Home Banking SBM Group: The Indian Ocean Island’s Financial Powerhouse

SBM Group: The Indian Ocean Island’s Financial Powerhouse

by internationalbanker


By Raymond Michaelsraymond.michaels@internationalbanker.com

SBM Bank Headquarters

SBM Bank Headquarters

In February, it was announced by the Mauritian banking group SBM (SBM Holdings Ltd) that it aims to expand its already burgeoning presence in the East African region. According to its chairman, Kee Chong Li Kwong Wing, SBM Group plans to grow its international business by 30 percent annually over the next five years by buying a bank in Kenya and starting a new one in the Seychelles. The announcement comes at a time when business at SBM Group is growing remarkably. The group’s banking component, SBM Bank (Mauritius) Ltd, announced strong full-year pre-tax profits of MUR 2.05 billion (58 million USD) as well as group net-interest income of MUR 4.25 billion (120 million USD), which was a 5-percent increase on the previous year.

In recent years, the attraction of Mauritius as a worthwhile investment destination has allowed SBM to expand its business substantially. The island itself has created an invitingly business-friendly environment, which has drawn increasing attention from the global investment community. As such, SBM Group is now the operator of Mauritius’s second-largest bank by market share, with an extensive branch network located on the island, as well as growing footprints in Madagascar and India. It has even established a representative office in Myanmar, indicating just how vibrant its international presence is at the moment and which only looks set to further expand.

In terms of performance, the 12 months of 2015 were some of SBM’s most important in recent years and resulted in the Indian Ocean island’s financial powerhouse receiving a spate of prestigious awards. Most recently, these have included Best E-Commerce Bank East Africa 2015 and Most Innovative Prepaid Card (SBM Smile Prepaid Cards) East Africa 2015 from the Global Banking & Finance Review Awards 2015, and Best Retail Bank in the Mauritius category at the Banker Africa Southern Africa Awards 2016.

Indeed, retail banking is arguably the business segment in which SBM is most highly reputed, thanks primarily to the comprehensive range of clients that are served through the bank’s huge variety of products. SBM has managed to acquire this large and diverse client base through its drive to expand geographically, both in Mauritius and overseas. For instance, SBM was the first bank to open branches in rural unbanked areas in the mid-1970s. Since then, it has focused on extending its expertise to an increasing cross-section of Mauritian society—from microbusinesses to the mass market to high-net-worth individuals—with each being given a suitably tailored service.

As such, the development of new products to satisfy such client diversity has continued unabated; the last year alone has seen SBM’s retail clients being offered more bancassurance solutions than ever before, while new asset-management products have been designed that are intended to cover the increasing breadth of tradeable financial markets. The bank has also proven its credentials with respect to environmental awareness in recent times, particularly with the introduction of an eco-loan, which provides favourable financing terms to those seeking to develop eco-friendly solutions (for example, photovoltaic plants for households that connect on a smart grid). In delivering the most innovative products effectively to its customers, moreover, SBM explicitly uses technology as a key differentiator to facilitate customer transactions. The bill-payment service via mobile phones was recently enhanced, for instance, as were several other mobile-payment solutions, while it is currently investing in state-of-the-art technology to provide customers with access to many sophisticated electronic-delivery channels for convenient banking from anywhere on a 24/7 basis.

In order to keep such a range of clients happy, SBM has implemented a robust customer service policy, which has allowed the bank to be perceived above its competitors. The bank’s approach towards customer interaction, for example, is to stay firmly in touch with its customers and remain adaptive towards their evolving preferences, whilst also offering solutions that can themselves be enhanced as appropriate.

SBM’s wealth management and private banking division has been particularly lauded in recent times. This is especially significant given the competitive nature of private banking within the region. Nonetheless, SBM has managed to bring a sufficiently wide range of products to market that serves its clients’ needs in such areas as financial planning and wealth structuring. The Group is also overcoming challenges specific to this area by increasing its proximity to select high-value clients (through special, one-off events, for example); constantly striving to improve its economic and financial know-how to provide clients with the most nuanced market perspectives; and always looking to expand its range of products and services

Along with retail banking and private banking, the corporate, international and investment banking division is one of SBM’s headline businesses. Again, much like the bank’s other flagship areas, the geographical scope of this division is extremely impressive, while the range of products and services on offer in comparison to that of local competitors provides much to applaud. Such products include working-capital finance, trade-finance facilities and structural-finance facilities (trade and non-trade) in both local and foreign currencies. Structured-finance facilities are also provided to customers and are customised in line with their specific requirements.

Kee Chong Li Kwong Wing, Chairman of SBM Holdings Ltd

Kee Chong Li Kwong Wing, Chairman of SBM Holdings Ltd

Corporate social responsibility (CSR) is one area in which SBM Group stands out from the banking-industry pack, specifically through its focus on assisting the most vulnerable in society. The majority of projects undertaken by the bank are centred on providing specific tools and opportunities to such groups, so that they are adequately equipped and skilled to enhance their employability, and thus ultimately improve their current financial situation. SBM’s leading project is the SBM scholarship scheme that is awarded to bright, underprivileged students for tertiary education across a range of academic, technical and vocational fields. In fact, a staggering 1,800 scholarships have been awarded over the past six years, indicating the extent to which SBM is dedicated to nurturing the next generation’s most talented.

Indeed, educational initiatives have been at the forefront of SBM’s CSR drive, as particularly evidenced by the SBM Education Fund, under which the scholarship scheme operates. Additional projects have included sizeable donations of refurbished computers to NGOs (non-governmental organisations) in order to increase ICT (information and communications technology) literacy among children in vulnerable groups; an extension project to accommodate a multimedia room and library; a fashion and fabrics workshop and a demonstration room; daily balanced meals to some 120 students; and educational facilities to children from a whole host of vulnerable groups.

When looking to the future and determining achievable goals for the coming months and years, SBM Group is refreshingly clear. It has embarked on a five-year strategy to consolidate its Mauritius banking operations, which are expected to remain the mainstay of the Group, while enhancing its revenue base by increasing the share of income from cross-border activities and non-banking operations. In line with the Group’s diversification strategy and in view of market trends, it also intends to further develop its small-and-medium-enterprises business, as well as wealth management and private banking.

In terms of achievable goals, moreover, the Group is clear and decisive. The lender wants to double its assets and profits within the next five years; increase market share in domestic banking by about 5 percent during the same period; and increase shares of non-interest revenue and cross-border income out of total revenue. Its share of global business and cross-border transactions has steadily increased over the past few years, which implies that SBM is currently on the right path. Given the bank’s recent positive announcements concerning its growing involvement in the East African region, as well as excellent performance from its core businesses—namely, its thriving, cutting-edge retail, corporate and private-banking divisions—it seems highly likely that its stated growth objectives over the medium term will be accomplished.

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