Citibank, the largest foreign bank in Taiwan by assets following its buyout of a local lender, said yesterday that it was looking to acquire a credit card business in the next year, possibly from a Taiwanese rival that has been hit by mounting unsecured bad loans.
"Some local banks are planning to sell or outsource their credit card businesses to cut costs after the number of cards in circulation shrank by one-third following the consumer credit abuse storm," Citibank Taiwan's country business manager Victor Kuan (管國霖) said on the sidelines of a press conference yesterday.
The US bank has more than one target on its list and expects to make a move in the next 12 months to increase non-organic growth in its credit card unit, he said.
The number of credit cards in circulation dropped to 37.7 million as of February from approximately 45.6 million in 2005, the year that mounting unsecured bad loans started to alarm the banking sector, according to the banking regulator's figures.
Upbeat about the market this year, Kuan said the bank's first quarter results beat expectations, with the retail banking unit seeing double-digit growth in revenue from a year earlier, driven by its wealth management business.
This year could be a "bumper year" for its credit card business if risk can be reduced with the anticipated amendment of the controversial personal bankruptcy bill to make it less favored towards debtors, Kuan said.
Citibank is looking to grow its credit card business as the unsecured lending problem stabilizes, expecting an annual increase in the number of card holders of up to 40 percent, Kuan added.
Citibank had 1.5 million credit cards in circulation in the nation as of February, the largest number among overseas banks and the eighth-largest among the nation's 42 credit card issuers, data showed.
To achieve the growth, the bank plans to offer more new products and benefits to cardholders -- air miles, cash rebates and bonus point rewards -- as rivals are cutting back on rewards to cut costs.
Citibank yesterday launched a revamped co-branded card with Eva Airways Corp (長榮航空), which targets big spending, frequent travelers and boasts air miles accumulation at the lowest cost, as low as NT$15 per mile.
Despite a 3.14 percent fall in domestic consumption last year, Taiwanese overseas consumption grew 2.07 percent as outbound travel increases by an average 6 percent annually, the bank said.
Frequent business travelers have an average monthly spending rate of NT$30,000 per card, 10 times the amount of average cardholders, it added.
Citibank agreed to buy the Bank of Overseas Chinese (華僑銀行) last week, increasing its number of branches to 66 nationwide. The bank said it would not look for further acquisitions to boost branch numbers in the near future.
"The outlet number is enough for now and the locations are also good, with more than 40 percent of our branches in the greater Taipei area," which would allow Citibank to expand its middle-class customer base for the bank's wealth management business, Kuan said.