As the COVID-19 vaccination rollout brightens the outlook for the economy, Citibank UAE plans to increase its workforce in the consumer business by close to 17 percent this year to strengthen its wealth management and credit-card segments.
In an interview with Zawya, Dinesh Sharma, Citi Middle East’s Head of Consumer Banking, said, “Our outlook for 2021 is positive. We expect the first two quarters to remain soft, albeit better than the previous year. But momentum is coming back into the system at the end of the second quarter.”
Based on the bank’s expectations of economic recovery, the new hiring will support card sales and strengthen its wealth management services. “Our plans for next five years are to continue to grow our wealth management business exponentially. Plus, we will also grow our card business, and that includes looking at any opportunistic partnership or acquisition that may come up in that space.”
Sharma said the consumer banking business saw significant growth last year; deposits grew by 30 percent, forex business revenues rose by 28 percent and investment business grew by more than 6 percent.
He noted that the bank had seen some increase in delinquency rates over the past year due to credit card and personal loan stresses, but their remedial management programme has helped mitigate the problems. “Close to 10 percent of our customers have participated in the remediation programmes, and of that [group], 90 percent have successfully transitioned,” he said.
On the cards front, he said, growth has been flat, mainly because of the lockdown, but also because the bank took measures to ensure that employees were not endangered by having to make sales in person. “Having said that, we are back to business from Q3, and our cards business is coming back to pre-COVID-19 levels from the fourth quarter onwards.”
He added that there was 34 percent growth in card-business growth in Q3 and Q4 compared to the first half.
Category Shift in Buying
Due to the pandemic and the lockdown, there has been a shift in retail buying from mall visits to online. “There was also a category shift. A lot of people who were paying cash earlier now prefer to pay by card, especially by contactless card.”
Among the many customers who have gone online in the past year are government services, Sharma said. Government spending on cards went up by 26 percent last year.
Sharma sees the current low interest-rate regime continuing for 2–3 years. However, this will only be a challenge for banks, which are very long on deposits and short on assets.
“Our deposits and assets are fairly well matched; less than 10 percent of our income comes from deposits, therefore the impact is much lower. Plus, our continuous focus on FX and investment advisory services has helped us to stay immune to the fluctuations in the deposit interest rate.”
Sharma is not worried about competition from local banks in the UAE; he believes there’s room for everyone.
The Digital Dividend
Sharma said the bank had been investing in digital infrastructure long before the pandemic made it necessary, but the lockdown and social-distancing measures have persuaded customers with inhibitions about digital transactions to make the switch, resulting in a significant increase in the numbers of mobile and digital users: 26 percent in 2020, after COVID-19-related lockdowns began, compared to 2019. He noted, however, that when the pandemic hit, more than 95 percent of their customers were already transacting with the bank digitally “in some way or the other, without a human touch.”
Sharma dismissed the idea that the bank is undergoing digitization to reduce its workforce and save on costs. “In the last 3–4 years, we have fully refined our infrastructure by reducing our physical footprint by 50 percent and have put the money into digital assets and to retrain and redeploy the workforce to meet the new customer requirements.”
(Reporting by Brinda Darasha; editing by Seban Scaria)
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