Insight into The State Bank of Mauritius Group Essay

The State Bank of Mauritius Group ( SBM ) is a taking fiscal services group in Mauritius with a turning international presence. It provides all services of a cosmopolitan bank within a diversified concern theoretical account. The lines of concern include: Retail Banking, Small and Medium Enterprises and Wealth Management ; Corporate, International and Investment Banking ; Treasury services, e-Business and fiducial services.

SBM started operations in 1973 and was listed on the Stock Exchange of Mauritius in 1995 and is the 2nd largest company listed, with a market capitalization of Rs 26 Billions ( USD 830 m ) as at August 2010.

Invention, flexibleness, handiness and dependability are the cardinal properties that have contributed to the Group ‘s repute and trustiness. Owned by about 17,000 domestic and international stockholders, SBM has more than 1,100 employees and services over 375,000 clients through its web of 48 service units and counters in Mauritius, India and Madagascar. Traveling frontward, we are puting greater accent on international every bit good as non-banking activities. We are ever aware that the quality of our human resources and service bringing makes the difference and hence, continuously invest in people, substructure and engineering.

SBM is good entrenched in the domestic banking landscape with a diversified and loyal client base, serviced through a big subdivision web by employees who are progressively antiphonal to germinating client demands. Besides a wide scope of nest eggs, investing and funding merchandises, in both local and foreign currency, we offer a big portfolio of cards, designed to accommodate the demands of specific client sections. Invention and market penetrations continue to drive merchandise development. In line with the Group ‘s variegation scheme and in position of market tendencies, we are now looking to further develop our Small and Medium Enterprise concern every bit good as our Private Banking and Wealth Management services.

After a really good public presentation in FY 2009, with net income after revenue enhancement, excepting dividend income, increasing by 35.3 % , the Group faced a more ambitious twelvemonth ended 30 June 2010 ( FY 2010 ) , as gauged by a bead of 3.6 % in net income excepting dividend. Taking into consideration lower dividend income received in FY 2010, overall net income declined by 8.2 % to make Rs 1,859 m ( 2009: Rs 2,025 m ) . In position of the volatile environment, an extra portfolio proviso of Rs 170 m over and above the minimal degree required by the Bank of Mauritius has been made in the statement of income. Excluding the one-off dividend income received in FY 2009 every bit good as the impact of this extra provisioning, net income for the twelvemonth would, in fact, have increased by 3.6 % .

While overall fiscal consequences are lower than last twelvemonth, Group fundamentals remain solid, with liquidness and capital maintained at really comfy degrees, the cost to income ratio contained to below 40 % , and the nonperforming progresss ratio stood at a really applaudable 1.9 % . Besides, we have successfully pursued our variegation scheme as gauged by the notable public presentation of some of the strategic growing countries, puting the scene for stronger future public presentation. In consequence, our international concern continues to spread out at a important gait, with international progresss increasing by 48 % and now stand foring 32 % of entire progresss ( 2008: 18 % ) . As a consequence, overall progresss grew by 9.8 % . Volumes have besides risen appreciably in regard of the cards concern and assets under direction, in line with our aim of advancing fee-based income. As significantly, in add-on to the widening of the gross base, important capacity edifice enterprises continue to be rolled out to back up growing in the countries of human resource, client service, information engineering, hazard direction and internal audit. Several sweetenings were underpinned by the on-going consolidation of the direction squad, another cardinal public presentation driver per Se.

SBM corporate administration model

SBM was among the first companies in Mauritius and the first listed one to follow with international best patterns in corporate administration as far back as 1997, good in front of the Bank of Mauritius Guideline on Corporate Governance issued in 2001 and the debut of the Code of Corporate Governance. SBM ‘s Corporate Governance model comprises its Board of Directors, Board Committees, direction forums, employees, internal and external hearers, and other stakeholders. It follows industry best patterns every bit good as established policies and processs. SBM is extremely committed to and embraces the highest criterions of effectual good administration patterns throughout its operations. This model is important in developing and prolonging a successful concern and SBM requires all its employees to follow the highest criterion of concern unity, transparence, professionalism and ethical behavior, and proctors conformity with policies and with the best patterns, Torahs, regulations and criterions while carry oning concern.

Management Discussion and analysis

The Group ‘s public presentation in FY 2010 has been below the old twelvemonth ‘s output, with a 3.6 % bead in runing income to Rs 3,837 m ( 2009: Rs 3,982 m ) and an 8.2 % diminution in net income for the twelvemonth to Rs 1,859 m ( 2009: Rs 2,025 m ) . The public presentation should be viewed within the context of hard operating conditions which affected our progresss portfolio, viz. in regard of the domestic corporate sector, every bit good as exchange income Given prevailing uncertainness in the mentality, notably associating to export-oriented sectors, we have besides increased our purveying charge above the minimal Bank of Mauritius demands. Besides public presentation in FY 2009 – when net income after revenue enhancement excepting dividend income increased by 35.3 % – had benefited from a one-off dividend income of Rs 97 m. Excluding the one-off dividend income every bit good as the enhanced provisioning, net income after revenue enhancement in FY 2010 would hold increased by 3.6 % .

Fiscal indexs remain overall sound with an betterment in the gross impaired progresss to gross progresss ratio from 2.0 % to 1.9 % , cost to income ratio maintained at below 40 % and capital and liquidness at comfy degrees. Building on solid basicss, the Group continues to diversify its gross base and invest in capacity edifice enterprises in people, procedures and engineering. While the increased spendings can take to subdued profitableness growing in the short term, peculiarly if the operating environment remains disputing, these are viewed as an investing for the hereafter as the Group maintains a medium to long term position.

The Group pursues variegation and capacity edifice enterprises

Amidst a hard economic context, the Group was aware to pull off hazards decently. Despite competitory force per unit areas, we focused on keeping a quality portfolio and on accomplishing an appropriate risk-return balance As a consequence, the loan book for the domestic corporate sector contracted. Commendably, this was more than compensated by a healthy rise in the retail portfolio and, peculiarly, in international progresss, including abroad concern generated from Mauritius, which grew by 48 % . Besides the international portfolio, the variegation of our gross base was pursued through noteworthy enlargement in the card issue and wealth direction concerns. In position of a hard economic context, we have besides reviewed our e-commerce model to supply a platform for more robust growing in front.

Despite the uncharacteristic economic conditions, gross progresss grew by 9.8 % to Rs 44.8 Bn, driven by the international and, to some extent, the retail portfolios while investing in Government securities went up by 33.2 % to Rs 20.2 Bn. On the other manus, sedimentations dropped by 3.3 % to Rs 61.5 Bn as we intentionally did non prosecute growing in rupee support amidst extra liquidness, concentrating alternatively on low cost sedimentations. In malice of a autumn in net involvement border on the footing of worsening outputs on Government securities and an increasing portion of lower giving international progresss, net involvement income increased by 3.9 % to make Rs 2,493 m in FY 2010. Conversely, non involvement income declined by a considerable 15.0 % as force per unit areas emanated from assorted foreparts. Trading income went down as a consequence of lukewarm external trade volumes, particularly in the first half of the fiscal twelvemonth, while dividend income from our investings besides dropped in position of a big one-off reception in FY 2009, linked to the weaving up of a company in which the Group invested. Furthermore, the reappraisal of our e-commerce concern resulted in a bead in income in FY 2010, but the improved set-up to incorporate hazards and broaden our base should lend to more robust growing traveling frontward. On the positive side, fee-based income was supported by strong public presentations in regard of card disbursement and wealth direction activities. Overall, runing income decreased by 3.6 % , while net income for the twelvemonth declined by 8.2 % to Rs 1,859 m ( 2009: Rs 2,025 m ) .

The decreased bottom-line takes into consideration a proviso of Rs 170 m charged to the statement of income above the minimal sum required by the Bank of Mauritius. This reflects a prudent stance in position of the possible inauspicious impact of economic conditions predominating at the year-end on our recognition portfolio. Should this extra sum non hold been provided, net income for the twelvemonth would hold stood at Rs 1,998 m, that is merely 1.4 % below the old twelvemonth ‘s public presentation. Besides, a major rise was recorded in staff costs in line with our capacity edifice enterprises for growing. Another factor explicating the decrease in net income is the significant part of Rs 30 m to CSR.

The fiscal twelvemonth ended 30 June 2010 has been a ambitious twelvemonth characterised by lingering uncertainness on the planetary mentality detaining investing undertakings at the domestic degree, heightened competition amongst Bankss competing for concern, high rupee liquidness and low outputs on Government securities. Within this context, the Group posted a net income after revenue enhancement of Rs 1,859 m, a diminution of 8.2 % compared to the old twelvemonth, on the dorsum of increased portfolio purveying above the lower limit required by the Bank of Mauritius, above the lower limit required by the Bank of Mauritius, lower dividend income, and significant outgo on CSR. Consequently, net incomes per portion stood at Rs 7.20 for the fiscal twelvemonth ended 30 June 2010 ( 2009: Rs 7.84 ) , while dividend per portion remained unchanged at Rs 2.75, stand foring a payout of 38.2 % ( 2009: 35.1 % ) . Should the increased portfolio proviso non be effected, net incomes per portion would hold been Rs 7.74. The Group remained cautious in constructing its assets book and the capital base remained strong.

Gross growing

Group runing income stood at Rs 3.8 Bn as at 30 June 2010, 3.6 % lower than in the old twelvemonth. Excluding dividend income, Group runing income really decreased by merely 1.1 % year-on-year, with growing of 3.9 % in net involvement income, dampened by a diminution of 10.5 % in non involvement income. In malice of an addition in the abroad recognition portfolio, gross generated from international concern declined to around 21.3 % of entire gross ( 2009: 22.9 % ) in position of decreased income from e-commerce.

Stockholders ‘ equity

Group stockholders ‘ equity increased by 13.2 % to Rs 14.7 Bn ( 2009: Rs 12.9 Bn ) at the year-end, with the add-on of the current twelvemonth ‘s net income of Rs 1.9 Bn and an addition in militias of Rs 0.5 Bn originating from reappraisal of belongings, partially offset by dividend payment of Rs 0.7 Bn for the fiscal twelvemonth 2009. Net plus value per portion therefore increased from Rs 50.13 to Rs 56.77 at 30 June 2010, reflecting a monetary value to book ratio of 1.4 times. Return on mean stockholders ‘ equity stood at 14.8 % ( 2009: 17.2 % ) given the comparatively high capital base. The Group declared a dividend per portion of Rs 2.75, same as last twelvemonth, in July 2010.