Friday evenings are most preferred by listed companies to make price sensitive announcements. Yet, on Saturday evening, two listed companies’ stock exchange announcements, involving a common person, were released within 17 minutes of each other.
HDFC Standard Life Insurance Company (HDFC Life) informed stock exchanges that its managing director and CEO, Amitabh Chaudhry, ‘has tendered his resignation’. A little later, Axis Bank released a three-page statement that the Reserve Bank of India has approved the appointment of Chaudhry as Axis Bank’s managing director and CEO with effect from January 1, 2019.
Fifty-four-year old Chaudhry, a B.Tech from BITS Pilani and an alumnus of IIM Ahmedabad, is a financial services’ veteran with stints with banks and IT companies such as Bank of America, CALYON Bank, Infosys BPO, and Infosys; he joined HDFC Life in January 2010.
Axis Bank's press release quotes the bank’s chairman Sanjiv Misra saying that “Amitabh has a proven track record and is well-equipped to lead Axis Bank in pursuing its growth ambitions balanced with a strong emphasis on risk and compliance management".
Welcoming Chaudhry on board, Axis Bank’s current managing director and CEO Shikha Sharma, whose tenure ends on December 31, 2018, took note of her nine-year association with the bank. “I shall always look back at my journey with a deep sense of satisfaction and pride,” Sharma said. “I am sure that under the leadership of Amitabh the bank would soar to greater heights.”
“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 to contribute to its future growth," Chaudhry said in the statement.
Some sections of the industry are puzzled by an insurance company CEO taking over the reins of a large private sector bank. But, at Axis Bank, history is repeating itself. Back in 2009, when it was still UTI Bank, Sharma came in to replace P.J. Nayak, the bank’s then chairman and managing director, from ICICI Prudential Life Insurance. Sharma, an ICICI group veteran, had spent over eight years at the helm of the insurance company.
At Axis Bank, Chaudhry, who is credited with HDFC Life’s recently concluded successful initial public offering (IPO), has a task at hand. The bank which ranked 25th in the Fortune India 500 list of 2017, has seen its top-line grow by a meagre 1.5%, from Rs 57,596.7 crore in FY17 to Rs 58,476.7 crore in FY18. However, the bank’s net profit fell by 88.5% from Rs 3,953.0 crore to Rs 455.8 crore in the same period. Provision for bad debts, at Rs 16,630.6 crore in FY18, was 39.8% higher than Rs 11,831.9 crore in FY17, and 177.2% higher than Rs 4,196.16 crore in FY16. While these numbers comprise Axis Bank’s consolidated financials, on a standalone basis, the bank’s net non-performing assets to net advances stands at 3.64% in FY18, compared to 2.27% in FY17 and a much lower 0.74% in FY16.
Under Chaudhry, HDFC Life’s standalone revenue grew over four times from Rs 297.1 crore in FY12 to Rs 1,295.5 crore in FY18; profit, too, grew four times from Rs 271.0 crore to Rs 1,109.0 crore in the same period.
Investors will hope Sharma has her wish: that Axis soars to greater heights under Chaudhry.