Message from the Group Chief Executive

Navigating unpredictable waters

In a year where the currents constantly shifted, we maintained our ship on a steady course, keeping our eyes on our purpose and adjusting our sails to forge ahead with determination.

Looking back at the operating environment from a macroeconomic perspective, the global economy exhibited resilience with inflation gradually trending downwards. That said, the ramifications of heightened geopolitical tensions and policy uncertainties in a significant election period continued to impact activity levels worldwide, with ripple effects across countries where the Group is present.

Sub-Saharan Africa is showing signs of recovery from the impact of the Ukraine conflict and the pandemic, but fiscal vulnerabilities, currency difficulties and political instability have triggered sovereign rating downgrades in some key economies on the continent. In our home market, Mauritius, growth momentum has been sustained by the strong performance in the tourism, construction, ICT and financial services sectors. The continued recovery in tourism has also driven economic growth in Seychelles and Maldives but successive sovereign rating downgrades for the Maldives amidst the decline in foreign exchange reserves warrant attention. In Madagascar, growth is being supported by the mining and tourism sectors, though challenges in the vanilla industry and weather-related disruptions continue to pose downside risks.

A financial performance of which we can be proud

The Group delivered higher income and profits whilst improving the quality of its assets and strengthening its capital base despite ongoing challenges in the operating environment. Profit attributable to ordinary shareholders increased by 13.5% to Rs 16,045 million, reflecting continued growth in core earnings. Operating income for the Group rose by 16.0% to Rs 36,893 million through its continuously improved domestic offering and sustained expansion of its foreign sourced activities with the latter, in particular, making a strong contribution to our results.

Net interest income rose by 22.5% through a combination of a steady balance sheet growth and improved margins arising from high foreign currency interest rates. Non-interest income increased by 5.4%, driven by higher revenues from our trade finance and payments activities as well as improved trading income linked to increased business activities. However, the Group recorded lower fair value gains on equity financial instruments compared to last year as well as a one-off loss arising from the disposal of our stake in our associate, Société Générale Moҫambique.

35.4% last year as a result of an increase of 19.7% in operating expenses amidst continued investment in human capital and technology. Impairment charge stayed relatively stable as the Group continues to uphold its sound risk profile with the gross NPL ratio falling to 3.1% from 3.3% in the previous year. The Group's funding and liquidity positions were maintained at healthy levels backed by ongoing efforts to grow and diversify its foreign currency funding base. Comfortable capital buffers were maintained in spite of a notable growth in risk weighted assets, with the overall capital adequacy ratio and Tier 1 ratio standing at 20.5% and 18.0% respectively. Our robust financial results coupled with our solid capital position allowed us to increase our total dividend pay-out to Rs 23.00 per share for FY 2023/24 and deliver on our commitment to provide continuously improving returns to our shareholders.

Our strong performance highlights the effectiveness of our strategy, commitment to digital innovation for enhanced customer experience and the strength of our risk management framework. For us, success goes beyond financial results—it is about making a positive impact on our customers, people, economies, societies and communities. This is embodied in our purpose, Success Beyond Numbers.

Making a positive difference to customers and economic development

Our universal banking model remains at the heart of our strategy, providing a robust foundation to offer customised solutions to our clients that meet their needs. At the same time, we play a key role in supporting economic growth in countries where we are present, capitalising on enhanced cross-selling capabilities and reinforcing synergies amongst Group entities. In Mauritius, we affirmed our leadership market positioning, despite heightened competitive pressures, by continuing to support economic operators across sectors, with MCB holding market shares of around half of local currency deposits and nearly 40% of domestic credit to the economy. Our new flagship branch in Madagascar should help us strengthen our proximity to our clients and partners, enabling us to better serve their needs and foster deeper relationships in this market. In Seychelles, we proudly contribute to 36% of the domestic corporate credit market, underscoring our vital role in supporting the local economy and fostering business growth.

Our market position is supported by our continuous investments in digital innovation aimed at enhancing client experience. MCB Juice, our flagship mobile banking application, has experienced remarkable success in FY 2023/24 with transaction volumes growing by 74% and now serving over 600,000 clients in Mauritius. This growth reflects a successful response to shifting customer demand since 2023 in favour of a cash-lite society. The application's popularity is also rising in other regions, with subscriber numbers nearly doubling in Madagascar. Additionally, we have streamlined our operations by centralising our core banking system within a private cloud infrastructure, simplifying processes and enhancing our capacity to deliver cutting-edge solutions.

We have continued to advance our strategic objective of becoming more diversified by enhancing our role as a specialist bank, with a particular focus on cross-border activities and regional expansion, predominantly in Africa. We further supported African economies by addressing their energy needs through our Energy and Commodities financing. We are also expanding our Power and Infrastructure franchise and exploring opportunities to build a metals and minerals business to finance key projects that will drive a successful energy transition. Moreover, we are also strategically positioning MCB as a core banking partner for global and international corporates operating in Africa, tapping into significant cross-border flows. By leveraging the Mauritius International Financial Centre (MIFC) and our strategically-located regional hubs, we are creating opportunities for businesses to thrive across borders through a client offering that goes beyond traditional banking services, including bespoke and specialised solutions. On that note, we hosted the second edition of the GIC Business Series at the Dubai International Financial Centre (DIFC), where representatives from over 100 major corporations, legal firms, and fiduciaries collectively reflected on how to address the challenges of doing business across African corridors. Additionally, we are strengthening our transactional offerings by actively developing and promoting solutions designed to meet our clients' treasury management, cross-border, hedging, and investment needs. Our wealth segment clientele also benefited from an enriched value proposition with personalised wealth management services designed to meet their evolving needs.

Regarding the non-banking financial sector, MCB Capital Markets advised EnVolt's on its inaugural issue of Rs 510 million Green Projects Bond, as part of the latter's Rs 2 billion Multi Currency Green Bond Programme. The issuance represents a major milestone for the Mauritian debt capital markets as it is the first time that a renewable energy project is financed by a bond issue.

Making a positive difference to our People

We recognise that success requires us to win in the marketplace and in the workplace. This is why, throughout the year, we have reinforced our Shared Ways of Working—a set of guiding principles focused on making things simple, acting responsibly, building partnerships, pushing boundaries and creating a positive impact. As part of a culture that embraces diversity, we have progressed in promoting gender equality, with the share of women in leadership roles having increased to 34%. I am also proud to announce that MCB Group has become the first bank/financial services group in Africa to achieve EQUAL-SALARY certification. This certification, awarded by the Equal Salary Foundation, confirms our commitment to equal pay for equal work and gender equality within our workforce.

Furthermore, reflecting our commitment to fostering a culture of trust, the organisation has improved its score in the 'Great Place to Work' survey compared to the previous assessment. Feedback from earlier surveys has helped shaped several initiatives, including the introduction of a Remuneration Framework following the launch of the Career Architecture Framework in Mauritius, with the latter having been extended to MCB Seychelles this year. While we are proud of these advancements, we recognise that there is still more to be done and we will continue our efforts to enhance our people-focused initiatives, ensuring their well-being and fostering an environment where everyone has the opportunity to thrive.

To drive our strategic plan forward, we have enhanced our capabilities in key areas, notably to uphold customer service, support our international expansion, and reinforce risk and control management. We have also provided our staff with training opportunities, including specialised and technical courses, empowering them to excel in a rapidly evolving environment. Additionally, to foster strong leadership across the organisation, we introduced the IMPACT Excellence Program and the IMPACT Accelerate Program, both accredited by Stellenbosch University. These programs are designed to equip participants with advanced skills in strategic thinking, team leadership, and negotiation, ensuring they are prepared to navigate complex challenges.

Making a positive difference to Societies and Communities

We have made significant progress on our journey to become more sustainable, remaining resolute in our efforts to reduce our environmental impact while empowering our clients to transition towards a low-carbon future. Through our Sustainable Loan offering, we have played a key role in supporting local companies in their transition to a greener future, with 20% of our Rs 10 billion credit line already disbursed. In November 2023, MCB entered into a new partnership with Proparco and DEG, with the latter extending a loan of up to USD 120 million to support our ambition to unlock further opportunities to finance climate mitigation and adaptation measures. We also signed our first Sustainability-Linked Syndicated Term Loan of USD 400 million, with the loan's key performance indicators focusing on sustainable financing and gender diversity.

Through the MCB Forward Foundation, we have deepened our engagement with the communities in which the Group operates. Internally, to scale up sustainability initiatives across the Group, we established the Sustainability, Reputation and Engagement SBU, with the Central Sustainability Office at its core. In response to the growing risks posed by climate change, our efforts have also focused on assessing its impact on our activities while working to integrate environmental and social risk management into our operations. This approach aims to promote positive impacts and mitigate potential negative effects on people, communities, and the environment.

For us, success goes beyond financial results - it is about making a positive impact.

Consolidating the core and building for the future

As we look to the future, I remain confident in our ability to thrive, grow and respond to our clients' needs in an ever-changing operating landscape. While consolidating our core businesses, our focus will be on scaling up in key areas and exploring and seizing emerging opportunities that are aligned with our strategy and competencies. We will refine our business model to adapt to evolving market conditions and respond to our customer needs as they also strive to grow whether domestically or internationally. By leveraging our network and enhancing cross-selling, we aim to enhance our value proposition in both existing and new markets.

our efforts towards delivering excellent customer service, cultivating a talented and engaged workforce and maintaining rigorous risk and control frameworks. On the latter grounds, we have elevated our Risk and Compliance functions to the Group level to enhance oversight, ensuring we are well-positioned to navigate the evolving financial ecosystem.

Moreover, to facilitate the smooth running of the business while delivering on key strategic priorities, the governance of the Group has been reinforced through the creation of dedicated executive committees and forums. In particular, we have set up a Group Executive Committee that drives organisational alignment, appraises developments in our operating environment and manages issues impacting the Group. In addition, the Group Executive Strategy Committee has been established to lead the formulation and execution of the Group's strategy, ensuring that performance is measured against set objectives and targets. To track our strategic progress, we have introduced a Group Scorecard for FY 2024/25, featuring key impact measurement metrics. This will enable us to assess our performance across all stakeholders and focus on sharpening our competitive edge while preserving the legacy of trust and service that has long defined our organisation.

Additionally, as we continue to evolve and grow as a Group, it is imperative that we adapt our structure in line with our strategic priorities. As such, we have brought about some key changes to our management team, reflecting our commitment to promoting talent from within our organisation and leveraging the diverse skills and expertise of our team to drive our business forward.

I remain confident in our ability to thrive, grow and respond to an ever-changing operating landscape.

Concluding remarks

As we reflect on this year's achievements, it is evident that our commitment to our purpose has shaped our success. We have not only supported our customers but also made a positive difference in the communities we serve. I want to extend my deepest gratitude to our talented teams, whose hard work and commitment have been the driving force behind our success.

I also extend my thanks to the members of our various Boards for their guidance throughout the year. A special acknowledgment goes to Gilbert Gnany for his remarkable 28 years of dedicated service, including his role as Chief Strategy Officer. Throughout his tenure, Gilbert has not only upheld the Group's values and helped advance our strategic objectives but also fostered crucial interactions with authorities and key stakeholders, strengthening our organisational position. I am pleased to announce that as of 1st September 2024, Dipak Chummun has joined the Group to assume the role of Group Chief Finance Officer. His experience at senior levels of global banks and in industry will reinforce our leadership in local and regional markets.

On behalf of the staff, management teams, and myself, I also wish to extend my deepest gratitude to Mr. Didier Harel, who is retiring as Chairperson after eight years of distinguished service to the organisation. His authentic leadership and objective insight have been instrumental in establishing a solid foundation to drive our transformation and to be recognised and respected as a reputable financial institution in Africa. He has also guided us through a particularly challenging environment, marked by the pandemic. I extend my heartfelt thanks for his outstanding contributions to the Group and wish him continued success in his future endeavours.

As I end this year's statement, a special thought and immense gratitude goes to our former CEO, Pierre Guy Nöel, who passed away during the year. His leadership and passion for MCB over three decades transformed our organisation and our people. He leaves an indelible imprint on us all and will be deeply missed.

Finally, as I look to the future, I am confident that our dedication and strategic focus will chart a course towards continued success. We will strive to deliver meaningful value to our stakeholders and stay true to our purpose that defines our journey.

Jean Michel NG TSEUNG

Group Chief Executive