Sanjoy Sen - Emirates - August 2009


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Sanjoy Sen - Emirates - August 2009

  1. 1. In running a retail bankingbusiness, loss should never bea problem as long as it iswithin what has beenprojected. “It’s never a zero-loss game, you will lose somemoney but the question is didthe players in the marketproject their loss and is their loss asper their projection or is it three timesmore than that?” according to SanjoySen, Citibank’s Middle East ConsumerBank Head. He said the bank remainsprofitable with actual loss running atonly single digit higher than its lossprovisions and recovery rates of non-performing loans running at 25-30 percent. He said the bank, which has amarket share of 17 per cent in creditcards and 15-20 per cent in loans, hasalso seen an uptake in deposits andinvestment sales.—How big is your non-performingloan (NPLs) as a percentage to yourloan book?—I can’t be specific but rates of NPLs,compared to what it was last year, havegone up because this market has gonethrough a high and reasonable amount ofstress leading to job losses and customersleaving this country. Having said that, weare still at very profitable levels because ofour balanced and prudent strategy. We’vegone through these cycles of recession andconsumer losses in different markets so introuble times we can live. We are a morematured and seasoned player.—You mentioned during a recentconference that collection is one ofyour frontline strategies. How much ofthe NPLs were you able to recover?—When we launch a lending business wefirst invest in collections parallel to whatwe invest in sales. There are differentnorms of recovery but we collect in arange of 25 to 30 per cent of those thatgoes to NPLs. We have strategies thatensure our recovery streams even if theaccount has gone to NPLs.—Say, a customer, who is individuallybankrupt, absconds and goes home.Even if you tracked him down, he hasno means of paying his debts. Whatelse can you do?—That’s when you take and incur losses.In a consumer business, you should havepriced or budgeted for that loss and ifyour lending norms are prudent and yourstrategy is conservative and you knowyour high risk segments, you can predictthat loss. It’s never a zero-loss game, youwill lose some money but the question isdid the players in the market project theirloss and have their loss as per theirprojection or is their loss three timesmore than that?—And is your actual loss lower or atleast as per what you forecast?—No, it’s higher. It’s running at single digithigher than expected but compared to themarket, we are significantly better.—Some blame hot money and otherson the market panic, but until nowsome banks’ loan-to-deposit ratioremains over 100 per cent. For thepast six to eight months, we have seenbanks chasing deposits. How’s theinflow of deposits in Citibank now?—There was a lot of drying up of liquiditylast year in the third and fourth quarterswhen a lot of clients wanted to move theirmoney from banks but starting January2009 there has been a lot of liquiditycoming to this market, lots of comfort forour customers to bring in money toCitibank. Today, we are running aliquidity level, a loan-to-deposit ratio,which is significantly higher than what isrequired by the regulators. All ourdeposits are getting renewed, we aregetting a flood of new deposits. We arepaying attractive rates to our depositors,in sync with the market. Earlier this year,it has gone up to 5.5 to 6 per cent; now it’s3 to 3.5 per cent on dirham deposits.—Was the flood of deposits due to theguarantee made by the UAEGovernment?—I don’t think that itself is the reason butit’s one of the reasons. There are otherreasons like our reputation as a solidcompany is back again as it should be;two, the market here is reviving againwith liquidity coming in. Third, clientswho have moved their money overseas arebringing it back to this market and fourthis that a lot of investors who would haveput their money in the property are nowputting it in the bank.—Will this market revival translate toprofit growth for 2009?—We are seeing double-digit growths ininvestment sales the past couple ofmonths but these growths are from whatit was in the last two quarters of 2008,which saw a sharp decline. It’s difficult tosay whether we’ll have substantial growthover last year but we can expect certainpockets of growth and certain pocketsmay be flat. Our objective is to stayprofitable.—Out of the 29 banks surveyed byEthos Consultancy’s BenchmarkingService Quality for the UAE RetailBanking Sector, Citibank came 14th,signifying customer service is notsatisfying. What are you doing toimprove the lapses in your customerservice?—We have set ourselves benchmarks onthe highest international levels, so whencustomers walk in or call Citibank theyexpect a high level of service. It’s likewhen you’re driving a Mercedez you don’texpect it to make any noise. If you don’tlive up to that highest level ofinternational class service then there willbe complaints but that is no way anindicator of our customer service levels.—The recession has pushed most ofthe banks to revamp their previouslyrelaxed lending strategies. Are yourevisiting your strategies as well?—We made ourselves more prudent butthere is no major change to our strategy.We always had a balanced approachtowards our consumers so we are not oneof those players who are just buildingmarket share for the sake of market share.At the end of the day as a bankinginstitution we are responsible to our depositlenders as custodians of their wealth.Interview by Karen Remo-ListanaQ&AIt’s never azero-loss game,you will losesome moneyCitibank remains profitable with actual loss running at onlysingle digit higher than its loss provisions Starting January,there has been a lot of liquidity coming on to the marketBank sees improvement in deposits and investment salesInvestors bringing back money from overseas marketsSanjoy SenConsumer Bank Head– Middle East, CitibankSen heads Citibank’sConsumer Banking businessfor the Middle East and servesas the Country BusinessManager for Citibank’sConsumer Bank in the UAE.His responsibility includesconsumer, wealthmanagement, credit cards andSME. Prior to moving toDubai, he was the RetailBanking Head and COO forCitibank in China. He hasbeen with Citibank for 19-plus years. he was RetailBanking Head for Citibank inIndia and CEO of CiticorpMaruti, a joint venturebetween Citibank and MarutiSuzuki, which he helped setup. Sen has a degree inelectronics engineering. He isan MBA and marketing goldmedalist from the IndianInstitute of Management andhas management trainingfrom Harvard BusinessSchool.EB FILE