We have extracted the financial summary from the full year abridged report of SBM Holdings Limited listed on the Stock Exchange of Mauritius under the share code SBMH.mu. SBM Holdings is a licensed commercial bank provides personal banking products and services.
The following is an excerpt from the Abridged Report:
The operating income of the Group for the year ended 31 December 2018 has increased by MUR 2.21 billion from MUR 7.57 billion for the year ended 31 December 2017 to MUR 9.78 billion for the year ended 31 December 2018. The increase was mainly attributable to higher net interest income and other income. However, profit after tax for the year 2018 decreased from MUR 2.57 billion for the year ended 31 December 2017 to MUR 1.25 billion for the year 2018. The decrease in profit was mainly due to an increase in credit loss expense on financial assets by MUR 2.44 billion for the year on account of some segment B customers in SBM Bank (Mauritius) Ltd which was classified as impaired during the year in additions to provisions made on overseas operations and IFRS 9 implementation.
Net interest income grew by MUR 1.08 billion from MUR 4.77 billion for the year ended 31 December 2017 to MUR 5.85 billion for the year ended 31 December 2018. This was driven by growth in average loans and advances to non-bank customers and an increase of MUR 31.60 billion in investment securities during the year. Non-interest income also increased by MUR 1.13 billion for the year, which includes a gain of MUR 0.96 billion on the fair value of all the assets and liabilities taken over from former CBLR.
Non-interest expenses increased from MUR 3.39 billion for the year 2017 to MUR 4.70 billion for the year ended 31 December 2018. This was due to a write off of goodwill of MUR 418 million, an operational loss expense of MUR 93 million following the cyber-attack in India and new expenses related to the CBLR acquisition for all the branch networks, system costs and staff. It is worth highlighting that SBMBK has more than 800 employees now with 52 branches across Kenya.
The cost to income ratio was 48.04% while the earnings per share were 48.25 cents for the year ended 31 December 2018.
The Group’s total assets as at 31 December 2018 stood at MUR 226 billion as compared to MUR 194 billion as at 31 December 2017, representing an increase of 17%, which arose mainly from the acquisition of the carved out assets of CBLR and increase in investment securities.
Gross impaired advances net of cash collaterals stood at MUR 14.81 billion with a gross impaired ratio of 13.59% while net impaired advances were MUR 6.27 billion, representing a ratio of 6.36% as at 31 December 2018.
Mauritius is witnessing a strong pipeline of projects in the construction, hospitality and real estate sectors. However, credit growth may remain moderate going forward, in the face of growing uncertainty characterizing the global economy. Yields on Government paper have firmed up, protecting margins, but are likely to be close to their near-term peak. The focus for the domestic Mauritius business will be to manage costs, improve service and diversify revenue streams, notably through further digitalization of our services, migration of customers to digital channels, increased cross-selling and provision of innovative solutions to customers.
As regards the cross-border business, following issues experienced in 2018 in the aftermath of a rapid expansion phase, a remediation plan has been established, against which considerable progress has been achieved. This provides a basis for resumption of growth in this segment, albeit in a more targeted manner.
In respect of our regional expansion strategy, significant milestones were reached in respect of growing scale in Kenya and achieving wholly-owned subsidiary status in India. This has set the base for consolidating our position as an Indian Ocean Rim bank, gearing up to tap opportunities in the Africa-Asia corridor.
After experiencing some challenges in 2018 and putting in place significant corrective measures while executing sound strategic investments, SBM is emerging stronger and more resilient in 2019. We remain focused on the careful deployment of our well-defined strategy, supported by strong capital and liquidity levels.
We wish to thank all stakeholders for their continued support