Kerala-based South Indian Bank’s outgoing Managing Director and chief executive officer (MD&CEO) Murali Ramakrishnan on March 29 denied market speculations that his decision not to seek re-appointment is due to differences with a section of members in the bank’s Board. The speculations on disharmony between the CEO and Board leading to his exit and concerns surrounding the next CEO had caused a selloff in the bank’s shares on Wednesday.
“The Board is fully behind me and has backed my strategies to grow the bank to make it a pan India organisation during this period. I could do what I wanted to do in terms of bank’s expansion strategies with the backing of the Board,” said Ramakrishnan in an exclusive conversation with Moneycontrol on March 29.
“There are absolutely no differences with me and the Board. There is hundred percent no truth in it, I can tell you,” Ramakrishnan said.
Shares of the bank had fallen sharply on 29 March post the bank’s communication to stock exchanges. At the time of filing this copy, the shares were trading at Rs 14.25 apiece, down 13.9 percent from the previous close.
Ramakrishnan said the search committee, constituted by the Board, will identify and evaluate suitable candidates for the position of Managing Director & CEO and as a member of the NRC (nomination and remuneration committee), he will assist the process.
The Board, on March 28, said it has considered the request of Ramakrishnan, Managing Director & CEO, not to offer himself for re-appointment, citing personal reasons. Ramakrishnan is set to complete his term on September 30, 2023.
“My term is till September-end. Till then I will be part of the overall expansion process of the bank. The bank has initiated major strategies to grow the business and expand reach in the last three years. The process is on,” Ramakrishnan said.
Ramakrishnan said the process to identify the next CEO of the bank has only started and it will take time for the process to complete.
Aggressive growth strategy
Ramakrishnan, who was earlier with ICICI Bank, had a largely successful stint at the south-based bank in terms of growing the book, digital transformation and rebranding as a pan-India bank. Before joining South Indian Bank, Ramakrishnan had worked with ICICI Bank as Senior General Manager at Strategic Project Group on May 30, 2020, and joined the South Indian Bank as an advisor on July 1, 2020.
During his tenure at ICICI Bank, Ramakrishnan was heading a business transformation project for small and medium-sized enterprises (SME).
In January, in an exclusive interview with Moneycontrol, Ramakrishnan had said that the bank would focus more on the retail sector going ahead.
“Our retail book has seen good growth. We would like to meet the market demand for the auto and home loan sectors,” Ramakrishnan had said. The bank’s retail deposit for the October-December 2022 quarter stood at Rs 88,660 crore -- 5.36 percent higher than last year’s corresponding quarter figures of Rs 84,151 crore.
The numbers
SIB’s net profit for Q3FY23 was at Rs 103 crore, as against a net loss of Rs 50 crore during the corresponding quarter last year. The lender’s total operating income in the period rose to 13.59 percent to Rs 1,898 crore from Rs 1,671 crore last year.
Also, the bank recorded its highest-ever quarterly net interest income for Q3FY23, at Rs 825 crore, against Rs 573 crore on a year-on-year basis.
During his period, Ramakrishnan has aggressively pursued bank’s shift to digital.
“Almost 93% of our transactions take place digitally. We can do personal loans and home loans digitally. Once our new retail platform, Nucleus, is commissioned, the entire fulfillment of the retail life cycle can take place digitally through this platform,” Ramakrishnan told Moneycontrol in April, 2022 .
Also, Ramakrishnan has consistently maintained that new-age fintechs aren’t a threat to the bank and the lender has partnered with fintechs in areas like credit card business. Besides, under Ramakrishnan, South Indian bank has significantly ramped up cheaper deposits from sub 25 percent to over 32%.
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