In FY19, the Consumer Banking Cluster had a productive year with a much-improved results as compared to FY18. Our liabilities book increased by 16% (5% in Current and Savings accounts and 33% in Fixed Deposits) while our assets book increased by 35%.

This performance is primarily due to the shift in focus for FY19. Our strategy was focused around rebuilding our brand image through increased proximity with the High Net Worth Individuals (HNWI) community.

With this as our objective, we organised some lifestyle events, like customer cocktails, golf games, among many more. The AfrAsia Mauritius Golf Open 2018 was an opportunity for our high-end clients to interact with high profile world professional golfers such as Romain Langasque, Mathieu Pavon and Marcel Siem during private events get-together.

Internally, we had more cross-selling opportunities across the Bank. We also worked on the turnaround time for loan applications, which reduced considerably in the last FY giving ABL a competitive edge in the market while still maintaining the rigorous KYC process. Moreover, a more rigorous approach for the daily management of arrears and excesses by Relationship Managers (RMs) were implemented, resulting in a significant drop in downgrading of accounts to Non-Performing Assets (NPA). Furthermore, the Bank revitalized and launched its credit card loyalty programme “XtraMiles”.

During FY19, our sales team was reorganised in order to better serve our clients. Hence, a new mentoring and RM pairing programme was introduced whereby junior staff started being mentored by the senior RMs. Consequently, significant improvement has been recognised in our customer service delivery.

Our focus to upskill our team members probably is the main reason for the very good results that Consumer Banking reaped in its employee engagement score in Staff Engagement Survey 2018. With a score of 71%, Consumer Banking was above amongst the best engagement of the Bank; this is testament to the team spirit within Consumer Banking. This was achieved through a high level staff motivation across the business. Much efforts were spent on having team bonding events, be it among ourselves and jointly with colleagues from other departments.

Furthermore, due to internal issues faced by some of our main competitors, we saw a number of their valuable clients moving their accounts to ABL due to the level of affiliation between the RMs and their clients. Our RMs were quick to respond by proposing a dedicated service and ready to offer tailor-made solutions to prospective customers.

On a final note, ABL is actively attracting Wealth Management Business from the region, mainly by local RMs visiting and targeting clients in Madagascar with our South African Representative Office (SAREPO) exploiting the Sub-Sahara Africa region.

The Corporate Banking Division primarily acts as a debt house and originator of assets in foreign currency focused on providing lending solutions ranging from short-term lending, term lending, debt advisory products to corporate syndications. On the domestic front, the division acts as the custodian of the entire client relationship providing a full suite of products across transactional banking, trade finance, debt advisory, lending and forex solutions.

Our efforts and initiatives to continuously strengthen and grow our existing business was underscored by the recognition received from Europe, the Middle East and Africa (EMEA) Finance as the ‘Best Investment Bank 2018’ in Mauritius (MRU). The award demonstrates our unwavering commitment to a strategy that revolves around our clients and delivering upon the innovative ideas of our people “A truly differentiated banking experience”.

Despite a challenging global environment and the provisioning increases from the adoption of IFRS 9 – “Financial Instruments’’, NII earned from customers served by this division grew by 1%. In order to position ourselves for growth, it has been critical for us to maintain constant vigilance on the risk profile of our asset book and also ensure effective risk management of our NPA.

During the course of the year, we took various initiatives to grow new businesses and expand our market reach. We were a key sponsor and participant to the 2018 Africa Down Under Conference held in Australia, with the aim to benefit our client coverage. As we look ahead, our focus is geared towards deepening our relationships with existing clients on the local market whilst diversifying our asset exposure across emerging markets in Africa and Asia on the international front.

In terms of performance, our strategy has been constantly delivering excellent results and this year was no different.

Trading Income performance was at a robust MUR 916.9m as at the close of FY19, a 12% growth year-on-year.

Strong performance was noted on the FX Trading Desk, the Money Markets and Fixed Income Desk, delivering on the strategy formulated for the year. Growth on each desk stood at 69% and 53% respectively.

However, the FX Sales Desk and the Structuring Desk enduring tough years with income shrinking by 2% and 73% respectively.

On the FX Sales side, local market condition remained tough with lessening margins in light of added competition from banks. On the Structuring side, FX hedging flows from two major clients dried up due to a reduced hedging appetite from these clients.

In terms of FX turnover, our domestic banking volume firmly stood at USD 1.2bn, representing a 14% market share in the local market – cementing our robust position on the market.

Gross Net Interest Income closed at MUR 2.0bn as at FY19, experiencing growth of 60% year-on-year. Growth was particularly enabled by driving balance sheet growth, particularly in the interbank placement space, loans to financial institutions and investment in securities.

This is testament to our growing FI business. Indeed, there has been a constant drive to diversify and grow our network of banking counterparts, all within a clear and defined risk appetite. This is demonstrated by a robust growth in interbank placements and circa USD 90m of disbursement on the Financial Institutions loans side.

This, coupled with significant work performed in shoring up our tactical liquidity management has brought in more efficiency from a balance sheet perspective.

The Liquidity Management and Assets and Liabilities Monitoring desks have worked closely together to also maximize the benefits of the rising interest rate environment.

Fee Income was down 87% year-on-year, with performance ending at MUR 2.0m as at FY19. This was on the back of no DCM mandates being bagged by the desk.

Custody and Securities Trading related income also shrunk by 22% year-on-year, closing at MUR 111.9m as at FY19. The overall downturn in the custody performance can primarily be attributed to plummeting stock market indices and an upheaval in competitive pressures during the year. It should however be noted that 196 new custody accounts were opened during the year at competitive tariffs to reinforce our stance in the market and custody expenses were curtailed by 61% across the year driven by the desk renegotiating tariff agreements with brokers.

With its extensive network and years of market knowledge and experience in Southern and East Africa, the SAREPO continues to play a key role representing AfrAsia in these markets.

South Africa went to the polls in May 2019 and the ruling African National Congress party was re-elected into power with Mr. Cyril Ramaphosa as the President. Over this period Mr Ramaphosa has made some key appointments (including new heads of the National Prosecuting Authority and SA Revenue Services) aimed at strengthening these portfolios. As reported previously, he has also embarked on an ambitious project to raise USD 100bn in new investments into South Africa. Several state-owned enterprises, however, remain a headache for the authorities, as well as ongoing revelations of the corruption that flourished under the previous regime.

It is believed that this is the commencement of a clean-up process which together with various other measures, including unbundling the state-owned power utility, will produce the ambient economic growth necessary to set South Africa on a path to growth and prosperity. It is crucial to the fortunes of the region and the continent that South Africa exceeds the World Bank’s conservative GDP growth forecasts of 1.3% in 2019 and 1.7% in 2020.

The AfrAsia Bank South African Wealth Report 2019, revealed total wealth in South Africa rose by 13.0% to USD 649bn over the past 10 years. A relatively modest performance not helped by a torrid 2018 which saw the Johannesburg Stock Exchange (one of the world’s 20 largest stock exchanges) lose 29.0% in USD terms. The local equity market has however bounced back in 2019 to rise some 13.0% in USD terms by mid-year. The report further predicts a healthy 30.0% growth in total wealth to USD 844bn for the next 10 years.

The wealth report also indicated that South African HNWIs have moved towards increased foreign asset allocations over the past 10 years. There is also increased interest and activity amongst the South African-based corporate and fund management sectors to explore international markets, with a focus on the African continent, over the same period. Furthermore, it is predicted that these trends will gather momentum over the next 10 years. Based in the international financial centre of Mauritius with a representative office in Johannesburg, AfrAsia Bank continues to be well-positioned to capitalise on these developments.

The representative office in South Africa also addresses the East African region, with an emphasis on Kenya. With economic growth projected at 6.0% in 2019 and 6.1% in 2020 (driven by growth in agriculture, completion of ongoing infrastructure projects and continued macroeconomic stability), Kenya is a key economic hub on the continent offering a range of private and global banking opportunities.

The Bank’s team based in South Africa actively promotes AfrAsia to corporates, fund managers, private individuals and financial institutions in the Southern and Eastern African regions as well as other international markets.