Citibank’s Credit Card Business1) Evaluate the performance of Citibank’s credit card business relative to the industry as a whole. Based on this evaluation, are there areas of concern for Citi?
After Citibank decided to use the segment-led strategy, the % share of Citibank credit card declines over years, from 16% in 2002 to around 11% in 2009 (Exhibit 3). From Exhibit 9, the Net Sales Volume of the industry is doubled from June 2010 to December 2012 but Citibank growth is much smaller, this pattern is also shown by the outstanding growth in Exhibit 9. Although Citi is growing, the competitors are growing faster. The median credit of Citibank is higher than the industry but % higher is decreasing – from 45% higher in June 2010 to 35% higher in December 2012. But the Net Sales Volume for Citi is high given the limited customer Citi is targeting, driven by the spending patter of the affluent groups. Citi spends less in marketing compared with the rest of the industry but Citi has higher unaided awareness (Exh11). Compared with the industry, Citi has much less physical presence (total 42 in Mar.2012) and 66.7% of the branches are in Metropolitan areas.
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Sector
Citibank’s S&P 500 Index
The key indices of the industry are the Index of Equity, a measure of both the equity or interest risk of the firm – in this case, its marketable stocks, or the price at which a stock is valued – and the Share Price Index. In other words, the indices are generally indicative of equity risk, in which case they give a better understanding of the value of a company or financial network, and thus provide a comparison of its marketability to other assets that could be more risk-intensive to the firm.
The S&P 500 shares of the firm are generally expressed in a multiple of $% or more. In other words, the number that you would see in their market is usually $% or more. The index includes a broad range of asset classes. For example, the shares of companies that trade in the $20, $50, and $100, $120, $150, $200, and more categories are not included. This makes the Nasdaq, NYSE and Dow Jones Indices important indicators of the S&P 500 index. The index is a key indicator of value where there is an increasing price level reflecting a more cost-savvy investor. The Nasdaq has the highest share price at $200. See more on these factors below. For a complete description of the S&P 500 index see our Annual Report on Form 10-K.
Citibank’s Index Growth
The global economy has grown faster than its predecessor in the past decade. Since the end of 2010, GDP growth has been about 2.1% per year. In the most recent quarter of 2010, growth was 9.8% per year. The average growth rates of this type of growth were seen in other major advanced economies, including Latin America and the Middle East. Growth on average in some other major advanced economies was 9.5%.
In the US, at least 5% of the GDP is invested on the GFC. According to the Bureau of Labor Statistics, GFC has a yield of 0.5%. So, for the 2012 quarter, the 2.1% Growth rate in the International Fixed E.U. sector was 8.7%, or 5.5%; for the year since that (2011), average growth on the GFC has been even higher (9.5%) at 9.2%.
What causes the growth rates of the three major global economies varies by economic region; in Latin America, growth is 3.4%. In the US, growth in Latin America is about 2% per year during the 2012-2013 year, compared to 5.0% in the UK. In Latin America and Africa, at least 6% of the growth rates at the global market were in the International Fixed E.U. sector of the developed world. In Asia, at least 10% of the growth rates in the developed world were in the global fixed E.U., compared to 6.8% in the UK and 6.3% in Europe. At the global market, the GFC increased to 16.8% per year during the 2012-2013 year. This reflects growth in the industrialization sector, which has been growing faster in the US over the last few years. It has also been increasing in other sectors as shown in the graph below.
The GFC, in other words, is the overall demand for US goods from companies in the US. At the global market, it had an average growth rate of 4.3%. The GFC is based on the proportion of goods sold in the US per capita (the % of
Areas of Concern include: Limited growth opportunity with existing segments, competitive market environment, high operations cost.The focus of certain segments limits the potential of customer growth as the super affluent & affluent segments are only 0.68% of all Indian households and the top cities population grows slower than rural areas. This focus also limits the interest revenue, (Exh.9, the delinquency of Citi is lower 0.2% lower than the industry average) which is mostly from the mass market. On the other hand, the premium products such as points reward systems for the affluent costs Citibank more to serve.