29 Jul 2022
Rating actions follow action on Mauritius' government ratings
Limassol, July 29, 2022 -- Moody's Investors Service ("Moody's") has today affirmed all ratings and
assessments of the three rated Mauritian banks, namely: Mauritius Commercial Bank Limited ("MCB"), SBM
Bank (Mauritius) Ltd. ("SBM Bank"), and Absa Bank (Mauritius) Limited ("Absa Mauritius"). As part of the same
rating action Moody's has changed the outlooks to stable from negative on MCB's and SBM Bank's long-term
deposit and issuer ratings. The outlook for Absa Mauritius' long-term deposit ratings remains stable.
A full list of affected ratings can be found at the end of this press release.
The rating action follows Moody's decision to downgrade the Mauritian government's long-term issuer rating to
Baa3, from Baa2, with an outlook change to stable from negative on 28 July 2022. The stable outlook on the
sovereign captures Moody's expectations that Mauritius's credit profile will remain aligned with Baa3-rated
sovereigns. For further information on the sovereign rating action, please refer to Moody's press release:
"Moody's downgrades Mauritius's rating to Baa3, changes outlook to stable",
https://www.moodys.com/research/--PR_467667 .
RATINGS RATIONALE
The affirmation of the three Mauritian banks' ratings reflects the resilient financial profile despite the
increasingly challenging operating environment. While banks asset risks remain elevated, to varying degrees,
banks maintain strong liquidity and solid capital buffers, and we expect their profitability to rebound following
the pandemic.
While the post-pandemic economic recovery remains fragile, following Russia's invasion of Ukraine that will
lead to higher inflation and lower global growth rates, we expect any asset-quality deterioration for Mauritian
banks to be manageable as a result of targeted support measures. Affected households and businesses have
benefitted from moratoriums on loan repayments and wage assistance schemes, and large enterprises have
received longer-term support from the Mauritius Investment Corporation (MIC).
The creation of MIC, a special purpose vehicle that is fully owned by the Bank of Mauritius and funded through
$2 billion of international reserves, has supported financial stability by providing funding to systemically
important corporates. The creation of MIC has, in this way, shielded the local banks from a sharp surge in
asset quality's deterioration, which is positive for the banking system, but in turn exposes the central bank's
balance sheet to increased credit risk.
The stable outlooks on the three banks' long-term deposit and issuer ratings reflects Moody's view that the
banks' ratings already capture the current risks to the banks' financials from the still challenging operating
conditions. The stable outlooks on the banks' long-term deposit and issuer ratings also incorporate the stable
outlook on the sovereign rating, as Moody's expects that the sovereign's capacity to provide support to banks,
in case of need, will remain broadly stable.
ISSUER-SPECIFIC RATING DRIVERS
MAURITIUS COMMERCIAL BANK LIMITED ("MCB")
The affirmation of MCB's Baa3 long-term deposit and issuer ratings reflects its solid capital levels, with a
shareholders' equity-to-assets ratio of 10.3%. At the same time, high liquid banking assets-to-tangible banking
assets ratio of 51% as of March 2022; and its stable domestic funding profile, mitigate MCB's sizeable offshore
deposits and growing market funding reliance. Despite a drop since the pandemic, MCB's profitability strongly
positions it among its global peers and Moody's expects a gradual improvement supported by reduced loan
loss provisions, the recent high growth in its international lending and the higher interest rate environment.These drivers are moderated by residual risks to MCB's asset quality amid the bank's high borrower
concentrations, and in the context of the still fragile post-pandemic economic recovery and following Russia's
invasion of Ukraine that will lead to higher inflation and lower global growth rates.
MCB's Baa3 long-term deposit and issuer ratings reflect its ba1 Baseline Credit Assessment (BCA), and a
one-notch rating uplift, resulting from Moody's assessment of a high likelihood of support from the Government
of Mauritius in the event of need, driven by MCB's importance to Mauritius' domestic financial system.
The stable outlook on MCB's long-term deposit and issuer ratings reflects Moody's view that the bank's ratings
already capture the current risks to the bank's financials from the tough operating conditions. The stable
outlook also incorporates Moody's view that the sovereign's capacity to provide support will remain broadly
stable, given the stable outlook on the sovereign rating.
SBM BANK (MAURITIUS) LTD. ("SBM BANK")
The affirmation of SBM Bank's Ba1 long-term deposit and issuer ratings reflects the bank's high share of liquid
assets at 64.5% of tangible banking assets as of March 2022, its predominantly domestic retail deposit funded
profile, with a low loan-to-deposit ratio; and strengthened capital levels with a reported regulatory Tier 1 capital
ratio of 16.4% as of March 2022.
The ratings also reflect SBM Bank's weak asset quality, with a higher share of NPLs at 10.0% of gross loans
as of year-end 2021, that remains its key credit challenge. Residual risks remain in the context of the still
fragile post-pandemic economic recovery and following Russia's invasion of Ukraine that will lead to higher
inflation and lower global growth rates.
SBM Bank's Ba1 long-term deposit ratings reflect its ba2 BCA and a one-notch uplift, resulting from Moody's
assessment of a high likelihood of support from the Government of Mauritius, in the event of need.
The stable outlook on SBM Bank's long-term deposit and issuer ratings reflects Moody's view that the bank's
ratings already capture the current risks to the bank's financials from the tough operating conditions. The
stable outlook also incorporates Moody's view that the sovereign's capacity to provide support will remain
broadly stable, given the stable outlook on the sovereign rating.
ABSA BANK (MAURITIUS) LIMITED ("ABSA MAURITIUS")
The affirmation of Absa Mauritius' Ba1 long-term deposit ratings reflects its strong liquidity buffers at 63% of
tangible banking assets as of March 2022 and solid capital levels with a reported regulatory common equity
Tier 1 capital ratio of 19.0% and a total capital adequacy ratio of 23.1% as of December 2021. The bank's
profitability and franchise benefit from the close cooperation with its parent, Absa Group Limited (AGL, Ba3
stable), and other group companies in the region, as well as its role as the group's international banking,
wealth management and asset hub, results in its ability to source good-quality regional business in the broader
Africa continent.
The ratings also capture the high credit risks stemming from the still fragile post-pandemic economic recovery
and following Russia's invasion of Ukraine that will lead to higher inflation and lower global growth rates.
Absa Mauritius Ba1 long-term deposit ratings reflect its ba2 BCA and a one-notch uplift to its BCA, stemming
from Moody's assessment of a moderate likelihood of support from the Government of Mauritius, in case of
need.
The stable outlook on Absa Mauritius' long-term deposit ratings reflects Moody's view that the bank's ratings
already capture the current risks to the bank's financials from the still challenging operating conditions. The
stable outlook also incorporates Moody's view that the sovereign's capacity to provide support will remain
broadly stable, given the stable outlook on the sovereign rating.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Any upward pressure on Mauritian banks' ratings is limited, given the difficult operating environment.
Mauritian banks' ratings could be downgraded if their financial metrics weaken beyond those of global peers
that Moody's rates similarly.
LIST OF AFFECTED RATINGS..Issuer: Absa Bank (Mauritius) Limited
Affirmations:
....Adjusted Baseline Credit Assessment, Affirmed ba2
... Baseline Credit Assessment, Affirmed ba2
....Long-term Counterparty Risk Assessment, Affirmed Baa3(cr)
....Short-term Counterparty Risk Assessment, Affirmed P-3(cr)
....Long-term Counterparty Risk Ratings, Affirmed Baa3
....Short-term Counterparty Risk Ratings, Affirmed P-3
....Long-term Bank Deposit Ratings, Affirmed Ba1, Outlook Remains Stable
....Short-term Bank Deposit Ratings, Affirmed NP
Outlook Action:
....Outlook, Remains Stable
..Issuer: Mauritius Commercial Bank Limited
Affirmations:
....Adjusted Baseline Credit Assessment, Affirmed ba1
....Baseline Credit Assessment, Affirmed ba1
....Long-term Counterparty Risk Assessment, Affirmed Baa2(cr)
....Short-term Counterparty Risk Assessment, Affirmed P-2(cr)
....Long-term Counterparty Risk Ratings, Affirmed Baa2
....Short-term Counterparty Risk Ratings, Affirmed P-2
....Long-term Issuer Rating, Affirmed Baa3, Outlook Changed To Stable From Negative
....Long-term Bank Deposit Ratings, Affirmed Baa3, Outlook Changed To Stable From Negative
....Short-term Bank Deposit Ratings, Affirmed P-3
Outlook Action:
....Outlook, Changed To Stable From Negative
..Issuer: SBM Bank (Mauritius) Ltd.
..Affirmations:
....Adjusted Baseline Credit Assessment, Affirmed ba2
....Baseline Credit Assessment, Affirmed ba2
....Long-term Counterparty Risk Assessment, Affirmed Baa3(cr)
....Short-term Counterparty Risk Assessment, Affirmed P-3(cr)
....Long-term Counterparty Risk Ratings, Affirmed Baa3
....Short-term Counterparty Risk Ratings, Affirmed P-3
....Long-term Issuer Rating, Affirmed Ba1, Outlook Changed To Stable From Negative....Long-term Bank Deposit Ratings, Affirmed Ba1, Outlook Changed To Stable From Negative
....Short-term Bank Deposit Ratings, Affirmed NP
Outlook Action:
....Outlook, Changed To Stable From Negative
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Banks Methodology published in July 2021 and available
at https://ratings.moodys.com/api/rmc-documents/71997 . Alternatively, please see the Rating Methodologies
page on https://ratings.moodys.com for a copy of this methodology.
REGULATORY DISCLOSURES
For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections
Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and
Definitions can be found on https://ratings.moodys.com/rating-definitions.
For ratings issued on a program, series, category/class of debt or security this announcement provides certain
regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series,
category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from
existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this
announcement provides certain regulatory disclosures in relation to the credit rating action on the support
provider and in relation to each particular credit rating action for securities that derive their credit ratings from
the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory
disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be
assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms
have not changed prior to the assignment of the definitive rating in a manner that would have affected the
rating. For further information please see the issuer/deal page for the respective issuer on
For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this
credit rating action, and whose ratings may change as a result of this credit rating action, the associated
regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following
disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated
entity.
The ratings have been disclosed to the rated entities or their designated agent(s) and issued with no
amendment resulting from that disclosure.
These ratings are solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit
Ratings available on its website https://ratings.moodys.com.
Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related
rating outlook or rating review.
Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit
analysis can be found at https://ratings.moodys.com/documents/PBC_1288235.
The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates
outside the UK and is endorsed by Moody's Investors Service Limited, One Canada Square, Canary Wharf,
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endorsement status and on the Moody's office that issued the credit rating is available on
Please see https://ratings.moodys.com for any updates on changes to the lead rating analyst and to the
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Please see the issuer/deal page on https://ratings.moodys.com for additional regulatory disclosures for each
credit rating.Christos Theofilou, CFA
Vice President - Senior Analyst
Financial Institutions Group
Moody's Investors Service Cyprus Ltd.
Porto Bello Building
1, Siafi Street, 3042 Limassol
PO Box 53205
Limassol, CY 3301
Cyprus
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454
Antonello Aquino
Associate Managing Director
Financial Institutions Group
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454
Releasing Office:
Moody's Investors Service Cyprus Ltd.
Porto Bello Building
1, Siafi Street, 3042 Limassol
PO Box 53205
Limassol, CY 3301
Cyprus
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454
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MOODY'S INVESTORS SERVICE - Rating Action: Moody's affirms ratings of Mauritian Banks; all outlooks are now stable
