Construction sector corners most credit in consolidated portfolio of Mauritian banks
As a prudential measure to reduce sectoral concentration of credit risk in the economy, the Bank of Mauritius has introduced sectoral limits on the commercial, residential and land parceling segments of the ‘construction’ sector, as well as in the ‘tourism’ and ‘personal’ sectors which started in July 2014, however the construction sector still dominates the list, tougher with the tourism cluster. (Image: Office of State Revenue)
The credit portfolio of Mauritian banks continues to be geared towards the construction sector, as per the sector wise distribution of credit to the private sector as at February 2015, published by the Bank of Mauritius on 31 March 2015.
As a prudential measure to reduce sectoral concentration of credit risk in the economy, the Bank of Mauritius had introduced sectoral limits on the commercial, residential and land parceling segments of the ‘construction’ sector, as well as in the ‘tourism’ and ‘personal’ sectors which started in July 2014, however the construction sector still dominates the list as well as tourism cluster.
Construction sector captures 26.1% of the consolidated amount of total credit provided to the private sector which amounts to Rs 312.8 billion out of which construction sector figure stood at Rs 81.6 billion.
Credit facilities towards the construction sector are provided mostly in terms of loan facilities for a total amount of Rs 71.4 billion and a detailed analysis shows that housing and commercial property development are those seeking maximum credit.
It is to be noted that the BOM prompted banks to issue five macro-prudential policy measures in October 2013 to improve the resilience of the banking system. These relative prudential limits target mostly credit facilities granted for the purchase or construction of a first property above Rs5 million and/or any subsequent residential unit.
Traders ranked second in the list worth credit facilities of Rs 31.6 billion mainly in terms of loan facilities which amounted to Rs 15.6 billion and wholesalers were next in line for those seeking financing in terms of loans, overdrafts and financing in foreign currencies in Mauritius.
Other major borrowers were the tourism industry and the global business sector which reported credit figures of Rs 31.6 billion and Rs 39.1 each respectively. The tourism industry availed credit mainly in terms of loans and financing in foreign currencies, and hotels and hotels management service certificate holders were the main operators in the industry who approached banks for financing.
As for global business license holders, the GBC 1 segment, which is defined as a resident corporation that is a body corporate formed or registered in Mauritius proposing to conduct business outside Mauritius, obtained credit facilities for Rs 39.1 billion and opted for financing in foreign currencies in Mauritius.
Credit facilities were also channeled at at Rs 25.4 billion towards the finance and business segment, Rs 29.4 for personal finance, manufacturing segment obtained Rs 19.0 billion and agriculture was provided with Rs 25.4 billion.
Finally, the Information Communication and Technology (ICT), infrastructure and transport were segments that were less prone to avail credit facilities, with figures of only Rs 1.4 billion, Rs 4.3 billion and Rs 5.1 billion with only Rs 1.4 billion being channeled into these sectors of the island economy.