MCB Group — Continued strong momentum

MCB Group (SEM: MCBG.N0000)

Last close As at 06/06/2025

MUR457.00

−8.00 (−1.72%)

Market capitalisation

MUR118,521m

More on this equity

Research: Financials

MCB Group — Continued strong momentum

MCB Group (MCB) delivered a robust set of results for the nine months to end March 2025 (9M25), with net profit rising by 16.2% y-o-y. This was underpinned by an expansion in interest earning assets, both in rupee and foreign currency. Asset quality remained resilient, with a low and improving non-performing loan (NPL) ratio and healthy provision coverage, reflecting prudent risk management. Profitability remained solid, with return on equity edging up to 17.4% (+0.2pp y-o-y), highlighting MCB’s continued ability to deliver strong returns in a stable domestic environment. At the same time, MCB has plenty of room to further expand its loan book based on its healthy loan-to-deposit ratio and strong capital base.

Milosz Papst

Written by

Milosz Papst

Director of Content, Investment Trusts

Financials

9M25 results

9 June 2025

Price MUR457.00
Market cap MUR120,340m

£0.016/MUR

Shares in issue

259.3m
Free float 93.0%
Code MCBG.N0000
Primary exchange MAU
Secondary exchange N/A
Price Performance
% 1m 3m 12m
Abs (0.7) (2.9) 23.5
52-week high/low MUR475.3 MUR364.5

Business description

MCB Group (MCB) is an integrated financial services provider headquartered in Mauritius. MCB operates one of the largest banks in Africa with about MUR1tn (£17bn) in assets. It provides financing to endeavours predominantly in Africa. Founded in 1838, it is one of the oldest banks in the world in terms of continuous operations.

Next events

Declaration of interim dividend

July 2025

FY25 results

September 2025

Analysts

Milosz Papst
+44 (0)20 3077 5700
Michal Mordel
+44 (0)20 3077 5700

MCB Group is a research client of Edison Investment Research Limited

Note: NII is net interest income. EPS as reported by the company.

Year end NII (MURm) EPS (MUR) DPS (MUR) ROE (%) P/E (x) Yield (%)
6/21 14,665 33.48 16.75 11.8 13.6 3.7
6/22 15,191 40.13 13.90 12.8 11.4 3.0
6/23 19,790 57.66 20.25 16.9 7.9 4.4
6/24 24,239 63.65 23.00 16.6 7.2 5.0

MCB has room for further growth

MCB continued to expand its balance sheet, with interest-earning assets rising 11.1% y-o-y to MUR899bn. Growth was primarily driven by a 15% increase in liquid assets, supported by strong accumulation of both local sovereign bonds (local liquid assets increased by 19% y-o-y) and US Treasuries (foreign liquid assets increased by 11% y-o-y). The group’s gross loan book grew by 7.6% y-o-y, with the Mauritian segment, up 11%, leading the expansion. Despite this growth, MCB retains significant capacity for further lending, with its loan-to-deposit ratio at a conservative 59.6%, down 3.6pp y-o-y, suggesting ample headroom to deploy capital into credit expansion.

Solid asset quality and capital base underscore stability

The group continues to demonstrate robust asset quality across its lending portfolio. Although NPLs increased modestly by 2.5% y-o-y to MUR14.2bn, this translated into a lower gross NPL ratio of 3.1% (down from 3.2% at end-Q324), reflecting healthy underlying loan growth. Importantly, the group has strengthened its provisioning position, with the specific coverage ratio rising to 79.8% from 63.7%, signalling a strong buffer to absorb potential credit losses. Despite this higher provisioning, MCB maintained cost discipline, with the cost of risk improving by 17bp y-o-y to a low 0.63% on a 9M25 basis, underscoring the resilience and quality of its credit portfolio.

The capital base remains solid, with the capital adequacy ratio improving by 1.3pp y-o-y to 22.4%, well above the regulatory threshold of 15%. Similarly, the Tier 1 ratio increased to 19.9% (up 1.3pp y-o-y), compared to 13% required by the regulator, which supports MCB’s growth ambitions.

Sustained strong profitability

MCB reported a 13.1% y-o-y increase in net interest income for 9M25, driven by strong portfolio growth. The local interest earnings have risen by 20.1%, supported by higher yields on rupee-denominated government securities. Foreign currency income rose by 8.6%, with growth tempered by lower returns on liquid assets (including cash balances) and a shift in asset mix: liquid assets now represent 43% of the foreign currency portfolio, up 2pp y-o-y. The rising share of term deposits in the funding base also contributed to a moderation in net interest margin, which declined by 15bp y-o-y to 3.0% in Q325. The key rate in Mauritius was kept unchanged at 4.5% at the last meeting of the Monetary Policy Committee in May 2025, in response to moderating economic activity and lessening inflationary pressure. The key rate was subject to gradual increases from 2.0% in 2022 in response to global inflationary pressures.

Meanwhile, non-interest income performed well, with net fee and commission income up 17.1% y-o-y, supported by increased activity in loan structuring, trade finance, payments and wealth management. This drove a 13.4% increase in overall operating income to MUR31.5bn. Despite a 13.0% y-o-y rise in non-interest expenses (mainly from higher staff costs), MCB’s cost-to-income ratio improved slightly to 35.7% (down 0.2pp). Net profit rose 16.2% y-o-y, with return on equity reaching a strong 17.4%, up from 17.2% in 9M24.

Global uncertainty weighs on valuations

In line with the broader volatility seen across frontier and emerging markets, the Mauritian stock exchange experienced a brief period of investor nervousness in early April following the unexpected announcement of proposed US tariffs. The SEMDEX Index dropped after the US administration proposed imposing a 40% tariff on imports from Mauritius on 2 April 2025, reaching a low on 18 April, 9.0% below the end-March level (in MUR). Although the proposal initially triggered significant concern due to its potential impact on the country’s export-dependent sectors, sentiment was somewhat calmed when the implementation of tariffs was postponed for 90 days, and currently the SEMDEX is 2.3% below the end-March 2025 level. The implementation of tariffs remains uncertain following the US trade court’s intervention in the process.

Despite the US being among Mauritius’s key export destinations (ranking third), the overall trade impact is expected to be limited given the country’s broad export base (the US accounted for around 10% of total exports in both 2023 and 2024). In 2024, Europe remained the largest trading partner, absorbing 42% of Mauritius’s exports, while 32% of imports were directed to African markets. This diversified trade exposure provides a buffer against external shocks from any single market and supports the medium-term resilience of the Mauritian economy.

MCB’s share price followed a similar pattern, and the shares remain 3.7% below the end-March level (initially dropping by 8.3% in MUR terms). The current share price implies a 1.0x price-to-book ratio and price to last 12 months earnings of 6.3x.

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