Citibank ready to put faith in Hong Kong after global restructuring
After a global restructuring last year, Citibank plans to add up to six branches to its Hong Kong network of 41 outlets in the next 12 months.
Weber Lo, the bank's country officer and chief executive in Hong Kong and Macau, said the bank's performance in the city so far was on track to beat the group's financial targets for 2015.
Citigroup has targeted returns on assets and equity reaching 0.9-1.1 per cent and 10 per cent respectively by 2015. It also aims to lift is efficiency ratio, or operating margin, from the mid-50 per cent level to above 60 per cent.
Seven branches in the city were cut last year as part of a global restructuring. High rentals in the city were also a key reason for the closures, Lo said. But because rents had since "normalised", the group would look for locations for the new branches.
The group had withdrawn from consumer banking in a couple of countries and Lo said the resources were redeployed to growing regions, such as Hong Kong. Economic growth and a first-mover advantage in offshore yuan business were "favourable" factors for Hong Kong, he said.
Citi plans to expand its customer base from its traditional affluent segment to the mass market and expected this to result in a more stable income, Lo said. Current staff levels in the city of some 5,000 would remain more or less unchanged.
The prospect of rising interest rates in the United States was good news for banks, and net interest margins were stabilising and likely to improve. Net interest margin, a measurement of profitability of loans, had remained low since quantitative easing injected massive liquidity into financial markets.
Lo said the bank aimed to double revenues earned on commercial banking business in the next five years.
Pre-tax profit grew at a double-digit rate in the first five months of this year from the same period last year. But Lo said he expected growth to slow in the second half and aimed at a growth rate in pre-tax profit of high single digits for the year.
With an eye to acquiring new customers, the bank would continue to offer competitive interest rates on Hong Kong dollar deposits, he said.