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AfrAsia Bank Limited and its Group Entities
Annual Report 2015
page 145
Product Development
The Bank’s aim is to be the preferred provider of Treasury
products in Mauritius and in the region and as such the Treasury
sales team spends a lot of time discussing with clients about
their FX needs and this approach has helped us gain around 15%
of FX volume in the local market. However, the banking sector is
becoming increasingly competitive and therefore it is important
to provide innovative solutions to clients to ensure that the
Bank remains ahead of the curve. While AfrAsia Bank Limited
continues to cater for the day-to-day FX spot volumes, the Bank
spends a lot of time understanding its clients’ FX exposures and
structuring the right FX derivatives products to help them. This
approach of providing tailor-made solutions has helped the Bank
become the preferred FX Derivatives provider in the market.
AfrAsia Bank Limited is now using its expertise to provide these
solutions to international clients.
Our Treasury Business in Numbers
For the Financial Year ending 30
th
June 2015, our Trading
Income amounted to MUR 373m, a 52% year-on-year
growth. Revenue on FX Spots and Forwards amounted to
MUR 269m, representing a 47% increase from the previous year;
the main driver was the increase in FX volumes from the Global
Business segment, where the Bank has witnessed a 40% increase
in FX volume from FY 2013/14. The most significant increase
has been on the income generated from client FX derivatives
transactions which amounted to MUR 45m compared to
MUR 5m in 2013/14.
In terms of FX Turnover, the Bank has seen a steady increase in
its domestic banking volume to USD 1.1bn, representing a 10%
increase year-on-year; which has helped us achieve a market
share of 15% in the local market. The Bank has, however, seen
an increase of 40% in FX Volume on the Global Business side to
USD 638m, as a result of the fact that it can settle in more than
100 different currencies.
0
100
200
300
400
2008/2009 2009/2010 2010/2011
2011/2012
2012/2013
2013/2014 2014/2015
Total
FX spots and Fwds
Swaps
Other Trading
Derivatives
TRADING INCOME (MUR’ M)
Local Market Dynamics
Foreign Exchange
The dynamics of the FX business have drastically changed
since the beginning of 2015. The business has become more
competitive and challenging with the margin between the
bid and offer being significantly squeezed. The market saw a
depreciation of approximately 12% of the MUR from January
to March 2015 driven by the depreciation of the Euro on the
international market; the Euro being the currency in which most
of our exports are denominated. This prompted the Central Bank
to intervene in the market more regularly to keep the EUR/MUR
competitive while also curtailing the USD/MUR which was
overvalued; it is now trading at a fair value when compared to
the USD’s appreciation on the international market. Mauritius
is heavily dependent on the importation of basic necessities,
(e.g. dairy products, clothing, rice, etc.), however, a slowdown in
consumption has recently been seen. Importers are very vigilant
with regard to USD purchases and the Forward purchase market
has also dried up. There has also been a decline in the sale
of Foreign Currency, which is usually driven by the tourism and
textile manufacturing sectors.