Axis Bank's margin may increase 20 bps with Citi deal: JM Financial

Axis Bank's acquisition of Citi's retail business in India could lead to an increase of 20 basis points (bps) in the former's margins and 7 to 10 basis points in Return on Assets (ROA), said Sameer Bhise, Banking Research Analyst at JM Financial Institutional Securities.

One basis point is one-hundredth of one percentage point

Citibank has sold its retail business in India to Axis Bank for $1.6 billion. Axis Bank is expecting the necessary approvals in the next 9-12 months.

“In terms of numbers, we are seeing that this could potentially add around 20 basis points to margins and around 7 to 10 basis points to Axis Bank ROA as we see today, obviously efficiencies will take some time to kick in," said Bhise in an interview with CNBC-TV18.

Axis Bank has said cards balance sheet will grow over 55 percent after the acquisition. However, concerns remain over customer acquisition for the lender.

“I think it is a very good asset, as we see it today. It is a very strong retail franchise," added Bhise.

Also Read: Citi deal will take 9-12 months to get all approvals; cards biz to grow 57%, says Axis Bank CEO Amitabh Choudhry