Mauritius: Construction sector continues to capture largest pie of credit granted by banks
As a prudent measure to reduce the sectoral concentration of credit risk in the economy, the Bank of Mauritius had introduced limits on the commercial, residential and land parceling segments of the ‘construction’ sector, as well as the ‘tourism’ and ‘personal’ sectors,starting July 2014 — however, the construction sector continues to dominate the credit allocation of banks in the island economy, together with the tourism cluster. (Image: Mercedes-Benz Mauritius)
The sectoral balance sheets of banks in Mauritius as at end of March 2015, published by the Bank of Mauritius, shows that the total assets across banks in Mauritius amounted to Rs 1438.6 billion, of which the major component was loans accounting for 43.7% of total assets at Rs 629.02 billion, followed by currency and deposits which stood at Rs 377.5 billion, or 26.2%.
Loans were mainly attributed to non-residents for an amount of Rs 311.6 billion, accounting for an overwhelming 49.5% of total loans issued by banks in Mauritius.
The assets of banks in Mauritius were also constituted by securities other than shares for an amount of Rs 91.4 billion,shares and other equity for Rs 20.9 billion, financial derivatives which amounted to Rs 181.1 billion,other accounts receivables which stood at Rs 16.9 billion while non financial assets were at Rs 21.6 billion.Further, it may be noted that the banksin Mauritius did not have ‘Monetary Gold’ and ‘SDR’ as assets in their balance sheet.
On the liabilities side, ‘Deposits Included in Broad Money’ was the main component accounting for 51.0% of total liabilities for an amount of Rs 733.3 billion, of which ‘Transferable Deposits in Foreign Currency’ was the major element followed by ‘Savings Deposits in National Currency’.
Another major component of liabilities was ‘Deposits Excluded from Broad Money’ which amounted to Rs 186.4 billion and ‘Financial Derivatives’ which stood at Rs 181.8 billion.
Besides, another report released by BOM depicts that credit provided by banks in Mauritius to the private sector as at the end of March 2015 amounted to Rs 323.2 billion. The bank finance was mainly geared towards the construction sector, which is yet again the most indebted sector in Mauritius with Rs 82.1 billion worth of credit provided to this sector alone, representing 25.4% of total credit allocation.
The tourism segment ranked second on the banking credit list with Rs 46.0 billion of funding provided to this sector,of which the hotel cluster was the one capturing the largest portion of finance for an amount of Rs 28.4 billion.
Global Business licence holders represented yet another category to which banks provided a large amount of credit at Rs 45.1 billion,while Rs 31.0 billion was allocated towards traders.
Moving on, personal loans accounted for 9.1% of total loans granted to the private sector, at a figure of Rs 29.3 billion.
Other sectors such as‘Agriculture and fishing’ also attracted a reasonably high credit allocation of Rs 18.0 billion and for ‘Manufacturing’, the level of finance from banks stood at Rs 21.1 billion.
The sector that took recourse to banks for the least amount of credit finance was Information Communication and Technology (ICT)at a credit level of Rs 1.5 billion, followed by the infrastructure and transport sectors where only Rs 4.2 billion and Rs 5.2 billion respectively were allocated as banking credit.
To conclude, construction is yet again the most indebted sector in Mauritius and it is the also a segment currently facing a challenging environment in the island economy. Hence, it would be premature to say that the credit requirements of this sector are expected to come down, in the near term horizon at least.