Mauritius to sharpen focus on destination next – high-income economy: Bheenick
Total income of banks increased by 6.2 per cent, from Rs 47,974 million in 2012-13 to Rs 50,970 million in 2013-14, while aggregate pre-tax profit of banks rose to Rs16,611 million in 2013-14, from Rs15,627 million in 2012-13. (Image: Orange)
Mauritius is poised to become a high-income nation and Governor Rundheersing Bheenick reiterated the island economy’s thrust, stating that it is “time for us to move on and sharpen our focus on our next destination –a high-income economy.”
According to the central bank’s annual report published yesterday, November 6, 2014, the banking sector remained generally sound and profitable during 2013-14, although challenges remained in terms of credit concentration risk, increasing non-performing loans, and declining return to asset and return to equity ratios.
As at end-June 2014, the banking sector comprised 23 banks licensed to carry out banking business in Mauritius, of which 10 were local banks, 8 were subsidiaries of foreign-owned banks, 4 were branches of international banks and 1 was a foreign- owned bank.
Two new banks were added in the central bank’s jurisdiction in April 2014, the first to be granted a licence for stand-alone private banking business.
As many as fourteen out of twenty one banks were assigned a ‘satisfactory’ rating in June and December 2013 while six banks maintained a ‘fair’ rating in those periods.
Mauritius’ banking sector is healthy as total assets crossed Rs 1 trillion in May 2013 with growth of 7.5% during the period under review.
Capital adequacy ratios averaged 16.8 per cent between June 2013 and June 2014, compared to a required minimum capital adequacy ratio of 10%.
During 2013-14, banks’ aggregate capital base (net of capital deductions) increased by 12.7 per cent to Rs 107,954 million. Tier 1 capital rose by 5.2 per cent to Rs 96,208 million, which represented 83.4 per cent of gross capital.
Aggregate pre-tax profit of banks rose to Rs16,611 million in 2013-14, from Rs15,627 million in 2012-13.
A majority of banks operating in Mauritius realised profit after tax, although three banks incurred losses. The operating profits of one bank were offset by impairment charges while two banks being new entrants in the banking sector, incurred high operational expenses upon establishing business in Mauritius.
Total income of banks increased by 6.2 per cent, from Rs 47,974 million in 2012-13 to Rs 50,970 million in 2013-14, mainly on account of growth of 8.6 per cent in interest income, but was offset by a decline of 2.1 per cent in non-interest income.
Also, at an overall economic level, despite the economic crisis, Mauritius is progressively showing significant signs of recovery, buffeting both business confidence and consumer sentiment.
In 2013, the Mauritian economy stood its ground and posted a growth rate of 3.2%, driven by all sectors except construction, while the level of unemployment remained stable at around 8%.
Mauritius has also succeeded in holding down inflation expectations as since 2009, the annual average rate of inflation has been close to 4% and has seen a reduction in its volatility compared to precedent years.
“We did everything within our statutory powers to achieve a low-inflation environment, hand-in-hand with a stable exchange rate, to ensure a solid basis for sustainable, equitable and broad-based growth,” Governor Rundheersing Bheenick noted.
In June 2014, headline inflation and year-on-year inflation stood at 3.3% and 4.0% respectively.
Mauritius is expected to see a growth of approximately 3.5% this year and expects inflation to remain below 4.0% in 2014, even as the international economic environment is not expected to improve significantly.
Credit extended by banks to the private sector grew by 3.6 per cent during 2013-14, with construction, traders, and personal loans taking the lion’s share of this expansion. In particular, construction, traders and personal sectors accounted for 51.2 per cent, 40.8 per cent and 29.6 per cent of the rise in credit.
Finally, the annual report highlighted that in 2014, key economic sectors appear to be weathering global uncertainties reasonably well, although the manufacturing sector’s contribution to growth may decline.