The year 2019 has been yet another eventful one, marked by controversies and a seemingly unending parade of crises, natural calamities, protests and - more recently - the deadly corona virus that made its appearance in Wuhan, China and spread rapidly
across the world taking the proportions of a pandemic.
Unsurprisingly, America continued to be at the forefront of the global political scenario. Donald Trump kept grabbing the headlines with his unprecedented visit to North Korea to work out a nuclear solution with President Kim Jong-Un, which unfortunately did not go very far. Talks are expected to resume in the coming year as well. President Trump’s impeachment trial proceedings still underway are another distractor on the political front.
Moving on to the United Kingdom (UK), Prime Minister Boris Johnson received a strong mandate to push forward the country’s Brexit agenda. After prolonged negotiations on both sides of the Channel, he managed to get a clearance for the UK to cease being a member of the European Union (EU) after 23:00 GMT on 31 January 2020.
Another issue that generated a lot of heat was the trade war between the United States of America (USA) and China. Globally, stock markets yo-yoed as each round of negotiations took place, until a tentative agreement was reached in October on a “Phase 1” deal. It took a further two months for the modalities to be worked out. The agreement, however, failed to settle the major differences between the two economic superpowers, suggesting that there could be more turbulence on the trade front in the coming year.
In the Middle East, tensions continued to mount and a war in the Persian Gulf seemed imminent at various points in time in 2019. Following the destruction of two major Saudi oil refineries, the USA announced its intention to deploy 3,000 additional troops and several missile defense systems to the region, in order to protect Saudi Arabia. Thereafter, the assassination of Iranian General Qasem Soleimani further exacerbated the situation. Fortunately, things appear to have calmed down for the time being.
On the environmental front, concerted global action appeared very limited despite the mounting evidence that the planet is warming. There was massive destruction of forests through deforestation and wildfires in Brazil, Australia and other countries, causing enormous damage to the global ecosystem.
World economic growth decelerated markedly in 2019, with continued downturn in global trade and investment. This weak trend was widespread, affecting both advanced economies as well as emerging markets and developing economies. The global growth in 2019 is estimated to be 2.9% and the projected recovery could be stronger if policy actions can lead to a sustained reduction in economic uncertainty.
All of the above, including the anti-government protests in Hong Kong, India’s new citizenship laws and unrest in many other parts of the world, are indications that the global economy is still fragile and fraught with uncertainty.
On the domestic front, performance in the major Mauritian economic sectors has been largely in line with the 3.8% GDP growth estimate. While construction, financial services and retail business have been doing relatively well, both tourism and agro-based industries appeared more vulnerable reacting to international trends. The first phase of the much-awaited Mauritian metro project was completed and has proven to be a real success, having positively impacted the lifestyle of a large segment of the population. The second phase has already kick started and is expected to be ready by December 2020. The completion of the entire project will be a landmark achievement, expected to bring about substantial improvements in local productivity.
The Mauritian banking system has remained resilient in spite of the increased regulatory supervision and reporting requirements imposed on the GBC sector. This sector will face tougher competition from other international financial centres and continued pressure from regulators.
Bank One has posted impressive numbers in 2019 despite all the local and offshore challenges. Our year on year 39% asset growth remains among the highest on the Mauritian market, contributed to a large extent by our offshore business. The Bank also closed some long-term deals with renowned international financial corporations during the last quarter. Efforts were made to hone up our risk management systems and de-risk our portfolio, by penetrating new markets and offering new products. The focus on our retail franchise during the year has paid off – the Bank is now a recognised player in this segment of the local market. We are confident that after this year’s stellar performance, resulting in a return on equity of over 20%, the Bank is on a firm footing to face future challenges. The additional equity injection of MUR 300 million by CIEL and I&M reaffirms our shareholders’ unconditional support towards sustainably growing the Bank.
On the Personnel side, our CEO, Ravneet Chowdhury, will be leaving in March 2020 to pursue opportunities outside the Bank. I wish to place on record the excellent job he has done to steer Bank One in the right direction. He has been instrumental in building a strong people-centric culture, offering innovative products and delivering customer satisfaction at all times. On behalf of the Board of Directors, I would like to thank Ravneet for his strong commitment and valuable contribution to the substantive improvements made in the Bank over the last six years. We wish him all the best in his future endeavours, both professionally and personally. Ravneet will be succeeded by Mark Watkinson, a career banker from HSBC who holds over 33 years’ experience in various worldwide locations. The changes in the Board’s composition during the year under review include the departure of Juan Carlos Albizzati, who resigned on 12 June 2019. We thank him for his valued contribution to the Board and his effectiveness as Chairman of the Board Risk Management Committee. We also welcome our new members, Ignacio Serrahima Arbestain and Paul E. Leech, who joined the Board of Bank One on 16 April 2019 and 26 June 2019 respectively. They come with a wealth of experience in their individual fields and we look forward to their active participation in Board-related matters. I would also like thank my fellow directors for their contribution to the smooth and effective functioning of the Board; the management and the staff of the Bank for their hard work and dedication; and our business partners and shareholders for their unwavering support. Last but not least, I acknowledge the guidance and support received from our Regulators and External Auditors, whose inputs are very valuable to us.
The year 2019 has been yet another eventful one, marked by controversies and a seemingly unending parade of crises, natural calamities, protests and - more recently - the deadly corona virus that made its appearance in Wuhan, China and spread rapidly across the world taking the proportions of a pandemic.
It is my privilege as outgoing CEO to share Bank One’s strategy
and performance for the year 2019. I am delighted to report
record numbers for the Bank for the period under review,
with total operating income growing by 18% and crossing the
MUR 1.5 billion mark for the first time ever. Additionally, the Bank
reported profits after tax of MUR 630 million for the year under
review, which represent a 60% momentum as compared to 2018.
This growth was fueled by strong momentum on the balance
sheet with deposits growing by 44%.
The Bank’s deliberate strategy to review its asset mix resulted in an 18% increase in gross loans and advances, while the investment book experienced a 181% rise. With a balance sheet size of above MUR 55 billion, the Bank is better equipped to face future challenges.
In order to support the Bank’s growth and improve its capitalisation, our shareholders injected another MUR 300 million in the form of ordinary shares, strengthening our capital base. The Bank delivered a return on equity of above 20%, which is among the best in the industry.
In parallel, risk has been well managed, with the NPL ratio going from 4.7% in 2018 to 4.2% in 2019. The coverage ratio has also improved from 64% in 2018 to 74% as at December 2019, on account of more provisions. And to cap a very successful year, we drew down on a significant amount of senior debt tranche from a renowned international financial institution, to strengthen our medium- to long-term liability base.
All our revenue generators, namely retail banking, corporate banking, international banking, private banking, treasury operations as well as e-commerce, had a very good year, with strong performances contributing significantly to the growth of the Bank, well backed by our support teams.
We continue focusing on our four main business enablers – human capital, customer experience, transformation and communication – while adjusting our strategy to the economic context in which we are currently operating.
We know our People continue to be our most important assets
and the cornerstone of our strategy, and we are lucky to count
such a dedicated team of professionals, working together to
reach a common goal. We aim to become a great employer
and have made good progress in 2019 towards becoming the
“Best place to work”, investing in a new e-learning platform that
provides for specialist training, as well as management and
leadership development training.
Our employee engagement efforts continue to bear fruit with regular surveys giving us feedback for areas of improvement. For instance, recognition awards were launched to promote excellence and thank great performers. We also refreshed our grading structure and aligned our remuneration to market. Last but not least, we reviewed our performance management system to promote and encourage a high-performance culture.
We obtained approval from our Board for a significant investment
in a new IT systems architecture that would enable our digital
journey, improve customer experience, enhance efficiency and
reduce transaction costs. This involved a deep dive into our
current processes and systems, as well as a mapping exercise
as to what the future state of our architecture should look like.
We engaged with external consultants and top tier global vendors
to arrive at a clear roadmap, and have started executing on same.
This will be backed by a strong change management process,
which also involves culture change programmes.
We have also set up an innovation lab called “One Lab”, to help incubate innovative ideas and attract talent, enabling us to pursue a disruptive journey on the market. Once implemented, our architecture should be second to none, enabling a top end digital experience and placing us right at the forefront to deal with the disruption which will transform the world as we know it today.
A lot is said about the global and local economic environments,
and the impact both will have on businesses. There have been
long debates on when the United States of America (USA) - China
trade war will abate and what shape global trade will end up in,
what impact will Brexit have, and how will the Middle East
tensions get resolved.
We recently held elections in Mauritius. With every elections comes speculation on who will win and what changes in policy or thought processes this will bring. Over the last few years, we have learnt that – irrespective of the economic or political situation – there are always opportunities in pockets. We have been very successful in identifying these safe pockets and engaging in them, but also prudent in withdrawing from pockets that showed promise but then exceeded our risk appetite.
In Mauritius, we are blessed to be an International Financial Services Centre. The world is our oyster, we will carry on exploiting this unique positioning and engage in geographies, products and businesses that match our risk appetite, backed by the right returns. We will keep following a similar selective strategy on the local market, so as to engage in segments of opportunity to provide our chosen clients with the right support and our shareholders with the right returns.
In October 2019, Bank One was once again recognised as
the Best Private Bank Mauritius 2020 by the Global Finance
Magazine, so for the fourth year running. We also won the
LinkedIn Talent Awards in the Best Employer Brand Category
in Sub-Saharan Africa in 2019. These accolades highlight the
efforts of our dedicated team, which we are very proud of.
Bank One is in a great place, having emerged from its past and established itself as a young, dynamic Bank envied by its competitors. We have witnessed strong balance sheet growth and have today become one of the top 20 most profitable companies in Mauritius. Our risk is well-managed and we have strong positive head winds to propel us faster and further. Investments in technology is going to further spur this growth and I have no doubt that Bank One will emerge as one of the top 5 Banks in Mauritius in the near future.
After six and a half years at the helm of Bank One, the time has come for me to move on to new opportunities. It has been a most fulfilling experience and I am very grateful for the contribution of my team, the support of our Regulators, the guidance of the Board and the trust of our shareholders.
I hand over the baton to Mark Watkinson, who takes over from me as the new CEO. Mark is a solid banker with vast experience and I wish him good luck in his new role.
It is my privilege as outgoing CEO to share Bank One’s strategy and performance for the year 2019. I am delighted to report record numbers for the Bank for the period under review, with total operating income growing by 18% and crossing the MUR 1.5 billion mark for the first time ever. Additionally, the Bank reported profits after tax of MUR 630 million for the year under review, which represent a 60% momentum as compared to 2018. This growth was fueled by strong momentum on the balance sheet with deposits growing by 44%.