Citibank bets high on corporate banking to boost earnings

By James Anyanzwa

Citigroup has unveiled ambitious plans to introduce more financial products and services to the Kenyan market tailored to the needs of large and institutional clients. The move is part of the group’s regional growth and expansion strategy.

The initiative is also designed to help the US-based financial conglomerate tighten its grip on Kenya’s corporate banking division. Citibank Kenya has promised to maintain a firm focus on corporate banking as a critical aspect of its banking prowess.

"We are differentiated because we are the only bank in the system which is focused on the corporate clients," Mr Daniel Connelly, the bank’s managing director in-charge of the East African region told reporters last week. "We are not doing retail although that could change at some point but we are really focused on corporates."

He said that Citibank Kenya harbours no immediate plans of reviewing its banking plans, which is biased towards corporate customers. "We are going to maintain the strategy that we have because I think it has been successful," he said. According to the bank’s boss, the institution is building on its local presence, with more products and services to serve its client base and wholesale business.

"We want to bring into the country products which are appropriate to the country and Kenyans," he said. Ironically, this comes as other commercial banks are ditching the corporate niche market for the mass market.

The success of other lenders such as Equity Bank in the mass market has changed the face of Kenya’s banking industry, with banks fighting it out to enlist more customers through branch opening drives.

The use of mobile phone banking has also enabled majority of the commercial banks to reach the low-income groups as technology offers a variety of banking services at affordable rates. Competition from upcoming micro banking institutions has seen major commercial banks craft new products to cater for the unbanked.

Bank accounts

The banks have, among other things, slashed ledger fees and waived operating fees on accounts targeting small-scale banking.

Banks have not only established branches near where the low-income groups operate but also reduced or done away with ledger fees and other operating charges on bank accounts.

Citibank Kenya, which is part of Citigroup with operations in over a hundred countries around the globe, has a wide-range of innovative products and services tailor-made to meet and fulfil customers’ needs to their satisfaction in a most efficient, economical and superior manner. "Our strength is in enabling the big companies and economy to do well and prosper.

We have our strength in dealing with financial institutions," said Ade Ayeyemi, the banks head for Global Transaction Services in-charge of African operations.

Key milestone

"Our strength is in institutions. There are always opportunities to do more but when you want to win you play to your strengths. Our strength is in the corporates." Citibank expects the East African region to embrace e-commerce and invest heavily in innovation, factors touted as the main drivers of economic development in the 21st century.

The bank reckons that the advancement of innovations such as mobile money transfer is a key milestone to East African Economies, which must be encouraged.

Kenya is currently leading other regional countries in mobile cash transfers with an estimated population of 18 million already using the facility. Citibank Kenya posted a pre-tax profit of Sh3.2 billion supported by a growing loan book during the nine month period ending September 30,2010. Its total loans grew by 26 per cent to Sh33.3 billion compared to a similar period the previous year.

The improved performance was largely attributed to strong business fundamentals and higher fees and commission income.