Mauritius Banking Bonanza: SBM & MCB see profits up in fiscal year to 30 Sept
Mauritius’ banking majors, the State Bank of Mauritius (SBM), and the Mauritius Commercial Bank (MCB) both saw profits zoom, as the former saw an 8.8% increase in post-tax profit to Rs 2.35 billion for the 9 months ended 30 September 2014 while the latter saw profits up in the first three months of 2014-15, with a 7% rise in net profit to Rs 1.37 billion. (Image: Mines & Money)
Mauritius’ second largest lender, the State Bank of Mauritius (SBM), saw an 8.8% increase in post-tax profit to Rs 2.35 billion for the 9 months ended 30 September 2014, against Rs 2.16 billion a year ago, mainly driven by an increase in non-interest income.
Meanwhile, the Mauritius Commercial Bank (MCB), which happens to be one of the largest lenders in the Indian Ocean region, also saw profits up in the first three months of 2014-15, with a 7% rise in net profit to Rs 1.37 billion over the corresponding period in 2013-14.
Coming back to SBM, the group operating income also increased to Rs 4.52 billion, compared to the corresponding period last year, when it stood at Rs 4.13 billion. However, net fee and commission income decreased by 16.0% to Rs 645.31 million against Rs 768.01 million realized last year.
Non-interest income rose to Rs 1.45 billion compared to Rs 1.11 billion for the corresponding quarter in the last fiscal, representing an increase of 30.6%, on account of gains on disposal of investment and trading activities.
The bank has also signed up with Union Pay International (UPI) a Card Association Payment operator and expects an increase in card income.
Furthermore, the group’s net interest margin to average assets dropped from 3.85% for the 9 months ended 30 September 2013 to 3.63% for the corresponding period of 2014, mainly due to increased volumes in placements and in investment securities with much lower interest rates compared to advances coupled with interest costs on subordinated debts of Rs 3.56 billion raised during the year.
In addition, the group’s gross advances decreased by Rs 3.47 billion and the group deposits have increased by Rs 1.78 billion to attain Rs 84.79 billion over the same period.
Impaired advances witnessed an increase during the period under review with net impaired advances to net advances as at 30 September 2014 standing at 1.26%.
The earnings per share have gone up to 9.09 cents from 8.36 cents for the nine months ended 30 September 2014 as compared to its corresponding period of 2013 based on the pre restructure exercise.
Interest income revenue increased by Rs 149 million as compared to interest income revenue growth of Rs 180 million for the corresponding period ended September 2013, due to sluggish growth and demand for credit, lower return on advances and lower yields on government securities.
Significant investments of Rs 11.38 billion were invested in gilt-edged securities during the period of nine months ended 30 September 2014, an increase of more than 41% at comparatively much lower yields.
The Group capital adequacy ratio (CAR) under Basel III was 25.7% as at 30 September 2014, which is comfortably above the minimum regulatory limit of 12.5%, and the Tier 1 to risk weighted assets ratio stood at 19.7% much above the minimum regulatory limit of 10.5%.
The financial report noted that the global economic performance is moderately improving, although still recovery remains laborious and subject to downside risks.
Additionally, the domestic economy appears headed towards modest growth, amidst weaker-than-expected momentum in economic activity and subdued investment levels.
The operating environment continues to face prospects of slow growth in credit demand and persisting excess liquidity within a low interest rate environment.
“SBM remains prudent in its approach to doing business, particularly with regards to risk management, and focused on pursuing its business-aligned technology transformation initiatives,” the financial report pointed out.
Besides, SBM is progressing in respect of its strategic initiative to diversify revenue streams and cost management.
Moving on to the MCB group, the profitability boost of 7% for the first quarter was powered largely by banking arm MCB Ltd which saw its net earnings increase by 16% during the latest quarter.
The MCB Group has seen its ‘Operating Income’ increase by 7.2%, despite excess liquidity and the low level of private investment in Mauritius impacting the ‘Net Interest Income’ , which rose a mere 1.2 % to reach Rs 801.5 million.
Boosted mainly by regional trade finance, the revenue coming from fees and commission has registered an increase of 16 %.
The non-banking financial activity has, for its part, registered a good performance by improving its profits.
The expenses of of the Group remain under control with an increase of only 3.5% during the first three months of the financial year 2014-2015.
Reserves for bad debts remain comparable to the first quarter of 2013-2014 but are clearly lower on an annual basis.
This situation reflects an improvement in the quality of assets, which can be measured by the decrease in the ratio of ‘Non Performing Loans’ during the actual quarter.
Thanks to the results registered from July till September, 2014 own shareholders equity saw a 5.5% growth to the reach Rs 32.7 billion in September 2014 whereas the overall capital adequacy ratio has increase from 16.1% to 16.6%.
However, management noted that the environment in which the MCB Group operates will remain challenging in the short term. On the basis of the current trend, the board of directors considers that the results of the first half of the calendar year ending December 2014 should be better than the corresponding period last year.