이 기사는 2021년 04월 21일 07:55 thebell 에 표출된 기사입니다.

Citibank Korea's employee productivity was the second poorest among Korean lenders, which could have an impact on its value amid its plan to withdraw its retail banking operations.

Citibank Korea's per capita pre-provision operating profit (PPOP) was ranked 12th among 13 major domestic banks as of the settlement date of 2020, industry sources said on Monday. Citibank Korea’s per capita PPOP was 146 million won ($131,300), higher than SC Bank Korea’s 115 million won.

Per capita PPOP is the amount of income that a bank earns in a given time period before subtracting funds set aside to provide for future bad debts, divided by the number of employees. PPOP is considered to be a better indicator of the operating competitiveness of individual banks compared to net income, which reflects changes in provision or asset sizes.

Hana Bank had the largest amount of per capita PPOP with 250 million won, followed by Kakao Bank (234 million won), Shinhan Bank (210 million won) and Kookmin Bank (208 million) at the end of 2020. Internet-only lender Kakao Bank’s per capita PPOP increased by eight times from a year ago even after it increased the number of employees by 136 over the past year, indicating improving productivity.

Citibank Korea’s per capita PPOP decreased by 32 million won to 146 million won in 2020, even though the lender cut the number of employees from 3520 to 3488.

This was because the bank’s operating profit was deteriorated. Citibank Korea recorded net profit of 187.8 billion won in 2020, down 38.9% from 307.4 billion won in 2018. Net profit of its retail banking business shrunk to 14.8 billion won from 72 billion won in two years. The bank’s net interest margin also decreased to 2.05% in 2020 from 2.35% in 2019.

Citibank Korea’s cost income ratio (CIR) increased from a 50% range in 2018 to more than 60% in 2020, higher than other commercial banks, whose CIR are in a 40~50% range. The CIR is a financial metric in determining the profitability of banks. The lower the CIR, the better the bank’s performance.

This unproductive structure is said to have stemmed from its employee relocation strategy. Citibank Korea underwent a major revamp last year, reducing the number of branches by 70% from 129 in 2014 to 38. However, the bank has maintained the number of employees at around 3500 since 2014.

It is said that the bank has failed to improve its fundamental cost structure. The average number of service years for full-time employees has steadily increased and the total employee benefits have grown every year despite the implementation of the peak wage system. The bank will likely lay off employees if it is sold.

On the contrary, Citibank Korea’s wealth management business is very competitive as it has focused on expanding its non-interest business for many years. Citibank Korea’s commission income grew by 16.08% to 208.6 billion won in 2020 from 179.7 billion won in 2019. Its loan market share, however, was 1.61% among 14 domestic commercial banks, with its rigid corporate culture regarded as one of the biggest obstacles.

Currently, Citigroup is likely to exit the country either by selling its Korean unit as a whole or separately or phasing out its operations. It is most likely to separate its consumer banking business and sell it. (Reporting by Hyun-ji Son)