Deal to strengthen lender’s position in credit cards business

After growing organically, Axis Bank has acquired the consumer business of Citibank. The senior management of Axis Bank broke the deal contours down on Wednesday.

Done deal

The purchase considerations, subject to customary and contractual adjustments at the closing date for the proposed acquisition are up to 12,325 crore, translating to a price to earnings multiple of 18.7 times based on normalised CY20 standalone earnings of this business.

Portfolio of assets

Citi bank has a complementary portfolio of 2.5 million cards, with amongst the highest monthly spends per card across the industry and a book size of approx 8,900 crore as of June 2021. This will strengthen its position as a top three credit card player in India in book size, with a healthy increase of around 31% to our existing credit card base. Axis Bank’s spends market share will go up about 480 basis points. The combined AUM of Axis Bank’s wealth management will increase by 42%, thereby making it the third-largest wealth manager in the country. On deposits, with 81 CASA ratio, and 73% being savings accounts, this is truly a granular consumer business. The combined CASA ratio on a perfoma basis will increase 200 bps to 47%. The consumer lending portfolio of18,500 crore consists of mortgages, asset back finances, small business lendings and personal loans.

Key components of deal

The deal structure and timelines required for customary regulatory clearances give Axis Bank about nine months of headstart. Axis Bak has a strong balance sheet, comfortable capital levels to execute this deal and the right team to make it a
success.