Amitabh Chaudhry, as the chief executive of Axis Bank, is yet to deliver his first quarterly earnings. But the stock is up 25% since he chose banking over insurance. Such investor trust in one’s leadership is a dream start, but it can be as much a burden when it comes to meeting expectations. Change is writ all over. From priorities, to new management team, and to the dos and don’ts –– all are new to a bank that moved from being a conservative lender to an aggressive financial conglomerate focused on growth under Shikha Sharma for nearly a decade.
Chaudhry, a former insurer, is bringing in the conservatism he acquired in his previous avatar as the chief of HDFC Life, and at the same time is not taking his eyes off financial metrics an investor is keen on – return ratios. Targets are set. Deliver a return on equity of 18% on a sustainable basis, up from the 7.3% in December 2018. A conservative provisioning policy that can depress profits now, but comforts investors. No more infrastructure and project funding. Raise share of working capital loans to industry average of 60% from 35% now. And in retail, reduce the mortgages where returns are getting squeezed.
“He’s driving us all hard,” says an insider who did not want to be named. “It’s result oriented. But he’s also providing us the cover. I give what you want, and you deliver is what we hear now.”