Citi consolidates NBFC operations

Citibank has consolidated operations of its non-banking finance companies (NBFCs) engaged in consumer financing under one entity, CitiFinancial Consumer Finance India Ltd (CCFIL).

The US-based financial services provider has stopped lending through its another subsidiary, Citifinancial Retail Services India Ltd (CRSIL).

Citibank India management had recommended to the parent that CRSIL be merged with CCFIL. The fate of CRSIL is still being decided. CRSIL has cleared all its liabilities with the last of the debentures maturing in November 2005.

"We haven't yet decided on the future of Citifinancial Retail Services," said P S Jayakumar, Citibank's country business manager, global consumer group.

CRSIL has been primarily into personal loans, two-wheeler financing and consumer durable loans. CCFIL is into similar lines of business along with auto and home equity loans. Prior to the consolidation, CCFIL had presence in northern and western regions of the country and CRSIL was focussed on southern and eastern regions.

These NBFCs primarily targeted the sub-prime segment of retail borrowers. The now defunct CRSIL had reported net profit of Rs 5.96 crore in 2003-04 and had total assets of Rs 276 crore as on March 31, 2004.

In 2004-05, CCFIL's net profit was Rs 128.9 crore on a total income of Rs 733.8 crore. The net profit had more than doubled from Rs 57.8 crore in 2003-04. CCFIL has not paid dividends in the past and has the policy of reinvesting profits back into the business to support future growth.

CCFIL had a net worth of Rs 641 crore as on March 31, 2005, up sharply after Citigroup injected additional capital of $48 million in December 2004.

Citibank also has another NBFC arm, a joint venture with Maruti Udyog Ltd. Citicorp Maruti finances purchase of only Maruti vehicles. Citicorp Finance has a 74 per cent stake in the joint venture, and Maruti holds the remaining 26 per cent stake.

As at March 31, 2005, CitiFinancial's loan portfolio comprised consumer durables and two-wheelers (11 per cent), personal loans (34 per cent), home equity and loans under mortgage of property at 37 per cent. The balance 19 per cent was accounted for by car loans.