Shares of Axis Bank climbed over 2% in early trade on Wednesday after the private sector lender completed the acquisition of Citibank’s India consumer and non-banking finance businesses. In March last year, the Mumbai-headquartered bank had signed a pact with Citibank India to acquire its credit cards, retail banking, wealth management, and consumer loans businesses for a cash consideration of ₹12,325 crore ($1.6 billion). The deal will bring around three million new customers to the Indian lender's clientele over from the American banking major.
Boosted by the development, Axis Bank shares price rose as much as 2.2% to ₹862.65 on the BSE in two hours of the day’s trade so far. The banking heavyweight opened higher at ₹846 against the previous closing price of ₹843.80 on the BSE. The market capitalisation of the lender stood at ₹2.65 lakh crore at the time of reporting.
The share price of Axis Bank currently trades 11% lower than its all-time high of ₹970.45 touched on January 4, 2023. The lender hit its 52-week low of ₹618.10 on June 23, 2022. The stock has outperformed BSE Bankex index and BSE benchmark Sensex in terms of one year return. The stock has delivered a positive return of 14.6% in the last one year, compared with a 10.3% rise in the Bankex index and 5.4% in the Sensex. The counter has risen 15.5% in the six-month period, while the counter gave a muted return of 0.4% in a month. In the last one week, the largecap stock climbed 3.7%.
Axis Bank in an exchange filing on Wednesday says it has completed the acquisition of Citibank's India consumer business from Citibank N.A. (CBNA) and Citi’s non-banking financial company, Citicorp Finance India (CFIL), comprising the asset-backed financing business, which includes commercial vehicle and construction equipment loans, as well as the personal loans portfolio. “Accordingly, the businesses of CBNA and CFIL stand transferred to Axis Bank and the Bank becomes the owner of Citibank’s India Consumer Business and NBFC Consumer Business effective from 00.00.01 hrs on March 1, 2023,” it says.
“The cash consideration for the acquisition based on the contracted computation of the closing position of assets, assets under management, and liabilities as of January 31, 2023, stands at ₹11,603 crore,” it adds.
The deal includes Citi's lucrative credit cards business, with around 2.5 million cardholders, which will enhance Axis Bank’s credit card customer base by around 31%. The bank's cards balance sheet will grow by 57% after the acquisition, making it one of the top three card businesses in the country. On an overall basis, the proposed transaction will add nearly 7% to the bank’s deposit base (with around a 12% increase in CASA) and nearly 4% increase in advances. This Axis-Citi deal, however, does not include the latter's institutional client businesses in India.
The completion of the deal will see Axis Bank getting additional aggregate deposits worth ₹50,200 crore, of which 81% are CASA deposits. On an overall basis, the proposed transaction will add 7% to the bank’s deposit base, with around 12% increase in CASA, and 4% increase in advances. Axis Bank will now have around 28.5 million savings accounts, over 2.3 lakh Burgundy customers, and 10.6 million cards. It will gain access to seven offices, 21 branches, and 499 ATMs across 18 cities. As part of the deal, Axis Bank will also absorb 3,600 Citibank employees.
In the wealth management segment, the deal will bring around ₹1.11 lakh crore AUM from Citi's wealth and private banking products to Axis’ Burgundy premium banking brand, making it the third largest segment player in terms of combined AUM.
Citi sold its retail assets in the country under CEO Jane Fraser's plan to exit the retail banking space in India and 12 other markets where it lacks the necessary scale to compete in a bid to overhaul its business.