Citi sees growth operations in mature Asia markets

Citigroup Inc's Asian consumer banking unit sees opportunities in mature markets such as Hong Kong, and aims to take business from local players who take their customers for granted, an executive said. Asia's largest credit card issuer aimed to have 50 branches in Hong Kong by the end of the year, double the number from the start of the year, Jonathan Larsen, head of Citi's consumer banking unit in Asia, said in an interview.
"There are competitors who are basically taking their customers for granted," Larsen said. "There are competitors who still don't offer 24-hour phone banking to their customers, who still pay 1 basis point on their current and savings account deposits. That's good news for us."
Before taking on his post, Larsen was Citi's country head in Singapore, where he embarked on an aggressive expansion to boost the number of branches there from four to about 24.
Hong Kong's saturated and highly competitive retail banking market is dominated by HSBC Holdings Plc, its majority-owned units Hang Seng Bank Ltd and Britain's Standard Chartered Plc, although other Asian players such as Singapore's DBS Group Holdings Ltd also have a presence.
Larsen said other markets he was targeting for big growth included Vietnam and Singapore. China was unlikely to see a mortgage or consumer credit crisis as the government had taken precautions to ensure controlled lending growth, Larsen said, amid fears that a fall in property prices could lead to a spike in non-performing loans.
He was also doubtful that a credit card crisis similar to that seen in South Korea and Taiwan in 2003 and 2004 - when a large number of credit card customers defaulted - would repeat itself on a larger scale in China. "China is pretty well controlled on the consumer credit side, and the government is trying to promote consumption, but is also very wary of creating a consumer debt crisis," he said.
Citi is trying to expand its retail presence in China, where it aims to have 38 branches by the end of the year, up from 29. However, the improved credit environment that helped the Asian consumer banking unit double its net income in the first half was unlikely to be repeated, Larsen said.
Falling credit losses and lower levels of reserve accumulation all contributed to the unit's strong performance in the first six months of the year, when net income rose more than 100 percent from 2009 to $1.15 billion.
"Those growth numbers partly reflect an improved environment and the fact that credit losses are much lower," Larsen said. "First of all, the losses themselves are lower, and secondly, you don't have to build reserves."