Moody's affirms Baa3 ratings of two Mauritian Banks, maintains stable outlook
Moody's Investors Service (Moody's) has affirmed Mauritius Commercial Bank Limited's (MCB) and SBM Bank (Mauritius) Ltd.'s (SBM) local and foreign-currency deposit ratings at Baa3/P-3 and their baseline credit assessments (BCA) of ba1. Moody's maintained the stable outlook on the long-term deposit ratings assigned to both banks.
MCB's and SBM's Baa3 long-term deposit ratings reflect their Baseline Credit Assessment (BCA) of ba1 and Moody's assessment of a `high' probability of Government of Mauritius (Baa1, stable) support in case of need.
The banks' ba1 BCAs reflect: (1) their very high liquidity buffers, (2) comfortable capital levels and (3) good earnings generating capacity. These positive credit drivers are moderated by banks' (1) elevated credit risks owing to sizeable borrower concentrations and problem loans, although on a declining trend and (2) reliance on relatively high portion of foreign-sourced deposits, which are confidence sensitive to any disruption in Mauritius' off-shore business sector, although part of these deposits relate to corporates and high net-worth individuals that are more sticky. The high government support assumption is driven by the banks' importance to the domestic financial system given MCB's approximate 45% market share of domestic customer deposits, and SBM's around 23% market share combined with its indirect government ownership of around 28% through state-owned entities.