Citigroup Inc. has made clear that its consumer operation in Mexico is expected to be an important source of earnings for the next few years. But uncertainties loom, including potential competition from technology giant Amazon.com Inc.

At its 2017 investor day, Citi executives estimated that a majority of earnings growth between then and 2020 would come in the bank's global consumer business, and within that operation, they viewed credit card and other product sales in Mexico as major drivers.

And the company is investing in its Mexico operation, Citibanamex, to push for that growth. At a conference in February, Citi's top Latin America executive, Jane Fraser, noted that in 2017 it launched a multiyear, $1 billion investment program to build out and modernize the bank's branch network, digital offerings and ATMs in Mexico. It has already added about 1,700 ATMs there and plans to add another 1,700 by 2020, she said.

Citi's cards unit in Mexico, a pillar of its business there, generated steady growth in the second half of 2017, Fraser said. "It gives us confidence that we can accelerate growth in our overall Mexico consumer franchise this year," she said.

Among U.S. banks, Citi has the greatest exposure to Mexico, far surpassing its nearest rivals there, American Express Co. and Comerica Inc. Citi says it has 21 million clients in the country and that it executes nearly a quarter of Mexico's financial transactions.

But political and competitive pressures lurk in the country. Compass Point Research & Trading analyst Charles Peabody noted a major possible snag: President Donald Trump's outstanding threat to pull the United States out of the North American Free Trade Agreement, or NAFTA. Such a withdrawal could result in fewer new businesses in Mexico, and it could also tack on new expenses for Mexican businesses that export products to the U.S. Such costs could ultimately get passed on to Mexican consumers.

At a conference earlier this month, Citi CFO John Gerspach acknowledged the validity of the NAFTA concerns. "From a Mexico point of view, to the extent that this uncertainty lingers, it has the real possibility of reducing foreign investment into Mexico, and that could certainly have a negative impact on the Mexico GDP," he said.

Also, the country will elect a new president in July, along with dozens of other federal lawmakers and both local and state elections. It raises the possibility for shifts in policy that could affect foreign businesses operating in the country, Peabody said.

On top of that, Citi could face competition from Amazon. The U.S. online retailer said this month that it launched a debit card in Mexico to help customers without bank accounts shop on the Amazon platform.

It is just one product, but Amazon has made several recent moves into financial services, reportedly including plans for co-branded credit cards in the U.S. and a new product that could be used much like a checking account. Those steps suggest that Amazon is building up its presence in financial services, and if it pushes further in Mexico, it could impact Citi in the longer term, analysts said.

"If you look at Amazon and the potential over several years, it is an important issue to watch," Peabody said. "Mexico is important for Citi, and if Amazon can move in and somehow impact the growth story, that would be significant."

David Allaire, portfolio manager at bank investor Mystic Asset Management Inc., agreed. Amazon "has a captive audience, and so it could open up a whole bunch of accounts with just its existing customers," he said in an interview. "If you are Citi, I think you start to prepare for that."

The potential competition noted, Allaire said Citi is well-equipped to compete with other banks or new entrants, and Amazon is in the very early stages of offering financial services.

"I am not saying Amazon is not a powerhouse; it is," Allaire said. "But I don't see them simply overtaking Citi or killing off banks. They are a long way from that."

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