Axis Bank Joins India’s Leading Private Lenders to Offer Salary Increases of Up to 12%
India’s third-largest private lender joins biggest rivals in delivering staff pay increases even as economic slump from the coronavirus pandemic threatens earnings growth.
Axis Bank Ltd. will increase staff salaries between 4% and 12% from October 1 based on performance, according to people with knowledge of the plans. The Mumbai-based lender, which has around 76,000 employees, has also paid bonuses to its staff, the people said, asking not to be identified as the case is private.
HDFC Bank Ltd., the country’s largest private lender by assets, raised wages in April based on performance and also paid bonuses, others with knowledge of the matter said. ICICI Bank Ltd., the second-largest private lender, gave around 80% of its 100,000 employees a bonus and a pay rise starting in July, according to various people familiar with the plans.
The salary increases come as the coronavirus pandemic is forcing some local and global peers to cut jobs and pay. Many Indian lenders are looking to cut costs as the coronavirus is expected to push degraded assets to a two-decade high.
Executives earning more than 2.5 million rupees ($ 34,109) from India’s fourth private lender, Kotak Mahindra Bank Ltd., will face a 10% pay cut, while senior executives will take a 15% cut.
S&P Global Ratings downgraded Axis Bank’s credit rating to below investment grade in June, fearing the Covid-19 pandemic could jeopardize the asset quality and profitability of the lender.
The Reserve Bank of India predicts that the capital adequacy ratio for lenders – a measure of available capital meant to ensure the bank can absorb a loss – could fall to 11.8% by March, from 14, 6% a year earlier, to the minimum requirement of 9%.
Still, Axis Bank, Kotak Mahindra Bank and ICICI Bank are among the private lenders who have raised around $ 9 billion by exploiting the stock markets to protect themselves and prepare for future business. Raising capital will also give them a greater ability to deal with bad debts even if they extend credit.
Representatives of Axis Bank, HDFC Bank, ICICI Bank did not immediately respond to emails seeking comment.