SBM sees profits after tax for first quarter dip 16.6%
The group operating income also decreased, albeit marginally, to Rs 1.33 billion, compared to the corresponding period last year, when it stood at Rs 1.36 billion.(Image: Wn.com)
Mauritius’ second largest lender, State Bank of Mauritius (SBM), saw a 16.6% dip in post-tax profit to Rs 596.5 million for the quarter ended March 31 2014, against Rs 715.2 million a year ago, on account of hike in credit impairment losses and dip in non-interest income.
The group operating income also decreased, albeit marginally, to Rs 1.33 billion, compared to the corresponding period last year, when it stood at Rs 1.36 billion.
Net fee and commission income decreased by 19.7% to Rs 199.8 million against Rs 248.8 million realized last year.
Moreover, non-interest income declined to Rs 326.2 million compared to Rs 368.1 million for the corresponding quarter last fiscal, due to lower cross border card income and forex income.
Accordingly, in order to reverse this trend, the bank has signed up with the UPI Card Association Payment operator and expects to improve card income from this partnership.
Furthermore, the group’s net interest margin to average assets dropped from 3.82% for the quarter ended 31 March 2013, to 3.66% for the quarter ended 31 March 2014.
Also, the group’s gross advances decreased by Rs 274.4 million from December 2013 to reach Rs 70.8 billion as at 31 March 2014.
Additionally, group deposits decreased by Rs 1.8 billion to hit Rs 81.3 billion over the same period, mostly due to non renewal of high cost term deposits.
Again, impaired advances witnessed an increase during the quarter under review with net impaired advances to net advances ratio standing at 0.92%.
The group capital adequacy ratio under Basel II was 23.1% as at 31 March 2014 against the minimum regulatory requirement of 10% whereas under Basel III, the capital adequacy ratio stood at 21.5%.
Also, in line with the policy of quarterly dividend payout; an interim dividend of 1.3 cents has been declared for the second quarter of the financial year ending 31 December 2014.
“Growth in credit demand is expected to be subdued and the excess liquidity situation is expected to persist for some more time. Against this backdrop, SBM will strengthen prudence and augment focus on risk management,” noted management.
Finally, following the board meeting held on March 15, 2014, the directors have approved the reorganization of the SBM group under 3 distinct special purpose vehicles (SPVs): (i) SPV-SBM (Bank) Holdings Ltd for banking activities; (ii) SPV-SBM (NBFC) Holdings Ltd for non banking financial activities; (iii) SPV-SBM (NFC) Holdings Ltd for non financial investments.
Under the banner of SPV-SBM (Bank) Holdings Ltd, there are three entities: SBM Bank (Mauritius) Ltd, SBM Bank (India) Ltd and Banque SBM Madagascar SA.
SPV-SBM (NBFC) Holdings Ltd counts under its banner the units of SBM Mauritius Asset Managers Ltd; SBM Securities Ltd; SBM Fund Services Ltd; SBM Asset Management Ltd; SBM Capital Management Ltd; SBM E-Commerce Ltd; and SBM Custody Services Ltd.
Finally, other individual investment have been housed under the SPV- SBM (NFC) Holdings Ltd.
As part of the re-organisation, the present shareholders of SBM will become shareholders of SBM Group Holdings Ltd and their underlying interests in the group will remain unchanged.