s

Financial Statements

for the year ended 30 June 2019

5. Derivative financial instruments

The Group utilises the following derivative financial instruments to manage its exposure to foreign currency risk and interest rate risk:
• Currency forwards represent commitments to purchase foreign and domestic currency, including undelivered spot transactions.
• Currency swaps and interest rate swaps are commitments to exchange one set of cash flows for another. Swaps result in an economic exchange of currencies, or interest rates, or a combination of all these.

Except for certain currency swaps, no exchange of principal takes place. The Group’s credit risk represents the potential cost to replace the swap contracts if counterparties fail to perform their obligation. This risk is monitored on an ongoing basis with reference to the current fair value, a proportion of the notional amount of the contracts and the liquidity of the market. To control the level of credit risk taken, the Group assesses counterparties using the same techniques as for its lending activities.

Warrant is a derivative financial instrument which gives the right, but not the obligation to buy or to sell a specific amount of a given stock, currency, index or debt, at a specified price (the strike price) during a specified period or on a specified date.

FSThe fair values of derivative instruments held are set out below:Currency forwardsInterest rate swapsCurrency swapsWarrantsOthersAt 30 June 2018Currency forwards 9,160.0 65.1 75.2 Interest rate swaps 52.7 8.7 2.8 Currency swaps 11,731.6 20.9 329.0 Warrants 3,942.8 417.0 476.4 Others 329.4 1.1 - 25,216.5 512.8 883.4

6. Loans

(a) Loans to and placements with banks

FSin Mauritius 14,514.0 outside Mauritius 17,836.7 32,350.7 Less:Loans and placements with original maturity less than3 months and included in cash and cash equivalents (13,294.9) 19,055.8 Less:Allowances for credit impairment (135.0) 18,920.8 Up to 3 months 3,074.1 Over 3 months and up to 6 months 2,226.3 Over 6 months and up to 1 year 12,095.7 Over 1 year and up to 5 years 1,519.1 Over 5 years 140.6 19,055.8 Exchange adjustmentProvision for credit impairment for the yearProvision released during the yearFinancial assets that have been derecognisedInterest in suspenseNon performing loans under loans to and placements with banks amounted to Rs 69.2M in 2019 (2018: Rs 117.6M).At 01 July 2017 - 6.4 6.4 Provision for credit impairment for the year 205.1 32.2 237.3 Amount written off (173.8) - (173.8)At 30 June 2018 31.3 38.6 69.9 Interest in suspense 65.1 - 65.1 Provision and interest in suspense at 30 June 2018 96.4 38.6 135.0

(b) Loans and advances to customers

FSRetail customers:Credit cards 1,044.0 Mortgages 27,500.7 Other retail loans 14,158.0 Corporate customers 111,359.5 Governments 2,240.8 Entities outside Mauritius 49,678.4 205,981.4 Less:Allowances for credit impairment (6,683.2) 199,298.2 Finance lease receivable included in Group loans amounts to Rs 3,486.7 million as at 30 June 2019 (2018: Rs 3,502 million). Up to 3 months 53,651.2 Over 3 months and up to 6 months 7,218.8 Over 6 months and up to 1 year 2,721.1 Over 1 year and up to 5 years 61,726.7 Over 5 years 80,663.6 205,981.4 Exchange adjustmentTransfer to 12 month ECLTransfer to lifetime ECL not credit impairedTransfer to lifetime ECL credit impairedProvision for credit impairment for the yearProvision released during the yearFinancial assets that have been derecognisedWrite offsChanges in models /risk parametersInterest in suspenseAt 01 July 2017 2,236.7 1,194.3 3,431.0 Exchange adjustment 21.5 - 21.5 Provision for credit impairment for the year 953.1 124.1 1,077.2 Provision released during the year (81.2) - (81.2)Amounts written off (440.1) - (440.1)At 30 June 2018 2,690.0 1,318.4 4,008.4 Interest in suspense 2,674.8 - 2,674.8 Provision and interest in suspense at 30 June 2018 5,364.8 1,318.4 6,683.2
FSManufacturingof which EPZ 149.1 TourismTransportConstructionFinancial and business servicesTradersPersonalof which credit cards 23.6 of which housing 274.7 ProfessionalForeign governmentsGlobal Business Licence holdersOthers * Lifetime expected credit loss (credit impaired), includes interest in suspense 8,786.1 675.3 318.2 55.1 373.3 Manufacturing 11,720.2 486.1 206.5 162.1 368.6 of which EPZ 4,877.0 89.4 46.7 43.6 90.3 Tourism 26,857.1 831.7 577.6 74.1 651.7 Transport 5,734.5 1,529.6 927.0 48.8 975.8 Construction 16,823.3 1,462.4 915.1 174.9 1,090.0 Financial and business services 28,174.5 122.1 82.7 90.7 173.4 Traders 41,031.5 1,960.6 748.8 233.6 982.4 Personal 40,554.7 1,525.7 778.9 242.5 1,021.4 of which credit cards 1,036.1 22.5 19.9 21.4 41.3 of which housing 27,500.7 787.6 311.8 123.0 434.8 Professional 1,176.2 300.8 183.7 18.8 202.5 Foreign governments 2,240.8 - - - - Global Business Licence holders 15,928.2 428.5 460.1 168.6 628.7 Others 6,954.3 293.4 166.2 49.2 215.4 205,981.4 9,616.2 5,364.8 1,318.4 6,683.2

(v) Credit concentration of risk by industry sectors

Corporate notes and credit facilities extended by the Group to any closely related customers for amounts aggregating more than 10% of its Tier 1 capital, classified by industry sectors.

FS 2,670.3 Manufacturing 2,712.9 of which EPZ 100.4 1,298.3 Tourism 17,349.1 Transport 93.7 Construction 7,574.6 Financial and business services 19,704.2 Traders 14,583.0 Global Business Licence holders 16,176.7 Others 184.1 81,048.6

7. Investment securities

FSNon-voting non-cumulative preference shares issued by MCB Leasing Ltd (previously Finlease Company Limited)* 200.0 Shares - Quoted level 1- 200.0 Amortised costFair value through other comprehensive incomeLess: Allowances for credit impairment

* In 2018, these were classified as available-for-sale under IAS 39

(a) Amortised cost

FSGROUP2019RS’M 49,996.3 12,213.3 338.2 18,833.3 309.4 81,690.5
FSGovernment of Mauritius and Bank of Mauritius bondsTreasury billsForeign bondsNotesIndexed linked noteExchange adjustmentProvision for credit impairment for the yearProvision released during the yearChanges in models/risk parameters

(b) Fair value through other comprehensive income by levels

FSBondsForeign sharesInvestment fundShares SharesAdditionsExchange adjustments

(c) Fair value through profit or loss by levels

FSLocal bondsLocal sharesForeign bondsForeign sharesGovernment of Mauritius & Bank of Mauritius bondsTreasury billsInvestment funds Local sharesForeign sharesDebt
FSAdditionsDisposalsFair value
FSHeld-to-maturity 56,500.1 Held-for-trading 24,232.4 Available-for-sale 7,947.0 117.8 88,797.3Less: Allowances for credit impairment (49.9) 88,747.4
FSGovernment of Mauritius and Bank of Mauritius bonds 42,824.6 Treasury bills 5,009.1 Foreign bonds 1,409.4 Notes 7,049.1 Other 207.9 56,500.1
FSGovernment of Mauritius and Bank of Mauritius bonds 773.4 1,812.8 6,259.8 24,147.2 9,831.4 42,824.6 Treasury bills 1,390.4 1,674.4 1,802.2 89.9 52.2 5,009.1 Foreign bonds 175.0 406.2 157.8 670.4 - 1,409.4 Notes - - - 2,956.3 4,092.8 7,049.1 Other - - - 52.1 155.8 207.9 2,338.8 3,893.4 8,219.8 27,915.9 14,132.2 56,500.1

(e) Held-for-trading

FSTreasury bills Less than 3 months 11,633.6 Over 3 months and up to 6 months 5,110.3 Over 6 months and up to 12 months 6,429.7 Government of Mauritius and Bank of Mauritius bonds 1,058.8 24,232.4 Government of Mauritius & Bank of Mauritius bonds 1,058.8 Treasury bills 23,173.6 24,232.4

(f) Available-for-sale by levels

FS 1,080.1 Bonds 1,354.8 Development and Enterprise Market : shares 665.5 Foreign shares 1,419.9 4,520.3Investment fund 714.4 205.7 920.1 Shares 2,441.2 Debts 65.4 2,506.6 7,947.0 2,284.0 Additions 595.9 Disposals (200.5)Fair value 31.5 Transfers to level 2 (205.7)Exchange adjustments 1.4 2,506.6


The book value approximates the fair value at the end of the reporting year
A 10% change in management estimate would affect the fair value by about Rs250.7M

8. Investments in associates

(a) The Group’s interests in its associates are as follows:

FSBanque Française Commerciale Ocean IndienSociété Générale MoçambiquePromotion and Development LtdCaudan Development LtdCredit Guarantee Insurance Co LtdBanque Française Commerciale Ocean IndienRéunionFrance-49.99Société Générale MoçambiqueMozambiqueMozambique-35.00Promotion and Development LtdInvestment andproperty developmentMauritiusRepublic of Mauritius0.1346.33Caudan Development LtdProperty development, investmentand provision of security servicesMauritiusRepublic of Mauritius4.8138.06Credit Guarantee Insurance Co LtdInsurance servicesMauritiusRepublic of Mauritius40.00-(i) The above associates are accounted for using the equity method. (ii) Except for Credit Guarantee Insurance Co Ltd, the other above associates are held through subsidiaries. (iii) Banque Française Commerciale Ocean Indien, Société Générale Moçambique and Credit Guarantee Co Ltd are unquoted. The other associates are quoted and the Group’s interest in the quoted associates based on SEM bid price at 30 June are as follows: Promotion and Development Ltd : Rs 1,816.5M (2018: Rs 2033.8M) Caudan Development Ltd : Rs 885.2M (2018: Rs 926.0M) Group’s share of net assets 9,017.0 Goodwill 56.9 Subordinated loans to associate 722.1 9,796.0

(b) Summarised financial information in respect of material entities

FS Current assets 9,749.4 Non current assets 64,227.9 Current liabilities 18,920.8 Non current liabilities 48,446.1 Revenue 4,130.6 854.4 Total comprehensive income 854.4 Current assets 279.0 Non current assets 13,224.5 Current liabilities 680.4 Non current liabilities 859.9 Non controlling interest 1,162.9 Revenue 563.7 (102.9) Other comprehensive income 22.8 Total comprehensive income/(expense) (80.1)

(c) Reconciliation of summarised financial information

(d) Aggregate information of associate that are not individually material

FSCarrying amount of interests 694.7 (72.7)Share of other comprehensive income/(expense) (0.6) 109.7 Additions 7.5 117.2


9. Investments in subsidiaries

The Group has the following main subsidiaries:

Except for Fincorp Investment Ltd which is quoted, the other above companies are unquoted. The fair value of the Company’s interest in Fincorp Investment Ltd was Rs 1,473.8 million at 30 June 2019 (2018: Rs 1,432.0 million).

* The stated capital and cost of investment in MCB Real Assets Ltd are negligible.
** ’Others’ relates to Mascareignes Properties Ltd involved in property rental and MCB International Services Ltd involved in other financial services in which the Group has an effective holding of 100%. The stated capital of both entities are negligible.

FS9,336.4 Additions2.09,338.4 Subordinated loans to subsidiaries1,461.210,799.6

(b) Details of Fincorp Investment Ltd which has non-controlling interests that are material to the company

FS2018(3.7)2,384.7

(c) Summarised financial information for Fincorp Investment Ltd

FSp266 Current assets 1,868.6 Non current assets 8,941.3 Current liabilities 1,611.9 Non current liabilities 3,556.4 Revenue 504.3 (8.7) Other comprehensive income 48.5 Total comprehensive income 39.8 456.3 Investing activities (118.6) Financing activities (97.4) Taxation (9.7) Net increase in cash and cash equivalents 230.6

The summarised financial information above is the amount before intra-group eliminations.

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