Analyst Meeting FY 2017 Highlights 5 April 2018 DISCLAIMER This - - PowerPoint PPT Presentation

5 April 2018

SBM Group

Analyst Meeting

FY 2017 Highlights

This document has been prepared by SBM Group (SBM Holdings Ltd and its subsidiaries) (the Group) for general circulation and is meant solely for information purpose, without taking into consideration any objective or aim of whoever is receiving this document. SBM Group does not, in any way whatsoever, warrant expressly or impliedly the accuracy and completeness of the contents of this publication and shall not be liable for any loss or damage (including, without limitation, damages for loss of business or loss of profits) or prejudice of any nature whatsoever, arising in contract, tort or otherwise suffered by any person / entity relying on the information contained in this document or arising from any shortcoming, mistake, omission, defect or inaccuracy, in the document arising through inadvertence or any other reason. This document is

• wned by SBM Group and no part of this publication may be reproduced or

transmitted in any form or by any means, including photocopying and recording,

• r by any information storage and retrieval system without the permission of the
• rganization.

DISCLAIMER

2

AGENDA

• Financial Highlights
• Share Price Info
• Focus Areas Going

Forward

• Q & A

3

SBM HOLDINGS LTD CONSOLIDATED KEY FINANCIAL HIGHLIGHTS

MUR 25.16 billion 31 Dec 2017 31 Dec 2016 MUR 23.80 billion

SHAREHOLDERS’EQUITY

MUR 194.02 billion 31 Dec 2017 31 Dec 2016 MUR 146.90 billion

TOTAL ASSETS TOTAL DEPOSITS

MUR 145.54 billion 31 Dec 2017 31 Dec 2016 MUR 111.85 billion

NET LOANS & ADVANCES

MUR 103.13 billion 31 Dec 2017 31 Dec 2016 MUR 71.62 billion MUR 168.86 billion 31 Dec 2017 31 Dec 2016 MUR 123.09 billion

TOTAL LIABILITIES

4

NET INTEREST INCOME

MUR 4,768 M 31 Dec 2017 (31 Dec 2016: MUR 4,383 M)

NON INTEREST INCOME

MUR 2,804 M 31 Dec 2017 (31 Dec 2016 : MUR 2,063 M)

OPERATING INCOME

MUR 7,572 M 31 Dec 2017 (31 Dec 2016 : MUR 6,446 M)

PROFIT AFTER TAX

MUR 2,575 M 31 Dec 2017 (31 Dec 2016 : MUR 2,309 M)

SBM HOLDINGS LTD CONSOLIDATED KEY FINANCIAL HIGHLIGHTS

5

200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 2,200 2,400 2,600 Dec-15 Dec-16 Dec-17 1,608 2,309

GROUP PROFIT FOR DECEMBER 2017 INCREASED…

MUR Million 2,575

6

… MAINLY DUE TO INCREASE IN NET INTEREST INCOME AND NON INTEREST INCOME, TEMPERED BY A SIGNIFICANT RISE IN OPERATING EXPENSES AND PORTFOLIO IMPAIRMENT CHARGES

2,309 384 741 647 321 78 90 95 2,575

+8.8% +35.9% +23.6% +10.3%

• 14.0%

1,000 1,500 2,000 2,500 3,000 3,500 PAT Dec 16 Net interest income Non interest income Non interest expenses Portfolio Charge Specific Prov & Write offs Share of profit of associate Tax PAT Dec 17 MUR Million

7

ROE RECOVERED SLIGHTLY, BUT ROA DROPPED

%

1.23 1.63 1.51 7.26 10.04 10.52

• 2

4 6 8 10 12 Dec-15 Dec-16 Dec-17 Return on Assets Return on Equity

8

TOTAL ASSETS GREW SUBSTANTIALLY BY 32% DRIVEN BY SIGNIFICANTLY HIGHER SEGMENT B ASSETS

MUR Billion

105.0 68.8 37.4 136.2 111.9 71.6 39.4 146.9 145.5 103.1 40.0 194.0

50 100 150 200 250 Total Deposits Net Loans & Advances Investment securities Total Assets Dec-15 Dec-16 Dec-17

9

4.05 3.90 3.56 3.00 4.00 5.00 Dec-15 Dec-16 Dec-17 % 7.06 6.26 5.73 3.00 6.00 9.00 Dec-15 Dec-16 Dec-17

Yield on investment Yield on advances

%

YIELDS DECLINED DUE TO (i) HIGHER MIX OF SEGMENT B ASSETS (ii) EXCESS LIQUIDITY IN DOMESTIC MARKET AND (iii) DROP IN REPO RATE

10

DEPOSIT MIX REMAINED WELL BALANCED

38% 44% 18%

Dec-15

37% 47% 16%

Dec-16

37% 40% 23%

Dec-17

Demand Savings Term

11

COST OF FUNDS IMPROVED SLIGHTLY AMIDST HIGH LIQUIDITY AND HIGHER MIX OF FCY DEPOSITS

2.06 1.61 1.56 1.00 1.50 2.00 2.50 Dec-15 Dec-16 Dec-17 % Cost of funds

12

OVERALL, NIM NARROWED BY 30 BPS

% 3.22 3.10 2.80 2.50 3.00 3.50 4.00 Dec-15 Dec-16 Dec-17 Net Interest Margin

13

NONETHELESS, NET INTEREST INCOME RECORDED APPRECIABLE GROWTH ON THE BACK OF THE STRONG ASSETS GROWTH

Dec-15 Dec-16 Dec-17

4,253 4,383 4,768

MUR Million 3.1% 8.8%

14

Other income

(e-business, etc.)

289 456 449

Net Fees & Commission

1,029 1,053 1,240

+18%

Dividend Income

157 39 22

• 45%

Net trading income

528 515 1,093

+112%

• 2%

2,003 2,063 2,804

31 Dec 15 Total Non-Interest Income

+36%

NON-INTEREST INCOME WAS SUPPORTED BY AN APPRECIABLE INCREASE IN NET TRADING INCOME AND FEES & COMMISSION

31 Dec 16 31 Dec 17

MUR Million

15

4,253 4,383 4,768 2,003 2,063 2,804

• 1,000

2,000 3,000 4,000 5,000 6,000 7,000 8,000 Dec-15 Dec-16 Dec-17 Net Interest Income Non Interest Income

HENCE, GROSS OPERATING INCOME GREW BY 17.5%

6,255 6,446 7,572 MUR Million

16

WHILE NON INTEREST EXPENSES INCREASED SIGNIFICANTLY AMIDST CAPACITY BUILDING INITIATIVES AND CONTINUOUS INVESTMENT IN TECHNOLOGY…

1,237 1,396 1,619 872 996 1,099 162 350 670 500 1,000 1,500 2,000 2,500 3,000 3,500 Dec-15 Dec-16 Dec-17 Personnel Expenses Other Expenses Depreciation & Amortisation

17

MUR Million

… RESULTING IN A RISE IN THE COST TO INCOME RATIO

% 36.30 42.53 44.75 30.00 32.00 34.00 36.00 38.00 40.00 42.00 44.00 46.00 48.00 50.00 Dec-15 Dec-16 Dec-17

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BOTH GROSS IMPAIRMENT RATIO AND NET IMPAIRED RATIO IMPROVED

For the year ended December 2017, SBM Mauritius Ops and SBM Indian Ops booked write offs of MUR 1.3 Bn and MUR 296 M respectively out of existing provisions.

3,712 4,998 4,789 5.14% 6.60% 4.47% 1.89% 2.64% 1.98% 1.00% 3.00% 5.00% 7.00% 1,000 2,000 3,000 4,000 5,000 Dec-15 Dec-16 Dec-17 MUR Million Impaired Advances Gross impaired / Gross Advances (%) Net Impaired / Net Advances (%)

19

CAPITAL ADEQUACY RATIO REMAINED WELL ABOVE REGULATORY REQUIREMENTS, ALBEIT DECREASING IN LINE WITH STRONG ADVANCES GROWTH

18.25 18.60 20.01 5.46 5.43 5.10 28.26 25.70 19.98 5.00 10.00 15.00 20.00 25.00 30.00

• 5.00

10.00 15.00 20.00 25.00 30.00 Dec-15 Dec-16 Dec-17 % MUR Bn Tier 1 Capital MUR Bn Tier 2 Capital MUR Bn Capital adequacy ratio

20

AGENDA

• Financial Highlights
• Share Price Info
• Focus Areas Going

Forward

• Q & A

21

Note: Share information prior to 19 October 2016 has been restated to reflect reverse share split of 10:1 effective that date.

EARNINGS PER SHARE IMPROVED, REFLECTING THE PROFIT TREND

Cents 62.27 89.43 99.73 20 40 60 80 100 120 Dec-15 Dec-16 Dec-17

22

BUT SHARE PRICE PERFORMANCE CONTINUED TO BE SUBDUED

6 6.5 7 7.5 8 8.5 1700 1800 1900 2000 2100 2200 2300 2400 02/01/2017 17/01/2017 01/02/2017 16/02/2017 03/03/2017 18/03/2017 02/04/2017 17/04/2017 02/05/2017 17/05/2017 01/06/2017 16/06/2017 01/07/2017 16/07/2017 31/07/2017 15/08/2017 30/08/2017 14/09/2017 29/09/2017 14/10/2017 29/10/2017 13/11/2017 28/11/2017 13/12/2017 28/12/2017 12/01/2018 27/01/2018 11/02/2018 26/02/2018 13/03/2018 28/03/2018 Index

SBMH (Jan 2017 - Mar 2018)

SEMDEX (LHS) SBMH (RHS) 23 Price (MUR)

…REFLECTED IN A LOW PRICE TO BOOK RATIO

0.83 0.72 0.77 0.60 0.65 0.70 0.75 0.80 0.85 0.90 Dec-15 Dec-16 Dec-17 Times

24

DIVIDEND YIELD REMAINED STRONG

% 5.63 6.02 5.33 3.73 3.29 2.96 2.00 2.50 3.00 3.50 4.00 4.50 5.00 5.50 6.00 6.50 Dec-15 Dec-16 Dec-17 SBM Market

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…AND PE RATIO ATTRACTIVE COMPARED TO THE MARKET

11.40 7.42 7.52 11.83 16.39 12.49 6.00 6.50 7.00 7.50 8.00 8.50 9.00 9.50 10.00 10.50 11.00 11.50 12.00 12.50 13.00 13.50 14.00 14.50 15.00 15.50 16.00 16.50 17.00 Dec-15 Dec-16 Dec-17 SBM Market

26

AGENDA

• Financial Highlights
• Share Price Info
• Focus Areas Going

Forward

• Q & A

27

Retail Banking

• Digitalisation to sustain/grow market share and reduce cost of
• perations
• Cross-selling to grow products per customer
• Improve level of customer service
• Reduce cost to serve through migration to lower cost channels

Domestic Corporates and SMEs

• Sales process efficiency to grow market share
• Move up the value chain to meet client needs and raise share of

fee-based income

OUR FOCUS AREAS: MAURITIUS

28

International Banking

• Leverage international presence
• Cross-selling across Group entities

Private Banking & Wealth Management

• Product and market diversification

Non-Banking Financial Services

• Product development and product scale
• Synergy with other entities of the Group
• Investment banking deals

OUR FOCUS AREAS: MAURITIUS

29

• Revamp customer value proposition to build a healthy book

and gain market share with a respectable Indian lender status

• Exploit India/Mauritius/Kenya/Madagascar linkages to grow

both funded and non-funded business

• Tap into synergistic opportunities with other entities of the

Group through cross-selling

• Grow presence and capability, based on customer value

proposition

• Manage impaired assets and recovery from written-
• ff/provisioned assets

OUR FOCUS AREAS: INDIA

30

• Stabilisation and integration (subject to deal completion)
• Take advantage of the combined strength to grow business

in the target segments

• Tap into synergetic opportunities with other entities of the Group
• Align policies to Group policies, particularly in areas of risk

and compliance

OUR FOCUS AREAS: KENYA

31

• Low-risk business focus
• Accompany Mauritian customers doing business in

Madagascar

• Cross-sell HNWIs and Corporates to Mauritius banking

and non-banking

OUR FOCUS AREAS: MADAGASCAR

32

OUR FOCUS AREAS: KEY ENABLERS

HR

• Improved capabilities in selected growth areas
• Enhanced organisational culture
• Recruit, retain and reward top talent

Technology

• Pursue digitalisation agenda
• Manage IT costs and cost of change
• Optimise distribution channels

Organisation and Governance Framework

• Revamped group organisation and governance structure to

enable accountability and synergy Risk Management

• Align risk appetite to strategy
• Improve risk culture
• End to end credit process review

33

AGENDA

• Financial Highlights
• Share Price Info
• Focus Areas Going

Forward

• Q & A

34

QUESTIONS & ANSWERS

35

THANK YOU