Focus on lower cost-to-income ratio, digital medium
After close to doubling their headcount in the past few years, leading private sector lenders ICICI Bank and Axis Bank have reduced their employee counts.
At the end of March this year, the employee base of ICICI Bank, India’s largest private lender, was 67,857, against 72,226 a year earlier.
During 2010-2014, the bank’s employee base more than doubled from 35,256 to 72,226.
Between March 2014 and March this year, the headcount at Axis Bank fell by 190 -- from 42,420 to 42,230.
Latest figures for HDFC Bank aren’t available.
A check on operating cost, an improving the cost-to-income ratio and a shift to the digital medium by consumers are behind the change in hiring plans.
“Given the addition of 14,000 employees in FY13 and FY14 and the bank’s focus on efficiency, the employee base fell about 4,400 during FY15.
“Primarily, this has been achieved by not replacing attrition,” N S Kannan, executive director, ICICI Bank, said after the announcement of the bank’s March quarter earnings.
The bank’s business per employee has increased between 2009-10 and 2013-14 (data for 2014-15 aren’t available yet).
Though the figure has increased in the post-crisis years, it is far below the 2008-09 levels. Profit per employee, however, remained stagnant during 2012-13 and 2013-14.
In September last year, ICICI Bank had indicated it could rationalise its workforce.
“We believe given our scale of operations, employee additions through the past two years and our aspiration in terms of growth and productivity, we can do with a lesser number of employees,” Kannan had told analysts in September.
Bankers say with credit offtake being tepid, the case for aggressive hiring is weak.
In 2014-15, credit growth stood at 9.52 per cent, compared with 13.83 per cent in 2013-14.
Axis Bank had increased its headcount to 42,420 from 21,640 at the end of March 2010. But in 2014-15, the number of employees fell, despite the bank increasing the number of branches from 2,402 to 2,589.
“There is a huge focus on cost-to-income in the bank in general, particularly in the retail segment.
“So, we have actually seen the number of employees within the retail bank come down on a year-on-year basis.
“We are seeing more and more transactions going through on digital channels and that is contributing to an improvement in the cost-to-income ratios,” Rajiv Anand, group executive (retail banking), Axis Bank, said in an analyst conference call.
He added with more customers shifting to digital channels, the size of branches was declining.
Therefore, these branches required fewer employees.
Axis Bank’s business per employee rebounded in FY14, after a dip in FY13. Its profit per employee, however, has been stable in the past few years.
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