Citigroup reveals all

Citigroup opens its books and reveals the numbers on its Asian businesses.

Citigroup held an analysts' and investors' meeting in Hong Kong yesterday (September 22) to brief its shareholders on its performance in the region. In the process the bank revealed financial breakdowns of its various business lines for the first time.

At the top line, the bank revealed Citigroup Asia made revenues of $7.6 billion in 2004 and profits of $2.6 billion, about 15% of total global profits. Geographically these numbers come from non-Japan Asia including Australia and New Zealand.

To put these figures in context, Citigroup Asia would rank as the 40th largest global financial company on a stand-alone basis and the ninth largest company based in Asia (including Japan).

Moreover, the bank is still growing. In the first half of the year, revenues have grown 13% and profits 5% compared to the same time last year. Yet despite this, the bank estimates that it has just a 3% share of Asia's $304 billion market for financial services.

In terms of business mix, 49% of the bank's 2004 revenues came from its consumer and retail banking presence, 45% from corporate and investment banking and just 6% from wealth management and private banking.

In terms of outright profits, consumer banking made $652 million profit in the first half of 2005, the vast majority of which came from credit cards and retail banking, with consumer finance growing quickly, but from a small base.

In corporate and investment banking, Citi earned $571 million in the first half of 2005, a 9% decline on the first half of 2004. However it made these profits on revenues of $1.676 billion implying a cost:income ratio of just 34% in regional investment banking, a figure many other banks will regard with envy.

In private banking and wealth management, the bank made revenues of $563 million in 2004 on assets under management of $61 billion. In the first half of 2005, it made profits of $71 million on revenues of $297 million, a profit margin of roughly 24%. The bank claims to bank half of the region's billionaires.

Finally in global transaction services, which handles trade finance, cash management and custody, the bank made profits of $217 million on revenues of $609 million in the first half of the year, growing the business by over 35% since the same period in 2004.

All told the numbers confirm what many suspected, namely that the big global banks can make an enormous amount of money doing business in the region. However, with Citi claiming just a 3% market share, it a hugely fragmented market ready for much more consolidation and evolution.

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