Citi Eyes 10% Asset Growth as Virus-Worn Asia Goes Online

(Bloomberg) -- Citigroup Inc. is forecasting a 10% boost in new clients and assets at its retail wealth unit in Asia, betting that a digital push will help it grow this year even as the coronavirus upends businesses across the region.

The bank plans to expand its customer base across 12 markets, underpinned by online growth, said Fabio Fontainha, Citi’s head of retail banking for Asia Pacific. Fontainha’s unit serves clients with investable assets of $100,000 to $10 million.

The New York-based bank is brushing aside disruptions triggered by the Covid-19 virus, confident that investments in online trading, electronic authorization of documents and digital systems will help it lure new clients from China to India.

The bank is racing against dozens of other players for a slice of a wealth and asset-management sector that’s expected to nearly double in Asia to $29.6 trillion in the nine years through 2025, according to a report last year from PricewaterhouseCoopers LLP.

“We think wealth is a leading business here in Asia,” Singapore-based Fontainha said. “All our digital capabilities are coming into play at this point.”

The retail wealth business -- Citigold and Citigold Private Client -- has several hundred thousand customers, said Fontainha, without being more specific. He declined to disclose how much the two units manage, though the overall Asia wealth business -- which includes the private banking unit for investors with $10 million or more -- runs $265 billion.

Fontainha projects asset growth even as the parent bank cautions the coronavirus outbreak will take its toll. The lender expects net interest revenue to decline in the first quarter, and it will probably have to set aside additional reserves, Chief Financial Officer Mark Mason said last week at an investor conference. The outbreak may prompt Citigroup to hold its annual shareholder meeting online next month, the bank said.

Read more on Citi’s outlook

Citigroup’s wealth management business in Asia remains a bright spot for the lender. The retail banking business in the region generated $4.4 billion in revenue last year, an increase of 4%, while profit jumped 11% to $1.04 billion.

For Singapore alone, the bank plans to double its wealth-management clients by 2025, while increasing its market share by 5 percentage points to 10% during the same period, the company said.

The bank gets about a third of new clients online and that trend is expected to grow, said Fontainha. Since the virus outbreak, relationship managers have been reaching out to customers via video conferencing and mobile chats.

“It’s quite valuable to create alternative ways for clients to reach their relationship managers and conduct banking online especially in times like this,” said Fontainha. “That trend will continue to pick up from this point.”

Online Strategy

Citigroup deploys an open-platform strategy for its asset-management business. It sells third-party mutual funds, which saw a 66% growth in online sales in Asia over the last two years compared with the end of 2017, Fontainha said.

Foreign exchange trading volume from retail customers also jumped 40% in the same period after the bank introduced a global wallet for automatic currency conversion and an online foreign exchange service, he said.

Citigroup has incorporated its retail banking service on Tencent Holdings Ltd.’s instant messaging tool WeChat, meaning clients can check their accounts within the mobile app.

“Clients’ comfort level in trading online is quite high and constantly increasing,” Fontainha said.

--With assistance from Chanyaporn Chanjaroen.

To contact the reporter on this story: Lulu Yilun Chen in Hong Kong at ychen447@bloomberg.net

To contact the editors responsible for this story: Candice Zachariahs at czachariahs2@bloomberg.net, David Scanlan, Katrina Nicholas

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