Axis Bank MD & CEO Shikha Sharma is in the process of transforming a good business into a great institution
Award: Best CEO-Private sector
Shikha Sharma
MD & CEO, Axis Bank
Age: 55
Interests outside of work: Loves movies, particularly ‘happy’ ones; also enjoys swimming and maintaining a fitness regimen. With her two children Tilak and Tvisha now away, goes for short holidays occasionally with husband Sanjaya
Why she won this award: Successfully transformed a bank, which primarily had a corporate lending and retail liability portfolio, into a full-service, end-to-end financial institution focussed on sustained profitable growth
Comparisons with peers and predecessors don’t bother Shikha Sharma, the 55-year-old managing director and CEO of Axis Bank, India’s third largest private sector bank by assets.
Sharma stepped into the shoes of PJ Nayak, who quit in a huff before his term ended when she was appointed MD and CEO over his candidate, in June 2009. But despite this rather turbulent entry, Sharma has, over the past five years, successfully brought about far-reaching changes at the bank while maintaining continuity on a number of fronts. The result: A bank with assets of Rs 3.79 lakh crore (as of June 2014), return on equity of nearly 18 percent, net non-performing assets of 0.44 percent, over 2,400 branches and a strong corporate and retail franchise.
“One of the things about being a woman leader is that the world is dominated by male leaders, so you’re constantly being compared,” says Sharma. “You have to shut out certain things and not worry about them so that you’re effective at the job.”
But succeeding Nayak couldn’t have been easy for the soft-spoken daughter of an Army officer, given the iconic status the former Axis Bank boss enjoyed not just at the bank (Nayak oversaw the changeover from the erstwhile UTI Bank to its Axis avatar) but also across the financial sector. Sharma, who studied at the Indian Institute of Management (Ahmedabad), is no stranger to the rough and tumble of high finance herself. In the 29 years she spent at the formidable ICICI Bank, India’s largest private sector banking institution, she performed a variety of functions, setting up various businesses, including a joint venture with JP Morgan and the investment banking and retail finance businesses. After a deputation to JP Morgan & Co, she returned to the ICICI Group as MD & CEO of ICICI Prudential Life Insurance. It is this wealth of experience that came in handy for her as she began to get acclimatised to the new assignment.
The Initial Challenges
One of Sharma’s first tasks was to understand the key things that made Axis Bank tick. Axis had a healthy track record even earlier, with a balance sheet size of Rs 1.47 lakh crore and net profits at Rs 1,815 crore in FY09, with a five-year compound annual profit growth rate of 45.51 percent. She was mindful that there was no need to fix what wasn’t broken.
“For me, the challenges were more personal because, while I had been with ICICI before it converted into a bank, I had not been a part of a commercial banking organisation earlier. I was in life insurance before I came here. So just understanding the conceptual framework of how all parts of the banking business tie up together was important,” says Sharma. “In hindsight, I realise there was nobody to teach me; I just landed in the middle of it all. The succession had been a very public one. So to come in as an outsider without knowledge of the business was pretty challenging.”
Sharma was aware that anyone who came into an organisation from the outside tended to have some preconceived notions. “If you start acting on those impressions too early, you can make some terrible mistakes,” she says. “So I had to step back and learn.”
While Axis had some basic similarities with her earlier institution, ICICI Prudential Life, the sheer breadth of activities was quite different. Besides, ICICI Pru was a joint venture, and Axis was a publicly listed company. This brought its own set of challenges, including a board whose composition was quite different from the one she had dealt with earlier.
But there were a number of positives as well. “There was no cultural mismatch. It’s easy to deal with people who are straightforward and respectful and Axis is very apolitical,” she says.
The other important factor that helped her settle in quickly was the tailwinds in the economy. India was recovering well from the financial crisis of 2008, and that made the job that much easier.
When Axis identified retail lending as one of its main focus areas in the Vision 2015 plan, analytics was an area the bank knew it would have to concentrate on. NPAs in the personal loans business were unacceptably high (a figure which is not in the public domain) and the problem could be addressed only through analytics and retail behaviour. It was also important to identify the right customers for the bank. That was when Sharma decided to hire Jairam Sridharan, who she had worked with at ICICI Bank, from Capital One in the US to head the bank’s retail business. The bank then put in place a detailed risk management system. “Over a period of time, we saw a reduction in retail NPAs and that is showing in the balance sheet,” says Sanjeev Kumar Gupta, executive director, corporate centre, and the bank’s chief financial officer.
The investors and the stock market seem happy with what Axis Bank has achieved in five years. In a recent report after the bank’s June quarter results, Nomura says Axis “continues to deliver well on asset quality and increasing balance sheet granularity”, while Edelweiss says “asset quality was noteworthy” with incremental stress well within guidance. This stable asset quality—despite the infrastructure and power sectors comprising over 12 percent of the bank’s fund-based outstandings—and growing book value per share (Rs 849.63 in the June quarter) have meant that the stock has also surged over 150 percent since June 2009, trading at around Rs 400 now.
(This story appears in the 17 October, 2014 issue of Forbes India. To visit our Archives, click here.)