- The outbreak of the COVID-19 pandemic continues to act as a major source of concern on the global scale, with Mauritius also confronted by the testing operating landscape. Notwithstanding the challenging environment, MCB believes that it can apply the necessary discipline and capitalise on its solid fundamentals with a view to managing through this period. We remain committed to taking informed and responsible decisions to preserve and promote the interests of all our stakeholders. In parallel, we have set out to consolidate our status as a strong and resilient bank, while upholding comfortable positions in terms of asset quality, liquidity, earnings and capitalisation.
Alongside recording a high capitalisation level beyond regulatory standards (including capital buffers, our total capital adequacy ratio stood at 16.6% as at December 2019), MCB continues to hold a sound funding and liquidity position, with our core liquid assets to total assets ratio standing at around 48% as at end of last year. We are, notably, well positioned on the FCY front, helped by our diversified sources of funding and disciplined asset-liability management. Our Liquidity Coverage Ratio (which depicts the amount of High-Quality Liquid Assets (HQLA) we hold to fund cash outflows for 30 days) stood at more than 170% in both EUR and USD as at end-March 2020, which is far ahead the regulatory limit of 100%. Our HQLA comprise mainly unrestricted balances with the Bank of Mauritius as well as investments in Central Banks and sovereign securities, notably US treasury bills. Our cash balances with the Bank of Mauritius stood at some 12% of our foreign currency deposits as at end-March 2020, i.e. much higher than the mandatory threshold of 6%. In the process, it is important to stress that MCB is dedicated to preserving the long-term safety and security of client deposits and investments, alongside quickly responding to their needs and requirements, especially in terms of forex supply. Our credentials and risk profile are reflected by the investment-grade ratings assigned to us by Moody’s Investors Service and Fitch Ratings. In spite of highlighting pressures on its sovereign credit profile amidst the demanding global climate, Moody’s Investors Service has, in a recent report, underscored the country’s inherent resilience to shocks, underpinned by a diversified economy, the wide stock of international reserves, a solid institutional framework and a large domestic financial system. The agency has also stressed on strong governance and policy making as key credit strengths.
- With respect to ramifications of the COVID-19 pandemic on economic operators and availability of FCY liquidity, MCB is taking pragmatic measures to bolster its funding base and ensure the fluidity of currency supply. Our clients remain at the centre of our considerations and we apply the necessary expertise and guidance to stand by them when times are tough. Operationally, alongside undertaking regular assessments of the ability of clients to deliver FCY at maturity and their requests for undertaking relevant transactions, the Bank is, on a day-to-day basis, ensuring that it maintains adequate liquidity buffers amidst challenging market conditions. We are pursuing active discussions with correspondent banks and external parties for raising adequate short and medium-term liquidity via money market lines, repos and credit facilities. Thus, while our committed FCY loans drawdowns and loan servicing are already catered for by our cash surplus, we aim to strengthen our ability to honour future commitments vis-à-vis our clients in the periods ahead. In further support of its endeavours, MCB is actively engaged in discussions with the Central Bank and the authorities to advocate the implementation of wide-ranging macro-financial measures in order to help in bolstering the soundness of the banking and financial system as well as mitigate the economic effects of the coronavirus.
Positioning of MCB Ltd in the context of COVID