The Bangladesh subsidiary of American financial services behemoth Citigroup, Citibank, saw its profit shrink 12.4 per cent in 2020 to Tk 90.8 crore as the pandemic ate away the appetite for loans for its client base, businesses.
The performance is better than its parent group, which saw its profit crash 41.2 per cent to $11.4 billion because of the “massive economic impact of COVID-19”.
In Bangladesh, Citibank, which opened its first branch in 2000,does not offer retail banking services like its foreign peer Standard Chartered; it offers trade financing and wholesale banking, meaning its only client group is businesses.
In 2020, private sector credit growth averaged 8.9 per cent, in contrast to 10.4 per cent a year earlier, as jittery businesses went on a self-preservation mode, putting their investment plans and businesses on hold indefinitely, according to data from the Bangladesh Bank.
Citibank’s loans and advances contracted 26.5 per cent year-on-year to Tk 1,358.2 crore last year.
Its roster of large loan clients increased from 28 to 31. Names include Grameenphone, Banglalink, Robi, Nestle Bangladesh, British American Tobacco, Pran, Heidelberg Cement, LafargeHolcim, Incepta, Renata, Brac, among others.
Their outstanding loans with Citibank stood at Tk 2,396.5 crore at the end of 2020, down 1.4 per cent year-on-year.
As a result, its interest income crashed 30.8 per cent to Tk 122.9 crore in 2020.
Citibank’s default loan ratio increased from 1.2 per cent in 2019 to 1.6 per cent -- which is way below the sector’s average of 7.7 per cent in 2020.
Its loan to deposit ratio is 33 per cent, down from 47.8 per cent in 2019 -- and much below the ceiling of 85 per cent.
It has the biggest exposure to the fuel & electricity sector, followed by garment and chemical industries.
But Citibank did not sit on its pile of liquidity: it invested heavily in government securities, particularly in 91-day Treasury securities. Subsequently, its interest income from investment soared 79.2 per cent to Tk 81.1 crore.
