Financial Crime World

Bank of Mauritius Report Shows Resilience in the Face of COVID-19

Despite the challenges posed by the COVID-19 pandemic, the Bank of Mauritius has reported a significant increase in deposits and a cautious approach to lending in its latest financial report.

Deposit Growth and Prudent Lending Approach

  • Total deposits in the banking sector increased by Rs926.6 billion (9.2%) to Rs854.2 billion as at end-June 2021, driven mainly by an increase in deposits from Global Business Companies (GBCs) and non-residents.
  • GBC and non-resident deposits accounted for around 56.3% of total banking sector deposits.
  • The advances-to-deposits ratio decreased from 65.8% to 58.8% in FY2020-21, reflecting a prudent approach to lending.

Lending Activities and Risk Management

  • Total advances, including investments in debentures and fixed-dated securities, increased by 5.8% to Rs862.3 billion, representing about 58.8% of total deposits and 45.1% of total assets.
  • The report highlighted the significant increase in risk-weighted assets in the 0-20% risk weight buckets, indicating a shift towards investments in Government and Bank of Mauritius securities and placements.

Credit Concentration Risks and Asset Quality

  • Credit concentration risks increased mildly during FY2020-21 due to prudent credit risk management.
  • Non-exempt large exposures aggregated Rs476.6 billion, representing 47.3% of total fund and non-fund based facilities extended as at end-June 2021.
  • The report emphasized the importance of asset quality, with banks containing the growth of non-performing loans (NPLs) through relief measures such as moratoriums and special relief amounts.

Response to COVID-19 Pandemic

  • “In response to the COVID-19 pandemic, we have implemented various support measures to alleviate financial strains on individuals, households, economic operators, and small and medium-sized enterprises,” said a Bank of Mauritius spokesperson.
  • The report shows that these measures have been effective in containing risks to financial stability and the economy.

Future Directions

  • The Bank continues to closely monitor the performance of the banking sector to ensure a smooth exit from support measures and is expected to phase out these measures gradually, limiting abrupt increases in NPLs.
  • Overall, the Bank of Mauritius report highlights the resilience of the Mauritian banking system in the face of COVID-19 and its ability to adapt to changing market conditions.