Mauritius’ second largest lender, the State Bank of Mauritius, has seen a towering increase of 35.1% in net profits after tax to Rs 4.8 billion for the 18 months ended 31 December 2013 at a group level, compared to Rs 3.5 billion for the 18 months ended 30 June 2012.
The group’s operating income grew by Rs 2.3 billion, or 32.4%, compared to the corresponding 18 months ending June 12, mainly attributable to higher net interest revenue by 34.0%.
Excluding dividend income, the group profit attributable to equity holders increased to Rs 3,941 million for the 18 months ended 31 December 2013, compared to Rs 3,296 million for the 18 months ended 30 June 2012, representing an increase of 19.6%.
An increase of Rs 1.0 billion or 11.7% in interest income was achieved during the current period on the back of higher yield, while interest expense decreased by Rs 0.5 billion or 13.2%, driven by lower cost of deposits coupled with refund of higher cost foreign currency deposits on maturity.
Net fee and commission income hit Rs 1.5 billion compared toRs1.1 billion for the 12 months ended 30June, 2012 while non-interest income amounted to Rs 3,393 million, compared to Rs 2,618 million for the 18 months ended 30June, 2012.
However, a drop of 6.5% was noted in non interest income excluding dividend income and gain on sale of equity investments, due to lower cross border card income and forex income.
To counter this decline, the bank has signed up with a third bankcard network operator and is confident that this partnership will prove a growing source of fee income.
Overall, the cost to income ratio improved slightly to 34.8%, against 35.5% for the corresponding period of 2012.
The effective growth in advances and deposits would have been 15.43% and 13.58% respectively compared to June 2012, had the Bank not strategically run down low yield assets and higher cost foreign currency deposits.
As matters stand, the group’s gross advances increased by 12.0% to reach Rs 71.1 billion at 31 December 2013 driven by growth in the domestic market while group deposits increased by 9.0% to Rs 83 billion over the same period, driven mostly by lower cost deposits.
However, impaired advances witnessed an increase during the period under review with net impaired advances to net advances deteriorating to 0.92% as at 31 December 2013.
Finally, the strong financial performance, coupled with the pursuit of strategic objectives for future growth, had a positive impact on the bank’s share price.SBM share pricerose as much as 27% from 82 cents as at June 2012 to 104 cents as at December 2013.
In conclusion, the board noted that the domestic operating environment would be challenging in at least the first half of the year, with low credit demand and excess liquidity. Thus, they noted that “while positioning itself to capitalize on the opportunities that should accompany an eventual recovery, SBM continues to showcase prudence in view of the still fragile environment.”
It may be noted that the bank is changing its reporting period from 1 July-30 June to 1 January- 31 December, hence the current reporting has been done from the end of its last financial year (30 June 12) to the end of the restated financial year (31 December 2013). This will be an exceptional year of 18 months reporting, after which the bank will resume its normal 12-month reporting cycle from 1 January 2014 to 31 December 2014.
Image (Orange): SBM management and staff. Net profits rose 35.1% for the 18 months ended 31 December 2013 at a group level, compared to Rs 3.5 billion for the 18 months ended 30 June 2012.
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