Move in line with US firm's strategy to expand consumer banking business

Citibank will boost investment in its wealth management business in China and aims to have double-digit growth in its client numbers in the coming years, according to a senior executive of the US bank.

The bank has launched a new wealth management service, known as Citigold Private Client, in China that targets clients with minimum investable assets worth 8 million yuan ($1.14 million).

Darren Buckley, executive vice-president and consumer business head for Citi (China) Co Ltd, said the bank will further accelerate the growth of its wealth management business and consumer banking business in China and will seek to boost the bank's digital capability to expand its reach in the Chinese market.

The move is in line with the US banking group's global strategy of expanding the proportion of its consumer banking business, which is the key segment that is driving higher returns for other major banks including JP Morgan and Bank of America.

"If we can scale up our consumer banking business successfully and rapidly in China, it will be hugely beneficial to Citigroup's overall business," Buckley said.

In the first half of this year, Citi China grew its annualized qualified affluent wealth customers by over 40 percent, up from full-year growth of 26 percent in 2018. The bank aims to further accelerate the current growth momentum and continue double-digit growth in the coming years, according to Buckley.

Citi China is also boosting its digital capabilities to reach more wealthy customers in the country. The bank will launch a new mobile banking app in November, which will be much more focused and tailor-made for local expectations, Buckley said.

According to Bain Consulting, the number of high net worth individuals in China with assets under management above 10 million yuan reached 1.97 million in 2018, an increase of 25 percent compared with 2016. This number is expected to reach 2.2 million by the end of 2019.

Max Xu, head of China retail banking and consumer distribution at Citi China, said the newly launched wealth management service will take advantage of Citi's global network and will give Chinese clients access to equities, bonds, commodities and mutual funds in the global market.

"We are seeing a trend that affluent Chinese clients are becoming increasingly focused on protecting and preserving the value of their assets rather than engaging in radical investment amid a slowing global economy," Xu said.

Citi China's wealth management products which are invested in offshore markets through the Qualified Domestic Institutional Investor program offered an average return of 16 percent in 2017. So far this year, Citi China's best performing QDII fund has offered returns of more than 30 percent, according to Xu.

In addition to targeting super-wealthy clients, Citi China is eyeing opportunities in the consumer lending business and is looking to tap into the rising demand for banking services among China's rapidly growing middle-income group.

"With the continued growth of China's middle class, we are in the process of developing new digital wealth technology that we will deploy in the market in the first half of next year to start to offer simple, easy access to new basic investment products for people with a lower value of investable assets," Buckley said.

Citi China has also formed a partnership with a major Chinese online payment company to offer a private loan service for its clients in China. The partnership will enable Citi to source customers with a relatively low credit line but low credit risks, and to use big data and behavioral information to enhance the credit decision-making process, Buckley said.

"China is probably more advanced in this capability than any other markets. But these opportunities are starting to grow in other markets. So by engaging here in China and learning how to do it here, we are going to export the learning to other markets so that we can be among the first in those markets," he said.