MUMBAI Citigroup (C.N) expects to boost its loans and deposits growth in India by about a fifth in each of the next two years, its India head said, as the U.S. bank enhances its focus on emerging markets.
Citigroup global Chief Executive Vikram Pandit is trying to turn the bank around after the financial crisis by focusing on emerging markets, where economies are still growing relatively quickly.
"India is amongst the top five or six emerging markets that is expected to contribute to this growth going forward," Pramit Jhaveri, a 24-year Citi veteran who became the head of its India operations last year, told the Reuters India Investment Summit.
"I believe our franchise in India continues to be an area of great focus as we look to execute on that strategy," he said, referring to Pandit's growth plans.
The bank, one of the top three foreign commercial banks in India along with Standard Chartered (STAN.L) and HSBC (HSBA.L),
operates across businesses including corporate, consumer and investment banking, and wealth management in the country.
Citi, the No. 3 U.S. bank by assets, is "comfortable" with its asset quality in the country and has not slowed down lending activity, Jhaveri said, amid concerns a series of interest rate hikes will lead to a surge in corporate and consumer loan defaults.
India's central bank has been among the most aggressive globally, increasing rates 13 times since early 2010 to tame inflation.
Earlier this month, Moody's downgraded its outlook for the Indian banking system to "negative" from "stable," and warned of slowing growth at home and overseas hitting asset quality, capitalization and profitability.
"As far as our business is concerned we are not, in any way, seeing signs of stress that one would associate with sleepless nights," said Jhaveri, who was previously head of global banking and the vice chairman of Asia investment banking at Citigroup.
"Even though we have not slowed down and the business is continuing as usual, our credit losses on the credit cards business or any of the consumer business are very much under levels that we would like them to be."
INVESTMENT BANKING CONSOLIDATION
Citi vies with Morgan Stanley (MS.N), Goldman Sachs (GS.N) and host of local firms in India's highly competitive investment banking market that has plunged this year due to slowing corporate growth, sluggish markets and global uncertainty.
India's M&A deal volume has fallen to $35 billion in this year through October from $57 billion in the year ago period, while share sale volume has more than halved to $8.4 billion in the same period, according to Thomson Reuters data.
Citi is No. 2 in India's share sale league table this year after Bank of America Merrill Lynch (BAC.N), while the bank stands at seventh position in the completed M&A league table, the data showed.
Jhaveri said the sharp slowdown in investment banking activity could result in consolidation and downsizing in the crowded sector. The fierce competition in the sector has also resulted in very low fee for banks' advisory services.
"The implications are obvious when you have over capacity in a slowdown," he said. "If you have operating models that (are) very standalone or very uni-dimensional they will see relatively more turmoil."
(Editing by Aradhana Aravindan)