ALSO READAxis Bank board cuts short CEO's tenure, Shikha Sharma to stay on till Dec In a surprise move, Shikha Sharma wants 7-month term as Axis Bank chief RBI asks Axis Bank to reconsider decision to re-appoint Shikha Sharma The journey: From 2009 to 2018, Shikha Sharma's years at Axis Bank Many one-offs dent Axis Bank's Q2 show
Shikha Sharma was appointed as the managing director and chief executive officer of Axis Bank in June 2009. Sharma’s appointment came at a time UTI Bank was named Axis Bank, and the board of directors felt that the bank should be more aggressive in pursuing business. The bank had a legacy issue and high exposure in corporate loans. Sharma’s job was to fortify the retail lending practice at Axis Bank and she did that.
Sharma was earlier with ICICI Bank for 29 years, and would be completing nine- and-a-half years at Axis Bank upon her retirement in December. Prior to this, she was the managing director and CEO of ICICI Prudential Life Insurance.
A contender for the top post at ICICI Bank, Shikha left when Chanda Kochhar became the head. But Sharma’s accession at Axis Bank was not an easy one. Axis Bank witnessed a flurry of senior management exits upon the appointment of an ‘outsider’ as CEO. Sharma almost completely changed the team and picked her own deputies.
Axis Bank became a true universal lender under Sharma, with an enviable investment banking team.
Axis Bank regularly features at the top three of every league tables in debt and equity fundraising.
Sharma acquired Enam Securities with this specific aim in mind. While her strategy to acquire Enam’s investment banking business for Rs 20.67 billion and expand the bank’s retail base worked well, loans to infrastructure sector players resulted in high non-performing assets. When she joined, the gross non-performing asset (GNPA) of the bank was at 1.01 per cent of total advances. By December 2017, GNPA rose to 5.28 per cent.
A Reserve Bank of India (RBI) audit also found the bank to be hiding much of its bad debts. The divergence between what the bank reported and what the RBI auditors found was to the tune of Rs 48.67 billion in 2016-17 and Rs 94.78 billion in 2015-16. Due to the pressure of bad debts, net profit at the end of December was at Rs 7.26 billion against Rs 5.62 billion when she became the MD of the bank.
Between 2008-09 and 2016-17, Axis Bank’s net interest income and other incomes, mainly from fees, grew five-fold and four-fold, respectively.
In July 2017, Sharma was recommended for a three-year reappointment by the bank’s board, effective July 2018. Some analysts say the board’s decision was is haste. But, now the RBI has reportedly asked the board to reconsider the decision.
The apex bank could be upset with the wide divergence in asset quality reporting, but Axis Bank probably angered the RBI by violating ‘Know Your Customer’ norms during demonetisation and even before. Axis Bank, ICICI Bank and HDFC Bank were fined by the regulator in June 2013 for helping a bogus client to legitimise unaccounted money.
Sharma would be 60 in November 2018, and would have completed 10 years as Axis Bank’s CEO the following year in June.
Considering Sharma was a lateral entry, hired from ICICI Bank, and not grown organically in the bank such as Aditya Puri in HDFC Bank, the RBI might want to ensure the bank has other options as well.
HIGHLIGHTS OF HER STINT
- 2009: Moves into corner office at Axis Bank
- 2010: Acquires Vallabh Bhansali-led Enam’s investment banking arm
- 2011: Rolls out online broking; push for infrastructure lending
- 2012: Raises Rs 55 billion in capital for future growth
- 2013: Targets ultra-high net worth segment via private banking
- 2015: Begins to feel heat from corporate defaults
- 2016: Faces trouble after demonetisation, sale rumour
- 2017: Bank acquires FreeCharge to push digital banking
- Faces RBI’s wrath for NPA divergence for FY16 and FY17
- Regulatory flak for alleged leak of its Q1 earnings on WhatsApp
- Raised over Rs 110 billion in capital from institutional investors
PRIORITIES & FOCUS AREAS
- Push with agenda to increase higher share of retail in business
- Leverage subsidiaries for business growth
- Strengthening consumer-friendly profile