RAM Ratings: Citibank’s AAA rating unaffected by consumer business exit

Published on 13 Aug 2021.

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Citibank Berhad’s (Citibank or the Bank) planned exit of its consumer banking business in Malaysia will not affect its AAA/Stable/P1 financial institution ratings. Subsequent to our recently concluded assessment of the move, we are of the view that Citigroup Inc’s (the Group) propensity to provide parental support to the Bank remains strong given the Bank’s strategic importance to the Group’s operations despite the planned withdrawal from the consumer banking business. 

The Institutional Clients Group (ICG) business – Citibank’s remaining franchise in Malaysia after the exit of the consumer segment – is closely aligned with the Group’s strategy. The Group’s presence in Malaysia is further reflected by its investments in the two Citi Service Centers (of 37 solutions centers worldwide presently) that support its global multi business processing solutions. These centers are based in Kuala Lumpur and Penang with an aggregate of over 3,000 employees. We expect the Bank to remain highly integrated with its parent and continue to leverage the Group’s global network to serve institutional clients in Malaysia.

Citibank will operate on a leaner balance sheet after exiting the consumer banking business, typical of a wholesale bank. The pullout will mean a narrower business focus and potentially a more volatile earnings profile. That said, its ICG business has a strong franchise and considers multinationals, government-linked companies and large local corporates as core clients. We expect the Bank’s asset quality and profitability (on a risk-adjusted basis) to improve in view of its emphasis on top-tier institutional clients. Gross impaired loans and impairment costs of the ICG portfolio have been minimal in the past. 

The Bank’s liquidity and funding profile should remain stable following the sale of the consumer business. Citibank derives the bulk of its funding from large corporate and institutional depositors, chiefly sourced via cash management operations. Capitalisation will remain strong, although it is uncertain how the sale proceeds of the consumer banking business will be redeployed by the Group for Citibank’s domestic ICG business.


Analytical contacts
Chow Kah Mun
(603) 3385 2501

Sophia Lee
(603) 3385 2619


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Published by RAM Rating Services Berhad
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Ratings on Citibank Berhad