‘Axis Bank happy with Citi's credit card portfolio performance’

MUMBAI: Axis Bank is satisfied with the performance of Citi India's credit card portfolio when gauged by spends and Non-Performing Assets (NPAs), a senior executive from the third largest private sector lender said on Wednesday.

Axis Bank, which is buying out Citi's retail business in a Rs 12,235-crore deal announced in March, is confident that it will be able to deliver the right value on the price that it is paying, Sanjeev Moghe, Head of Cards and Payments of the bank, told reporters.

Moghe was speaking against the backdrop of recent media reports about the invocation of the clawback clause and a possible downsizing in the overall payment which the American lender stands to receive in light of erosion of the customer base and revenues.

He said Citi's portfolio had been witnessing an attrition on the number of cards, but what is important in a portfolio like Citi's, which consists of affluent and super-affluent customers, is the spends.

''Their spends is a very important indicator of what is happening and the overall spends are growing and therefore, those metrices look ok,'' Moghe said, adding that he is ''fine'' with the de-growth in the number of cards.

The industry average on NPAs in the cards portfolio is between 4-5 per cent, and dud assets in Citi's credit card portfolio are ''substantially lower'' than the industry average, he said, adding that the NPAs for both Citi and Axis Bank's own portfolio are under control.

On the question of clawback clause, Moghe hinted that the clause may not be invoked and expressed confidence on Axis Bank extracting the assumed value for the price it is paying.

''We are very confident of what we have done diligence on, the price that we have bid on. We are confident that we will be able to deliver value on the price that we have paid. I think those parameters dont change,'' he said.

Moghe said the credit card industry clocked overall spends of Rs 1.13 lakh crore in May and Axis Bank feels that up to Rs 30,000 crore of it is the low-margin corporate or commercial customers, while the rest is retail.

Three years ago, Axis Bank took a strategic call not to pursue the corporate or the commercial credit cards business because the revolve rates - where customers part-pay their dues and commit to pay high interest on the remaining ones - are lower which deprive lenders of interest, he said.

The RBI's recent order on credit flow happening through the Prepaid Payment Instruments (PPI) does not impact Axis Bank. It has 'buy now pay later' offerings in tie-ups with merchants and those will continue, Moghe added.

Meanwhile, the bank on Wednesday announced a tie-up with Eazydiner under which its 3 crore card users will be able to enjoy discounts of up to 40 per cent in over 10,000 restaurants in the country and Dubai, and also get deep discounts on birthdays.

Moghe said the overall contribution of dining on card spends will continue to remain in the 3-5 per cent range but such tie-ups will help enhance the experience of owning an Axis Bank card for the customer and hence up the stickiness.