The announcement of a 100% dividend on each Rs 10 share by Axis Bank to top a remarkable turnaround in the fourth quarter of 2008-09 was superseded on Monday by the dramatic announcement by the board of the bank to appoint Shikha Sharma as its managing director & CEO.
Incumbent chairman & CEO PJ Nayak told the board he was not pleased with the decision and walked out of the meeting, saying he would resign forthwith. The term of Nayak, a former IAS officer, was to end in July.
Shikha Sharma will have a five-year term, according to a statement filed by the private sector bank with the stock exchanges. Sharma is currently managing director & CEO of the country?s second-largest life insurance company, ICICI Prudential Life Insurance.
The consolidated net profit of Axis Bank for 2008-09 has risen by a phenomenal 71.17% to Rs 1,812.93 crore, from Rs 1,059.14 crore the year earlier. The rise caps an impressive quarterly performance wherein net profit rose by almost 61% to Rs 581.45 crore from Rs 361.40 crore a year earlier.
Consolidated interest income?a critical measure of how well the core business of a bank has performed?also jumped by 56.18% to Rs 3,039.22 crore, from Rs 2,015.4 crore in 2007-08. The improvement in the performance by Axis Bank is remarkable in a year when the Indian banking industry as a whole has been under enormous pressure as liquidity dried up in the system in the wake of the global economic meltdown.
Responding to the performance, the bank?s shares jumped at the end of trading on Monday to close at Rs 510.30, a 1.29% rise, on the Bombay Stock Exchange. In 2007-08, the company paid out 60% dividend on its shares.
The total income of the bank on a consolidated basis rose to Rs 13,745.04 crore in 2008-09 from Rs 8,801.00 crore in 2007-08. On a standalone basis, the country?s third-largest private sector bank reported a net profit of Rs 1,815.36 crore in 2008-09, compared with Rs 1,071.03 crore the previous financial year.
Sources said the ten-member board approved Sharma?s candidature by a majority of 8:1 with one member, Pannir Selvam, abstaining. Nayak, who has also sent his dissent note to RBI, apparently wanted the bank to select an internal candidate to succeed him.
Speaking to FE, Sharma said she was happy about the development and looked forward to joining Axis. ?I had a great career, but I have to move on,? she added, referring to her tenure with ICICI Bank. An ICICI Bank spokesperson said it had not yet received her resignation.
