Citibank Leaps 62% To $104m
The Age
Wednesday March 23, 1994
Australia's biggest foreign bank, Citibank, made a record profit in 1993 - up 62 per cent to $104.5 million - to consolidate its position as one of the nation's most profitable banks.
Citibank's chairman, Mr Brian Clayton, said he expected the 1994 result to better last year's. Trading in the first two months of the year was ahead of last year and consumer and business confidence was high, he said.
The 1993 calendar year result was struck on flat revenue of around $330 million and slightly reduced operating expenses. It follows record earnings of $3.1 billion by its US parent, Citicorp.
Mr Clayton said both the corporate and retail arms of the Australian bank performed strongly, contributing about half each of the profit in line with the group's strategy.
Citibank, the only foreign bank to establish a substantial retail presence in Australia, has made strong progress from its inception in 1985 with a series of heavily marketed niche products.
It said yesterday it had 300,000 accounts and continued to gain market share through the year.
It has an eight per cent share of new home loan business, mainly through its Mortgage Power offset account.
During the year the bank became the first to introduce credit cards with photo-ID, and two weeks ago it introduced Citiphone, allowing customers to bank by telephone.
Other institutions' bank-by-phone schemes have foundered, but Mr Clayton said advances in technology made the idea more workable.
He said Citibank's move last September into retail funds management was ahead of target and had so far pulled $50 million to $100 million into the four trusts launched.
Citicorp Life increased annual premiums by 19 per cent, and single- premium sales doubled.
The corporate bank, which was largely responsible for Citibank's 1991 loss of $230 million, continued its recovery, writing back $47 million in bad debts recovered.
The debt writeback was offset by a $26.2 million tax charge.
Mr Clayton said corporate banking was gaining through exporters or multinational companies taking advantage of the bank's Asian network.
He said the bank had invested heavily in technical systems last year and opened more branches, taking the total to 18, with another four to open this year.
``The challenge now for banks is in the delivery of product rather than product innovation," Mr Clayton said.
Citibank group assets rose by 3.5 per cent, to $8.8 billion. The rise would have been more but for the securitisation of $450 million in mortgages. Further off-balance-sheet business takes group assets to more than $10 billion.
© 1994 The Age
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