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Risk Management Report


Statement: “With a clear vision of where we want to be heading and an elaborate risk appetite framework, AfrAsia Bank is fully prepared to manage and mitigate the risks and challenges across the various products we offer and in the various markets we operate.” We live in a risky time in which the global economy has been propped up by unprecedented monetary stimulus and the emergence of a new global economic and political order. At AfrAsia, our attempt is to keep risk at the core of our decision making and keep sharpening the tools to navigate our way through ‘known unknowns and unknown unknowns’, to borrow a phrase from Donald Rumsfeld.



“Taking risk is inherent to the Financial Institutions, but such risk taking needs to be made in an informed, calculated and disciplined way, and within a pre-determined risk appetite and tolerance. This is the primary objective of AfrAsia Bank risk management strategy and framework.”





To identify, evaluate, respond and monitor risks to which the Bank is exposed and set acceptable risk parameters while upholding sustainable business operations and growth.


To improve stakeholders and management self-assurance in the making of risk informed decisions through a robust risk appetite framework and policies while in observance of regulatory requirements.


The Bank’s risk appetite is defined by a risk appetite framework set by the Board. It aids to emphasize its strong risk culture and helps define thresholds to manage aggregate risks through an acceptable scale. In line with Bank of Mauritius Guidelines on credit and country risk management, the Board has established a set of policies and procedures in respect of cross-border activities, which clearly translate to the Bank’s strategic goals and risk parameters.


Stress-testing (ST) is an integral part of the Bank’s risk management process as it consists of both sensitivity analysis and scenario analysis.

Stress testing is a fundamental tool to

  • facilitate a view of the organisation’s forward risk profile as a result of portfolio effects and/or changes in economic conditions;
  • Identify potential vulnerability to unprecedented but plausible events; and
  • Determine appropriate management actions or contingency plans to limit the impact of such events on the entity;

Results of stress testing must impact decision making, including strategic business decisions via

  • Strategic planning and budgeting;
  • Internal Capital Adequacy Assessment Process (ICAAP), including capital planning and management, and the setting of capital buffers;
  • Informing the setting of risk appetite statements;
  • Liquidity planning and management; and
  • Identifying and proactively mitigating risks through actions such as reviewing and changing risk limits, limiting exposures and hedging;

The various type of scenario analysis performed at ABL are as follows:

Scenario analysis
  • Changing multiple risk inputs simultaneously with the source of the stress event being well defined;
  • Macroeconomic stress testing involves the creation of a severe but plausible macroeconomic scenario and assessing the impact of key macroeconomic risk drivers (e.g. GDP, interest rates, inflation) on key risk inputs (e.g. PD, LGD and EAD);
  • Other hypothetical or historical scenarios: “what-if”;
  • Assessing the impact on income statement, balance sheet and capital ratios;
Sensitivity analysis
  • Move of a risk parameter, or a small number of very closely related risk parameters to understand the impact on a risk position;
  • It is important to note that the event that gives rise to the movements in the parameters is hypothetical;
Reverse stress testing
  • Entities to assess scenarios and circumstances that would render its business model unviable, thus identifying potential business vulnerabilities

Starts from the point of failure of the organisation’s business model and then working backwards to identify circumstances or scenarios under which this might occur;

Point of failure is considered as significant financial losses that impact the Bank’s capital or lack of liquidity to such an extent that the existing business model would no longer be viable or where material supervisory intervention would result.

Risk Weights

In view of the gradual phase-in of regulatory adjustments to the common equity component of Tier 1 capital under Basel III, certain specific prescriptions of Basel III capital adequacy framework (e.g. rules relating to deductions from regulatory capital, risk weighting of investments in other financial entities etc.) will also continue to apply in a phased manner. Essentially, advances to customers will be weighted at an approved percentage unless collateralised/guaranteed by eligible security/guarantors in which case, a lower risk weight may be applicable. Unrated exposure of the Bank complies with 100% risk weightage as per BOM guideline and is monitored by the Board.

Committees established by the Board of Directors

Credit Committee

  • The Board Credit Committee (BCC) consists of 2 nonexecutive directors, and 3 independent non-executive directors, who are experienced credit & risk professionals with extensive experience in emerging markets and Mauritius.
  • The BCC is a consultative as well as an approval panel for facilities exceeding the Management Credit Committee’s lending authority as defined in the Credit Risk Policy. In this capacity, the BCC examines and approves large credit applications where global exposures exceed MUR 50M.

Risk Management Committee

  • The Board Risk Committee (BRC) composes of the chair/independent non-executive director, 1 independent nonexecutive director, 2 non-independent non-executive directors and 1 executive director. They all met four times during the year for review.
  • The BRC reviews the principal risks and has a global view on all risks that the Bank faces. It oversees that appropriate actions are being taken to mitigate or avoid these risks, all in compliance with Bank of Mauritius guidelines and policies approved by the Board. The BRC also ensures that transactions which could materially affect the financial stability of the Bank are identified at source and that liquidity ratio is maintained at all times.

Conduct Review Committee

  • The Conduct Review Committee (CRC) composes of 3 independent nonexecutive directors. They met four times during the year for review.
  • The CRC reviews the practices of the financial institution and approves credit exposures to related parties. It ensures that market terms and conditions are applied to all related party transactions. It also reports on a quaterly basis to the Board on matters it has reviewed, including exception on policies, processes and limits.

Audit Committee

  • The Audit Committee compromises of three non-executive independent directors, who met four times during the year for review.
  • The Audit Committee's principal responsibilities are to ensure that the Bank implements and maintains appropriate accounting, internal control and financial disclosure procedures, evaluate and approve the related procedures. It can also have consultations with both the Bank’s internal and external auditors, as required.

Corporate Governance Committee

  • The Corporate Governance Committee (CGC) consists of 1 independent nonexecutive director, 3 non-independent non-executive directors and 1 executive director, who met 8 times during the year.
  • The CGC has the responsibility to deal with all Corporate Governance issues and make recommendations to the Board in accordance with the National Code of Corporate Governance 2016.

Committees established by Management

Management Credit Committee

  • The Management Credit Committee (MCC) reports to the BCC and comprises of three voting members (Chief Executive Officer, Head of Credit Risk and Head of Risk with veto rights on policies.
  • The MCC assists the Board to formulate, approve and implement loan policies, guidelines and credit practices of the Bank. It is also responsible for the implementation and maintenance of the Bank’s credit risk management framework. The key objective of the MCC is to evaluate, review and sanction credit applications up to MUR50M and those referred by lower mandates or, which cannot be sanctioned at lower levels.

Assets and Liabilities Committee (ALCO)

  • This committee, which comprises the Chief Executive Officer, Chief Financial Officer, Head of Risk, the General Manager, Senior Executive - Head Corporate Banking, Senior Executive - Head of Global Business, Senior Executive - Treasury and Markets, Head of Credit Risk and Head of Treasury meets at least once a month.
  • The Bank’s Assets and Liabilities Committee’s overall responsibility is to ensure that the Bank’s overall asset and liability structure including its liquidity, currency and interest rate risks are managed within limits and target


Consistent reporting facilitates the Board of Directors to monitor whether the overall risk policies are being complied with and whether they are in line with the Bank’s strategies and goals. In addition, the Board regularly reviews reports by analyzing the Bank’s portfolio, including data on industry concentration and country analysis. [Please refer to Corporate Governance Report- Principle 2- The Structure of the Board and its Committees – Page 43 for roles and objectives of each committee]


Risk can be defined as the uncertainty of an event to occur in the future. In the banking context, it is the exposure to the uncertainty of an outcome, where exposure could be defined as the position/stake banks take in the market. The main type of risks faced by the Bank are as follows:

Definitions of Risk types

rmType of RiskDescriptionWhich capitals will be impacted? Mitigating Actions FINANCIAL RISKCredit RiskIt is the risk of loss arising out of the failure of obligors to meet their financial or contractual obligations when due. It is composed of obligor risk and concentration risk.1. Policies & Procedures2. Regulatory Guidelines3. Control & Monitoring4. Key Resources with technical expertise5. Ongoing TrainingCountry RiskCountry risk, also referred to as cross-border country risk, is the uncertainty that obligors (including the relevant sovereign, and the group’s branches and subsidiaries in a country) will be able to fulfil obligations due to the group given political or economic conditions in the host country.1. Regular Country Review 2. Cap in terms of Country Risk Limit3. Quality Review by Board 4. In line with Risk Appetite frameworkMarket RiskMarket risk is the risk of a change in the market value, actual or effective earnings, or future cash flows of a portfolio of financial instruments, including commodities, caused by adverse movements in market variables such as equity, bond and commodity prices, currency exchange and interest rates, credit spreads, recovery rates, correlations and implied volatilities in all of these variables.1. Work around solution (manually)2. Market Risk Policy3. Process & level of acceptance4. Tolerance limit5. System Implementation
rmType of RiskDescriptionWhich capitals will be impacted? Mitigating Actions FINANCIAL RISK (CONT’D)Funding and liquidity RiskFunding risk is the risk associated with the impact on a project’s cash flow from higher funding costs or lack of availability of funds. Liquidity risk is defined as the risk that an entity, although solvent, cannot maintain or generate sufficient cash resources to meet its payment obligations in full as they fall due, or can only do so at materially disadvantageous terms.1. Liquidity risk is manage in line with the Bank’s internal liquidity risk management framework and the BoM Guideline on Liquidity Risk Management.2. Daily reporting of liquidity metrics and monitoring of Liquidity Early Warning Indicators.3. TrainingInterest rate RiskThe risk arising from changes in interest rates or the prices of interest rate related securities and derivatives, impacting on the Bank’s earnings or economic value of equity.1. Monitoring of interest rate risk exposure in line with the Bank’s internally prescribed limits. NON-FINANCIAL RISKOperational RiskOperational risk is the risk of loss suffered as a result of the inadequacy of, or failure in, internal processes, people and/or systems or from external events.1. Documented policies, procedures and processes2. Implementation of systems and internal controls3. TrainingCompliance RiskCompliance risk is the risk of legal or regulatory sanction, financial loss or damage to reputation that the group may suffer as a result of its failure to comply with laws, regulations and codes of conduct and standards of good practice applicable to its financial services activities.1. Policies and Procedures- to ensure Bank is compliant to Regulatory Standards 2. Internal Controls3. Trained and qualified staff 4. Appropriate system/tools Information RiskThe risk of accidental or intentional unauthorized use, modification, disclosure or destruction of information resources, which would compromise the confidentiality, integrity or availability of information.1. Documented policies, processes and procedures. 2. Implementation of systems and internal controls3. Awareness Training and best practices.
rmType of RiskDescriptionWhich capitals will be impacted? Mitigating Actions TRANSVERSAL RISKBusiness strategic riskBusiness strategic risk is the risk of earnings variability, resulting in operating revenues not covering operating costs after excluding the effects of market risk, credit risk, structural interest rate risk and operational risk.1. Documented policies, procedures and processes 2. Implementation of systems and internal controls3. Training4. Ensuring that the Bank adheres to its Risk Appetite5. Ensuring that Business strategy is embedded in the Risk Appetite FrameworkReputational riskReputational risk is the risk of potential or actual damage to the group’s image, which may impair the profitability, and/or sustainability of its business.1. Effective communication, staff training, and HR practices2. Documented policies, procedures and processes3. Efficient complaints & feedback handling for continuous improvement of products/services4. Constant compliance checks and monitoring5. Information Security Key Financial Capital Human Capital Social & Relationship Capital Natural Capital Manufactured Capital Intellectual CapitalPlease refer to Principle 6- Reporting with Integrity in the Corporate Governance Report for an overview of each capital on Page 64


Credit risk arises from the possibility of financial losses stemming from the failure of clients or counterparties to meet their financial obligations to the Bank. Credit processes control the credit risk of individual and corporate clients. Other sources of credit risk arise from trading activities, including: debt securities, settlement balances with market counterparties, amongst others. The objective of credit risk management is to maintain a rigorous and effective integrated risk management framework to ensure that all controls are in line with risk processes based on international best practices.

Organisation and Structure

The Bank has structured the responsibilities of credit risk management so that decisions are taken as close as possible to the business, whilst ensuring that there is an adequate segregation of tasks. Credit policies and processes monitor and manage credit risk in a manner that complies with the Bank of Mauritius guidelines and AfrAsia Bank’s risk appetite.


As a fundamental credit principle, the Bank does not generally grant credit facilities solely on the basis of the collateral provided. All credit facilities are also based on the credit rating, source of repayment and debt-servicing ability of the borrower. Collaterals are taken whenever possible to mitigate the credit risk. The collateral is monitored on a regular basis with the frequency of the valuation depending on the liquidity and volatility of the collateral value.

Enforcement legal certainty of enforceability and effectiveness is another technique used to enforce the risk mitigation. Where a claim on counterparty is secured against eligible collateral, the secured portion of the claim is weighted according to the risk weight of the collateral and the unsecured portion against the risk weight of the counterparty. To mitigate counterparty risk, the Bank also requires close out netting agreements. This enables the Bank to offset the positive and negative replacement values of contracts if the counterparty defaults. The Bank’s policy is to promote the use of closeout netting agreements and mutual collateral management agreements with an increasing number of products and counterparties in order to reduce counterparty risk.

As an indication, claims secured by cash and other charges represent 70% of the asset book*, whilst unsecured portions account for 30% of total asset book.

Collateral DetailTotal
Claims on bank6,009,187,500
Floating Charge5,033,654,613
Fixed charge1,715,440,407
Cash secured790,271,278

*exclusive of interest.


Market risk refers to the potential losses that arise from the adverse movement in market value of financial instruments triggered by changes in market variables. These variables include, but are not limited to, interest rates, foreign exchange rates, inflation rates, implied volatilities, credit spreads, and the prices of bonds, equities, commodities or derivatives. The key drivers of market risk that the Bank is exposed to is mainly associated with fluctuations in interest rates and foreign exchange rates.

Market risk, also known as “systematic risk”, typically affects the entirety of a market. As such, this risk cannot be fully eliminated through diversification but may be reduced using the various hedging products and techniques.

The Bank has in place a sound risk management framework to monitor and manage the market risks that the Bank is exposed to on a daily basis, a framework of limits and triggers as approved and regularly reviewed by ALCO (Asset and Liability Committee) and the BRC (Board Risk Committee) which is in line with the Bank’s risk appetite and complement the regulatory limits as established by the central bank.

The Market Risk unit, being responsible in identifying and monitoring the Bank’s exposure to market risks, works in partnership with business lines to efficiently define market risk policies and procedures. As part of the independent risk management structure, the Market Risk unit reports to the Bank’s Head of Risk. The objective of market risk management is to help control risk, facilitate risk-return decision-making, reduce volatility in operating performance and provide transparency into the Bank’s market risk profile to senior management, the Board of Directors and regulators.

Interest Rate Risk

Interest rate risk arises from the likelihood that movements in interest rates will affect future cash flows and the market value of financial instruments. The main approach used by the Bank to measure this risk is through a gap analysis and sensitivity analysis. The risk is managed as per the Bank’s interest rate risk policy.

Foreign Exchange Risk
Foreign exchange or currency risk is the risk that exchange rate fluctuations may result in adverse changes in the value of current holdings and future cash flows that are denominated in currencies other than the base currency. This risk affects the Bank due to the multi-currency investing and lending activities. For the financial year ended 30th June 2019, the Bank has maintained a daily net FX Open position against the Mauritian rupee that were well under the regulatory limit of 15% of Tier 1 capital as prescribed by the Bank of Mauritius.
>rmFX Exposure Regulatory Limit0.00%2.50%5.00%7.50%10.00%12.50%15.00%11.92%10.28%9.80%7.87%10.95%9.99%12.12%13.13%Jul-18Sep-18Dec-18Feb-19Apr-19Jun-19FX Exposure for the Financial Year ended 30th June 2019
Market Risk Monitoring and Controls

The Bank uses a variety of risk measures to estimate the size of potential losses for both moderate and more severe scenarios, under both short-term and long-term time horizons.

Not all activities need to have the same limit structure and adequate market risk limits are established in accordance with the complexity of the activity and risks undertaken.

Market risk reports are regularly communicated to Senior Management, ALCO and the BRC highlighting all market risk matters and relevant issues are promptly escalated.

Value at Risk (VaR)

The Value at Risk is a statistical measure of risk that is used to quantify risks across products, per types of risks and aggregate risk on a portfolio basis, from individual trading desks up to the Bank level. The metric can be defined as the maximum loss that the Bank can incur during a given holding period under normal market conditions – at specific confidence levels.

The Bank has adopted a parametric approach to compute the VaR at a 99 percent confidence level using a 10-day daily volatility change. The holding period used is one day in order to proactively manage risk on a day-to-day basis.

Sensitivity Limits

Sensitivity limits are used to monitor the potential risks faced by the Bank due to changes in several pricing parameters. These measurements include Portfolio Duration limits and PV01 limits.

The PV01 is a measure of sensitivity to a 1bp (basis point) change in interest rates. The outcomes may be positive or negative reflecting the percentage change in value for a 1bp or a 100bp (PV100) rise or fall in interest rates.

Gross Position Limits and Transaction Limits

Absolute gross position limits are set up to mitigate concentration risk and ensure that the Bank is not overly exposed to one particular market, sector, or instrument.

These limits are usually referred to as portfolio restrictions upon creation of the portfolio. Many trading portfolios have limits on the amount of certain products that can be held in the portfolio and these are often due to liquidity issues (e.g. limits on the maximum $ amount or percentage of portfolio in corporate bonds, etc.)

Maturity Limits

The majority of fixed income products are contracts that expire at a certain date. In general, the mark-to-market valuations of these products are more difficult to obtain if the products have long-term maturity, low liquidity or low credit rating. Maturity limits are established for portfolios that trade those types of products.



    Liquidity risk is defined as the risk that at any time, ABL does not have or cannot generate sufficient cash resources to meet its financial obligations as they fall due or do so at significant costs. The assessment, monitoring and management of the Bank’s liquidity risk and strategy is done through the Asset and Liability Management (ALM) desk.

    ALM acts as an independent risk management function and has the responsibility to control and manage the Bank’s liquidity risk in line with internally approved tolerance limits. The Bank also complies with the limits set by the Bank of Mauritius Guideline on Liquidity Risk Management.

    As per the principles outlined in the Bank’s liquidity risk policy, the following approach is adopted to manage liquidity risk under both business-as-usual and stressed scenarios.

    Short-term liquidity risk managementStructural (longer-term) liquidity risk managementContingency Liquidity Risk Management
    Managing intra-day liquidity positionsIdentification of structural liquidity mismatches against tolerance limits and breaches escalated to ALCOSet appropriate liquidity buffers
    Monitoring daily and short-term cash flow requirementsManaging term lending capacity through application of behavioural profiling of ambiguous maturity liabilitiesUndertake liquidity stress testing and scenario analysis
    Setting up of interbank and repo linesMonitor depositor concentration against internal limits and hold sufficient marketable assets against identified concentration risks. 
    Setting of deposit rates according to market conditions and ALCO approved targets.Managing long-term cash flows

    In order to protect the Bank against unpredicted disruptions in cash flows, the Bank maintains sufficient amount of liquid and marketable assets against internally approved limits.

    The table below provides a breakdown of the Bank’s eligible liquid and marketable instruments as defined by the Basel Committee on Banking Supervision and the Banking Act 2004.


      As at 30 June 2019
    Coins and bank notes 42
    Excess cash with Central Bank 3,969
    Short-term balances (less than 1 month) with banks in Mauritius 2,435
    Short-term balances (less than 1 month) with foreign banks 43,914
    Securities issued by sovereigns 33,572


    As at 30th June 2019, the Bank’s liquid assets ratio was 79% against an internal limit of 25%.


    The Bank’s deposit base remains well diversified. As at 30th June 2019, the depositor concentration ratios were as follows:


    MUR deposits  
    Single depositor 4.94%
    Top 10 depositors 26.98%
    FCY deposits  
    Single depositor 3.17%
    Top 10 depositors 13.57%

    The Bank of Mauritius, in line with Basel principles, issued its Liquidity Coverage Ratio (LCR) requirements in November 2017 as part of the Guideline on Liquidity Risk Management.

    The objective of the LCR is to ensure that a bank maintains an adequate stock of unencumbered high quality liquid assets (HQLA) that consist of cash or assets that can be converted into cash at little or no loss of value in private markets, to meet its liquidity needs for a 30 calendar day time period under a severe liquidity stress scenario.

    Formula missing

    BoM has adopted the following phased in approach to the LCR requirement:


    As at 30th June 2019, the Bank was within regulatory LCR limits with a MUR LCR of 729%, a USD LCR of 232%, an EUR
    LCR of 95% and a consolidated LCR of 350%.


      As from 30 November 2017 As from 31 January 2018 As from 31 January 2019 As from 31 January 2020
    LCR in Mauritian rupees 100% 100% 100% 100%
    LCR in material foreign currencies 60% 70% 80% 100%
    Consolidated LCR 60% 70% 80% 100%


The Top 10 principal risks of the Bank have been evaluated where all departments were requested to provide their assessment through a rating exercise with regards to their actual business activities. The snapshot below depicts the inherent risks of the Top 10 principal risks in terms of likelihood and impact. From the Bank’s risk scoring, it can be deduced that the inherent risks are positioned in the Low to Medium quadrant, which is acceptable.
rmRareInsignificantIMPACTMinorModerateMajorMassiveM1 - Challenging economic environmentM2 - Regular changes in regulatory guidelinesM3 - Operational ChallengesM4 - Existing IT PlatformsM5 - Digital TransformationM6 - Cyber SecurityM7 - Fight against financial crimeM8 - Fair dealingM9 - Responsible financingM10 - Talent management and Employee RetentionUnlikelyOftenLikely ExpectedM8M9M3M3M5M5M1M1M10M10M2M2M6M6M4M4M7M7M9M8LegendVery LowLowMediumHighCritical
The diagram below depicts the trends of the Top 10 principal risks between the FY 2016/2017, FY 2017/2018 and FY 2018/2019. Existing IT platforms and Cyber Security are among the lead risks positioning themselves first and second respectively while Talent Management and Employee Retention has moved from the eight position to third position. The Bank is taking appropriate actions to mitigate the inherent risk in this area. No major movement is observed for the remaining risks identified and they are containable within the Bank’s risk profile.
rmTrends Analysis of Enterprise Risk012345678910M6 Information Technology Cyber securityM10 People Talent management and Employee RetentionM2 External Factors and Operating EnvironmentRegular changes in regulatory guidelines M7Genuineness and Commitment towards our clients Fight against financial crimeM5 Information Technology DigitalTransformationM1 External Factors and Operating EnvironmentChallenging economic environmentM3 External Factors and Operating Environment Operational ChallengesM8 Genuineness and Commitment towards our clients Fair dealingM8 Genuineness and Commitment towards ourClients Responsible financingM4 Information Technology Existing IT Platforms


At AfrAsia, Operational Risk is Everyone’s Responsibility. Operational Risk (OR) is the risk of not achieving our strategy or objectives as a result of inadequate or failure in internal processes, people, and systems or from external events, which can lead to adverse customer impact, reputational damage, litigation or financial loss. Operational risk is inherent in the day-to-day operations, activities, products and services which the Bank offers.

The Bank has a well-defined structure for operational risk that complies with regulatory and best practice requirements and is aligned with the risk culture and the risk profile of its activities. This is supplemented through an operational risk charter and operational risk framework, which include the three lines of defense (Business Units, Control Units, and External Auditors) and involvement of senior management ensuring the coverage that all operational risks are efficiently managed across its activities.

The OR framework includes a risk control self-assessment (RCSA) process, risk impact likelihood matrix, key risk and control indicators, Early Warning Indicators(EWIs), a robust operational risk event management tool, an escalation process, scenario analysis, audit recommendations, external information sources (external events or industry reports) and operational losses process.

ABL continuously improve operational control procedures to keep pace with new regulations and best practices in the market through holistic follow up of risks and their mitigating controls.

ABL fosters awareness and knowledge of operational risks at all levels of the organization through its risk-pro culture. During the financial year 18/19, several training sessions were conducted using the e-learning platform (LMS) and face-to-face sessions addressed general knowledge of Operational Risk.

ABL calculates its minimum (Pillar I) operational risk capital requirement using the Basic Indicator Approach (BIA) where the capital charge is 15% of average gross income over the last 3 years.

ABL has come up with an Early Warning Indicators (EWIs) for Operational Risk, which is 0.1% to 1.0 % of Gross income.

The Operational risk radar depicts the position of Operational Risk incidents with Operational losses according to the Basel Event Classification under the four quadrant; people, process, system and external factors vis-a-vis the Early Warning Indicators (EWIs).


Technology is at the forefront when leading modern business and revenue generating strategies. FinTech and banking strategies are enabling simpler, more efficient and innovative ways to complete our tasks. Our efforts and investments are thus geared in the same direction.
Data and information
Effective deployment of data and information assets is in the form of Management information system, business intelligence / analytics, decision support and forecasting. Data and information being among the most valuable assets of the organisation, the information strategy of the Bank focuses not only on the above but also on data governance, to ensure integrity and consistency of data at every stage of the data lifecycle, maintaining adherence to the General Data Protection Regulation (GDPR) and the Mauritius Data Protection Act (DPA) 2017. AfrAsia is committed to ensure that privacy rights and entitlements are adequately protected in relation to the techniques used to capture, transmit, manipulate, record or store data relating to individuals.
Technology, Infrastructure and Security

With technology evolving faster than ever, the primary challenge for an enabling technology is to ensure that the Bank is adequately prepared and equipped to sustain the rigorous and continuous evolution of requirements for new technologies in the era of digital innovation and artificial intelligence, whilst managing the costs and the associated risks.

The Bank’s Information Technology (IT) and Information Security (IS) frameworks are built on global standards like ITIL, ISO 27001 etc. and the governance principles are modeled along the lines of COBIT, ISO/IEC 27014:2013. The practice of governance includes regular reviews with executive management and extends up to the Board with regular updates and feedback to and from the Board. Internal, external and regulatory audits play a crucial role in the governance cycle with intermittent checks on the policies and implementation of same.

Information Risk
Information Risk aims to maintain the confidentiality, integrity and availability of information assets when being stored, processed and transmitted. Management focus is oriented to ensure that all measures converge towards adopting the best practices including governance through frameworks & standards, and establish efficiency and consistency of protections.


Business Continuity Management (BCM) Policy includes plans to mitigate operational risks, and as a commitment to continue business to our shareholders, customers and employees. Business Impact Analysis, Business Recovery Strategies and Emergency Response plans are defined and implemented to provide for a Disaster Recovery site with data being updated as per preset recovery time objectives. This minimises operational, financial, legal, reputational and other material consequences arising from any disruption to the primary IT infrastructure.

The BCM policy reviewed in May 2019 is in line with the Business Continuity Institute Good Practice Guidelines 2018 (BCI GPG 2018), which is built on ISO requirements namely ISO 22301:2012 for business continuity management and ISO/TS 22317:2015 for Business Impact Analysis (BIA).

The management team of the Bank is committed to the following statement:

“We will take all necessary measures to ensure the continuity of business operations and to minimize recovery time in the case of disaster (natural or otherwise) or in the event of an emergency.”

The Bank has a BCM Steering Committee to review the processes after each testing exercise and to review the policy every year with a view to continuously improve resilience. The ultimate objective is to cater for any eventual disruption of operations to be restored within a minimum lapse of time such that the Bank resumes to normal operations within a reasonable time frame.

At least one BCM test is performed annually for all critical infrastructure involving all functions and user groups of the Bank to ensure the effectiveness of the processes and the readiness of the infrastructure and people. The Bank has adopted a cyclical approach residing on the four pillars: Readiness, Prevention, Response and Recovery /Resumption to continuously improve on the BCM and attain an efficient and acceptable level. Rigorous administration and maintenance, as well as any event experienced, will necessitate revisions and/or plan additions. The strategy adopted for an efficient BCM is to continuously test, train, evaluate and maintain the BCP.

The BCM policy is in place for moving towards a better resilient framework to protect the interest of all stakeholders of the Bank.


Internal control and risk mitigation measures are put in place and implemented to ensure compliance with the relevant laws, regulations and internal policies and procedures.

As per the Compliance Plan approved by the Board of Directors, compliance reviews of departments are conducted on a regular basis. Reports/findings are duly submitted to Senior Management, Audit Committee of the Board and the Board of Directors.

Moreover, the Compliance Function is responsible to provide assurance and advise the Management and staff members concerning Compliance and regulatory matters. During this past financial year, the Bank further invested in capacity enhancement of the Compliance Function and is thus able to better assist and support internal customers.

The compliance culture of the Bank has been reinforced in line with regulatory requirements. The Customer On boarding Team (responsible for new clients being on boarded) and Compliance Team have been segregated (responsible for post compliance checks) for a better governance structure.

The Compliance Team will continue to provide support and advice to business lines, management and the Board and assist in regulatory matters. Furthermore, it will continue to provide ongoing training to relevant departments of the Bank.


Common Equity Tier 1 capital: instruments and reserves    
Share Capital 3,641,0493,641,0493,157,608
Share premium (from issue of ordinary shares included in CET1) --2,862
Statutory reserve 692,398454,679339,711
Retained earnings 1,836,2421,277,521944,373
Accumulated other comprehensive income and other disclosed reserves 108,36588,72870,618
Common Equity Tier 1 capital before regulatory adjustments 6,278,0545,461,9774,515,172
Common Equity Tier 1 capital: regulatory adjustments    
Treasury (Own Shares)  --
Other intangible assets (243,398)(249,585)(155,855)
Deferred Tax (100,953)(141,462)(147,057)
Significant investments in the capital of banking, financial and    
insurance entities that are outside the scope of regulatory    
consolidation, net of eligible short positions (amount above 10%    
threshold) -(151,650)(113,738)
Total regulatory adjustments to Common Equity Tier 1 capital (344,351)(542,697)(416,650)
Common Equity Tier 1 capital (CET1) 5,933,7034,919,2804,098,522
Additional Tier 1 capital: instruments    
Instruments issued by the Bank that meet the criteria for inclusion in Additional Tier 1 capital    
(not included in CET1) 1,323,5521,360,7151,340,467
Additional Tier 1 capital before regulatory adjustments 1,323,5521,360,7151,340,467
Additional Tier 1 capital: regulatory adjustments ---
Total regulatory adjustments to Additional Tier 1 capital ---
Additional Tier 1 capital (AT1) 1,323,5521,360,7151,340,467
Tier 1 capital (T1 = CET1 + AT1) 7,257,2556,279,9955,438,989
Tier 2 capital: instruments and provisions    
Instruments issued by the Bank that meet the criteria for inclusion in Tier 2 capital (and are    
not included in Tier 1 capital) -11,380269,260
Provisions or loan-loss reserves (subject to a maximum of 1.25 percentage points of credit    
risk-weighted risk assets calculated under the standardised approach) 463,159415,825381,347
Tier 2 capital before regulatory adjustments 463,159427,205650,607
Tier 2 capital: regulatory adjustments ---
Significant investments in the capital of banking, financial and insurance entities that are    
outside the scope of regulatory consolidation (net of eligible short positions) -(37,913)(75,825)
Total regulatory adjustments to Tier 2 capital -(37,913)(75,825)
Tier 2 capital (T2) 463,159389,292574,782
Total Capital (capital base) (TC = T1 + T2) 7,720,4146,669,2876,013,771
Risk weighted assets    
Credit Risk 43,810,04941,591,45942,506,702
Market Risk 499,978332,436440,288
Operational Risk 4,404,2673,421,4902,988,502
Total risk weighted assets 48,714,29445,345,38545,935,492
Capital ratios (as a percentage of risk weighted assets)Regulatory Limits under Basel III   
CET1 capital ratio9.38%12.18%10.85%8.92%
Tier 1 capital ratio10.88%14.90%13.85%11.84%
Total capital ratio12.88%15.85%14.71%13.09%


30 June 2019 
 Statement of Financial Position as in published financial statementsStatement of Financial Position as per Basel III
Cash and cash equivalents *63,666,92265,383,047
Trading assets8,415,7258,433,956
Pledged assets--
Derivative assets held for risk management--
Loans and advances to banks6,019,0486,009,188
Loans and advances to customers22,150,19622,131,334
Derivative financial instruments92,413-
Financial investments-held for maturity36,892,44636,901,673
Investment securities--
of which: Insignificant capital investments in financial sector entities exceeding 10% threshold--
of which: Significant capital investments in financial sector entities exceeding 10% threshold--
Property, plant and equipment185,675185,675
Intangible assets243,398243,398
of which: Goodwill--
of which: Other intangible assets243,398243,398
Deferred tax assets100,953100,953
Other assets2,106,722884,374
of which: Defined benefit pension fund assets  
Total assets139,873,498140,273,598
Deposits from banks30,43430,434
Deposits from customers131,208,365131,208,365
Derivative financial instruments49,99549,995
Trading liabilities--
Derivatives liabilities held for risk management--
Debt securities issues--
Other borrowed funds--
Subordinated liabilities184,205184,205
of which: Subordinated debt not eligible for inclusion in regulatory capital 184,205184,205
of which: Subordinated debt eligible for inclusion in regulatory capital --
Current tax liabilities112,116112,116
Deferred tax liabilities--
of which: Provision reflected in regulatory capital-463,159
Other liabilities571,979561,502
Total liabilities132,157,094132,609,776
Shareholders' Equity  
Share capital and share premium5,026,8175,026,817
of which amount eligible for CET13,641,0493,641,049
of which amount eligible for AT11,323,5521,323,552
Retained earnings1,836,2421,836,242
Other reserves853,345800,763
Accumulated other comprehensive income--
Total shareholders' equity7,716,4047,663,822


The total asset book witnessed a growth of MUR 19.5bn for the year ended June 2019 versus the same period in 2018. The total risk weighted assets as at end of the current FY stood at MUR 48.7bn, demonstrating an increase of 7% in comparison to MUR 45.3bn as at end of June 2018. Despite the year-on-year growth of MUR 3.4bn in the risk weighted assets, the capital adequacy ratio rose from 14.71% to 15.85% as at end of June 2019, achieved through a net profit after tax recognised in retained earnings, as a result of a good performance of the Bank’s balance sheet. The capital adequacy ratio was well above the regulatory limit of 12.88% for the year 2019. The regulatory limit includes a capital surcharge of 1% in 2019, given that the Bank is classified as a Domestic Systemically Important Bank.

Analysis by risk type:

 Credit Risk  MUR 43.8bn
 Market Risk  MUR 0.5bn
 Operational     Risk  MUR 4.4bn