Citi Hong Kong Bucks Groupwide Profit Trend

1 min readUpdated Feb 10, 2021Feb 11, 202111:06 PM

In this article (5)

Citi’s Hong Kong businesses registered growth across the board, according to an internal memo seen, despite a more than 40 percent drop in profit for the overall group. Citi Hong Kong’s consumer business saw a 44 percent increase in net new money inflows with 9 percent revenue growth in wealth management in 2020, according to an internal memo seen.

Within its institutional business, banking revenues were up 10 percent, backed by a 61 percent increase in investment banking. The memo highlighted equity deals Xinyi Solar and Kerry Express Thailand, the secondary listing of Yum China, and advisory for the privatization of Li & Fung.

Its markets business saw 5 percent growth with its treasury unit as the major revenue performer, benefitting from low-interest rates.

According to Citi’s Hong Kong and Macau CEO Angel Ng, Asia remains key to the success of the bank’s wealth strategy which includes its recent move to merge the whole business from affluent to ultra-high net worth clients. She also highlighted digitalization, Greater Bay Area, and other areas of focus for the business.

A spokesperson confirmed the contents of the memo.

The Hong Kong unit contrasts with that of Citi’s global results which posted flat revenues year-on-year at $74.3 billion with profits down 41 percent to $11.4 billion.

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What this means

Citi Hong Kong’s robust performance against a challenging groupwide profit trend suggests its focused strategy on wealth management and institutional banking is paying dividends. The merger of client segments and emphasis on digitalization and the Greater Bay Area are smart moves, using regional growth drivers. This success contrasts with other financial institutions facing a tougher climate, although direct comparisons with retail store openings/closings are distinct business models. Citi's aggressive pursuit of the high-net-worth segment positions it strongly, potentially pressuring rivals in this competitive market. The key challenge will be scaling these successful elements across Asia without diluting service quality, so the growth in net new money inflows will be a crucial metric to watch.

Wei Zhang · Retail News Asia newsroom

Questions & Answers

What contributed to the institutional business's revenue growth in Hong Kong?

Banking revenues increased by 10 percent, primarily supported by a substantial 61 percent rise in investment banking. This included work on equity deals, a secondary listing, and advisory services for a privatisation.

Which specific deals were highlighted for Citi Hong Kong's investment banking performance?

The internal memo mentioned equity deals for Xinyi Solar and Kerry Express Thailand. It also highlighted the secondary listing of Yum China and advisory work for the privatisation of Li & Fung.

What is the broader strategic importance of Asia for Citi, according to its Hong Kong and Macau CEO?

Angel Ng stated that Asia is crucial for the bank's wealth strategy. This strategy involves merging its entire business, catering to clients from affluent to ultra-high net worth.

How did Citi's global financial performance compare to its Hong Kong unit?

Globally, Citi reported flat revenues of $74.3 billion year-on-year, with profits decreasing by 41 percent to $11.4 billion. This contrasts with the growth seen across its Hong Kong businesses.

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