One of India's largest private lenders, Axis Bank earlier this year agreed to buy Citibank's consumer business in India for over Rs 12,000 crore in cash. The deal, which is expected to close in the first half of the 2023 calendar year, includes sale of credit cards, retail banking, wealth management, and consumer loans to Axis Bank as part of the American bank's plans to exit retail operations in 13 markets.
While addressing a press conference, post the deal announcement, Axis Bank Chief Executive Officer Amitabh Chaudhry said that Axis Bank's cards balance sheet will grow by 57 percent with this acquisition. He, however, did add that the company had factored in customer attrition while finalising the deal.
A look at the data released by the Reserve Bank of India throws light on how the bank has lost out on debit card consumers from October 2021 to October 2022. During the period under review, Axis saw a decline of 8.7 percent in the number of outstanding debit cards. Citi, for the same period, lost 17.1 percent of the number of outstanding debit cards.
| October 2021 | October 2022 | |
| Axis | 25732793 | 23482967 |
| Citi | 1588092 | 1317002 |
"Many new private banks have entered the debit card and credit card market like IDFC First and smaller SFBs (small finance banks) like Equitas and Ujjivan which has led to fierce competition in the domestic market," said Avinash Gorakshakar, Head Research Profitmart Securities. "Further Jio, financial part of MDA group is also planning to enter financial services and is likely to make competition tougher ahead," Gorakshakar added.
However, Axis has gained on credit cards. The number of outstanding credit cards from October 2021 to October 2022 has seen a 19 percent jump. The data suggests that Citi bank has contributed in this growth. "Axis Bank has missed on Credit Card customers big time, where Citi has been innovator and has cornered best of the segment. This acquisition will straight away move Axis to third position after HDFC and ICICI," Satyam Kumar, CEO and Co-Founder of LoanTap, told CNBC-TV18.com.
Kumar added that Axis’s wealth practice was low key, where as Citi had 40k top of the line wealth customers. "So, the gaps are best plugged in through this deal and hence a great value add," he said.
(Edited by : C H Unnikkrishnan)
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