'Deal of a lifetime': Axis Bank’s Amitabh Chaudhry cheers Citibank India's portfolio buyout

Amitabh Chaudhry, MD & CEO, Axis Bank (Image: PTI)

Axis Bank Managing Director and Chief Executive Officer Amitabh Chaudhry on March 30 called the bank’s move to acquire Citibank's India consumer business as a “deal of a lifetime”. The buyout will give Axis Bank access to 2.5 million Citibank customer cards and will result in an increase of around 31% to its existing card base.

The transaction will aid the lender in increasing its card spends market share by 480 basis points, the MD said. “Citibank has a complimentary and quality portfolio of close to 2.5 million cards with amongst the highest monthly spends per card across industry and a book size of approximately Rs 8,900 crore as of June 2021,” he added.

Further, post conclusion of the transaction, the combined assets under management of Axis Bank’s wealth management business will increase by 42%, making it the third-largest wealth manager in the country, as per Chaudhry.

The combined current account and savings account ratio, on a proforma basis, post completion of the transaction would improve by 200 basis points to 47% and it will also be liquidity coverage ratio accretive, the management said.

“The consumer lending portfolio of approximately Rs 18,500 crore consists of mortgages, asset-backed finance, small business lending, and personal loans. These are our focus segments as well and will deepen our relationship in this space by offering differentiated financial solutions,” the MD said.

Apart from improvement in the CASA ratio, net interest margin, and credit card market share, the deal would also give Axis Bank access to the premium set of high spending customers.

Addressing a press conference today, Chaudry said Axis Bank has grown organically all these years and scaled well but its aspirations are bigger. “This deal gives us the strategic thrust to close the gap between us and some of our peers. We hope this particular acquisition will improve the quality of our franchise across many parameters meaningfully,” he said.

When asked whether the bank will raise capital to fund this acquisition, Chaudhry said the bank intends to pay for this transaction from its own balance sheet. However, going ahead depending on the credit demand and macro-economic conditions, the bank will look at raising capital.

On a question about how the bank aims to tackle the attrition problem of Citibank India customers, Chaudhry said as per data shared by Citi with the bank, the customer retention levels remain satisfactory.

“Obviously there is a risk that there could be customer attrition. We believe very strongly that Axis Bank has a bigger suite of products and services to offer to Citibank customers. Citibank was limited by branch presence, perks that it could offer, Axis Bank has much more to offer,” he said.

He added that there were certain price-adjusted mechanisms that were part of the deal which will kick in if customer attrition goes beyond certain numbers.