Citibank's consumer biz acquisition to up Axis Bank's card biz by 57%
Experts believe that acquisition of Citibank’s consumer biz will boost Axis Bank (AXSB)’s credit card biz by 57 per cent.
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Mumbai, Apr 01 Experts believe that acquisition of Citibank's consumer biz will boost Axis Bank (AXSB)'s credit card biz by 57 per cent.
AXSB on Wednesday announced the acquisition of Citibank India's Consumer Banking business for a cash consideration of Rs 123b. The deal includes the Credit Card, Wealth, and Retail Banking operations of both Citibank India and Citicorp Finance.
It will acquire loans/deposits worth Rs 2 74b/Rs 509b, including the Credit Card book of Rs 89b. This will increase its Credit Card book by 57 per cent to Rs 244b and propel it to among the top three players. Wealth Management AUM will rise 42 per cent to Rs 3.8t, making it the third largest player on combined AUM.
AXSB will acquire 3m unique customers, complemented by Citibank's Affluent Customer segment. Post-acquisition, it will have 28.5m savings accounts, more than 0.23m Burgundy customers, and 10.6m cards.
'While synergies in terms of cost savings and RoA accretion will take more than two years to accrue, the deal, at 18.7x P/E on CY20 normalized earnings, makes limited economic sense from medium term perspective given the declining revenue profile /cards base of Citi's business, higher capital charge and high integration cost to be absorbed over the next 2 years', says a report by MOFSL.
