Speculations about many private banks looking to buy stake or merge with Axis Bank to benefit from its strong retail franchise are rife, but its chief executive Shikha Sharma tells Saloni Shukla and MC Govardhana Rangan in an interview that the bank can grow for years and keep delivering returns to shareholders as a standalone entity. Edited excerpts:
We are hearing about Axis being a beautiful bride. Is Axis in play? Why should Axis be in play? We have not been approached by anyone, so I don’t know where all these stories are coming from. There is absolutely no truth to this.
You have been an investment banker yourself, and you know there’s always a possibility of people who are thinking along these lines... Yes, but that doesn’t mean there’s anything happening right now, because something will happen only if there’s a real conversation or a formal proposal, and there is absolutely nothing of this sort going on. We haven’t been approached by anybody, and frankly for Axis at this point of time, there is so much to do.
We have always believed in the India story. I have now been with the bank for almost eight years. It has always been a strong franchise, and in the past eight years, we have only grown and strengthened that franchise. So, in the retail business, our market share on the deposit side has gone up from 2.5% to about 5%; in the retail assets, we have a 6% market share; in cards, we are 10%; and in mobile banking, we are 13%.
So, you can grow on your own without benefits of merger? Whenever we talk internally, we think we are in a sweet spot because when you have 1-2% market share, you don’t have relevance. When you get to 12-15% market share, you become big and finding growth faster than the industry becomes a bit tougher. So, at this point of time, doing anything inorganic would be a distraction for the bank. We are well capitalised, so we don’t have a shortage of capital, we have got the people and the process capability, and merger at this point of time therefore will be a complete distraction.
You listed your strong business, franchise and distribution capabilities. Has that itself made you an attractive proposition for those who don’t have it? That’s always nice to hear. It’s good to feel like a beautiful bride that everybody is aspiring for, but the point is that if the beautiful bride is not putting up her hand for marriage, then you can have a lot of suitors but there won’t be a marriage.
If you have to wear your investment banker hat again, would you consider an inorganic growth proposal? That’s a speculative question because there’s no such thing on the horizon, and, as I said, at this point of time, our clear focus is to grow and go after the opportunities that are important to the economy. The mergers work well if you are doing it for a synergy-value perspective. If you do it for a transaction value, most mergers do not pay off. In all, our chosen businesses, we have built capability so there aren’t any gaps. We think that scale for the sake of scale to take out costs is not the thesis that is right for us at this point of time.
But what is the bank board’s opinion on the merger speculation? We have a very active and a very professional board, so we have open conversations about everything and they know that nothing is happening. We are not a promoter-owned company, we cannot do a conversation without engaging with our board. The fact that there is no engagement with the board means that there’s no thought of this sort.