The Indian Banking Sector is going through a Massive Transformation post Economic Crisis. While some have cut down on Expenses, Some have Halted Expansion. However, Axis Bank is the one which has Hardly Changed its Course as it Apparently kept its basics right. But can this ‘Basics’ Strategy work out for the long run as well?
It was July 2007, when UTI Bank changed its name to Axis Bank, and in the process broke away from a legacy of triumphs as well as tragedies. The bank’s board felt that the existence of several shareholder-unrelated entities using the UTI brand was leading to a brand confusion, which forced them to take this decision.
Though the branding legacy was lost, the bank itself found its way quite well, especially after the recent global slowdown that to an extent affected several in the Indian banking fraternity. In fact, the strategic move had a positive impact on Axis Bank, as its net profit tripled in a span of just two years (from Rs.6.6 billion in FY 2007 to Rs.18.16 billion in FY 2009) and by FY 2010 the figure had reached a whopping Rs.25.15 billion.
With total deposits of Rs.1.56 trillion and net advances to the tune of Rs.1.10 trillion as on September 2010, the bank has come a long way from its humble beginnings in 1994 (though the bank was set up in December 1993, it started operations only in April 1994), when its deposits stood at Rs.1.15 billion. The bank has not only outperformed public sector behemoth like State Bank of India (SBI), but has also given tough competition to its counterparts like HDFC Bank when it comes to the growth in advances. While Axis Bank witnessed a 48.72% increase in its advances between FY 2007 and FY 2009, SBI and HDFC Bank reported a growth of 26.81% and 45.13% in their advances during the corresponding period.
The bourses are responding well. The bank’s stock is trading at Rs.1,547.25 (as on November 10, 2010) at Bombay Stock Exchange (BSE) and market capitalisation is worth Rs.633.44 billion (as on November 10, 2010). The financial results have been admittedly overwhelming; the bank has just registered a net profit of Rs.14.77 billion for H1 2010, a massive surge of 35% from Rs.10.94 billion profit reported during the same period last year.
It was July 2007, when UTI Bank changed its name to Axis Bank, and in the process broke away from a legacy of triumphs as well as tragedies. The bank’s board felt that the existence of several shareholder-unrelated entities using the UTI brand was leading to a brand confusion, which forced them to take this decision.
Though the branding legacy was lost, the bank itself found its way quite well, especially after the recent global slowdown that to an extent affected several in the Indian banking fraternity. In fact, the strategic move had a positive impact on Axis Bank, as its net profit tripled in a span of just two years (from Rs.6.6 billion in FY 2007 to Rs.18.16 billion in FY 2009) and by FY 2010 the figure had reached a whopping Rs.25.15 billion.
With total deposits of Rs.1.56 trillion and net advances to the tune of Rs.1.10 trillion as on September 2010, the bank has come a long way from its humble beginnings in 1994 (though the bank was set up in December 1993, it started operations only in April 1994), when its deposits stood at Rs.1.15 billion. The bank has not only outperformed public sector behemoth like State Bank of India (SBI), but has also given tough competition to its counterparts like HDFC Bank when it comes to the growth in advances. While Axis Bank witnessed a 48.72% increase in its advances between FY 2007 and FY 2009, SBI and HDFC Bank reported a growth of 26.81% and 45.13% in their advances during the corresponding period.
The bourses are responding well. The bank’s stock is trading at Rs.1,547.25 (as on November 10, 2010) at Bombay Stock Exchange (BSE) and market capitalisation is worth Rs.633.44 billion (as on November 10, 2010). The financial results have been admittedly overwhelming; the bank has just registered a net profit of Rs.14.77 billion for H1 2010, a massive surge of 35% from Rs.10.94 billion profit reported during the same period last year.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles
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