Mauritius Banks Show Improved Resilience Amid Global Uncertainties

Economic Environment Remains Challenging

Despite a difficult economic environment, banks in Mauritius have demonstrated improved resilience, according to the latest report by the Bank of Mauritius. The report highlights the banks’ ability to withstand potential shocks and maintain financial stability.

Stress Testing Framework Reveals Improved Resilience

The bank’s stress testing framework evaluated the capital and liquidity buffers of local lenders, revealing that they generally held resilient buffers capable of absorbing potential shocks. This is an improvement compared to March 2021, indicating a stronger ability to withstand risks to financial stability.

Survey Highlights Rising Optimism Among Banks

A survey conducted by the Bank with the banking industry highlighted rising optimism among banks regarding economic growth over the next year, accompanied by improved profitability. Most respondents anticipated stabilizing credit losses and favorable liquidity positions in the coming year.

Challenges Ahead

However, the survey also identified climate-related risks and operational risks arising from cybersecurity vulnerabilities as key challenges for the sector going forward. To address these concerns, the Bank has launched its Climate Change Centre to enhance its response to climate-related risks.

Improving Payment Ecosystem

The bank has also taken steps to improve the payment ecosystem, including the establishment of a National Payment Systems Committee to advise on oversight functions and support the development of sound payment systems.

New Role for the Bank

As the country’s macroprudential authority, the Bank is reviewing its policy framework to assess and monitor systemic risks in the financial system. This new role complements its existing mandate to ensure stability and soundness in the sector.

Non-Bank Financial Services Industry Recovery

In other news, the non-bank financial services industry has broadly recovered its growth momentum, with Non-Deposit-Taking Institutions adopting a prudent approach to redeploy their funds towards less risky assets. The long-term insurance industry showed better resilience to the pandemic’s effects, while the pension scheme industry maintained an upward trend in asset values.

Global Business Sector Maintains Growth Momentum

The global business sector, a key driver of Mauritius’ economy, has also maintained its growth momentum, despite risks stemming from the pandemic and international monitoring lists. The sector is projected to expand by 5.0% in 2021, after contracting by 10.3% in 2020.

Reinforcing Reputation as a Robust Financial Center

Mauritius successfully exited the Financial Action Task Force’s list of jurisdictions under increased monitoring in October 2021, and was also removed from the United Kingdom’s list of high-risk countries in November 2021. The European Union is expected to follow suit soon. These developments have reinforced Mauritius’ reputation as a robust and credible financial center, upholding its integrity and reputation as a jurisdiction for international financial services.