Moody’s Investors Service (Moody’s) has affirmed all ratings and assessments of the three rated Mauritian banks, namely: Mauritius Commercial Bank Limited (MCB), SBM Bank (Mauritius) Ltd. (SBM Bank), and Absa Bank (Mauritius) Limited (Absa Mauritius).
As part of the same rating action Moody’s has changed the outlooks from negative to stable on MCB’s and SBM Bank’s long-term deposit and issuer ratings. The outlook for Absa Mauritius’ long-term deposit ratings remains stable.
The rating action follows Moody’s decision to downgrade the Mauritian government’s long-term issuer rating from Baa2 to Baa3 on July 28,2022. The stable outlook on the sovereign captures Moody’s expectations that Mauritius’s credit profile will remain aligned with Baa3-rated sovereigns.
RATINGS RATIONALE
According to Moody’s, the affirmation of the three Mauritian banks’ ratings reflects the resilient financial profile despite the increasingly challenging operating environment.
“While banks asset risks remain elevated, to varying degrees, banks maintain strong liquidity and solid capital buffers, and we expect their profitability to rebound following the pandemic,” it said in a fresh document released on Friday July 29.
While noting that the post-pandemic economic recovery remains fragile, following Russia’s invasion of Ukraine that will lead to higher inflation and lower global growth rates, it expects any asset-quality deterioration for Mauritian banks to be “manageable” as a result of targeted support measures.
The stable outlooks on the three banks’ long-term deposit and issuer ratings reflects Moody’s view that the banks’ ratings already capture the current risks to the banks’ financials from the still challenging operating conditions.
The stable outlooks on the banks’ long-term deposit and issuer ratings also incorporate the stable outlook on the sovereign rating, as Moody’s expects that the sovereign’s capacity to provide support to banks, in case of need, will remain broadly stable.
