Affluent Consumers Help Citigroup Arm Lift Profit To $332m
Sydney Morning Herald
Tuesday May 16, 2006
THE Australian arm of the world's biggest bank, Citigroup, is tightening its hold in the banking scene here, pulling in a record $332 million profit last year.
The result represents a 44 per cent jump on the previous year and was boosted by $87 million from a one-off sale of its insurance business to US insurer MetLife. Profits from continuing operations also grew, at a moderate 6.6 per cent to a record $201 million, as Citigroup closes in on the Australian banks. Les Matheson, its head of Australian consumer banking, said the company had been stealing market share in credit cards, mostly from the big four banks. "Cards is clearly one of our strengths," he said. "We are the largest cards issuer worldwide." By contrast, NAB group chief John Stewart last week said he was not concerned about the bank losing market share in credit cards, saying: "Why push it when it could be exactly the wrong time?" Mr Matheson said Citigroup would be only too happy to take NAB's place as the fourth-largest credit card issuer in Australia:"I think a [number] four in four years is a great goal." By targeting the "mass affluent" - individuals with assets worth between $100,000 and $1 million - he said Citigroup could secure a growth rate 50 per cent above the market average. "If the market is growing at 10 per cent, we want to grow at 15 per cent," he said. Citigroup now has 13 branches and 60 ATMs across Australia. Mr Matheson said he was not worried about negative fallout from this month's interest rate rise through any increase of bad loans or defaults. "I don't think that is something that is a major concern," he said. Nonetheless, Citigroup intends to diversify and broaden its spectrum of offerings through both organic growth and acquisitions."We are always interested in acquiring businesses," he said. Three quarters of Citigroup's total revenue of $827.2 million last year came from its "Citibank" retail banking - cards, mortgages and consumer finance - with the remaining quarter coming from corporate banking, including transactions, fixed income trading. The bumper profit result was less than initially expected by Citigroup, which is now in dispute with Metlife over the final sale amount allocated to the Australian businesses. "The management in Australia does not agree with the amount being allocated and have referred the matter to arbitration," the reports filed with the Australian Securities and Investments Commission, said. Mr Matheson described the dispute as "actually a relatively typical process following a sale" that would be resolved over the next six weeks.
© 2006 Sydney Morning Herald
