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In what could possibly be her swan song message, Shikha Sharma, MD & CEO, Axis Bank, told shareholders that deposit mobilisation in the fiscal 2019 could pose a big challenge.
Sharma’s message, which outlines the bank’s performance over the nine years she has been at the helm, comes in the backdrop of a few non-banking finance companies recently raising funds by offering investors attractive yields of up to 9.75 per cent.
“We expect branches to continue playing a crucial role in deposit mobilisation, customer acquisition and providing localised services. Hence, we will continue to make adequate investments in our branch network,” she said.
Sharma observed that private sector banks in the country will continue to gain significant part of the incremental market share. Axis Bank is India’s third largest private sector bank.
Nine years performance
“I am extremely proud of the great franchise we have built and that is reflected in the way in which customers and shareholders have reposed faith in us. Over the last nine years, we have successfully built a strong CASA (current account, savings account) franchise on back of continued investments in branch infrastructure,” said Sharma.
She underscored that the bank’s market share in deposits has grown from 2.6 per cent in 2008-09 to 3.6 per cent at the end of 2017-18, with branch network increasing from 835 branches to over 3,700 branches over this period.
“On the lending side, we have grown our lending book from nearly ₹80,000 crore to around ₹440,000 crore over these nine years, at a compounded annual growth rate of 21 per cent. At the same time, we have achieved significant diversification in balance sheet with the share of retail loans in our loan book rising from 20 per cent to 47 per cent…The retailisation of the Axis franchise has been the bedrock of the Bank’s financial performance, thus improving the quality and sustainability of its earnings,” she said.
Rise in NPAs
During her nine-year tenure, the bank’s bad loans swelled from ₹898 crore as at March-end 2009 to ₹34,249 crore as at March-end 2018. During this period, the ratio of gross NPAs to gross customer assets increased from 0.96 per cent to 6.77 per cent.
“…The Bank has taken significant steps in fiscal year 2018 to get past the asset quality issues of this cycle and the top priority for us in fiscal year 2019 will be to achieve normalisation of credit risk,” said Sharma.
Bidding adieu
As per the bank’s annual report, the current term of Sharma as Managing Director & CEO is due to end on May 31, 2018. The Board of Directors, at its meeting held on December 7, 2017, had re-appointed her as the Managing Director & CEO of the Bank for a further period of three years with effect from June 1, 2018.
However, at the meeting of the Board of Directors held on April 9, 2018, Sharma requested the board that the period of her re-appointment be revised from June 1, 2018 up to December 31, 2018. The Board considered her request and approved the same.
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