, India

Axis Bank’s Citi purchase to improve profits long-term: S&P

Positive effects will only be felt starting fiscal year 2025 and onwards.

Axis Bank’s planned acquisition of Citi’s consumer banking portfolio in India is a win for the Indian lender, although effects will be felt only through 2025 onwards, according S&P.

The purchase is expected to strengthen Axis Bank’s retail market position as well as diversify its revenue profile–but it will take three years for it to take effect.

“We expect significant profitability improvements to only accrue from fiscal 2025 onwards as it will take time to complete the acquisition and integrate the assets,” S&P wrote in a report, estimating that the acquisition will be completed over the next 9 to 12 months, whilst full integration will take another 18 months.

Earnings will ultimately depend on Axis Bank's ability to retain acquired customers and successfully cross-sell its products and services to them.

On the upside, Axis Bank is expected to be able to absorb any incremental risks given the small size of Citi's portfolio. The acquired portfolio is equivalent to about 4% of Axis Bank's loans, and it comprises credit cards, mortgage loans, personal loans, asset-backed finance and small business banking loans. 

The new portfolio is also composed mainly comprised affluent clients, another positive for Axis, as the credit quality with these clients tend to be better than mass-market customers. 

Citi's spending per credit card is also higher than Axis Bank's as well as the average for Indian banks.

On short-term downsides, the acquisition will reduce Axis Bank's capital buffer because it plans use excess capital to fund the deal. The bank's S&P Global Ratings risk-adjusted capital (RAC) ratio was 8.5% as of March 31, 2021. As per S&P’s initial estimates, this acquisition can reduce the RAC ratio by about 100 basis points. 

“Despite the deterioration, we expect the RAC ratio to stay sufficient for its rating. The bank's earnings will remain supportive of its capital position. Axis Bank enjoys good access to markets and can raise additional capital to restore buffers and fund organic growth,” S&P said.

Follow the links for more news on

Join Asian Banking & Finance community
Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!

Top News

Crypto-focused SEBA Bank rebrands to AMINA Bank
It recently clinched a license to offer regulated services in Hong Kong.
Japan’s SMFG names Toru Nakashima as CEO
Nakashima retired from SMBC in April 2022, but returned to the company in 2023.


Bank DBS Indonesia avails fast, reliable and sustainable corporate banking
Its ESG-based bank financing, as reflected in sales and asset under management, proves to be an IDR1.8t (US$117m) success.
Italy brings its strong suits to Singapore’s fintech expo
Italian trade executive says 9 firms at the Singapore Fintech Festival 2023 exemplify the diverse range of products and expertise Italy can bring to the table.
Digibank by DBS sets new digital banking standards
Apart from speed and convenience, DBS stays ahead with exceptional personalisation, open banking, and enhanced security.