Citi today said that India along with Spain and Mexico was among the biggest international contributors to the deterioration in its consumer banking portfolio during the quarter ended December 2008.
In its fourth-quarter earnings review, Citi estimated its total net credit losses (NCL), or the monetised value of bad debt, from the international consumer credit business, comprising cards and consumer banking, at $1.6 billion. Of this, India’s share in the fourth quarter NCL was estimated at 7.8 per cent or $124.8 million (around Rs 610 crore).
The NCL ratio in the India business was estimated at 6.3 per cent as against 5.78 per cent during the third quarter. On a quarter-on-quarter basis, Citi said that there was a 7.3 per cent rise in net credit losses during October-December 2008. For the fourth quarter, Citi’s NCL ratio in the Asian consumer credit business was estimated at 4.02 per cent. Citi said that in Asia, credit costs rose by 54 per cent and were mainly driven by continued deterioration in the credit environment in India.
In recent months, for banks operating in India, there has been an increase in delinquency rates in the credit card, personal loan and even home loan segments. For instance, according to RBI data, at the end of June, the impairment in the credit card portfolio is estimated to have doubled to 11.5 per cent. Of the Rs 29,700 crore outstanding, Rs 3,400 crore is said to have been the impaired credit. Bankers said that the situation has deteriorated further since October.
Indian lenders such as HDFC Bank and Axis Bank have also reported an increase in non-performing assets (NPAs). For instance, HDFC Bank, the country’s second-largest private sector bank, said its gross NPAs rose over 120 per cent during the October-December quarter.
In terms of contribution to Citi’s consumer credit business, based on annualised net revenues ($129.5 billion), India ranked sixth with a share of 6 per cent or $7.8 billion (around Rs 38,000 crore).
Citi also said that it was on course to lower its manpower. The recent sale of Citi Technology Services to Wipro will help it get rid of 1,700 employees. At the end of December 2008, Citi had 323,000 employees and the target is to lower the headcount to 300,000 in the next six months.