ANNUAL REPORT MAUBANK Annual Report 2019 001 Table of Contents 004 Corporate information 007 Chairman Statement 008 Chief Executive Statement 012 Directors’ report 021 Corporate governance report 035 Statement of compliance 037 Statement of management’s responsibility for financial reporting 038 Report from the secretary 039 Independent auditor’s report 043 Statements of financial position 045 Statements of profit or loss and other comprehensive income 047 Statements of changes in equity 049 Cash flow statements for the year ended 050 Notes to the financial statements 154 Management discussion and analysis 173 Administrative information CORPORATE INFORMATION MAUBANK 004 Annual Report 2019 Corporate Information DIRECTORS: Non-Executive Directors Appointed on Resigned on Mr Burkutoola Mahmadally (Chairman) 29 March 2019 Mr Lalloo Said (Chairman) 20 January 2016 01 October 2018 Dr Paligadu Dharamraj (was appointed Acting Chairman on 06 June 2018) 07 March 2015 06 August 2019 Mr Nicolas Jean Marie Cyril 13 March 2015 Mr Putchay Vassoo Allymootoo 20 January 2016 05 September 2019 Mr Gokhool Ashvin Jain 23 February 2016 Mr Nilamber Anoop Kumar 22 March 2016 Mr Codabux Muhammad Javed 10 March 2017 Executive Directors Mr Mungar Premchand 23 November 2018 Mr Nagarajan Sridhar 24 September 2015 21 September 2018 MAUBANK Annual Report 2019 005 KEY MANAGEMENT TEAM: Position Mr Mungar Premchand Chief Executive Officer (As from 23 November 2018) Mr Nagarajan Sridhar (As from 24 September 2015 to 21 September 2018) Chief Executive Officer Mr Vydelingum Vishuene (As from 05 August 2019) Deputy Chief Executive (As from 20 March 2019 to 02 August 2019) Executive Head – Treasury, International Banking, Commercial Banking and SME Banking Mr Toynoo Yougeshsingh (Asish) Chief Financial Officer (As from 03 October 2016) Mr Motee Ramesh (As from 03 February 2016) Chief Risk Officer (As from 24 September 2018 to 22 November 2018) Officer in charge Mr Mardaymootoo Pillay Chedumbrum (Nanda) (As from 03 February 2016) Executive Head – Operations Mr Yasdeo Rawoteea (Rajesh) ((As from 01 February 2017) Executive Head – Human Resources Mrs Luximon-Mathur Jessma Head of compliance (As from 1 November 2016) Mr Kundan Anil Kumar Executive Head – SME Banking (As from 02 February 2017) Miss Saddul Anouchka (As from 03 January 2017) Head of Corporate Affairs, Brand Management and Marketing Mr Muhem Dharmarajan (As from 01 April 2019) Acting Head – Information & Technology Services Mr Prabhu Sudheer Chief Information and Digital Officer (As from 28 August 2017 to 31 March 2019) Mr Bhagavan Ramakrishna Head of Retail Banking (As from 12 October 2017) Mr Appadoo Yogendra Head of International Banking (As from 15 July 2018 to 22 August 2019) Mr Carver Jean Clifford Eric Head of Asset Financing (As from 22 January 2018) Mr Vyapooree Govinden Modeliar Head of Market (As from 09 February 2018) Mr Agrawalla Anup Kumar Head of Wealth Management (As from 27 February 2018 to 30 April 2019) MAUBANK 006 Annual Report 2019 Corporate Information (Contd) KEY MANAGEMENT TEAM (CONTD): Position Mr Mussai Satish Head Large Corporate and Debt Restructuring (As from 09 March 2018 to 26 April 2019) Mr Albert Clint Head of Commercial Banking (As from 09 March 2018) Mr Beebeejaun Muhammad Asif Head of Special Asset Management (As from 01 June 2018) Mr Youell Peter Gregory Head of Credit Risk (As from 05 November 2018) INTERNAL AUDIT: Mr Seebaruth Rakesh (B.K) Head of Internal Audit (As from 03 June 2019) Mrs Nujeebun Shameema Bibi Khan Acting Head of Internal Audit (As from 01 March 2018 to 02 June 2019) SECRETARY: Ms Prosand Ashiti Company Secretary and Head of Legal (As from 27 October 2016 to 15 March 2019) Mr Ramjunum Gauravsingh Company Secretary and Manager Legal (As from 30 April 2019) REGISTERED OFFICE: MauBank Building 25 Bank Street Cybercity Ebene 72201 Republic of Mauritius AUDITOR: Deloitte 7th Floor, Standard Chartered Tower 19-21 Bank Street Cybercity Ebene 72201 Republic of Mauritius MAUBANK Annual Report 2019 007 Chairman Statement Dear Shareholders, Customers and Staff, “Create sustainable growth and enhance the clients experience by providing solutions with a high level of Good The banking industry in Mauritius is a very competitive Governance.” While Segment A will remain our main focus, sector with 20 Commercial Banks in the landscape. In spite Mauritius as a financial hub offers many opportunities for of the challenges of the global and local economy, the international business in Africa and the Middle East, and the banking sector is striving to maintain high value addition and bank contemplates to step into Segment B. MauBank has to deliver a healthy year on year contribution to the National already started to build up its capabilities and networking in Economy. order to focus on this new area of opportunity. Deloitte’s 2018 Banking Industry outlook mentions that We would like to extend our thanks to the Shareholder for 2018 and beyond, banks must contend with multiple for its support, to our customers for their trust and to challenges tied to regulations, legacy systems, disruptive MauBank’s staff for their diligence. The years ahead will be models and technologies, new competitors, and a restive full of opportunities and challenges and with your continued customer base while pursuing new strategies for sustainable support, we will welcome them and make the most out of growth. This statement still stands in 2019. Technology them. is changing the way business is done and in the local Banking Industry, technology and digitalization are already transforming the landscape, with the implementation of MauCAS by the Bank of Mauritius on 14 August 2019 and the launching of My.t Money on 24 August 2019. The Financial year 2018/2019 was full of challenges for the bank. With the leadership and the vision of the CEO and the board of directors, we were able to steer the bank from a loss of MUR 62 Million for the semester ending in December 2018 to a profit of MUR 6.296 after impairment but before income tax. The different initiatives taken at the bank enabled us to Mr. Mahmadally Burkutoola stay as a digital transformation leader in the industry. Our Chairman, MauBank Ltd two digital products that we launched – namely MauBank WithMe and MyLease, have become instant success stories. The success of these products have been recognized and rewarded at the Finacle client Innovation Awards 2019 with MyLease winning first prize for the category Application Programming Interface Led Innovations and WithMe being the runner up for in the category of Emerging Technology led Innovations. On 14th June 2019 we launched the Visa Contactless Card (normal, Gold and platinum flavours). On that same occasion, to commemorate the 10th edition of the Indian Ocean Island Games, we launched a limited edition of a debit card with the colours and the logos of the games. More recently, on 16 August 2019, we moved to our brand new branch in Flacq to further increase our service level to our customers. MauBank will need to continue to build up on these successes to aspire to greater successes in the Segment A. MauBank is the bank of the SMEs. We are going to stay a true partner of the SME sector, and part of its strategy is to enhance its growth. We do take into account that there are more than 126000 SMEs, these contribute to nearly 40% of the GDP, and employing more than 300,000 persons, which represents 54% of the workforce. For the five years ahead, the Board together with the leadership team will put in place our 5-year corporate plan (2019 – 2024) to further develop MauBank. The Corporate Strategy of the bank is a three-pronged approach that can be summarized in the following corporate strategy statement: MAUBANK 008 Annual Report 2019 Chief Executive Statement MAUBANK Annual Report 2019 009 Dear Shareholders, Customers and Colleagues are in the process of becoming a different bank; stronger, fairer and customer focused. It is with immense pleasure that I present the annual report for the year 2018-19 to you. This is the second report that I have presented to you since my appointment as Chief FINANCIAL PERFORMANCE Executive of our bank on 23 November 2018. During our 2018-19 financial year, our bank posted a profit I joined the bank in the middle of a turbulent period. Yet, I of MUR 6.3 million after impairment and before tax. knew that our shareholders were committed to creating a We have significantly more high-quality capital than in the strong bank and knew that I would be joining colleagues past. The Bank of Mauritius prescribes a capital adequacy who wanted to do great work for our customers. ratio of 11.875%. As part of the phase-in arrangements of The past is not completely behind us. Time and again the capital requirements pursuant to the implementation of Basel bank is brought to the forefront of public discussion whether III, the Bank of Mauritius will increase the capital adequacy on the merger that created the bank, the potential sale of the ratio to a minimum of 12.5% as from January 2020. Our capital bank or employee conduct. adequacy ratio at the end of our 2018-19 financial year stands at 15.29% and our bank is strongly capitalised. TRANSFORMING OUR CULTURE Our productivity strategy is two-fold: improve our cost structure and make our revenue sustainable. The Board of Directors of MauBank Ltd, the “Bank”, is pleased to present its Annual Report together with the We made good progress on our costs. Interest expense has financial statements of the Bank and its subsidiary for decreased by 14.23% from 534 million Rupees to 458 million the financial year ended 30 June 2019. The financial Rupees.