Citigroup unit targets middle-income segment to grow

Wednesday, October 18, 2006

Provencred, the Argentine consumer finance unit of Citigroup (NYSE: C), is targeting the middle-income segment to grow its operations in Argentina, CEO Marcelo Gorrini told BNamericas.

The company recently announced it would open 20 new branches through 2008 to reach 45 countrywide.

Provencred's branch network is mainly concentrated in provinces such as Córdoba, Mendoza and Argentina's northwest region, where it claims to be a market leader with a 30% share of consumer loans.

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"We have been growing operations at 80% annual rates over the last three years and this is one of the most important investments the company has made lately," Gorrini said, without providing loan or investment figures.

Provencred will also enter Buenos Aires, opening two branches before the end of October.

The company specializes in short and medium-term consumer loans of up to 10,000 pesos (US$3,200) and credit cards through its alliance with Visa.

Consumer loans represent about 60% of company billing, with the remaining 40% coming from credit cards, Gorrini said.

The company is bullish on consumer loan growth perspective in Argentina for 2007 due to an improved economy as well as increasing offers from banks and consumer finance companies and heightened consumer confidence, he added.

Consumer loans in Argentina have been growing at 5-6% monthly over the last year, totaling 9.38bn pesos at end-June.

Provencred was acquired by Citigroup in 1999 through Citibank Overseas Investment Corporation.

Citibank Argentina was the country's eighth largest bank in terms of loans at end-July with 3.38bn pesos and 10th in terms of assets with 7.12bn pesos.