SBM Holdings Ltd… Interim unaudited financial report for the nine months ended 30 September 2018

SBM Holdings Ltd is pleased to present its interim unaudited condensed financial report for the nine months ended 30 September 2018.

SBM Group Chairman, Kee Chong LI KWONG WING, GOSK, declared: “We have today published our Group results for the nine months ended 30 September 2018. This has been so far an eventful year for our Group. But, despite the severe unexpected hits that we suffered from a couple of bad loans made by the bank to certain international clients, our Group has shown that it has a strong capital base and sound financial fundamentals to absorb such shocks. Our international loan business has experienced an aggressive growth in the past two years, which was not commensurate with the level of risk controls and management bandwidth required. However, our internationalization strategy remains valid and sound and we shall continue to focus and pursue the strategy with reinforced controls and improved risk management. In August this year, we completed the acquisition of carved out assets and selected liabilities of Chase Bank Kenya (In Receivership); and we are now well-positioned in the Kenyan market as a Top Tier 2 Bank with over 60 branches and 700 employees to tap business opportunities. In India, we have received the Reserve Bank of India approval for the Wholly Owned Subsidiary licence and will start operation as a fully-fledged WOS as from 1st December. Our operations in the Seychelles are expected to start early next year. Moreover, we have opened a fifth branch in Madagascar and have recently launched UPI Prepaid Card, which is a first in Madagascar. In Mauritius, we are strengthening our value proposition through innovative products and modernizing our channels to enhance our customers’ experience. For instance, we launched ShopNCash in October this year. ShopNCash is a first in Mauritius whereby a client can withdraw cash at a retail point of sale and this service is available in more than 100 shops and supermarkets across Mauritius. We have also revamped our Internet Banking and Mobile Banking app and we are continuing our digital journey as part of our sustainable strategy. All these initiatives are expected to yield positive results in the near future”.

Andrew Bainbridge, Group Chief Executive Officer, commented: “I am very pleased with the positive results for the nine months ended 30 September 2018. We continue to make good progress in the implementation of our strategy, both in Mauritius and regionally. The third quarter marked the successful takeover of selected assets and liabilities of Chase Bank Limited (In Receivership) in Kenya, and we have now obtained the go-ahead for conversion of our India business into a wholly-owned subsidiary structure. In Mauritius, we continue to make good progress both in serving the people and businesses of Mauritius and in building a strong and robust international business. Our ambition is to use the combined strength of our business in the countries where we are present to serve our clients seamlessly across borders, to their and our benefit. We are also making progress in our ambition to support our clients trading and investing along the South Asia – Mauritius – East Africa corridors. This is supported by enhancements in our risk management, where we have strengthened our processes, enhanced our risk appetite framework and continued to make our business more robust. We remain committed to serving our clients and safeguarding the interests of our shareholders and other stakeholders by continuing to build our business in a disciplined manner and positioning SBM as a group with a strong regional footprint.

SBM Holdings Ltd (‘the Group’) is pleased to present its interim unaudited condensed financial report for the nine months ended 30 September 2018.

This report has been prepared in accordance with the Bank of Mauritius Guideline on Public Disclosure of Information and IAS 34 – Interim Financial Reporting and based on the accounting policies used in the audited financial statements for the year ended 31 December 2017. The Group and the Company have adopted all new standards and interpretations which are effective as from 01 January 2018.

Operating results

The Board of Directors is pleased to announce the successful take-over on 18 August 2018 of the carved-out assets and selected liabilities of Chase Bank Limited in Receivership (CBLR) in Kenya. The figures presented in the statements of financial position as at 30 September 2018 incorporate the carved-out assets amounting to MUR 24 billion of CBLR. The statements of profit or loss for the period takes into account the impact of the carved out operations of the former CBLR from 18 August 2018 to 30 September 2018.

The Group, for the nine months ended 30 September 2018, reported a net profit after tax of MUR 1,415 million as compared to MUR 1,864 million for the same period last year. This is mainly due to an increase in credit loss expense on financial assets by MUR 1,228 million for this period. The increase in impairment is on account of a segment B customer in SBM Bank (Mauritius) Ltd for which a provision of MUR 932 million had been made on the full outstanding amount in June 2018 in additions to provisions made on overseas operations and IFRS 9 implementation.

Net interest income has grown by MUR 618 million from MUR 3,539 million for the nine months ended 30 September 2017 to MUR 4,156 million for the nine months ended 30 September 2018. Non-interest income has also increased by MUR 1,363 million for the same period, which includes a gain of MUR 1,261 million on the fair value of all the assets and liabilities taken over.

Non-interest expenses have increased from MUR 2,463 million for the nine months ended 30 September 2017 to MUR 3,627 million for the nine months ended 30 September 2018. This was due to a write off of goodwill of MUR 417 million, an operational loss expense of MUR 93 million following the cyber-attack in India and new expenses related to the CBLR acquisition. It is also worth highlighting that the expenses for the acquisition of Ex-Fidelity Commercial Bank Ltd has a full nine months impact for 30 September 2018 while for last year it was only for the period of 10 May 2017 to 30 September 2017.

The cost to income ratio was 48.53% while the earnings per share were 54.79 cents for the period ended 30 September 2018.

The Group’s total assets as at 30 September 2018 stood at MUR 227 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 amounting to MUR 24 billion.
Gross impaired advances stood at MUR 8,933 million with a gross impaired ratio of 7.74% while net impaired advances were MUR 3,249 million, representing a ratio of 3.04% as at 30 September 2018.

The Group Capital

The capital base and equity of the Group remained strong at MUR 30.68 billion and MUR 24.85 billion as at 30 September 2018. The increase in capital base was due to the profit for the period and the Tier II bond raising made in June 2018, partly offset by the adoption of IFRS 9 and payment of dividends during the period. This significant capital base underpins the Group’s strong fundamentals resilience.

The Group’s capital adequacy ratio (CAR), increased to 24.06% as at 30 September 2018 as compared to 19.98% as of 31 December 2017. The Tier 1 capital and common equity Tier 1 capital ratios decreased marginally to 15.84% and 15.84% respectively as at 30 September 2018 compared to 15.92% and 15.92% respectively as at 31 December 2017.

Outlook

Further to the takeover of selected assets and liabilities of CBLR we are seeing positive signs in Kenya in terms of customer acceptance and business opportunities, and we are confident of building a solid franchise in this market. The conversion of our Indian branches into a wholly owned subsidiary is planned for completion on 01st December 2018 as approved by the Reserve Bank of India. This will provide a solid footing for disciplined growth in India. We expect these developments to lead to significant synergies and cross selling along the South Asia – Mauritius – East Africa Corridor. In addition, the Group is pleased with the progress made in respect of measures taken to reinforce controls and improve our risk management. We will maintain focus on this area as we continue to strengthen and diversify our business. We wish to thank all stakeholders for their continued support.

Posted by Minority Voice on Nov 14 2018. Filed under Economie, Featured. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry