2012: A landmark year for SBM
The financial year ended 30 June 2012 has been a landmark year in many ways for SBM and its group. The Group has achieved an excellent performance and also set the stage for strong and sustainable growth in the years to come. Net profit and earnings per share have increased substantially by 30% to Rs 2,617m from Rs 2,013m and Rs 10.14 from Rs 7.80 respectively in spite of the continued difficult operating economic environment. The Group’s financial performance was revealed yesterday by Mr Jairaj Sonoo, Chief Executive – Banking (Indian Ocean Islands) at the Bank’s annual meeting, which was held at the Swami Vivekananda International Convention Centre, Pailles, under the chairmanship of Mr Muni Krishna T. Reddy.
Return on assets and return on equity have also improved to 2.69% from 2.29% and 15.44% from 13.15% respectively. Excluding one-off gain on disposal of equity investment of Rs 114m in 2011, net profit have increased by 38% on a like-to-like basis. Economic Value Added has increased by 131.3% to Rs 629m for FY 2012 from Rs 272m, reflecting improved value creation for shareholders.
Group total on-balance sheet assets reached Rs 98.7Bn as at June 2012. Asset growth was mainly driven by net advances growth of 9.7% to Rs 62.3Bn particularly on the back of market share gains in the Mauritian rupee coupled with the planned downsizing of cross-border lending from Mauritius in other currencies. Conversely, investment in Mauritian gilt-edged securities decreased substantially by 46.9% to reach Rs 9.3Bn from Rs 17.4Bn as focus was laid onto improving the asset mix to desired levels.
Deposits increased by 7.4% to Rs 76.2Bn and remained by far the main source of funding for the Group whereas Mauritian rupee deposits grew by 12.5% taking into account the Bank’s strategy of downsizing of deposits and borrowings in other currencies. Although spreads have been under pressure due to heightened competition and excess liquidity in Mauritian rupee, overall Net Interest Margin improved to 3.29% for FY 2012 from 2.85% through planned reduction of high cost funding and at the same time increase in net interest margin by assets aligned with enhanced asset mix in major other currencies.
SBM continues to be recognized, both in Mauritius and internationally, for excellent achievements. Moody’s, for instance, continues to rate SBM the highest amongst its peers in Mauritius and SBM’s Long Term Foreign Currency deposit rating was upgraded last year from Baa2 to Baa1. SBM also won the award in the Risk Management Disclosures category for the PricewaterhouseCoopers Corporate Reporting Awards 2012 and has been conferred the award of “Best Bank Mauritius” by Capital Finance International this year. Additionally, SBM has been elected as top rated Bank in Mauritius for its range of investment products and first in servicing of clients in the High Net Worth category by the annual Euromoney Private Banking Survey 2012.
A key focus of the new financial year, which will be of an 18-month duration from 1 July 2012 to 31 December 2013, will be the implementation, in an innovative and improved cost-effective manner, and rollout of the new technology solutions to have unified customer experience across all geographies the Bank operates. This should materially enhance service delivery and operational efficiency, thus generating significant value to SBM stakeholders over the medium to long term. However, in the short term, the cost base, mainly relating to implementation of the systems, is expected to rise from present level, warranting reinforced cost management and heightened efforts to improve revenue generation. Besides, further headway is expected with respect to SBM’s geographical diversification strategy during the 18 months both in Africa and Asia. In the same breath, SBM is re-organising its group structure into various clusters to better align with global trend, besides complying with regulatory requirements.