SBM BANK (MAURITIUS) LTD

Interim unaudited condensed financial statements

for the nine months ended 30 September 2018

SBM Bank (Mauritius) Ltd (‘the Bank’) is pleased to present its interim unaudited condensed financial
statements for the nine months ended 30 September 2018.

The interim unaudited condensed financial statements have been prepared in accordance with the Bank
of Mauritius Guideline on Public Disclosure of Information and IAS 34 - Interim Financial Reporting. The
interim financial statements have been prepared, based on the accounting policies used in the audited
financial statements for the year ended 31 December 2017, except for the adoption of all the new
standards and interpretations which are effective as from 01 January 2018.

Results
This start of year was marked by the implementation of IFRS 9 Financial Instruments. As at 01 January
2018, the opening retained earnings have been adjusted by an amount of MUR 275 million, mainly on
account of other financial assets like investment securities, loans and placements with banks and off
balance sheet items on which no expected credit loss was required to be provided for by the previous IAS
39.

The Bank’s total assets grew by 6.44%, from MUR 179,684 million as at 31 December 2017 to reach
MUR 191,253 million as at 30 September 2018, mainly on account of an increase in investment
securities of MUR 11,712 million and a growth in the net loans and advances of MUR 1,407 million or
1.40%.

Deposits from banks and non-bank customers increased by MUR 3,689 million or 2.59% to reach MUR
146,125 million as at 30 September 2018 from MUR 142,436 million as at 31 December 2017. This
increase was mostly from low cost savings and current accounts in foreign currency. Other borrowed
funds increased from MUR 13,117 million as at 31 December 2017 to MUR 16,470 million as at 30
September 2018.

The Bank’s operating income continued to improve with higher average advances following growth of the
loan book since the second half of financial year 2017. An increase of MUR 797 million was recorded in
interest income as compared to the nine months ended 30 September 2017 representing a growth of
16.29%. Furthermore, as a result of the deposit book growing mainly on account of low interest bearing
deposits, interest expense increased by only MUR 29 million from MUR 1,449 million for the nine months
ended 30 September 2017 to MUR 1,478 million for the current period. Net interest income reached
MUR 4,210 million (30 September 2017: MUR 3,442 million) representing an increase of 22.32%. Non-
interest income went slightly up from MUR 1,730 million for September 2017 to MUR 1,803 million for
September 2018. This was due to higher fee and commission income and higher profits from dealing in
foreign currencies offset by lower profits on bond trading as a result of increasing interest rates and fall
in bonds prices. Operating income increased from MUR 5,172 million for the comparative period to reach
MUR 6,013 million for the nine months ended 30 September 2018 representing a growth of 16.24%.
Non-interest expense increased from MUR 2,203 million for the nine months ended 30 September 2017
to MUR 2,518 million for the nine months ended 30 September 2018. This resulted with higher
personnel costs due to salary revision and increase in staff force; higher amortisation charges following
additional software costs incurred and higher operational loss on account of the recent cyber-attack
pertaining to our Indian Branch. Cost to income ratio improved to 41.88% for September 2018 as
compared to 42.58% for September 2017.

Profit before credit loss expense and tax reached MUR 3,495 million for the nine months ended 30
September 2018, from MUR 2,970 million for the nine months ended 30 September 2017. However,
profit after tax decreased by 26%, from MUR 1,929 million for nine months ended 30 September 2017
to MUR 1,427 million for nine months ended 30 September 2018 on account of significant impairment
charges registered during the period under review. Credit loss expense on financial assets increased by
MUR 994 million during the period 2018, from MUR 637 million for the nine months to 30 September
2017 to reach MUR 1,631 million for the nine months to 30 September 2018, mainly on account of one
segment B client.

Capital
The shareholder’s equity stood at MUR 19,597 million as at 30 September 2018 (31 December 2017:
MUR 18,357 million). Tier 1 capital was MUR 15,143 million as at 30 September 2018 compared to MUR
13,624 million as at 31 December 2017. The capital adequacy ratio (CAR) and Tier 1 capital to risk
weighted assets ratio reached 15.85% and 14.21% respectively, as at 30 September 2018. Both ratios
were above the minimum regulatory requirement including the Domestic-Systemically Important Banks
(D-SIBs). The Bank received a capital contribution of MUR 1,100 million from its holding company during
the period under review and paid dividends amounting to MUR 697.5 million.

Outlook
The credit environment is expected to benefit from an uptick in economic activities and rising public and
private investments. However, margins would continue to remain under pressure. Against this backdrop,
the Bank has upped its efforts to manage risks and costs via a number of initiatives including business
model review, digitalisation and channel migration.

Venkateswara Rao Parvataneni Ishwar Anoopum Gaya Nayen Koomar Ballah, G.O.S.K.
Director Chairman, Audit Committee Chairman

08 November 2018
 REVIEW REPORT TO THE BOARD OF DIRECTORS OF

SBM BANK (MAURITIUS) LTD

We have reviewed the accompanying interim condensed statement of financial position of SBM Bank
(Mauritius) Ltd (the “Bank”) as of 30 September 2018 and the related interim condensed statements of
profit or loss and other comprehensive income, changes in equity and abridged cash flows for the nine
months then ended, and a summary of significant accounting policies and other explanatory
notes. Management is responsible for the preparation and fair presentation of this interim financial
information in accordance with IAS 34 Interim Financial Reporting. Our responsibility is to express a
conclusion on this interim financial information based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements 2410,
“Review of Interim Financial Information Performed by the Independent Auditor of the Entity.” A review
of interim financial information consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review procedures. A review is
substantially less in scope than an audit conducted in accordance with International Standards on
Auditing and consequently does not enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying
interim condensed financial information does not present fairly, in all material respects, the financial
position of the Bank as at 30 September 2018, and of its financial performance and its cash flows for the
nine months then ended in accordance with IAS 34 Interim Financial Reporting.

ERNST & YOUNG PATRICK NG TSEUNG, A.C.A.

Ebène, Mauritius Licensed by FRC

08 November 2018
SBM BANK (MAURITIUS) LTD
STATEMENT OF FINANCIAL POSITION AT 30 SEPTEMBER 2018

Unaudited Unaudited Audited

30 September 30 September 31 December
2018 2017 2017
MUR' 000 MUR' 000 MUR' 000
ASSETS
Cash and cash equivalents 13,773,904 17,624,440 15,620,778
Mandatory balances with central banks 8,787,916 9,013,623 8,712,062
Loans to and placements with banks 9,658,949 8,324,078 8,895,860
Derivative financial instruments 1,234,142 3,906,753 1,356,774
Loans and advances to non-bank customers 102,246,667 96,945,136 100,839,231
Investment securities 48,863,037 35,048,394 37,150,731
Equity investments 1,682 3,996 370
Property and equipment 2,575,102 2,663,377 2,631,782
Intangible assets 3,215,218 3,511,344 3,457,061
Deferred tax assets 86,317 94,930 95,461
Other assets 810,144 479,516 923,892
Total assets 191,253,078 177,615,587 179,684,002

LIABILITIES
Deposits from banks 721,488 854,752 739,926
Deposits from non-bank customers 145,403,406 145,188,423 141,695,769
Other borrowed funds 16,470,416 9,847,275 13,116,593
Derivative financial instruments 970,586 1,445,223 1,334,584
Current tax liabilities 274,944 137,090 105,869
Deferred tax liabilities 216,719 97,977 170,905
Other liabilities 7,598,713 2,854,127 4,163,207
Total liabilities 171,656,272 160,424,867 161,326,853

SHAREHOLDER'S EQUITY
Stated capital 310,000 310,000 310,000
Capital contribution 10,163,106 8,063,106 9,063,106
Revenue reserve 8,338,314 7,589,667 7,855,520
Other reserves 785,386 1,227,947 1,128,523
Total equity 19,596,806 17,190,720 18,357,149

Total equity and liabilities 191,253,078 177,615,587 179,684,002

Approved by the Board of Directors and authorised for issue on 08 November 2018.

Venkateswara Rao Parvataneni Ishwar Anoopum Gaya Nayen Koomar Ballah, G.O.S.K.
Director Chairman, Audit Committee Chairman
SBM BANK (MAURITIUS) LTD

STATEMENT OF PROFIT OR LOSS FOR THE NINE MONTHS 30 SEPTEMBER 2018

Unaudited Unaudited Unaudited Unaudited Audited

Quarter Quarter Nine months Nine months Year
ended ended ended ended ended
30 September 30 September 30 September 30 September 31 December
2018 2017 2018 2017 2017

MUR' 000 MUR' 000 MUR' 000 MUR' 000 MUR' 000

Interest income 1,931,683 1,724,223 5,687,729 4,891,053 6,649,890

Interest expense (507,697) (518,991) (1,477,654) (1,449,089) (1,929,686)
Net interest income 1,423,986 1,205,232 4,210,075 3,441,964 4,720,204

Fee and commission income 215,031 222,630 785,791 685,661 1,023,061

Fee and commission expense (6,177) (5,084) (19,555) (15,610) (24,621)
Net fee and commission income 208,854 217,546 766,236 670,051 998,440
Other income
Profit arising from dealing in foreign currencies 141,585 103,760 499,217 358,810 455,673
Net gain from financial instruments 230,728 132,474 457,343 333,564 516,538
Net gain on sale of securities 46,146 119,926 79,765 367,944 451,793
Other operating income - 61 - 78 79
418,459 356,221 1,036,325 1,060,396 1,424,083
Non-interest income 627,313 573,767 1,802,561 1,730,447 2,422,523
Operating income 2,051,299 1,778,999 6,012,636 5,172,411 7,142,727
Personnel expenses (398,418) (357,156) (1,197,602) (1,065,508) (1,435,185)
Depreciation and amortisation (186,471) (172,938) (530,421) (476,572) (648,027)
Other expenses (342,390) (257,014) (790,056) (660,443) (900,380)
Non-interest expense (927,279) (787,108) (2,518,079) (2,202,523) (2,983,592)
Profit before credit loss expense 1,124,020 991,891 3,494,557 2,969,888 4,159,135
Credit loss expense on financial assets (286,189) (219,525) (1,630,968) (636,795) (987,262)
Profit before income tax 837,831 772,366 1,863,589 2,333,093 3,171,873
Income tax expense (147,158) (118,372) (436,499) (404,537) (560,580)

Profit for the quarter / period / year 690,673 653,994 1,427,090 1,928,556 2,611,293
SBM BANK (MAURITIUS) LTD

STATEMENT OF OTHER COMPREHENSIVE INCOME FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2018

Unaudited Unaudited Unaudited Unaudited Audited

Quarter Quarter Nine months Nine months Year
ended ended ended ended ended
30 September 30 September 30 September 30 September 31 December
2018 2017 2018 2017 2017
MUR' 000 MUR' 000 MUR' 000 MUR' 000 MUR' 000

Profit for the quarter / period / year 690,673 653,994 1,427,090 1,928,556 2,611,293

Other comprehensive income :

Items that will not be reclassified subsequently to
profit or loss:
Remeasurement of defined benefit pension plan - - - - (32,881)

- - - - (32,881)

Items that may be reclassified subsequently to

profit or loss:
Exchange differences on translation of foreign
operations (117,698) (60,279) (193,985) (41,806) (28,403)
Movement in fair value of available-for-sale
investments - (46,799) - 163,831 182,180
Fair value re-cycled on disposal of available-for-sale
investments - 37,743 - (47,798) (175,477)
Debt instruments at fair value through other
comprehensive income: 136,683 - (120,897) - -
Net movement in fair value during the period 205,767 - (77,823) - -
Net loss on derecognition of financial instruments at
fair value through other comprehensive income (69,084) - (43,074) - -

18,985 (69,335) (314,882) 74,227 (21,700)

Other comprehensive income / (loss) 18,985 (69,335) (314,882) 74,227 (54,581)

Total comprehensive income for the quarter /

period / year 709,658 584,659 1,112,208 2,002,783 2,556,712
SBM BANK (MAURITIUS) LTD
STATEMENT OF CHANGES IN EQUITY FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2018
Foreign
Fair Property currency
Stated Capital Retained Statutory value revaluation translation Total
capital contribution earnings reserve reserve reserve reserve equity
MUR' 000 MUR' 000 MUR' 000 MUR' 000 MUR' 000 MUR' 000 MUR' 000 MUR' 000

At 01 January 2017 310,000 8,063,106 6,193,747 530,390 (25,415) 1,218,250 (535,641) 15,754,437

Profit for the period - - 1,928,556 - - - - 1,928,556

Other comprehensive income for the period - - - - 116,033 - (41,806) 74,227

Total comprehensive income for the period - - 1,928,556 - 116,033 - (41,806) 2,002,783
Transfer to retained earnings - - 33,864 - - (33,864) - -
Dividend - - (566,500) - - - - (566,500)

At 30 September 2017 310,000 8,063,106 7,589,667 530,390 90,618 1,184,386 (577,447) 17,190,720

At 01 January 2017 310,000 8,063,106 6,193,747 530,390 (25,415) 1,218,250 (535,641) 15,754,437

Profit for the year - - 2,611,293 - - - - 2,611,293

Other comprehensive (loss)/income for the year - - (32,881) - 6,703 - (28,403) (54,581)

Total comprehensive income/(loss) for the year - - 2,578,412 - 6,703 - (28,403) 2,556,712
Capital contribution received during the year - 1,000,000 - - - - - 1,000,000
Transfer to retained earnings - - 37,361 - - (37,361) - -
Dividend - - (954,000) - - - - (954,000)

At 31 December 2017 310,000 9,063,106 7,855,520 530,390 (18,712) 1,180,889 (564,044) 18,357,149

At 01 January 2018 310,000 9,063,106 7,855,520 530,390 (18,712) 1,180,889 (564,044) 18,357,149
Impact of adopting IFRS 9 (Note 9.14) - - (275,051) - - - - (275,051)
Restated opening balance under IFRS 9 310,000 9,063,106 7,580,469 530,390 (18,712) 1,180,889 (564,044) 18,082,098
Profit for the period - - 1,427,090 - - - - 1,427,090
Other comprehensive loss for the period - - - - (120,897) - (193,985) (314,882)

Total comprehensive income / (loss) for the period - - 1,427,090 - (120,897) - (193,985) 1,112,208
Capital contribution received during the period - 1,100,000 - - - - - 1,100,000
Transfer to retained earnings - - 28,255 - - (28,255) - -
Dividend - - (697,500) - - - - (697,500)
At 30 September 2018 310,000 10,163,106 8,338,314 530,390 (139,609) 1,152,634 (758,029) 19,596,806
 SBM BANK (MAURITIUS) LTD

ABRIDGED STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2018

Unaudited Unaudited Audited

Nine months Nine months Year
ended ended ended
30 September 30 September 31 December
2018 2017 2017

MUR' 000 MUR' 000 MUR' 000

Net cash (used in) / from operating activities (5,354,622) 3,597,439 (1,891,999)
Net cash from financing activities 3,756,323 4,740,266 8,622,084

Net cash used in investing activities (248,575) (137,206) (221,473)

Net change in cash and cash equivalents (1,846,874) 8,200,499 6,508,612

Net foreign exchange difference - - (311,775)

Cash and cash equivalents at start of period / year 15,620,778 9,423,941 9,423,941

Cash and cash equivalents at end of period / year 13,773,904 17,624,440 15,620,778

The financial information, including the independent auditor’s report to the member of SBM Bank (Mauritius) Ltd, has been
extracted from the interim unaudited condensed financial statements for the nine months ended 30 September 2018.