MCB Group posts profits of Rs 10,8 billion
Commenting on the results, Jean Michel Ng Tseung (Chief Executive - MCB Group Ltd) said: “The Group delivered a strong financial performance for the nine months ended 31 March 2023 with ‘Group profits attributable to ordinary shareholders’ growing by 49.2% to Rs 10,777 million, on the back of the continued robust contribution of our international activities, with the share of foreign-sourced income, now standing at some 66% of Group profits.
Operating income increased by 28.2% to Rs 23,055 million with an improved performance across business segments, in line with our diversification strategy. Net interest income recorded a solid growth of 28.5% driven by the increase in interest rates and the resulting improved margins on our interest-earning assets in foreign currency, as well as an expansion in our foreign loan book and investment securities portfolio. Conversely, interest margins on the MUR investment securities dropped following the successive increases in the cost of our deposits during the period. Net fee and commission income grew by 12.5% to Rs 4,963 million, supported by the continued growth in regional trade financing and payment activities in the banking cluster. ‘Other income’ went up by 55.8% mainly due to higher profits arising from dealing in foreign currencies and fair value gains on equity financial instruments.
The Group continued to invest significantly in human capital and technology, which, coupled with the impact of higher inflation, led to an increase in operating expenses of 19.5% to Rs 8,203 million. However, given the strong growth in income, the cost-to-income ratio dropped to 35.6% compared to 38.2% for the corresponding period last year. Impairment charges fell by 13.1% to Rs 2,486 million, representing an annualised cost of risk of 78 basis points on gross loans and advances. Gross NPL ratio remained relatively stable at 3.6%.
The share of profit of associates rose by Rs 36 million due to improved results at the level of BFCOI and Société Générale Moçambique.
The Group continues to be well capitalised backed by its robust performance and the recent issuance of a Basel III compliant Tier 2 capital instrument of USD 147 million, with its capital adequacy ratio standing at 20.0%, of which 17.4% in the form of Tier 1. Additionally, the Group has maintained a healthy level of liquidity positions, with a total loans to deposits ratio of 62.2% and a total loans to funding base ratio of 53.1%, when including borrowings. At Bank level, the US dollar Liquidity Coverage Ratio remained well above the regulatory norm.
The growth momentum on the global scene has been disrupted by the impact of persistently high inflation rates, as well as the recent turmoil in the banking sector, arising from the aggressive monetary policy stance implemented by central banks worldwide. Thus, whilst continuing its recovery, the Mauritian economy will still be subject to a highly uncertain external context. The latter is also exacerbating inherent challenges in key regional economies, although prospects for the medium-term remain promising. Against this backdrop, the Group will closely monitor developments in its operating environment and will pursue its international diversification strategy in a prudent manner by capitalising on inroads made in niche segments. We remain focused on reinforcing our growth enablers and, in this respect, the Bank recently closed its first USD 300 million senior unsecured notes issuance under its USD 3 billion Global Medium-Term Note Programme listed on the International Securities Market of the London Stock Exchange.
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