State Bank of Mauritius sees modest 4.5% rise in profits upon low demand for credit
SBM saw a modest 4.5% rise in profit after tax in 2014 to Rs 3.16 billion against Rs 3.0 billion in 2013, mainly due to a decline in demand for credit amidst excess liquidity in the domestic market and increasing competition.(Image: Dario Li Collection)
The island economy’s second largest banking major by market share published its financial accounts this week, revealing a 4.5% rise in profit after tax in 2014 to Rs 3.16 billion against Rs 3.0 billion in 2013.
The modest growth amidst challenging operating conditions was mainly due to a decline in demand for credit amidst excess liquidity in the domestic market and increasing competition, noted the bank in its financial statement.
The operating income of the entity for 2014 stood at Rs 6.2 billion and components contributing towards this figure were mainly a net interest income of Rs 4.1 billion and non-interest income of Rs 2.2 billion, out of which net fee and commission was the main contributor at Rs 900.9 million.
The earnings per share have gone up to 12.25 cents for 2014 from 11.71 cents as compared to 2013 and the net interest margin decreased to 1.57 % in 2014.
Meanwhile, the bank noted that corrective measures have been taken to improve the net interest margin. As stated in the financial statement report, this is being done by taking into account the mix of high yielding interest earning assets to low yielding assets, the cost of optimal capital, the cost of excess capital at the average liability cost of the Group’s balance sheet, a higher cash reserve ratio and the cost of acquiring deposits.
The balance sheet shows an increase in total assets to Rs 127.3 billion against Rs 112.5 billion in 2013 with total deposits amounting to Rs 92.4 billion and total loans standing at Rs 68.8 billion, making a loan deposit ratio of 77.45%.
SBM’s future outlook indicates the company’s constant endeavour to improve the operating environment of the entity, both domestic and overseas, by actively pursuing business development, strengthening in-house capabilities and improving quality of customer service.
It may be noted that SBM is listed on the Stock Exchange of Mauritius with a market capitalisation of Rs 30 billion.
Finally, a rise in credit uptake is expected as the Government of Mauritius has declared the intention to improve the environment for doing business and has expressed commitment to support the development of SMEs. These declarations under Budget 2015 are expected to have a positive impact on the local economy and increase the credit appetite of local players — especially entrepreneurs.