The highlight of the week was the release of the financial results of The Mauritius Commercial Bank Limited (MCB). For its year ended 30th June 2003, MCB saw its net profits drop by 20.0% to Rs 923.3m. This decline in profitability resulted from the exceptional loss arising from the fraud discovered at the bank last February.

According to the recent letter sent to its shareholders, the fraud including interest costs stood at Rs 881.6m. This shortfall in profitability was mitigated by exceptional gains derived from the sale of 50% of Banque Française Commerciale Océan Indien (BFCOI) to Société Générale (SG). The realized gains from this transaction stood at Rs 212m for the MCB Group. This deal excludes BFCOI?s operations in Seychelles, which are transferred to a newly incorporated local subsidiary, MCB Seychelles Ltd.

At the operational level, MCB?s operating income and operating profit witnessed a jump of 12.8% (to Rs 5.3bn) and 10.7% (to Rs1.6bn) respectively. The bank?s operating income included a dividend in specie (amounting to Rs257m) from its associate Fincorp Investment Limited. Operating expenses grew by 17.8% to reach Rs 3.0bn. MCB saw its cost to income ratio rise by 2 percentage point to reach 56.7%, mostly due to increased costs associated with its Business Process Reenginering (BPR) exercise. Consultancy costs stood at Rs 225m for the financial year under review. The management expects the cost-to-income ratio to improve as from the current year.

Going ahead, the bank?s directors expect to enhance further the bank?s operations and business through the launch of new banking products and an equity fund, optimization of its resources through the application of the BPR, leveraging its strategic alliance with SG and diversifying its income stream through regional expansion. MCB also plans to pursue its capital restructuring plan with its share buy-back programme. Last week, MCB shares gained 2.6% to Rs 27.50. Buyers were also active on the other banking concern the State Bank of Mauritius Limited (SBM), which rallied by 5.1% to Rs 18.40. Foreign investors were reported active on the stock. In a press communiqué, SBM announced the appointment of Mr. C. Gunness as Managing Director/ CEO as from 28th October 2003, in succession to Mr. M. K. Reddy.

Mr. Reddy is nominated as the bank?s Chairman so as to ensure a smooth transition and to help in driving the bank forward.

For the week ended Monday 6th October 2003, the local bourse remained its upward momentum as indicated by the 1.5% gain recorded by the Semdex, the broad equity benchmark. Highly capitalized stocks witnessed the sharpest gains. The blue chip Sem-7 index jumped higher by 2.0%. The total return (SEMTRI) index rose by 1.8% to 1060.77, its highest level to date.

Most economic sectors finished the week under review higher. The appreciation of sugar concern Mon Trésor Mon Désert Limited (MTMD) propelled the sugar sector higher by 2.2%. Investors remained upbeat on Air Mauritius Limited as they drove the shares up by 3.4% to Rs 18.40.

Shares of commerce conglomerate Harel Mallac Limited (HML) and industrial concern Mauritius Stationery Manufacturers Limited (MSM) remained flat at Rs 42.50 and Rs 58.50 respectively. For the half-year ended 30th June 2003, HML witnessed a drop in both its turnover (down by 7.0% to Rs 456.3m) and net profits (down from Rs 63.5m to Rs 3.3m). MSM reported a 10.4% rise in turnover and a jump of 7.6% in net profits.

Contribution by Confident Asset Management Ltd