Rajiv Anand, Asset Manager-Turned-Banker, Has His Work Cut Out For Him At IndusInd Bank
Analysts see Rajiv Anand's appointment at IndusInd Bank as a major positive for the beleaguered lender
Rajiv Anand who took early retirement from Axis Bank this week, has now been appointed as MD & CEO of IndusInd Bank, with effect from August 25. Anand's appointment is for three years.
His appointment at the beleaguered private bank is being seen by analysts as a positive sign, especially since some earlier reports had indicated that a former public sector banker might be appointed for the role. Citi believes that the appointment brings credibility at the top for IndusInd Bank.
Anand started his career as a bond trader at HSBC in the 90s. Since then, he has held senior positions at ANZ Grindlays, Standard Chartered Bank and IDFC. He was then appointed as MD & CEO of Axis Asset Management in 2009. Anand entered Axis Bank in 2013 as President-Retail Banking, after which has served as Executive Director and later as Deputy Managing Director till his exit this week.
In the four years that Anand was acting as deputy managing director of Axis Bank, the lender's advances rose at a compounded annual growth rate of 14.58% to Rs 10.59 lakh crore, while its deposits are up 12.94% at Rs 11.61 lakh crore. Gross non-performing asset ratio for Axis Bank was at 2.59% as of December 2021, and at 1.57% as of June 30, a drop of over 100 basis points.
According to a person in the know, Anand decided to quit Axis Bank to actually retire from professional life as a banker. However, when the IndusInd Bank CEO hunt began in early May, he decided to throw his hat in the ring.
"I would like to acknowledge Rajiv Anand’s exceptional 16–year journey with Axis Group. We thank him for his visionary leadership and invaluable contributions across all business segments of the Bank, that has created a lasting impact on the bank’s growth and culture," Anand's last boss, Axis Bank MD & CEO, Amitabh Chaudhry, told analysts during the Q1 results call.
His former colleague at Axis Bank and current MD at Piramal Finance Jairam Sridharan calls Anand "captain cool".
"Considering the situation that IndusInd Bank is in, Rajiv is the best person for the job. He is always calm and composed and knows how to retain his sense of humour," Sridharan told NDTV Profit.
Because of Anand's habit of letting other people take the limelight, some may underestimate his expertise, Sridharan said.
Another former Axis Bank official, speaking anonymously, said that Anand is a professional banker who always backs his team, even when the going gets tough. According to this official, Anand is one of the few private bankers who come with a thorough understanding of all angles of running a bank.
Anand's role at Axis Bank has ranged between retail and wholesale banking, but his past experience in asset management also brings with it a clear understanding of global and domestic money markets.
Rajiv Anand on the golf course. (image courtesy: Rajiv Anand's X profile)
Has His Work Cut Out For Him
Anand's new role brings with it great challenges too. Establishing a trustworthy and competent leadership team will be the first goal for him. According to a person in the know, IndusInd Bank has already appointed headhunters to look at potential hires for senior management roles, especially because the bank does not have a chief financial officer, treasury head and internal audit chief.
Sunil Mehta, chairman of the bank, in the recent analyst call has spoken about five key focus areas. These include a profitability first approach, stringent cost management, heightened focus on recoveries, building the "One IndusInd" franchise and effective engagement with stakeholders.
These focus areas will squarely fall on Anand to execute. In his role as the CEO, Anand will also be responsible for course correcting IndusInd Bank's growth strategy.
The bank is being run by a committee of two senior executives since Sumant Kathpalia and Arun Khurana's exit. In such a scenario, IndusInd Bank has largely been focusing on maintaining business as usual, while addressing the various governance concerns.
"We are confident of building a strong management team which will unlock the true potential of this franchise underpinned by robust governance framework," Mehta had told analysts while announcing the bank's Q1 results.
In the quarter-ended June 30, IndusInd Bank reported a net profit of Rs 604 crore, operating profit of Rs 2,568 crore, a loan book of Rs 3.33 lakh crore and a deposit base of Rs 3.97 lakh crore. Its return on equity stood at 3.71% and return on assets was 0.45%. The cost to income ratio is also elevated at over 62%.
Right-sizing this operation, while focusing on growth, is going to be a significant challenge for Anand. He will need to focus on IndusInd Bank's core strengths, including commercial vehicle finance, gems and jewellery financing and asset-backed lending.
And he will also have to grow the nascent housing finance business, which the lender began only recently. As of June 30, the home loan book was Rs 4,996 crore, for 2% of the consumer loans.
On top of that, he will have to manage the stress in the microfinance business which is consistently rising. As of June 30, the microfinance business had a gross non-performing asset ratio of 16.39%, higher than 13.18% as of March 31.
Anand is an avid golfer, who often enjoys spending time on the course. So, as the CEO of IndusInd Bank, Anand's gambit will be like playing a "risky shot over a water hazard", it may result in a significant career advantage or a costly setback. All his colleagues, though, wish him the best.
