This performance was largely driven by an improvement in our core earnings and a drop in net impairment charges. Contribution from foreign-sourced income stood at above 65% of Group profits. 

 

Operating income grew by 21.5% to Rs 14,610 million. Net interest income rose by 21.1% to Rs 9,166 million, mainly explained by improved margins linked to the rise in interest rates globally and the expansion of our foreign currency loan book while interest margins on local investment securities declined on average. Net fee and commission income grew by 13.2% to Rs 3,361 million, backed by higher revenues from payment and regional trade financing activities in the banking cluster. ‘Other income’ rose by 39.3%, mainly due to an increase in profit arising from dealing in foreign currencies and to a higher contribution from MCB Real Assets Ltd. 

 

Operating expenses increased by 18.9%, reflecting ongoing investment in human capital and the impact of higher inflation. Given the relatively higher increase in revenues, the cost to income ratio improved to 36.9% compared to 37.7% for the corresponding period last year. Impairment charges fell by 10.9% to Rs 1,696 million, representing an annualised cost of risk of 84 basis points of gross loans and advances. The gross Non-Performing Loan ratio declined to 3.5% from 3.7% in June 2022. 

 

Our capitalisation level remains comfortable with shareholders’ funds increasing to Rs 84.1 billion, contributing to a capital adequacy ratio of 18.6%, of which 17.2% in the form of Tier 1. 

 

The recent upgrade by the IMF of its global outlook for 2023 is indicative of a relative improvement in economic conditions, including inter alia, China’s reopening, the easing of energy prices and the abating inflationary pressures particularly in the US. However, the operating environment remains uncertain with the balance of risks being tilted to the downside. Growth in key markets is expected to slow down markedly this year amidst significant monetary tightening undertaken to fight inflation, as well as the continuing effect of the war in Ukraine. In Mauritius, the economy is set to maintain its recovery process but continues to face some key challenges, for instance, linked to persistently high inflation, which has led to successive increases in the policy rate. Whilst the latter is likely to impact our clients and activities, the rise of international interest rates and the implementation of our strategic initiatives should contribute to a strong performance in this financial year.