Citi innovates with hi-tech network

He also discussed the important contributions from Asia and Vietnam and the outlook for the TPP.

Citi recently reported a strong set of third quarter results globally with net income up over 50 per cent year on year. What is driving Citi’s performance, and what contribution are Asia and Vietnam making?

On October 15 Citi reported adjusted earnings of US$4.2 billion for the third quarter. The quarter had more than its fair share of volatility and the results spoke to the resilience of Citi’s franchise.

We feel good about the quality and consistency of the earnings we have demonstrated so far through 2015. We have made strong progress against our core priorities; there is no complacency.

This quarter showed that Citi is well-equipped to serve our clients no matter what the world throws our way. Challenging environments have become the norm, and the work we have done to make our firm simpler, smaller, safer, and stronger has given us a resilient and sturdy platform from which to operate. With one quarter remaining in 2015, we are on track to hit our financial targets of a

Citigroup return on assets of at least 90 basis points and a Citicorp efficiency ratio in the mid-50s range.

In Asia, we reported net income of US$0.9 billion for the third quarter. Asia was again the largest contributor to our global net income outside of North America. The trends in the region play to our strengths as a company.

As Asian companies increasingly go global they can tap into our global network in over 100 countries, and the rise of the emerging affluent plays to our strong position in retail banking and wealth management. The region is vital to Citi’s strategy and contributes between a fifth and a quarter of our profit every quarter.

Vietnam is also making an important contribution and it remains in a strong position given the investments made by our multinational clients in the country and the aspirations of Vietnamese companies to expand. We are also seeing good growth in our retail banking in Vietnam across many areas including the card business.

What is your strategy for further growth globally, and how important are Asia and Vietnam in such a strategy?

Citi’s mission is to serve as a trusted partner to our clients by responsibly providing financial services that enable growth and economic progress.

Our business model is wholly focused on banking. We provide products and services that allow us to serve all of our clients’ needs in ways that makes banking more efficient for them.

We have a unique franchise with the world’s only closed-loop payment system in 100 countries, owned and operated by us. We process anywhere on any given day around US$3 trillion in payments through those channels.

This global network in over 100 countries is a competitive advantage and is central to our strategy. If you’re a Vietnamese company looking to expand abroad, Citi’s global perspective is second to none for M&A opportunities, or if you are looking to raise international capital we have the most global distribution network.

Likewise, if you are a retail client in Vietnam who travels to Asia or the US, our consumer presence across 24 markets makes Citi the world’s leading global retail bank. Also, our credit card system is the leader in the market.

In terms of strategy, Citi’s strategy is aligned with the three defining secular trends of our time, Globalisation, Urbanisation, and Digitisation.

We talk about countries, but we also increasingly talk about cities where we have a presence across the leading cities of the world, including here in Vietnam. We have a strategy to focus on the world’s top cities where economists estimate that as much as two thirds of future growth will be generated. 

When it comes to innovation, Citi has acted quickly to bring the power of technology and digitisation to bear for our clients. We were the bank that pioneered the widespread use of ATMs and made them an industry standard, and now we are looking at the next step, screen-less/card-less ATMs.

We continually scan the world for ideas including launching Mobile Challenges across the world, creating a venturing business in Silicon Valley, and building digital labs around the world. In many ways, we see ourselves as a technology company with a banking license and you can expect to see much more innovation from us.

How has Citi promoted the trade ties between the US and Vietnam, as well as foreign investments into the country since your opening in 1993? How important is it for Citi to boost your presence here in Vietnam?

Citi was the first US financial institution to receive a branch license in 1994 and the first bank to launch internet banking in Vietnam in 2001.

In 2007, Citi launched the first long-term negotiable instrument to be issued in Vietnamese dong to help develop the local capital market via a floating rate issue with a tenor of two years.

Today, Citi offers the full range of banking services in Vietnam. We have branches in the dynamic cities of Hanoi and Ho Chi Minh City, and a nationwide partnership network that covers all of Vietnam’s 64 provinces.

I am just as proud though of our commitment to responsible finance in the country – it is how we define our business. We aim to ensure that our actions are in the best interests of our clients, are designed to create economic value, and are systemically responsible.

Citi Vietnam’s citizenship priorities are focused on areas such as microfinance, financial education, community development, and employee volunteerism. I was pleased to learn much more about them during my recent visit. It is important that as a company we are giving back to the local communities where we operate.

What will you expect of the investment trend from the US to Vietnam in the years to come, given that the country has now joined the Trans-Pacific Partnership (TPP)?

Vietnam’s growth prospects remain resilient. It is the only economy in the region where our economist’s growth forecast was upgraded significantly since the beginning of 2015 – we forecast GDP growth for Vietnam of 6.4% in 2015 and 6.5% in 2016.

Vietnam will be a significant beneficiary of the TPP. Vietnam is the only TPP-negotiating member that is a transition economy, and thus Vietnam has negotiated for more time and flexible arrangements than others and is seen as one of the biggest beneficiaries.

The TPP will establish a free trade area in the Pacific Rim that will set comprehensive and enforceable disciplines for trade and investment among its members. This will mean more growth and jobs for these economies. The agreement also is an important expression of the respective governments’ confidence in the power of competition, freedom of movement of capital, goods and services.