MIRA
INFORM REPORT
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Report Date : |
15.10.2007 |
IDENTIFICATION DETAILS
|
Name : |
STATE BANK OF MAURITIUS LIMITED |
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Registered Office : |
101, Raheja Centre, Free Press Journal Marg, Nariman Point, Mumbai –
400 021, |
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Country : |
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Financials (as on) : |
30.06.2006 (Group) |
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Date of Incorporation : |
1998 |
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Legal Form : |
Subject is a foreign commercial branch. |
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Line of Business : |
Subject is a commercial bank carrying on all kinds of banking activities. |
RATING & COMMENTS
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MIRA’s Rating : |
Aa |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit
transaction. It has above average (strong) capability for payment of interest
and principal sums |
Large |
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Maximum Credit Limit : |
--- |
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Status : |
Excellent |
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Payment Behaviour : |
Regular |
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Litigation : |
Exists |
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Comments : |
Subject is a commercial bank carrying on all kinds of banking activities. The bank has been making satisfactory progress in its performance. Financial position is also satisfactory. Trade relations are reported as fair. Payments are reported as correct and as per commitments. The bank can be considered normal for business dealings at usual trade terms and conditions. |
LOCATIONS
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Registered Office : |
101, Raheja Centre, Free Press Journal Marg, Nariman Point, Mumbai –
400 021, |
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Tel. No.: |
91-22-22842965 |
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Fax No.: |
91-22-22842966 |
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Telex |
1182229 MAUR IN |
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Website : |
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Head Office : |
State Bank of Tower, 1 Place of Armes, |
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Tel. No.: |
91-230-2021111 |
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Fax No.: |
91-230-2021666 |
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Telex: |
4910STATEMDIW |
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E-Mail : |
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Website: |
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Corporate Office : |
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Tel. No.: |
(230) 202 1111 |
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Fax No.: |
(230) 202 1234 |
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E-Mail : |
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Website: |
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Branches : |
v
Prince Arcade, 4th Floor, 22A Chennai 600 086, Tamilnadu Tel: 91-44-28237806 Fax: 91-44-28259143 Telex: 41-5028 MURM IN Email: sbml@md2.vsnl.net.in v
Andhra Pradesh Tel: (91) (40) 330 0436 Fax: (91) (40) 330 0442 Email; sbmlhyd@eth.net |
DIRECTORS
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Name : |
Mr. Munni Krishna T. Reddy |
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Designation : |
G.O.S.K. (Deputy Chairman) |
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Name : |
Mr. Bashirally Currimjee |
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Designation : |
G.O.S.K. |
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Name : |
Mr. Michael John Leming |
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Designation : |
Director |
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Name : |
Mr. Hambyrajen Narsinghen |
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Designation : |
Director |
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Name : |
Mr. Philippe Ong Seng |
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Designation : |
Director |
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Name : |
Mr. Christopher Pearce |
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Designation : |
Director |
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Name : |
Mr. Loganarden Ramsamy |
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Designation : |
Director |
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Name : |
Sir Maurice Rault |
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Designation : |
Q.C. |
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Name : |
Mr. Francois Woo Shing Hai |
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Designation : |
Director |
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Name : |
Mr. Guiness Chaitall |
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Designation : |
Director |
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Experience: |
29 years |
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Name : |
Mr. Richard charles |
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Designation : |
Director |
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Date of Birth / Age: |
55 years |
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Name : |
Mr. Lai Fat Fur |
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Designation : |
Director |
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Date of Birth / Age: |
56 years |
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Qualification: |
BA Economics |
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Name : |
Mr. Mohamedbhai Goolamhussen |
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Designation : |
Director |
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Date of Birth / Age: |
61 years |
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Qualification: |
Bsc, Phd, FIEM |
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Name : |
Mr. Ng Thow Hing |
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Designation : |
Director |
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Date of Birth / Age: |
52 years |
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Name : |
Mr. Parianen Soopaya |
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Designation : |
Director |
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Date of Birth / Age: |
53 years |
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Qualification: |
Economics |
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Name : |
Mr. Rossouw Rocco |
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Designation : |
Director |
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Date of Birth / Age: |
58 years |
KEY EXECUTIVES
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Name : |
Mr. Munni Krishna T. Reddy |
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Designation : |
Chief executive officer |
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Name : |
Mr. C. Appadoo F |
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Designation : |
Secretary |
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Name : |
Sir Deewonarain Dookun |
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Designation : |
Chairman |
MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN
|
Names of Shareholders |
No. of Shares |
Percentage of
Holding |
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|
63335510 |
--- |
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State bank of Mauritius Limited - Treasury Shares |
57362170 |
--- |
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National Pensions Fund |
48518750 |
--- |
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State Insurance Company of |
44108421 |
--- |
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Domestic |
16429 |
98.80 |
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Overseas |
198 |
1.19 |
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Treasury Shares |
1 |
0.01 |
BUSINESS DETAILS
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Line of Business : |
Subject is a commercial bank carrying on all kinds of banking activities. |
GENERAL INFORMATION
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No. of Employees : |
50 |
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Bankers : |
v
Bank of |
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Banking
Relations : |
Good |
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Auditors : |
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Name : |
Kemp Chatteris Deloitte and Touche Chartered Accountants |
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Associates/Subsidiaries : |
v
SBM ABN AMRO Asia Securities
Limited. Tel: (230) 202 1111/1437 v
SBM Nedbank International Limited. Tel: (230) 202 1111, 202 1550 Fax: (230) 210 7819 v
SBM Nedcor Holdings Limited. Tel: (230) 202 1111, 202 1560 v
SBM Investment Limited Address: 1, Tel: (230) 202 1111, 202 1700 Email; finance@sbmintnet.mu v
Banque SBM Address: 1 Rue Andrianary
Ratianarivo Antsahavola, 101 Tel: (261) (2022) 66607
335306/7/8 Fax: (261) (2022) 66608
/5335311 Telex: 22639 SBM MG Email: sbmm@dts.mg v
SBM Mauritius Assets Manager Limited Address: Tel: (230) 202 1111, 202 1422 Email: sbmassetm@sbm.intnet.mu v
SBM Global Investments Limited Address: Tel: (230) 202 1111, 202 1700 Email; finance@sbm.intnet.mu
v
SBM Securities limited Address: Tel: (230) 202 1111, 202 1437 Email: sbmsecurities@sbm.intnet.mu v
Alliance Investments Limited Address: Tel: (230) 202 1111, 202 1700 Email: finance@sbm.intnet.mu State insurance copmnay
Mauritius Limited Address: Email: email@sicom.intnet.mu |
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Group companies : |
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SBM Realty Limited Tel: (230) 202 1111, 202 1490 v
SBM IT LIMITED Address: Tel: (230) 202 1111, 202 1255 E Mail: sbmit@sbm.intnet.mu Tel: (230) 202 1111, 202 1225 v
SBM Lease Limited Address: Tel: (230) 202 1111, 202 1478 Email: sbmlease@sbm.intnet.mu v
SBM Financials Limited Address: Tel: (230) 202 1111, 202 1488 E Mail: sbmfinancials@sbm.intnet.mu v
MN HOLDINGS (formerly known as SBM
Nedcor Holdings Limited) v
State Insurance Company of |
CAPITAL STRUCTURE
Authorised Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
1000000000 |
Equity shares |
MRe.1/- Each |
MRs.1000000 |
Issued, Subscribed & Paid-up Capital :
|
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Number
|
MR’s000 |
|
At 1st July |
38241470 |
382414 |
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Shares bought back and cancelled |
--- |
-- |
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Treasury Shares Cancelled |
--- |
-- |
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At 30th June |
382414470 |
382414 |
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Treasury Shares
held |
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At 1st July |
57362170 |
57362 |
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Shares bought back and held as treasury shares |
-- |
-- |
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Treasury Shares cancelled |
-- |
-- |
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At 30th June |
57362170 |
57362 |
As at 30 June 2003, the Bank had bought back and held as Treasury shares 46296999 of its own shares. A further 11078001 shares were bought back during the month of July 2003 at prices ranging from MRs15.60 to MRs17.10 (an average of MRs16.86 per share), bringing total shares bought back and held as Treasury Shares to 5737,000 at the end of July 2003. Treasury shares are not eligible for voting and dividend.
In November 2003, the Bank started a third Share Buy Back Programme, under which shares purchased were cancelled immediately on acquisition. As at 30 June 2004, 72700 shares had been purchased at an average price of MRs 20.16 per share and an additional 12830 shares have been cancelled from the Treasury Shares Account so as to keep the percentage of Treasury shares to issued shares within the limit of 15% in accordance with the regulations under Companies Act 2001.
No shares were bought back during the financial year ended 30 June 2005 and 30 June 2006
The Share Buy Back programme approved by shareholders lapsed on 17 May 2005.
FINANCIAL DATA
[all figures are
in MRs’000]
ABRIDGED BALANCE
SHEET
|
PARTICULARS
|
GROUP |
||
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|
30.06.2006 |
30.06.2005 |
30.06.2004 |
|
ASSETS |
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Cash resources |
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|
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Cash and balances with Central Bank |
3083739 |
1894720 |
2040409 |
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Balances With Banks and Inter bank Loans |
6174670 |
6378422 |
2090179 |
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Total
|
9258409 |
8273142 |
4130588 |
|
Securities,
Placement and other investments |
|
|
|
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Investment Securities |
|
|
|
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Available for safe |
2555765 |
2319450 |
2121623 |
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Loans and Receivables |
8938038 |
9253094 |
10844302 |
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Trading
Securities |
213702 |
144338 |
254791 |
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Placements |
45208 |
466261 |
40390 |
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Other investments |
--- |
9263 |
8849 |
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Total
|
11752713 |
12192406 |
13269955 |
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LOAN AND ADVANCES |
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|
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Personal and credit Cards |
7045391 |
5753721 |
4934304 |
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Business |
13909855 |
13621537 |
13130212 |
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Government |
3505159 |
2665379 |
2665791 |
|
Entities outside |
300035 |
768346 |
652239 |
|
Overseas Operations |
2414264 |
2319098 |
2155137 |
|
Total
|
27174704 |
25128081 |
23537683 |
|
Less: Allowances for credit Impairment |
(811713) |
(626505) |
(865500) |
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Net
Total |
26362991 |
24501576 |
22672183 |
|
|
|
|
|
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Other |
|
|
|
|
Property and Equipment |
2451838 |
2517890 |
1230134 |
|
Intangible assets |
412149
|
476100 |
528972 |
|
Other assets |
663495
|
645926 |
425889 |
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Total |
3527482
|
3639916 |
2184995 |
|
Total assets |
|
|
|
|
|
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LIABILITIES AND
SHAREHOLDERS EQUITY |
|
|
|
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Deposits |
|
|
|
|
Personal |
22601767 |
20668106 |
19425906 |
|
Business |
11801195 |
11044220 |
8911278 |
|
Government |
5663670 |
3188265 |
4458426 |
|
Banks |
27307 |
100216 |
76643 |
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Total
|
40093939 |
35000807 |
32872253 |
|
|
|
|
|
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Borrowings |
|
|
|
|
Central Banks |
452266 |
247829 |
342698 |
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Inter bank in |
602046 |
566218 |
278107 |
|
Inter bank abroad |
287519 |
2717466 |
1613735 |
|
Other financial Institutions |
--- |
67697 |
--- |
|
Total
|
1341831 |
3599210 |
2234540 |
|
|
|
|
|
|
Other |
|
|
|
|
Current Tax liability |
249757 |
185088 |
56519 |
|
Deferred Tax Liability |
286714 |
483324 |
51411 |
|
Obligations Under Finance Lease |
--- |
--- |
--- |
|
Other liabilities |
1113411 |
1134782 |
889870 |
|
Total
|
1649882 |
1803194 |
997800 |
|
|
|
|
|
|
Total liabilities |
43085652 |
40403211 |
36104593 |
|
|
|
|
|
|
Minority Interest in Subsidiaries |
247 |
21008 |
18462 |
|
|
|
|
|
|
Shareholders
Equity |
|
|
|
|
Ordinary share capital |
382414 |
382414 |
382414 |
|
Reserves |
7433282 |
7800407 |
5752252 |
|
Equity attributable to equity holders of the parent |
7815696 |
8182821 |
6134666 |
|
|
|
|
|
|
TOTAL EQUITY AND
LIABILITIES |
50901595 |
48607040 |
42257721 |
|
|
|
|
|
|
US$ / MRs Mid Exchange Rate as at balance sheet date |
30.93 |
29.47 |
28.15 |
|
|
|
|
|
|
MEMORANDUM ITEMS |
|
|
|
|
Acceptance, Guarantees, Letter of Credit, Endorsements and other
Obligations on accounts of customers |
2475717 |
5014389 |
4612736 |
|
Credit Commitments |
3704839 |
2772432 |
3465270 |
|
Inward Bills held for collection |
270876 |
335561 |
277156 |
|
Outward Bills sent for collection |
568996 |
616669 |
687454 |
|
Total
|
8020428 |
8739081 |
9042616 |
PROFIT & LOSS ACCOUNT
|
PARTICULARS |
Group |
||
|
|
30.06.2006 |
30.06.2005 |
30.06.2004 |
|
Interest Income |
|
|
|
|
Loan and advances |
2784927 |
2300563 |
2132163 |
|
Securities |
575521 |
617760 |
778709 |
|
Placements and loans to banks |
306149 |
152880 |
71251 |
|
Total |
3666597 |
3071203 |
2982123 |
|
|
|
|
|
|
Interest expenses |
|
|
|
|
Deposits |
(1813723) |
(1324486) |
1400570 |
|
Deposits and borrowing from Banks |
(102346) |
(118446) |
100870 |
|
Lease Finance charges |
--- |
--- |
--- |
|
Others |
(7258) |
(3575) |
--- |
|
|
(1923327) |
(1446507) |
(1501440) |
|
|
|
|
|
|
Net Interest Income |
1743270 |
1624696 |
1480683 |
|
Provisions for Credit Impairment |
(223583) |
(78613) |
(164401) |
|
Net Interest Income after Provisions for Credit Impairment |
1519687 |
1546083 |
1316282 |
|
Non Interest Income and Gains |
|
|
|
|
Net Fee and commission Income |
512041 |
400889 |
320121 |
|
Net Gain from Dealings in Foreign Currencies |
237585 |
288288 |
331105 |
|
Dividend Income |
129515 |
69032 |
72114 |
|
Net Gain from Dealings in Trading Securities
and Derivatives |
(16232) |
(14877) |
89576 |
|
Net gain on Investment securities |
99261 |
40257 |
63796 |
|
Net Gain on Disposal of Tangible Fixed
Assets |
635 |
5175 |
11620 |
|
Total |
960805 |
788764 |
888332 |
|
|
|
|
|
|
Net interest and other Income after provision for Credit Impairment |
2480492 |
2334847 |
2204614 |
|
|
|
|
|
|
Non Interest Expenses |
|
|
|
|
Salaries and Human Resources Development |
(321173) |
(285680) |
(314044) |
|
Pension Contributions and Other Staff
Benefits |
(79589) |
(77535) |
(136258) |
|
Depreciation of Tangible Assets |
(134800) |
(131915) |
(118182) |
|
Amortizations of Intangible assets |
(120289) |
(113383) |
(75685) |
|
Others |
(374786) |
(313283) |
(260832) |
|
|
(1031637) |
(921796) |
(905001) |
|
|
|
|
|
|
Income from operations |
1449855 |
1413051 |
1299613 |
|
Share of profit of associates |
74567 |
75607 |
60733 |
|
|
|
|
|
|
Net Income before Tax |
1524422 |
1488658 |
1360346 |
|
Income Tax Expenses |
(204181) |
(292226) |
(230173) |
|
Net Income after Tax |
1320241 |
1196432 |
1130173 |
|
|
|
|
|
|
Attributable to: |
|
|
|
|
Equity holders of the parent |
1318998 |
1191213 |
1126521 |
|
Minority Interest |
1243 |
5219 |
3652 |
|
Total |
1320241 |
1196432 |
1130173 |
|
|
|
|
|
|
Weighted Average Number of Outstanding
Shares (thousands) |
325052 |
325052 |
325282 |
|
|
|
|
|
|
Earning Per share (Cents) |
406 |
366 |
346 |
LOCAL AGENCY FURTHER INFORMATION
DIRECTOR REPORT:-
Operating Results
The Mauritian economy experienced
modest GDP growth during the Group’s financial year. Sugar production levels
were on the low side due to poor prevailing climatic conditions and exports
from the textiles and sugar industries were negatively impacted by the
dismantling of the Multi-Fibre Agreement and the Lome Convention Restructuring
respectively. The tourism industry however remained resilient with tourist
arrivals on an increasing trend, and together with a buoyant offshore financial
services segment, contributed to a major extent to economic growth over the
financial year. Against the above economic backdrop and the increasingly
competitive banking environment brought about by the single banking licensing
regime, income attributable to shareholders registered a satisfactory growth of
10.7% to Rs1,319M in 2006 from Rs1,191M in 2005. Earnings per share increased
by 40 cts to reach Rs 4.06 for 2006. The Group continued to diversify its
sources of income by leveraging on its superior technology to create new
business activities and products, and benefited from a lower tax rate on its
foreign source revenues under the new fiscal regime. The cost to income ratio
of 41.1% in 2006 remained at an internationally enviable level, although having
increased slightly. Net income was affected by a squeeze in interest and
currency trading margins, a reassessment of the realisable value of
collaterals, and increased costs. Consequently, the return on average
shareholders’ funds only increased marginally in 2006. The Board of Directors
is pleased to report that the Group continues to add year-on-year ‘’economic
value” of Rs392M for the year ended June 30, 2006.
Group assets reached Rs. 58.9Bn in
2006 as all lines of business contributed to a stronger balance sheet. Non-bank
deposits grew by 14.8% to reach Rs40 Bn, with substantial increase in foreign
currency denominated deposits, while advances grew by 7.6% to reach Rs26.4Bn at
the end of the year. The gross impaired advances have decreased by 7% to Rs636M
in June 2006, reducing the percentage to gross advances from 2.72% in 2005 to
2.34% in 2006, thus reflecting a stronger loan book.
ANNUAL REPORTS:
Reddy, Muni Krishna T., G.O.S.K Age 60 Chairman.Mr Reddy has a masters degree
in extension education with over 36 years of experience in financial services.
He was the Chief Executive of the State Bank of Mauritius (SBM) Group over 16
years until October 2003 when he was elected Chairman of the SBM. Prior to
joining SBM, Mr Reddy worked in the banking sector in
Board of Directors Ganoo, Harry, G.O.S.K, BA (Hons), Age 59.Former
Secretary to Cabinet and Head of Civil Service.
Gunness, Chaitlall, FCCA,
Age 54. Has 29 years work experience out of which 26 years with the Bank at
senior
management level at various Divisions including Inspection, Retail
Banking, Corporate Banking, International Banking and Administrative Divisions.
Was also the Chief Operating Officer.
Currently Chief Executive. Laubscher, Richard Charles Montague, Age 55.
Former Chief Executive Officer of Nedbank Limited. Company Director Lai Fat
Fur, Louis. G.O.S.K, A (Economics), ACA, Age 56.
Mr Lai Fat Fur is presently the managing director of Compagnie
Mauricienne De extile Ltee. He was a partner of on of the largest international
accounting firm until 1982 when he embarked in the textile industry.
Mr Lai Fat Fur was conferred
with the title of Grand Officer of the Star and Key of the Indian Ocean
(G.O.S.K) by the Government of the
Mohamedbhai, Goolamhussen, T G,
G.O.S.K., BSc, PhD, FIEM, Age 61. Prof Mohamedbhai is currently the President
of the International Association of Univerisities and Vice-Chairman of the
Regional Scientific Committee for
Ng Thow Hing,
Former Chief Financial Officer of State Bank of Mauritius Limited. Prior
to appointment as Chief Financial Officer she worked in Corporate, Retail and
International Banking. Has 27 years experience with 22 years at management
level in accounting, finance and banking in U.K,
Parianen, Soopaya,
BA Hons (Economics), Age 53
Mr Parianen has 29 years experience in Banking out of which 22 years at
the Bank at Senior Management level, having been successively Group Divisional
Leader Corporate Banking, Group Divisional Leader Retail Banking and Group
Divisional Leader for Credit Management Support Services. He is presently Chief
Operating Officer. Poncini, André José, G.O.S.K, Age 78. Chairman of Poncini
Group of Companies. Director on the Board of National Investment Trust and
Rossouw, Rocco, BCom, Age 58. Functioned in numerous executive positions
within the Standard Bank Group, including Managing Director of the
OTHER
INFORMATIONS:
It has correspondent banking relationship with over 500 banks worldwide.
It is also endeavoring to open a fourth branch at
It is a leading commercial bank in the country with around 27% market share, over 300,000 customers and a local network of 49 branches including 3 in Rodrigues.
It provides a comprehensive range of financial services together with its Subsidiaries/Associates and strategic alliances with reputed International Financial Institutions.
It is a leader in Electronic Banking with on line real-time basis system linking 78 ATM’s including 1 in Rodrigues and 13 off-site ATM’s, phone banking, credit and debit cards, Electronic signature verification (ESV), Electronic Fund Transfer at Point of Sale (EFTPOS) and Electronic Corporate Banking System (Corporate Direct).
It is first among Mauritian Banks with a rank of (Alpha) with “Predict Financial Strength” D under “Emerging Market Bank Ratings” as per “Euromoney” in their IMF/World Bank September 1997 issue.
“The Banker” ranked SBM twelfth among top 100 African banks in terms of Tier 1 One Capital in their December 1997 issue and highlighted that Cost to Income ratio of SBM is one of the lowest among African Banks in their August issue.
It is a most performing and liquid stock on the local Exchange with a market capitalization of Rs. 6196.500 millions as at June 30, 1998.
overseas
expansion
In line with its strategy to become a premier bank in the
region, SBM has expanded overseas. It is the first Mauritian Bank in Africa to
have three full-fledged branches in
A subsidiary bank in
SBM has also set up two joint ventures with its Strategic
Alliance Patner, Nedcor Group, a leading financial services group in
MANAGEMENT DISCUSSION
AND ANALYSIS:
OPERATIONS REVIEW
Value and Strategic Management
SBM has embraced a value-based
decision making process across the entire organisation, encompassing strategic
value-based planning and budgeting, risk management, performance reporting and
results-linked rewards systems and continuously benchmarks its operating model
and technological architecture against international best practices. The Group
is hence in a strong position to face the changing market and regulatory
environment whilst maintaining its competitive edge and consistently generating
increased value to its shareholders. For the financial year under review, SBM
has generated “economic value” to the extent of Rs392M (2005: Rs304M).
In order to realise the Group’s
medium and long-term goals, strategic and annual operating budgets are established
taking into account the prevailing macro economic menvironment, opportunities
that exist, the available capital, the required human and technological
resources and the acceptable risk and return trade-offs. Detailed strategies by
line of business are set out and performance is measured against the budget on
a monthly basis to ensure that the required returns are being generated by
business segments, portfolios, products and clients. The strategic planning
process is continually reviewed to ensure effectiveness and a half-yearly
rolling forecast enables the teams to plan ahead in term of resources and keep
in line with the Group’s corporate objectives. A rewards system, linked to
achievement of key performance indicators, completes the value management
chain. It motivates and promotes the good performers and reconciles the
aspirations of the individual, the corporation and the shareholder in
maximising value.
To support the above structure,
the Enterprise Data Warehouse and Oracle Financial Services Applications were
implemented to enable timely multi-dimensional performance reporting and
decision making based on economic returns, while ensuring consistency in the
way data is collected and interpreted. Methodologies for Funds Transfer
Pricing, Activity Based Costing and Capital Allocation based on levels of risks
are continuously being refined to better reflect economic realities, given
dynamic market conditions and regulations. The Risk Adjusted Return on Capital
(RAROC) remains one of the key performance measurements across the Group and
analysis by line of business is illustrated below
Given that most of the allocated
capital represents the buffer for the management of credit risks, changes in regulatory
requirements and recommendations under Basel II relating to credit issues have
a significant impact on computed RAROC. For a meaningful comparison, the
capital allocated in 2005 has been adjusted to reflect revised risk weights in
accordance with recent guidelines issued by the Central Bank on Basel II and
adjustments for one-time income and expenses and related tax charges. Group
RAROC has improved by 2% to reach 41% in 2006. The increase in capital
allocation was 4% despite an increase in average assets of 11.5%, reflecting
the overall good quality of credit attracting proportionately less
capital, besides increased exposure to sovereign risk.
Group Income after tax increased by 10.4% in 2006 on a comparable basis.
Looking at the lines of business, the RAROC of Personal
Banking dropped mostly on account of higher
charge-offs compared to previous year in the mortgage
portfolio and higher allocated costs from the support and service
centres, which have not been sufficiently
compensated for by increase in business volumes. On the
other hand, the RAROC of Business Banking showed a slight improvement compared to last year, as fee-based income from
both traditional banking and new e-business
activities was higher, and an increased portion of revenues was generated from non-resident sources and hence taxed
at a lower rate. The increase in transactional
income was to some extent dampened by the drop in interest
margin as the growth in foreign-currency denominated assets yielded lower margins. Given that the overall risk rating
of the lines of business did not change
significantly year on year, the changes in RAROC were mostly driven by changes in transaction-based income.
In order to maintain RAROC at such
levels, focus will remain on the good quality credit,
diversification of income sources and introduction of new and innovative products to retain and widen the Group’s customer
base. Sales and Service initiatives across the organisation will be started in
the forthcoming year to build on and optimize the
Group’s robust business model, technological capabilities and wide network of delivery channels.
Risk Management
The Enterprise Risk Management Framework complements the strategic management structure in place within the Group. Taking measured risks remains an integral part of the Group’s business and managing risks is the business of every member of the organisation. The Board of Directors is ultimately responsible for the effectiveness of the risk management system and approves the risk strategies, policies and prudential limits on an annual basis. It delegates to the Risk Committee its main function to review the risk management processes i.e. the identification, measurement, mitigation, control and reporting of risks.
The Risk Management function is supported by an independent Audit function comprising both internal and external auditors and together they create a comprehensive framework for the management and monitoring of key risks.
Operational Risk
The Group promotes an organisational structure that puts emphasis on high levels of ethical behaviour and integrity across all levels of the organisation whereby each and every employee is involved in the management of operational risk, with additional responsibilities on managers and specialist units to ensure that there is adherence to operation controls. Operational risks include people risk, processing and system risk, information security, legal risk, compliance risk, reputational risk and strategic risk.
An Operational Risk Management Framework has been developed to ensure that operational risks within the Bank are properly identified, monitored, managed and reported in a structured, systematic and consistent manner. All the major operational risk issues are discussed and reported at the monthly Operational Risk Management Forum. A comprehensive loss events and incidents database has been established to monitor changes in the operational risk profile. The loss events database is in line with the Central Bank requirements and will enable the future use of advanced approaches for quantification of operational risk. Business activities have also been mapped to the respective business lines as defined by the Central Bank and by the Basel Committee on Banking Supervision.
The Group recognises the importance of a Business Continuity Plan as an integral art of he Group’s strategy to mitigate risks and to manage the impact of unforeseen vents. The Business Continuity Plan across all areas of operation is being set up nd tested. Training also remains pivotal to the SBM pro-active risk management culture to keep staff members abreast of developments in their areas of operation. During the year, the Group has experienced a reduction in card losses, which was contained with the introduction of the EMV chip cards and the implementation of “Proactive Risk Manager ” tool, which alerts the Bank on transaction patterns displaying unusual behaviour. SBM has in place high security standards securing access to the Bank’s premises, thus safeguarding its assets and its employees. Finally the Group has a comprehensive insurance cover to mitigate the risk of high impact loss events as part of the operational risk management framework.
In line with the Central Bank requirements and local legislation, a Money Laundering Reporting Officer ensures all identified suspicious transactions are reported to the appropriate authorities.
Internal Audit
The Bank’s independent team of internal auditors has been reinforced during the year so that the scope of work could be widened across the organisation on a risk-based approach, complementing the work being carried out by the team of Compliance Officers. The testing and review of internal controls, in addition to the work done by external auditors, is carried out based on a pre-agreed plan approved by the Audit Committee and is designed to rigorously assess and detect weaknesses in internal control systems.
During the year, where higher level of expertise was required, the Bank has sought the assistance of “SIFY” as independent experts to carry out an IT audit and a review of the security controls in the main business applications in use by the organisation. This exercise has helped to identify various areas for improving the effectiveness of our controls and also to strengthen the internal control culture. Recommendations presented to the Audit Committee are targeted to be fully implemented by December 2006. In line with best practice, the internal Auditor has direct access to the Chairperson of the Audit Committee and the Board.
Lines of business 2006 have witnessed the entrance of new players in the domestic market with the single banking license regime. To continue maintaining its competitive edge, SBM leverages on its superior technology to enhance its portfolio of products and services whilst continuously further improving its sales and service processes. The marketing team, together with the product specialists across the different lines of business, continues to ensure that customers are provided with flexible solutions and are serviced through the most appropriate and convenient delivery channel of their choice. During the year, the in-house Research team became fully operational. Macro economic indicators, economic policy, market and sectoral trends were analysed and forecasts derived in order to identify strategic and market risks and opportunities. The economic and sector reports are continuously updated and contribute to dynamic portfolio management and market intelligence.
Personal Banking
During the financial year, various
initiatives targeted at specific customer segments were undertaken to be closer
to the retail customers and add value to SBM’s range of products and services:
• Working closely with the
Marketing team, “Open days” were organised at large Service Units and shopping
complexes as well as other public events to reach out to existing and potential
clients, as part of the “Get Connected” Campaign.
• Enhancements were made to SBM
“Boost” consumer loan and to “Flexi” Mortgage Loan, with a view to provide a
more flexible solution adaptable to clients’ needs and to keep a competitive
edge in the market.
• In line with the objective to be
a modern bank and to be a service leader in the local banking market, an
e-lobby was launched at Cybercity, Ebene in October 2005. Equipped with indoor
ATMs and interactive e-kiosks service, it gives customers 24-hour access to the
SBM website with online product applications, as well as free Internet access
to facilitate banking. Another e-lobby equipped with latest technology was launched
at our Curepipe service unit in January 2006 to service an increasing number of
customers. viding electronic banking solutions 24 hr a day witM e-lobbies
Security Broking Business
SBM Securities Ltd is the security broking business arm of the Group. Its activities complement those of its parent company by providing a gateway through whichclients can invest on the local stock market, locally managed funds and government issued products.
SBM Securities Ltd assists clients in their investments decisions through its personalized service and regular client contact and independent advice. The company ensures that its clients’ short term and long-term financial objectives are achieved and the clients are also kept up to date on local and overseas financial markets through its weekly stock market report. With the changes in the fiscal regime for the forthcoming year, the activity on the local stock exchange is likely to pick up and SBM Securities will strive to increase its share of business whilst maintaining operating efficiency. The company intends to better service its clients and the public at large with the launching of a website in the forthcoming year.
SBM Investments Limited
SBM Investments Limited is the domestic investment arm of SBM and it focuses on equity investments for strategic purpose and long-term capital gains. During the year under review, the company invested in the growing tourism sector which partly explains the increase in assets from Rs125.1M in June 2005 to Rs194.5M in June 2006. Profit from its operations for the year ended June 30, 2006 amounted to Rs17.6M.
SBM Global Investments Limited
SBM Global Investments Limited (SGIL) is SBM’s main investment vehicle for non-rupee equity investments. During the year, with the termination of the Strategic Alliance Partnership with Nedbank, SGIL acquired the 20.01% equity stake in Banque SBM Madagascar SA, which became a fully owned subsidiary of SGIL. SGIL also disposed of its 20.1% holding in MN Holdings, previously known as SBM Nedcor Holdings Limited and acquired Alliance Investments Limited, previously known as Nedbank Africa Investments Limited, which held the 20.1% equity in SBM. The profit for the year of SGIL amounted to USD0.43M as at June 30, 2006.
Alliance Investments Limited (formerly
Nedbank Africa Investments Limited)
Alliance Investments Limited (AIL) is a wholly owned subsidiary of SGIL and it was acquired on the termination of the Strategic Alliance with Nedbank. On the date of acquisition, AIL already had in its books the equity shareholding of 20.1% in SBM. The fair value of that investment amounted to USD78.2M as at June 30, 2006 and was
entitled to dividends of USD4.2M.
SBM Financials Limited
SBM Financials Limited, a wholly owned subsidiary of SBM Investments Limited, provides share registry, debenture holder’s representative and other fiduciary services. The company achieved profits of Rs0.79M for the year ended June 30, 2006 arising from its operations.
SBM IT Limited
SBM IT Limited is the technology arm of the Group and acts as a service support provider to the Group.
Board of
committee:
· Audit Committee
Chairperson
Ng Thow Hing, Mary
Members
Prof. Mohamedbhai, Goolamhussen
T.
G., G.O.S.K.
Lai Fat Fur, Louis, G.O.S.K.
Poncini, André J., G.O.S.K.
· Risk Committee
Chairman
Reddy, Muni
Members
Lai Fat Fur, Louis, G.O.S.K.
Laubscher, Richard
Ng Thow Hing, Mary
Rossouw, Rocco
· Strategic Planning Committee
Chairman
Reddy, Muni
Members
Gunness, Chaitlall
Ng Thow Hing, Mary
Parianen, Soopaya
Poncini, Andre J., G.O.S.K.
Laubscher, Richard
Rossouw, Rocco
· Credit Sanction Committee
Chairman
Reddy, Muni
Members
Gunness, Chaitlall
Laubscher, Richard
Ng Thow Hing, Mary
Parianen, Soopaya
Rossouw, Rocco
· Remuneration Committee
Chairman
Reddy, Muni
Members
Ganoo, Harry, G.O.S.K.
Prof. Mohamedbhai, Goolamhussen
T.
G., G.O.S.K.
Ng Thow Hing, Mary
Poncini, André J., G.O.S.K.
· Conduct Review Committee
Chairman
Reddy, Muni
Members
Lai Fat Fur, Louis, G.O.S.K.
Prof. Mohamedbhai, Goolamhussen
T.
G., G.O.S.K.
Ng Thow Hing, Mary
Poncini, André J., G.O.S.K.
· Corporate Governance
Committee
Chairman
Reddy, Muni
Members
Lai Fat Fur, Louis, G.O.S.K.
Laubscher, Richard
Prof. Mohamedbhai, Goolamhussen
T.
G., G.O.S.K.
Ng Thow Hing, Mary
· Nomination Committee
Chairman
Reddy, Muni
Members
Ganoo, Harry, G.O.S.K.
Laubscher, Richard
Prof. Mohamedbhai, Goolamhussen
T.
G., G.O.S.K..
Poncini, André J., G.O.S.K.
INVESTMENTS IN
SUBSIDIARIES AND ASSOCIATES (UNQUOTED)
Acquisition and
Disposal Of Subsidiary And Associates
The formal termination of the Strategic Alliance Partnership with Nedbank Group was completed in April 2006.
As part of the exit process of the Strategic Alliance Partnership,
(i) SBM (Bank) disposed of its 50% equity in SBM Nedbank International Limited to Nedbank Group (Note 7C).
(ii) SBM Global Investments Limited disposed of its 20.1% equity held in MN Holdings (formerly known as SBM Nedcor HoldingsLimited) to Nedbank Group .
(iii) SBM Global Investments Limited acquired the 20.01% of equity of Nedbank Group in Banque SBM Madagascar SA (Note 7D).
(iv) SBM Global Investments Limited acquired 100% equity of Alliance Investments Limited (formerly known as Nedbank Africa Investments Limited) from Nedbank Group (Note 7E).
ACQUISITION OF EQUITY IN BANQUE SBM MADAGASCAR SA
SBM Global Investments Limited
(SGIL), a subsidiary of the SBM Group, acquired 20.01% of the equity of Banque
SBM Madagascar SA (BSBMM) from Nedbank, bringing its total holding in BSBMM to
100%. The net assets of BSBMM at the date of acquisition are estimated to equal
their fair value and are analysed as follows:
for the year ended 30 June 2006
(cont’d)
ACQUISITION OF
SUBSIDIARY - ALLIANCE INVESTMENTS LIMITED
SGIL acquired 100% of the equity of Alliance Investments Limited (AIL) in April 2006 for a cash consideration of USD49.2m. AIL held 65,335,510 shares in State Bank of Mauritius Limited, the ultimate holding company of the SBM Group at the time of acquisition of AIL. The Group continued to hold these shares as allowed under the provision of Section 83 of the Companies Act 2001. Upon consolidation of the group accounts, the shareholders’ funds are negatively impacted by MRs1.5bn pending the disposal of AIL. At 30 June 2006, AIL recorded an unrealised fair value gain of USD28.9m, representing the increase in fair value of these shares. This unrealised investment fair value gain has not been recognised in the group accounts.
Property and
equipment
The freehold land and buildings and buildings on leasehold
land in
LITIGATION
There is since May 2003 a legal action brought about by The
Mauritius Commercial Bank Limited (“MCB”) against 38 parties, including SBM and
two other banks in
Since March 2005, SBM has made a counter claim against MCB for damage and prejudice.
CMT REPORT (Corruption, Money Laundering & Terrorism]
The Public Notice information has been collected from various sources
including but not limited to: The Courts,
1] INFORMATION ON
DESIGNATED PARTY
No exist designating subject or any of its beneficial owners, controlling
shareholders or senior officers as terrorist or terrorist organization or whom
notice had been received that all financial transactions involving their assets
have been blocked or convicted, found guilty or against whom a judgement or
order had been entered in a proceedings for violating money-laundering,
anti-corruption or bribery or international economic or anti-terrorism sanction
laws or whose assets were seized, blocked, frozen or ordered forfeited for
violation of money laundering or international anti-terrorism laws.
2] Court Declaration :
No records exist to suggest that subject is
or was the subject of any formal or informal allegations, prosecutions or other
official proceeding for making any prohibited payments or other improper
payments to government officials for engaging in prohibited transactions or
with designated parties.
3] Asset Declaration :
No records exist to suggest that the property or assets of the subject
are derived from criminal conduct or a prohibited transaction.
4] Record on Financial
Crime :
Charges or conviction
registered against subject: None
5] Records on Violation of
Anti-Corruption Laws :
Charges or
investigation registered against subject: None
6] Records on Int’l
Anti-Money Laundering Laws/Standards :
Charges or
investigation registered against subject: None
7] Criminal Records
No
available information exist that suggest that subject or any of its principals
have been formally charged or convicted by a competent governmental authority
for any financial crime or under any formal investigation by a competent
government authority for any violation of anti-corruption laws or international
anti-money laundering laws or standard.
8] Affiliation with
Government :
No record
exists to suggest that any director or indirect owners, controlling
shareholders, director, officer or employee of the company is a government
official or a family member or close business associate of a Government
official.
9] Compensation Package :
Our market
survey revealed that the amount of compensation sought by the subject is fair
and reasonable and comparable to compensation paid to others for similar
services.
10] Press Report :
No press reports / filings exists on
the subject.
CORPORATE GOVERNANCE
MIRA INFORM as part of its Due Diligence do provide comments on
Corporate Governance to identify management and governance. These factors often
have been predictive and in some cases have created vulnerabilities to credit
deterioration.
Our Governance Assessment focuses principally on the interactions
between a company’s management, its Board of Directors, Shareholders and other
financial stakeholders.
CONTRAVENTION
Subject is not known to have contravened any existing local laws, regulations
or policies that prohibit, restrict or otherwise affect the terms and
conditions that could be included in the agreement with the subject.
FOREIGN EXCHANGE RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs.39.31 |
|
|
1 |
Rs.79.95 |
|
Euro |
1 |
Rs.55.71 |
SCORE & RATING EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
8 |
|
PAID-UP CAPITAL |
1~10 |
8 |
|
OPERATING SCALE |
1~10 |
8 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
9 |
|
--PROFITABILIRY |
1~10 |
7 |
|
--LIQUIDITY |
1~10 |
8 |
|
--LEVERAGE |
1~10 |
8 |
|
--RESERVES |
1~10 |
8 |
|
--CREDIT LINES |
1~10 |
8 |
|
--MARGINS |
-5~5 |
--- |
|
DEMERIT POINTS |
|
|
|
--BANK CHARGES |
YES/NO |
YES |
|
--LITIGATION |
YES/NO |
YES |
|
--OTHER ADVERSE INFORMATION |
YES/NO |
NO |
|
MERIT POINTS |
|
|
|
--SOLE DISTRIBUTORSHIP |
YES/NO |
NO |
|
--EXPORT ACTIVITIES |
YES/NO |
NO |
|
--AFFILIATION |
YES/NO |
YES |
|
--LISTED |
YES/NO |
NO |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
72 |
This score serves as a reference to assess SC’s credit risk
and to set the amount of credit to be extended. It is calculated from a
composite of weighted scores obtained from each of the major sections of this report.
The assessed factors and their relative weights (as indicated through %) are as
follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit history
(10%) Market trend
(10%) Operational
size (10%)
RATING EXPLANATIONS
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
>86 |
Aaa |
Possesses an extremely sound financial base with the strongest
capability for timely payment of interest and principal sums |
Unlimited |
|
71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit
transaction. It has above average (strong) capability for payment of interest
and principal sums |
Large |
|
56-70 |
A |
Financial & operational base are regarded healthy. General unfavourable
factors will not cause fatal effect. Satisfactory capability for payment of
interest and principal sums |
Fairly Large |
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
|
26-40 |
B |
Unfavourable & favourable factors carry similar weight in credit
consideration. Capability to overcome financial difficulties seems
comparatively below average/normal. |
Small |
|
11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with
full security |
|
<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
|
NR |
In view of the lack of information, we have no basis upon which to
recommend credit dealings |
No Rating |
|