rebello and Sangita Mehta in an interview. Balasubramanian said he is bullish about the bank's growth prospects in the country. Edited excerpts:

How has Citibank India done after the sale of its retail business to Axis Bank?

In March 2023 we gained about ₹11,000 crore from the divestment. But after adjusting for those gains, revenue showed a 28% rise in two years-from ₹17,314 crore to ₹22,173 crore. Similarly, profit after tax after adjusting for one-time gain rose from ₹4,700 crore to ₹6,193 crore, up 32% over two years (₹6,237 crore in FY24). Total assets, after the divestment, rose from ₹2.17 lakh crore to ₹2.70 lakh crore at the end of March 2025, an increase of 25% (₹2.59 lakh crore in FY24). So, as part of our strategy, we have created capacity in a segment where we believe we will grow the best, which is corporate business. That's what we are now leveraging to grow. The bank's loan book rose by 45% from ₹50,000 crore to ₹72,000 crore. Deposits also rose 36%-from ₹1.47 lakh crore to ₹1.99 lakh crore.

How did you achieve this despite the sale of the retail business?
When we quit retail, we were going to double down on the institutional business. In transaction banking, we have over 8% market share, despite not being present in oil and defence. The government's Viksit Bharat vision needs between $3 trillion and $4 trillion capital to be invested in India; there is not enough firepower within India to fund this capex. This money is going to come from the FDI and FII routes. Therefore, on the FDI side, one in four foreign companies that are present in India bank with us, while on the FII side, it is one in three. In foreign exchange, we have early-teens market share. In the ECM business, we have done reasonably well. The pipeline between now and the end of 2025 continues to be strong. If we look at the pipeline between now and at the end of the year, assuming the markets hold, we got a high single-digit billion dollar-plus IPOs which will see the light of the day.

Has the exit from retail allowed you to focus more on your strengths?

Yes. At the end of the day, capital is finite and I have to use the same capital for my retail business as well as on the institutional side of the business. With the retail exit, that capital was available for institutional business. Every year, 25% of our annual profit gets accreted into capital here and the balance 75% we remit. In FY24, we capitalised ₹2,100 crore from the gain made from the consumer business sale. Our capital adequacy was between 18% and 20%. Right now, we are 20.3% despite this growth, which means that we have created a buffer for at least the next two years. Citi India is close to Jane Fraser, the CEO of the bank. We are probably among the top three countries globally for her in terms of investments and growth.

What is the outlook for the current fiscal year?

We would grow at 10% in dollar terms which is 15% in rupees. Strong capital markets and advisory are going to be a big positive. Securitisation will continue to be focus because returns are accretive. Commercial real estate business will grow rapidly and I won't be surprised if that book increases to $600 million in one year from $200 million now. We are looking at participating in big-ticket items the government is focused on-energy transition or renewable energy. We also launched EMCT (emerging market credit trading), wherein we invest in listed debt instruments issued by top-rated corporates. We have built a $650 million book and it can go to $1 billion.

What has changed in the last three years for you to be able to do these kind of businesses?
Capital is available. Ability to take risks is much better today, because we don't have consumers. We are fully focused on further building our institutional capabilities. And that's exactly what is playing out in the last 24 months.

What is the sense you're getting when you interact with corporates?
The top 7-10 conglomerates in India are sitting on $10 billion of capex. Every large group has plans to invest in energy transition.

Reliance is putting up new giga factories; Tata is looking at renewable capacity creation and semiconductor, electronics. JSW is into energy transition and battery technologies.

L&T is getting into battery technologies in a very material way. In the last 5-7 years, the government is spending on infrastructure in a material way, unlike the last 15 to 20 years. The nature of capex is changing. We are probably going through the best time in terms of corporate balance sheets, as well as bank balance sheets in our life. Even government banks are sitting on significant cushion of capital, so they are able to lend money for government capex.

What is the plan in terms of branches?
We have 14 branches from 34 before the Axis Bank deal. I don't think we will look at expanding anything significantly beyond this.

Citi’s growth is despite exiting retail which was a quarter of your book ….
We launched securitisation of loans three years ago. It has risen from $200 million before retail exit to $1 billion. This helps in growing the fee and balance sheets. We started lending to commercial real estate, which is a Rs 1,400-crore book now, from zero two years ago. It is secured lending against either assets or portfolio receipts from different companies. We also provide loans to medium and small enterprises under commercial banking business, which grew by over 20% where the spreads are very good.

In corporate banking, we have worked with almost all the large companies, including the Tatas and Reliance.

Will gathering deposits be more of a challenge with consumer banking not being there?
Even when we had consumer banking, it was run as two separate units—consumers used to raise deposits for their assets. Corporate banking unit borrowed money from the consumer unit at arm's length transfer price. So, we were never reliant on the consumer deposit. The 36% market share on FII is a counter for the deposit challenge.

For example, in the HDB IPO, the street collected Rs 80,000-Rs 90,000 crore. We got Rs 30,000 crore of deposit float for 7-8 days. We are also working with development financial institutions to help India get access to newer ports of capital at competitive rates. They do 80% of the financing and we do 20% of the financing. We are on the shorter run of the covers; they take the longer run of the cup. It is 7-19 years. That book is also growing quite nicely.