Mauritian financial sector shines in 2012-13
The island economy’s financial sector continues to be a golden goose, logging pre-tax profits of Rs 15.4 billion in 2012-2013 against Rs 14.3 billion in 2011-2012.
The financial sector, an important pillar of the island economy, continued to cash in on Mauritius’ reputation as an investment gateway into Asia and Africa, logging pre-tax profits of Rs 15.4 billion in 2012-2013 against Rs 14.3 billion in 2011-2012.
“The banking sector grew at a faster pace during 2012-2013 than in the preceding year,” noted the Bank of Mauritius in its annual report for 2012-13. Deposits grew by 11.3% in the last fiscal year on the back of a 16.9% increase in deposits with banks abroad.
Overall, the financial sector scored well, with only four of the 21 banks in operation at the end of last June having suffered losses in financial year 2012-13. The central bank goes on to comment that three of these four banks saw their profits wiped out by provisions for bad debts, while the fourth, a new entrant, continued to face high operational costs.
Also, on the CAMEL framework, an internationally recognized framework for rating financial institutions on crucial parameters such as Capital adequacy, Asset quality, Management, Earnings and Liquidity, 15 out of 20 banks were assigned a ‘satisfactory’rating in June and December 2012 while five banks maintained a ‘fair’ rating across those periods.
The banking sector in Mauritius consisted of nine local banks, eight foreign bank subsidiaries and four branches of international banks, employing a total of 7,464 people as on 30 June 2013. These financial institutions operated a total of 223 branches, 450 ATMs, 9 counters and a mobile service. Besides traditional services, 14 banks offered card-based services and internet banking while three went a step further and offered banking by phone as well.
Moreover, commercial banks hit a revenue milestone of close to Rs 48 billion in 2012-2013, an increase of 13.8% over the year-ago period. Also, the central bank noted that the cost/income ratio of banks has declined from 40% to 38.5%, with a lower ratio indicating greater efficiency of banking operations.
However, credit extended by banks to the private sector grew a mere 8% in 2012-13, standing at Rs 258,853 million as on 30 June 2013, compared to an increase of 10.7% in the year-ago period. The struggling construction industry’s share in total private sector allocations increased 53%, the personal loan segment saw 26.7% increase in credit, while the agriculture & fishing, transport and tourism sectors together accounted for a 34% rise in credit.
Also, bad loans rose 16.6% to Rs 21.4 billion at end-June 2013, pushing the ratio of bad loans as a percentage of total loans from 3.1% to 3.5%. Accordingly, commercial banks had to set aside a larger sum, up from 5.9 billion in 2011-12 to Rs 9.1 billion in 2012-13, to provide for losses on loans.
On the personal banking front, the BoM noted that both volume and value of card transactions increased. While cards in circulation (debit, credit and other) increased from 1,378,854 to 1,439,074, the average monthly value of transactions with credit cards grew 15.6% to reach Rs 10.5 billion for the quarter ending June 2013.
Furthermore, BoM itself reported a net profit of around Rs 71 million for financial year 2012-2013 but had to draw on reserves to avoid going into the red since the fiscal year ended with an operational loss Rs 1.8 billion.