Axis Bank CEO Shikha Sharma to step down by end of 2018

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The bank had come under the RBI radar, following which the central bank approached the bank's Chairman to reconsider Sikha Sharma's fourth term.

IDFC Securities maintained "Neutral" view on Axis Bank and it does not see any positive earnings triggers in the short term. While Axis Bank was silent on Sharma's replacement, the new CEO's most pressing task will be to tackle the lender's high level of soured assets and deteriorated financials. She began her career with ICICI Ltd in 1980.

The sources indicated there were organisational changes in the recent past, including transfers, that "upset" a section of the senior and mid-management staff. Axis Bank had been under pressure since previous year following divergence in bad loan classification.

Saswata Guha, a financial sector analyst at Fitch Ratings, said Sharma's decision to seek a shortening of her term was not "entirely unexpected" given the media reports on the RBI move. The bank's total income declined to Rs 14,314.63 crore during the December quarter. While it was partly because of the slowdown in the economy and key infrastructure sector not doing well, the bank saw a huge rise in its gross NPAs as compared to other banks. Last year, there were reports that Kotak Bank had informally approached the Union government for a merger with Axis Bank. Axis Bank was the first to slip amongst the private bank, though other banks like ICICI Bank joined in later.

The bank's Board has written to the Reserve Bank of India (RBI) saying that Sharma has requested them to shorten her fourth term to six months that will end by December as against an earlier approved three-year term that would have ended by May 2021.

However, in recent times, Axis Bank, like its peers, has been facing the challenge of bad loans. Its net profit fell from Rs 2,175 crore in December 2015 to just Rs 597 crore in December 2016. Axis Bank did have a run-in with the regulator on bad loans. Last year, Axis Bank hired executive recruitment firm Egon Zehnder to find its next CEO, which conducted a preliminary search before the board made a decision to reappoint Sharma.

In 2017, the bank's board initiated a process to select a new MD and CEO and hired executive search firm Egon Zehnder. The top banker has sought to cut short her term by December 31, 2018, instead of continuing on the post for another three years, reports said on Monday.