Eyes on the bright side
Even as the finance industry is struggling to fend off the effects of adverse operating conditions in Hungary, Citi’s Budapest business boasts continuing growth. The Budapest Business Journal spoke with the recently appointed chief executive Aftab Ahmed about his impressions of the country’s economy and his expectations of the future.
Q: You became chief executive at Citi’s Budapest division just a few months ago. What are your impressions of the country and its economic situation so far?
A: The economy performed well in 2013 with strong progress being made in improving GDP growth and maintaining the current account surplus. The favorable outlook for the economy is supported by the improvement in most macroeconomic indicators. Export performance was strong, leading to a large trade surplus. The manufacturing sector has done well and is projected to continue to do well based on an improvement in demand in Hungary’s key export markets.
Q: Hungary is often criticized for its adverse tax environment, in particular sectoral taxes on the finance industry (among others) that is inhibiting lending. How do these conditions affect you?
A: We are not aware of any client exiting the market as a direct consequence of the tax environment. We, in addition to being comfortable with the environment, continue to view Hungary as an important growth market.
Q: What are your expectations for Hungary in 2014?
A: The macroeconomic scorecard is good and is on a path to move onto an even stronger footing with gross domestic product growing by approximately 2% to 2.5% this year. Several important sectors of the economy performed well in 2013, like manufacturing, exports, auto, food and beverages, logistics and warehousing, agriculture and construction. Hungary also has other factors that position it well for growth, e.g., its proximity to key markets in the region and strong infrastructure in terms of logistics and transportation. There are already some 71 service centers that operate here and this number is projected to grow as Hungary, in addition to being a hub for innovation, has high availability of qualified, bilingual resources.
Q: How did Citi fare in the past year?
A: It was a good year as we achieved strong results in all our core businesses. We are amongst the top five most profitable banks in Hungary and in the top three in terms of liquidity. Additionally, we are the number one securities dealer in the market. I would also like to highlight that we have no exposure to foreign currency denominated mortgage loans. Our goal for 2014 is to continue to grow the franchise.
Q: What is your strategy for growth? Would you be interested in buying out one of your troubled international peers if they were ready to exit Hungary?
A: Our growth plans involve organic growth with a strong focus on growing our involvement with our existing customer base, in addition to acquiring new clients. Our growth aspirations will be achieved through leveraging our core strengths and our global footprint. We are strongly committed to digital technologies as we believe that digital will be key to serving our customers in the future. We were voted the best Internet bank in Hungary, we are market leaders in credit cards and Euromoney ranked Citi Hungary as the leading provider of wealth management products and solutions.
Q: You mentioned good relations with the regulators. Are you participating in the central bank’s Funding for Growth program? What is your impression of this scheme?
A: Citi is an active participant in the Funding for Growth program and the booking quota assigned to us last year was fully met. SMEs are the backbone of the economy, and supporting this segment is important.
Q: What are your main goals with Citi in Hungary? What do you plan on doing differently than your predecessor?
A: We have a successful franchise in Hungary, and my plan is to continue to build on our successes. We have a very strong team and the goal is to leverage the team, our comprehensive product set, robust platforms and global network to build strong relationships with existing and new clients. We will continue to focus on productivity, our talent and strong operating controls. Another priority is to retain our market leadership in credit cards, fixed income trading, debt capital markets and Internet banking. We have a service center in Budapest that already employs approximately 1,000 people and given the growth prospects and the high availability of skilled labor, I can see that number increasing in the future.
Aftab Ahmed has lived and worked in 10 countries during his 30 years at Citibank, during which time he has held numerous and varied executive positions. His fields of expertise include business banking, corporate banking, correspondent banking, consumer banking, distribution and Treasury. Before taking lead of Citi in Budapest, he was country Head for Egypt. Ahmed holds an MBA from Tulane University.
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