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29 Sep 2017

MCB Group posts profits of Rs 6.7 billion (+1.2%)

The board of MCB Group met this morning and approved the financial results for the year ended 30th June 2017.

The highlights of the results are as follows:
  • Growth of 5.9% in net interest income
  • Net fee and commission income up by 5.2%
  • Rise of 21.3% in profit on exchange
  • Increase of 10.6% in operating expenses
  • Impairment charges higher by 4.1%
  • Share of profit of associates lower by Rs 397 million
Commenting on the results, Pierre Guy Noël (Chief Executive - MCB Group Ltd) said:

“In a challenging context notably marked by persisting excess liquidity, profit attributable to equity holders of the Group edged up marginally by 1.2% to reach Rs 6,702 million. This was achieved despite a significant drop of Rs 397 million in our share of profit from associates, on account of lesser contributions from PAD Group, which registered significant non-recurring revenues in the previous year and, BFCOI, whose performance was impacted by a significant increase in impairment charges during the last semester.

Our results were supported by a healthy growth of 7.6% in operating income in line with the expansion achieved across clusters. Net interest in-come grew by 5.9% to Rs 9.4 billion, albeit being primarily driven by the rise in income from low yielding liquid assets as a result of deposits growing at a much higher rate than loans and advances. Net fee and commission income recovered from last year’s low, supported by higher receipts at both banking and non-banking levels. Indeed, our deposits increased by 7.7% whilst the lending portfolio rose at a moderate pace of 2.8% with the drop in our corporate portfolio being compensated by healthy growth in foreign lending and retail advances.

‘Other income’ rose by 17.8%, driven primarily by higher profit on exchange. Despite a slowdown witnessed in the last quarter of the year as a result of excess supply of foreign currencies prompting an appreciation of the rupee, profit from dealing in foreign exchange grew by an impressive 21.3% to reach Rs 1.9 billion for the year. Operating expenses grew by 10.6% in line with capacity building initiatives across the Group, with the cost to income ratio increasing to 41.2%. Impairment charges posted a contained growth of 4.1% to stand at just above Rs 1 billion, representing 0.59% of our loans and advances, while the gross NPL ratio declined from 6.2% to 6.1%.

Our capitalisation level remains comfortable with shareholders’ funds of the Group increasing to Rs 45.9 billion, contributing to a capital adequacy ratio of 18.9%, of which 16.5% in the form of Tier 1.
Notwithstanding the anticipated improvement in the global economic environment, market conditions are expected to remain challenging. In Mauritius, economic growth is likely to pick up only gradually with delays being observed in the implementation of several large scale infrastructure projects. There is little sign of the excess liquidity situation abating while the relative strength of the rupee is impacting our foreign-sourced income. Our business pipeline is, however, encouraging with our international operations and non-banking activities expected to grow further.”GMS June 2017PDF 568KB