Citi Korea to enjoy strong capitalisation, stable credit profile through 2025: Moody’s

The bank’s winding down of its consumer banking business is a positive.

Citibank Korea’s credit profile will remain largely stable over the next 12 to 18 months, according to Moody’s Investment Service.

The bank has been winding down its consumer banking business since early-2022. As of September 30, it has cut its consumer banking business loans by 2023.

Thanks to this, it is expected to maintain strong capitalisation thanks to its declining risk-weighted assets (RWA), and support asset quality by decreasing unsecured personal loans.

However, the change will lead to an increased concentration in corporate loans, as well as high corporate depositor concentration.

Tangible common equity (TCE) is expected to remain over 20% over the next 12 to 18 months.

Any dividend increase will likely be smaller than the capital released from the wind-down. This will enable Citibank Korea to maintain sufficient capital buffers, Moody’s said. 

Meeanwhile, should Citibank Korea see trouble, Moody believes that the likelihood of the Korean government supporting the bank is high. This is due to Citibank Korea’s role in Korea’s foreign currency market, its asset size comparable to other regional banks in the country, and the government’s track record of bailing out commercial banks.