The bank may be at a sweet spot after three years of struggle with mounting bad loans which it had lent to the infrastructure sector. Steel, power and road companies hobbled along in this period because of policy flip-flops and a slowing economy. Chaudhary, who will take over as MD & CEO for 3 years from January 1, 2019, said, “I would like to thank the RBI and the Axis Bank board for the privilege and honour given to me to lead this great institution.
Axis Bank is amongst the leading private sector banks in the country. Together with the support of the board and the Axis team, I am confident of continuing the bank’s remarkable journey these past 25 years and contribute to its future growth.” The 54-year old Chaudhry, selected as the CEO, has a varied experience from baking to running a Business Process Outsourcing company of Infosys, and is not new to reviving businesses.
Not only has he delivered on those missions, he has also created a company and successfully listed it on the stock exchanges. HDFC Life is today the most valuable life insurance company in the country with a market cap of close to Rs 1 lakh crore. Axis Bank posted its worst quarterly earnings in March with a Rs 2,189-crore loss. But the stock has now risen by about 30%, outperforming the Sensex since April.
While the bank may be turning a corner, Chaudhry could still give it a boost by re-orienting its strategy as analysts turn positive on the stock. “The biggest highlight of the quarter was the management’s confidence in asset quality, stemming from its expectation of much lower slippage from investment grade asset pool, which should lead to ‘BB & below’ book to shrink gradually,’’ Jefferies analysts said after the June quarter earnings of Axis. “The management highlighted that going forward, slippage into “BB & below” portfolio should be less than Rs 1,000 crore versus an average of Rs 2,500 to Rs 4,500 crore over the last eight quarters,’’ it said.
Axis had to hire a new CEO after the Reserve Bank of India turned down its proposal for another term for Shikha Sharma, the current chief of Axis. While the reasons were not made public by either the regulator or the bank, it was learnt that the divergence in recognition and provisioning for bad loans was among the reasons. But the bank subsequently was aggressive in recognition and provisioning that led to record losses last fiscal in the March quarter.