Clearing the air around Axis Bank showing interest in making a move for Yes Bank, Amitabh Chaudhry, MD & CEO, Axis Bank, ruled out the possibly of evaluating Yes Bank or IDBI Bank as potential acquisition candidates. ‘We are not looking at them, categorically. I just want to ensure that the message is loud and clear,” he said. However, he was quick to add that this should not mean that the bank is averse to the idea of taking a stride with inorganic growth opportunities.
“We should never say no to any opportunity that might come our way”. Explaining further on his rationale for mergers and acquisitions, Chaudhry said the target should add up something materially for the bank. “We did Citi because it made lot of sense for us, and we luckily won the transaction through a bidding process. Let's see if some other deals come, which make imminent sense for us. But right now we do not see a huge value acquisition coming to us,” he alluded.
When asked about his plans for capital raise, Chaudhry believes that the bank is sufficiently capitalised despite funding for Citi acquisition through internal accruals. “Firstly, the overall industry growth rate is slowing down. So we're actually adding to our capital,” he said while explaining why the bank doesn’t need to raise capital at this juncture. “Secondly, we have a pretty large cushion in terms of COVID provisions, which you have not used. We also had a 70 plus basis point impact because RBI changed risk weights on certain specific classes of business. At some point in the future, when they comfortable, hopefully the risk rates will be brought back to what they were,” he added, stating that the bank wants to be careful about the timing of raising capital.
Chaudhry is quite clear that the current level of growth in the banking system and for his bank will remain guided by the ability to raise deposits. “Deposit is a constraint today. Our asset growth is dependent on deposit growth. We can get aggressive on deposit growth, but it impacts the long term health of the institution. We have worked very hard to ensure that we do not do certain things. I don't want to go back to doing those things just to deliver on the growth side”.
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