1
BanyanTree Bank Limited
Contents
Corporate information
Directors’ report
Corporate governance report
Pages
2
3-5
6 - 15
Statement of compliance under Section 75 (3) of the Financial Reporting Act 2004
16
Statement of management’s responsibility for financial reporting
17
Report from the secretary
18
Independent auditors’ report
Statement of financial position
19 - 21
22
Statement of comprehensive income
23 - 24
Statement of changes in shareholders’ equity
25 - 26
Statement of cash flows
27
Notes to the financial statements
28 - 70
Management discussion and analysis
71 - 74
Administrative information
75 - 77
2
BanyanTree Bank Limited
Corporate Information
Directors
Appointed on
Mr Jagdish Capoor (Chairman)
Mr Sanjiv Singhal
(Vice-Chairman and Managing Director)
Mr Om Prakash Gahrotra
Mr Baljinder Sharma
Mr Lekhram Nundlall
Mr Ashoke Roy
Mr Arvind Sailendre Soobashchand Issur
Mr Gopakumar Puthenveettil
(Chief Executive Officer)
Ms Ackbaree Aumeerally Arekion
Mr Sebastien Mamet
18 June 2012
05 June 2012
15 June 2012
15 June 2012
18 June 2012
18 June 2012
17 July 2012
25 March 2013
Key Management Team
Position
Mr Gopakumar Puthenveettil
Mr Parvin Jain
Mr Ritesh Abbi
Chief Executive Officer
Head of Treasury
Chief Operating Officer
Secretary:
Associated Corporate Services Limited
5 St James Court
St Denis Street
Port Louis
Republic of Mauritius
(As from 27th October 2014)
08 July 2013
08 July 2013
(Up to 30th September 2014)
Legis Corporate Secretarial Services Ltd
Les Jamalacs Building
Vieux Conseil Street
Port Louis
Republic of Mauritius
Registered Office:
13 NexTeracom 1
Cybercity
Ebene
Republic of Mauritius
Legal Adviser:
Avinash Sunassee
5 St James Court
St Denis Street
Port Louis
Republic of Mauritius
Auditors:
Grant Thornton
Ebene Tower
52 Cybercity
Ebene
Republic of Mauritius
3
BanyanTree Bank Limited
Directors’ Report
The Board of Directors of BanyanTree Bank Limited (the “Bank”) is pleased to present the Annual Report and
Audited Financial Statements for the financial year ended 31 December 2014. These financial statements have been
prepared by the Bank in accordance with the requirements set out in the Bank of Mauritius Guideline on Public
Disclosure of Information, International Financial Reporting Standards, the Financial Reporting Act 2004, the
Mauritius Companies Act 2001 and the Banking Act 2004 and on a fair value basis.
During the year under review, the Bank saw liquidity scenario relatively benign for Mauritian Rupee. The Bank
capitalised on the opportunity and raised deposits worth USD 42.7 M (in USD: 8.32 M and in MUR: 1,086 M) and
inter-bank placements of USD 7.15 M during the year. The Bank took a focused effort to reach out to various
government agencies, institutional investors and parastatal bodies. Consequently, the Bank expanded and added
many more customers in the institutional space.
The Bank demonstrated efficient treasury management by reducing the duration of the bond portfolio and a
determined exercise to reduce the mismatch of the tenure of the Assets and Liabilities. There was renewed focus to
improve asset quality and efficiency. Capital inefficient assets were replaced leading to better capital management
and increased capital availability. The Bank also expanded its relationships with several financial institutions both
locally and outside Mauritius.
The Bank is proud to promote savings culture among the unbanked and unserviced population by its innovative
product “Doorstep Banking”. A pilot project has been rolled out whereby a no-frills zero balance account is being
opened for customers with new-age handheld Transaction Point Terminals (TPT). The use of technology reduced
delivery cost and monitoring expenses with the card-less TPT terminal. Use of technology will help improve
traceability and reduce fraud.
There was a firm focus to strengthen the Bank’s senior management team with a view to roll out new products and
services like Treasury, Private Banking, Remittances, Channel Financing, etc. The Bank has hired senior bankers
locally and from overseas with extensive experience in the field of Banking / Financial Services.
The Bank ensured that it is fully compliant will all rules, regulations and policies of the Bank of Mauritius and other
local acts and laws. This enabled the Bank to conduct its business activities and operations during the year 2014 in
accordance with regulatory norms and good banking practices.
Corporate governance
The Bank adopts sound corporate governance principles and procedures in its business strategy, operations and
organisational culture.
The Board of Directors delegates its powers to several Board Committees and Management, which operate in line
with the best international good corporate governance practices.
The Audit and Compliance Committee, the Nominations and Remuneration Committee, the Conduct Review
Committee, the Risk Monitoring Committee, the Corporate Governance, Environment, Health and Social
Committee, the Credit Committee and the Finance Committee have been setup to foster safe and sound banking
practices. The Bank also ensures adherence to guidelines issued by the Bank of Mauritius.
4
BanyanTree Bank Limited
Directors’ Report (Contd)
Substantial shareholders
As 31 December 2014, the stated capital of the Bank stood at Rs 269,650,528 represented by 27,797,588 ordinary
shares of no par value.
The shareholding of the Bank is detailed in Note 2 of the Corporate Governance Report.
Directors’ remuneration
During the year ended 31 December 2014, the Independent Directors received Rs 600,000 as remuneration and the
same has been disclosed in the Corporate Governance Report.
Directors’ service contracts
The Bank does not have any employment contract with its directors, except for letters of engagement with the
Independent Directors and a letter of employment with the Chief Executive Officer.
Auditors
Grant Thornton, acted as External Auditors of the Bank and remuneration for audit and other services has been
fixed at Rs 376,500, exclusive of Value Added Tax.
2014
2013
Rs
Rs
250,000
175,000
Taxation fees
36,500
35,000
Other services
90,000
-
376,500
210,000
Audit fees
TOTAL
Other services represent mainly fees paid for review of the Bank’s interim financial information.
Directors’ responsibilities in respect of the financial statements
Company law requires the directors to prepare financial statements for each financial year which present fairly the
financial position, financial performance and cash flows of the Bank. In preparing those financial statements, the
directors are required to:




Select suitable accounting policies and then apply them consistently;
Make judgments and estimates that are reasonable and prudent;
State whether International Financial Reporting Standards have been followed and complied with, subject to
any material departures disclosed and explained in the financial statements; and
Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Bank
will continue in business.
The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any
time the financial position of the Bank and to enable them to ensure that the financial statements comply with the
requirements set out in the Bank of Mauritius Guideline on Public Disclosure of Information, International
Financial Reporting Standards, the Financial Reporting Act 2004, the Mauritius Companies Act 2001 and the
Banking Act 2004. They are also responsible for safeguarding the assets of the Bank and hence for taking
reasonable steps for the prevention and detection of fraud and other irregularities.
The directors confirm that they have complied with the above requirements in preparing the financial statements.
5
BanyanTree Bank Limited
Directors’ Report (Contd)
Acknowledgements
The Bank has made significant progress in its second year of operations in all areas of business, operations and
service delivery. This has been made possible due to the cooperation, efforts and dedication of staff members,
leadership of its senior management and the guidance of its Board of Directors.
The Bank of Mauritius has been kind enough to support the Board and Management during the year. The Board of
Directors take this opportunity to thank the Bank of Mauritius for its co-operation and support during the year, and
look forward to their guidance in the future.
The Board of Directors wishes to express its appreciation to the efforts of the team members for their dedication
and hard work in the execution of the business strategy of the Bank.
_________________________
Mr. Jagdish Capoor
Chairman
On behalf of Board of Directors
Date:
Ebene, Republic of Mauritius
_________________________
Mr. Sanjiv Singhal
Vice-Chairman
On behalf of Board of Directors
6
BanyanTree Bank Limited
Corporate Governance Report
1.
Statement on corporate governance
The Bank is guided by the Bank of Mauritius Guideline on Corporate Governance, the Fit and Proper
Person Criteria and also the Code of Corporate Governance enacted in the Financial Reporting Act 2004.
Corporate Governance involves a set of relationships between a company’s management, board,
shareholders and other stakeholders. Effective corporate governance practices are essential to achieve and
maintain a high level of public trust and confidence in the banking system.
The Board of Directors is fully committed to attaining and maintaining the highest standards of corporate
governance. It has all the powers for managing, directing and supervising the management of the business
and affairs of the Bank.
The Bank’s corporate governance framework consists of the Board of Directors, Board Committees,
Management, external auditors, industry best practices as well as established policies and procedures.
2.
Shareholding
At 31 December 2014, the stated capital of the Bank stood at Rs 269,650,528 represented by 27,797,588
ordinary shares of no par value.
The shareholders of the Bank are as follows:
Name of shareholders
Neemtree Advisors (Singapore) Pte Ltd
No. of shares held
% Shareholding
10,233,103
36.81%
Triolet Bus Service Ltd
1,500,000
5.40%
The Beechand Company Limited
1,500,000
5.40%
Mr Rajesh Arun Desai
2,222,222
7.99%
Mr Baljinder Sharma
1,231,450
4.43%
Mr Marcel Posthuma
2,775,500
9.98%
Terra Mauricia Ltd
2,777,777
9.99%
Mr Sanjeev Gupta
2,777,777
9.99%
Anex Management Services Ltd as trustees of the BanyanTree Bank
Employee Share Scheme
TOTAL NUMBER OF SHARES
3.
2,779,759
10.00%
27,797,588
100.00%
Dividend policy
The Bank plans to strengthen its reserves and hence no dividend distribution is planned for the year ended
31 December 2014.
7
BanyanTree Bank Limited
Corporate Governance Report (Contd)
4.
Board of directors and management
4.1
Board of directors
4.1.1 Composition of the board
There was no change in the composition of the Board in the financial year ended 31 December 2014. As of
date, the Board of Directors is made up of one executive director and nine non-executive directors, out of
which four are independent. The directors’ profile is described in the “Administrative information” section.
4.1.2 Responsibilities of the Board
The Board of Directors functions independently of management and some of the key responsibilities are
enumerated below:



Ensure proper internal control mechanisms are in place to protect the Bank’s assets and reputation,
including appointment of external auditors;
Evaluate and approve credit proposals that are beyond the delegation to management;
Approve appointments of senior management and policies governing employee compensation and
remuneration.
Board Committees include Audit and Compliance Committee, Conduct Review Committee, Corporate
Governance and Environmental, Health and Social Committee, Credit Committee, Nominations and
Remuneration Committee, Risk Monitoring Committee and Finance Committee. These Committees are in
line with the Code of Corporate Governance.
4.1.3 Committees of the Board
Audit and Compliance Committee
The role of the Audit and Compliance Committee is to monitor the internal control system, review financial
statements, provide support to Board of Directors on financial matters, oversee performance of external
auditors of the Bank, recommend appointment of external auditors and review external inspection reports.
There was a change in the composition of the Audit and Compliance Committee. The Committee met four
times during the year under review. In addition to the meetings, the Committee also approved many items
by circulation. The Committee was comprised of the following members up to 30 September 2014:
Mr Om Prakash Gahrotra, Chairman
Mr Jagdish Capoor
Mr Ashoke Roy
Ms Ackbaree Arekion
There was a change in the composition of the Audit and Compliance Committee. The new Committee
members from 01 October 2014 are as follows:
Mr Ashoke Roy, Chairman
Mr Om Prakash Gahrotra
Ms Ackbaree Arekion
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BanyanTree Bank Limited
Corporate Governance Report (Contd)
4.
Board of directors and management (Contd)
4.1
Board of directors (Contd)
4.1.3 Committees of the Board (Contd)
Corporate Governance, Environment, Health and Social Committee
Good corporate governance practices require businesses to adopt principles in the areas of responsibility,
accountability, fairness and transparency. The Bank is guided by the guidelines issues by the Bank of
Mauritius in this regard. The Bank is also committed to highest environmental, health and social standards.
The Corporate Governance, Environment, Health and Social Committee met once during the year under
review.
The Committee was comprised of the following members up to 30 September 2014:
Mr Ashoke Roy, Chairman
Mr Jagdish Capoor
Mr Om Prakash Gahrotra
Mr Arvind Sailendre Soobashchand Issur
There was a change in the composition of the Corporate Governance, Environment Health and Social
Committee. The new Committee members from 01 October 2014 are as follows:
Mr Jagdish Capoor , Chairman
Mr Ackbaree Arekion
Mr Arvind Sailendre Soobashchand Issur
Nominations and Remuneration Committee
The Nominations and Remuneration Committee is a Committee of the Board of Directors that has the
responsibility of selecting competent and qualified personnel and making recommendations to the Board of
Directors. The Committee approves reward policy including employee share participation schemes and
review human resource policies. The Committee reviews and recommends nomination of suitable persons
eligible as candidate for directorship, in accordance with Fit and Proper Person Policy and the Corporate
Governance framework. The Nominations and Remuneration Committee met four times during year under
review. In addition to the meetings the Committee also approved many items by circulation. The Committee
was comprised of the following members up to 30 September 2014:
Mr Om Prakash Gahrotra, Chairman
Mr Jagdish Capoor
Mr Ashoke Roy
Ms Ackbaree Arekion
Mr Baljinder Sharma
There was a change in the composition of the Nominations and Remuneration Committee .The new
Committee members from 01 October 2014 are as follows:
Ms Ackbaree Arekion, Chairman
Mr Ashoke Roy
Mr Sanjiv Singhal
9
BanyanTree Bank Limited
Corporate Governance Report (Contd)
4.
Board of directors and management (Contd)
4.1
Board of directors (Contd)
4.1.3 Committees of the Board (Contd)
Conduct Review Committee
The Conduct Review Committee reviews transactions connected with related parties to ensure that they are
carried out on terms and conditions that are at least as favourable as market terms and conditions. The
Conduct Review Committee met four times during the year under review. There was a change in the
designation of the members of this Committee. In addition to the meetings, the Committee also approved
many items by circulation. The Committee was comprised of the following members up to 30 September
2014:
Mr Ashoke Roy, Chairman
Mr Om Prakash Gahrotra
Mr Jagdish Capoor
Mr Sebastien Mamet
There was a change in the composition of the Conduct Review Committee. The new Committee members
from 01 October 2014 are as follows:
Mr Om Prakash Gahrotra, Chairman
Mr Ashoke Roy
Mr Jagdish Capoor
Credit Committee
The responsibilities of the Credit Committee are to:



Review and approve credit facilities;
Review and approve the structure of any credit facilities; and
Approve the appropriate client exposure, sector exposure and country exposure.
The Credit Committee met four times during the year under review. In addition to the meetings, the
Committee also approved many items by circulation. The Committee was comprised of the following
members up to 30 September 2014:
Mr Jagdish Capoor, Chairman
Mr Ashoke Roy
Mr Baljinder Sharma
Mr Sanjiv Singhal
Mr Sebastien Mamet
Mr Gopakumar Puthenveettil
There was a change in the composition of the Credit Committee. The new Committee members from
01 October 2014 are as follows:
Mr. Om Prakash Gahrotra, Chairman
Mr. Baljinder Sharma
Mr. Sebastian Mamet
10
BanyanTree Bank Limited
Corporate Governance Report (Contd)
4.
Board of directors and management (Contd)
4.1
Board of directors (Contd)
4.1.3 Committees of the Board (Contd)
Risk Monitoring Committee
The Committee works very closely with the Board of Directors and Management to identify, monitor and
measure the risk profile of the Bank (including market risk, operational risk and credit risk). The Risk
Monitoring Committee met four times during the year under review.
The Committee was comprised of the following members up to 30 September 2014:
Mr Ashoke Roy, Chairman
Mr Jagdish Capoor
Ms Ackbaree Arekion
Mr Arvind Sailendre Soobashchand Issur
Mr Lekhram Nundlall
Mr Sanjiv Singhal
Mr Sebastian Mamet
Mr Gopakumar Puthenveettil
There was a change in the composition of the Risk Monitoring Committee. The new Committee members
from 01 October 2014 are as follows:
Mr. Ashoke Roy, Chairman
Mr. Lekhram Nundlall
Mr Gopakumar Puthenveettil
In addition to the Credit Committee, the Risk Committee also reviewed and approved all the investments
and credit proposals of the Bank. In addition to the meetings, the Committee also approved many items by
circulation.
Finance Committee
The Finance Committee approves fund raising proposals including issue of equity shares of the Bank to
prospective investors. The Finance Committee met two times during the year under review.
The Finance Committee has seen a change in its composition. The Committee was comprised of the
following members up to 30 September 2014:
Mr Jagdish Capoor, Chairman
Mr Om Prakash Gahrotra
Mr Lekhram Nundlall
Mr Sanjiv Singhal
Mr Gopakumar Puthenveettil
The new Committee members from 01 October 2014 are as follows:
Mr Jagdish Capoor, Chairman
Mr Sanjiv Singhal
Mr Gopakumar Puthenveettil
11
BanyanTree Bank Limited
Corporate Governance Report (Contd)
4.
Board of directors and management (Contd)
4.1
Board of directors (Contd)
4.1.4 Directors’ interests and dealings in shares
The independent directors have no interest in the share capital of the Bank, whether directly or indirectly.
The shares of the Bank are unquoted and hence there were no dealings in shares by the independent
directors of the Bank.
The following non-independent directors have interest in the equity of the Bank:
1.
2.
3.
4.
5.
Mr. Sanjiv Singhal, currently Vice-Chairman, is a director of Neemtree Advisors (Singapore) Pte Ltd, a
shareholder of the Bank.
Mr. Lekhram Nundlall is a director of Triolet Bus Service Ltd, a shareholder of the Bank.
Mr Arvind Sailendre Soobashchand Issur is a director of The Beechand Company Limited, a
shareholder of the Bank
Mr. Baljinder Sharma is a shareholder of the Bank.
Mr. Sebastien Mamet is an employee of Terra Mauricia Ltd, a shareholder of the Bank.
4.1.5 Directors’ remuneration
During the year ended 31 December 2014, the directors received Rs 6,600,006 as remuneration. The
remuneration of the directors has not been disclosed on an individual basis due to commercial sensitivity.
4.2
Director’s service contracts of the Bank
All director service contracts are for a period of 2 years.
12
BanyanTree Bank Limited
Corporate Governance Report (Contd)
4.
Board of directors and management (Contd)
4.3
Board attendance
The following table gives the record of attendance at Board meetings and at meetings of Board Committees for the year under review.
Board Committees
Corporate
Governance,
Audit and
Directors
Nominations and
Environment,
Board
Compliance
Risk Monitoring
Conduct Review
Remuneration
Credit
Finance
Health and Social
Meetings
Committee
Committee
Committee
Committee
Committee
Committee
Committee
4 out of 4
3 out of 3
2 out of 2
3 out of 3
3 out of 3
3 out of 3
Nil
1 out of 1
4 out of 4
N/A
2 out of 2
N/A
1 out of 1
3 out of 3
Nil
N/A
4 out of 4
4 out of 4
2 out of 2
N/A
3 out of 3
N/A
N/A
N/A
Mr. Jagdish Capoor
(Chairman)
Mr. Sanjiv Singhal
(Vice chairman and
Managing Director)
Ms. Ackbaree
Aumeerally Arekion
Mr. Arvind Sailendre
Soobashchand Issur
3 out of 4
N/A
2 out of 2
N/A
N/A
N/A
N/A
1 out of 1
Mr. Ashoke Roy
4 out of 4
4 out of 4
4 out of 4
3 out of 3
3 out of 3
3 out of 3
N/A
1 out of 1
Mr. Baljinder Sharma
4 out of 4
N/A
N/A
N/A
1 out of 2
1 out of 2
N/A
N/A
Mr. Lekhram Nundlall
3 out of 4
N/A
4 out of 4
N/A
N/A
N/A
Nil
N/A
Gahrotra
4 out of 4
4 out of 4
N/A
2 out of 2
1 out of 2
N/A
Nil
1 out of 1
Mr. Sebastien Mamet
2 out of 4
N/A
2 out of 2
2 out of 2
N/A
1 out of 3
N/A
N/A
4 out of 4
N/A
4 out of 4
N/A
N/A
3 out of 3
Nil
N/A
Mr. Om Prakash
Mr. Gopakumar
Puthenveettil
13
BanyanTree Bank Limited
Corporate Governance Report (Contd)
4.
Board of directors and management (Contd)
4.4
Shareholders’ agreement affecting the governance of the Bank by the board
There is a shareholders’ agreement executed between the founding investors. All directors are appointed by
the shareholders and the independent directors and Executive Director are appointed by the Board of
Directors.
4.5
Third party management agreement
No third party management agreement presently exists.
4.6
Key management profile
Refer to “Administrative information” section.
5.
Related party transactions and practices
The Guideline on Related Party Transactions issued by the Bank of Mauritius is made up of 5 sections:





Board and Senior Management Responsibilities;
Rules Governing Related Party Transactions;
Monitoring of Related Party Transactions;
Disclosure and Regulatory Reporting; and
Transitional Provisions.
Related parties, whether body corporate or natural persons, fall into two main categories:
(a)
(b)
Those that are related to a financial institution because of ownership interest; and
Those that are related otherwise, such as directors and senior officers who may also have some
ownership interest in the financial institution.
The Board Conduct Review Committee is required to review and approve related party transactions. Related
party transactions may include:
(a)
(b)
(c)
(d)
(e)
(f)
Credit, financial leasing, non-fund based commitments such as documentary credits, guarantees on
behalf of a related party, acquiring a loan made by a third party to a related party;
Placements made by the Bank with the related party;
Consulting or professional service contracts with directors;
Investment in equity of a related party;
Deposits placed with the Bank by related parties; and
Acquisition, sale or lease of assets from/to related parties.
The Guideline outlines 3 categories of credit exposures to related parties and prescribes the regulatory limits
applicable. As at 31 December 2014, the Bank was not exposed to any significant credit risk from its related
parties as most of the related party transactions were on account of issue of shares and share application
monies, deposits placed by shareholders, directors and other related parties and IT hardware procurement
from related parties.
Refer to Note 32 of these financial statements for other details on related party transactions.
14
BanyanTree Bank Limited
Corporate Governance Report (Contd)
6.
Material clauses of the Bank’s Constitution
Material clauses of the Constitution include the appointment and remuneration of auditors and the holding
of Shareholders’ and Board meetings. Both are in line with the Banking Act 2004 and the Mauritius
Companies Act 2001.
7.
Statement of remuneration philosophy
The Bank has a Nominations and Remuneration Committee, which is a Committee of the Board, and it has
the responsibility as specified in section 4.1.3.
8.
Employee Share Scheme
The Bank created an Employee Share Trust and transferred 10% of the equity shares of the Bank to the
Trust to be distributed to employees and key management personnel as per the Employee Share Scheme.
9.
Risk management
The Bank has implemented a comprehensive system to understand and manage the risks it faces in
conducting its banking operations. The risk management policy / procedure of the Bank are detailed in
Note 6 to the financial statements and in the “Management Discussion and Analysis” section.
10.
Political and other donations
The Bank did not make any political and other donations during the year ended 31 December 2014.
11.
Table of Important events
Financial Year End
Annual General Meeting of Shareholders
December
April 2015
Publication of unaudited financial statements:
31 March quarter end
30 June quarter end
30 September quarter end
12.
May 2015
August 2015
November 2015
Code of Ethics
The Bank’s policies and procedures are in line with Section 65 of the Bank of Mauritius “Guideline on
Corporate Governance”. At an employee level, our Employee Handbook is one of the first policies we
share with all new recruits, which requires employees to adhere to the Bank’s code of ethics, privacy and
confidentiality policy.
The policy is reviewed by the Senior Executive team on an annual basis to ensure it not only is compliant,
but remains relevant to our day-to-day activities. Further, all directors and senior officers are required to
submit a fit and proper questionnaire, based on which the Board appoints the Director/Senior Officer.
15
BanyanTree Bank Limited
Corporate Governance Report (Contd)
13.
Environment, Health & Social Responsibility
The Bank has setup a Corporate Governance and Environment Health & Social (“EHS”) Committee,
which is a Committee of the Board, and it has the responsibility as specified in section 4.1.3.
14.
Executive Director - Disclosure
The Board of Directors have appointed only one executive director due to limited banking operations of the
Bank. The Board will take a decision to appoint an additional executive director in the future, depending on
the growth of the Bank.
15.
Internal Audit Department
The Bank started with an independent Internal Audit function during the year ended 31 December 2014
and the auditor conducted detailed audit of the bank’s operations/policies and procedures. The audit was
conducted twice during the year in August and December and the findings were duly submitted to the Audit
Committee.
16.
Re-election of the Directors
At the Annual General Meeting, the directors were re-elected until the next annual meeting.
17.
Assessment of the Board of Directors
The Guideline on ‘Fit and Proper Person’ issued by the Bank of Mauritius has been followed by the Bank
before appointment of directors. Directors have many years of Board level and Executive level experience
prior to their appointment as Board members. Refer to the ‘Administrative information’ section for more
details on the Bank’s Board of Directors.
__________________________________
Associated Corporate Services Limited
Secretary
Date:
16
Statement of Compliance
(Section 75 (3) of the Financial Reporting Act 2004)
Name of the Bank:
BanyanTree Bank Limited
Reporting Period:
Financial year ended 31 December 2014
We, the undersigned, being the Directors of BanyanTree Bank Limited (the “Bank”), confirm that to the best of our
knowledge that the Bank has complied with all of its obligations and requirements under the Code of Corporate
Governance (the “Code”) except for the following section:
1.
Section 2.4: Board Composition
The reason of non-compliance with the above Section of the Code is provided in the Corporate Governance
Report as follows:
Page Number
1.
Board Composition
Mr. Jagdish Capoor
Chairman
On behalf of Board of Directors
Date:
Ebene, Republic of Mauritius
15 (under Executive Director - Disclosure)
Mr. Sanjiv Singhal
Vice-Chairman
On behalf of Board of Directors
Mr. Gopakumar Puthenveettil
Chief Executive Officer
17
BanyanTree Bank Limited
Statement of Management’s Responsibility for Financial Reporting
For the year ended 31 December 2014
The financial statements for the Bank’s operations presented in this Annual Report have been prepared by
management, which is responsible for their integrity, consistency, objectivity and reliability. International Financial
Reporting Standards, as well as the requirements of the Banking Act 2004, the Mauritius Companies Act 2001, the
Financial Reporting Act 2004 and Bank of Mauritius Guideline on Public Disclosure of Information have been
applied and management has exercised its judgement and made best estimates where deemed necessary.
The Bank has designed and maintained its accounting systems, related internal controls and supporting procedures,
to provide reasonable assurance that financial records are complete and accurate and that assets are safeguarded
against loss from unauthorised use or disposal. These supporting procedures include careful selection and training
of qualified staff, the implementation of organisation and governance structures providing a well-defined division of
responsibilities, authorisation levels and accountability for performance, and the communication of the Bank’s
policies, procedures manuals and guidelines of the Bank of Mauritius throughout the Bank.
The Bank’s Board of Directors, acting in part through the Audit and Compliance Committee and the Conduct
Review Committee and Risk Monitoring Committee, comprising of independent directors who are not officers or
employees of the Bank, oversees management’s responsibility for financial reporting, internal controls, assessment
and control of major risk areas, and assessment of significant and related party transactions.
The Bank’s Internal Auditor, who has full and free access to the Audit Committee, conducts a well-designed
programme of internal audits in coordination with the Bank’s external auditors. In addition, the Bank’s compliance
function maintains policies, procedures and programmes directed at ensuring compliance with regulatory
requirements.
Pursuant to the provisions of the Banking Act 2004, the Bank of Mauritius makes such examination and inquiry
into the operations and affairs of the Bank, as it deems necessary.
The Bank’s External Auditors, Grant Thornton, have full and free access to the Board of Directors and its
Committees to discuss the audit and matters arising therefrom, such as their observations on the fairness of
financial reporting and the adequacy of internal controls.
Mr. Jagdish Capoor
Chairman
On behalf of Board of Directors
Date:
Ebene, Republic of Mauritius
Mr. Sanjiv Singhal
Vice-Chairman
On behalf of Board of Directors
Mr. Gopakumar Puthenveettil
Chief Executive Officer
18
BanyanTree Bank Limited
Report from the Secretary
We certify, to the best of our knowledge and belief, that the Bank has filed with the Registrar of Companies all such
returns as are required of the Bank under the Mauritius Companies Act 2001, in terms of Section 166 (d), during the
financial year ended 31 December 2014.
__________________________________
Associated Corporate Services Limited
Secretary
5 St James Court
St Denis Street
Port Louis
Republic of Mauritius
Date:
19
Independent auditors’ report
To the members of BanyanTree Bank Limited
Report on the Financial Statements
We have audited the accompanying financial statements of BanyanTree Bank Limited, the “Bank”,
which comprise the statement of financial position as at 31 December 2014, and the statement of
comprehensive income, statement of changes in equity and statement of cash flows for the year
then ended, and a summary of significant accounting policies and other explanatory information.
Directors’ Responsibilities for the Financial Statements
The directors are responsible for the preparation and fair presentation of these financial statements
in accordance with International Financial Reporting Standards and in compliance with the
requirements of the Mauritius Companies Act 2001, the Financial Reporting Act 2004, the Banking
Act 2004 and the Bank of Mauritius Guideline on Public Disclosure of Information and for such
internal control as the directors determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We
conducted our audit in accordance with International Standards on Auditing. Those standards
require that we comply with ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditors’ judgment,
including the assessment of the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the auditors consider internal control
relevant to the entity’s preparation and fair presentation of the financial statements in order to
design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates made by the directors, as well as evaluating the overall presentation of the financial
statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.
Opinion
In our opinion, the financial statements on pages 28 to 70 give a true and fair view of the financial
position of the Bank as at 31 December 2014, and of its financial performance and its cash flows
for the year then ended in accordance with International Financial Reporting Standards and the
requirements of the Mauritius Companies Act 2001, the Financial Reporting Act 2004 and the
Banking Act 2004.
20
Independent auditors’ report (Contd)
To the members of BanyanTree Bank Limited
Report on Other Legal and Regulatory Requirements
(a)
Mauritius Companies Act 2001
In accordance with the requirements of the Mauritius Companies Act 2001, we report as follows:

we have no relationship with, or any interests in, the Bank other than in our capacity as
auditors and tax advisors;

we have obtained all the information and explanations that we have required; and

in our opinion, proper accounting records have been kept by the Bank as far as appears
from our examination of those records.
(b)
Banking Act 2004
(i)
In our opinion, the financial statements:

have been prepared on a basis consistent with that of the preceding year;

are complete, fair and properly drawn up; and

comply with the Banking Act 2004 as well as the regulations and guidelines of the Bank of
Mauritius.
(ii)
The explanations or information called for or given to us by the officers or agents of the
Bank were satisfactory.
(c)
Financial Reporting Act 2004
The Directors are responsible for preparing the Corporate Governance Report. Our responsibility
is to report on the extent of compliance with the Code of Corporate Governance as disclosed in
the annual report and whether the disclosure is consistent with the requirements of the Code.
In our opinion, the disclosure in the Corporate Governance Report is consistent with the
requirements of the Code.
21
Independent auditors’ report (Contd)
To the members of BanyanTree Bank Limited
Other Matters
This report is made solely to the members of the Bank as a body in accordance with Section 205 of
the Mauritius Companies Act 2001. Our audit work has been undertaken so that we might state to
the Bank’s members those matters we are required to state to them in an auditors’ report and for
no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Bank and the Bank’s members as a body, for our audit
work, for this report, or for the opinion we have formed.
Grant Thornton
Chartered Accountants
K RAMCHURUN, FCCA
Licensed by FRC
Date:
Ebene, Republic of Mauritius
22
BanyanTree Bank Limited
Statement of financial position as at 31 December
2014
2013
2012
Notes
Rs
Rs
Rs
ASSETS
Cash and cash equivalents
9
554,583,430
42,444,841
244,699,302
Loans and advances to customers
10
43,666,446
1,199,556
-
Investment securities
11
2,298,149,751
442,739,025
-
Derivative financial instruments
12
-
933,000
-
Plant and equipment
13
5,923,201
3,952,882
489,528
Deferred tax assets
29
129,188
1,136,248
241,755
Other assets
14
263,691,524
45,148,689
1,025,149
3,166,143,540
537,554,241
246,455,734
Total assets
LIABILITIES
Deposits from banks
15
227,440,355
151,500,000
-
Deposits from customers
16
1,360,776,953
123,041,859
-
Derivative financial instruments
12
24,277,359
-
-
Obligations under finance lease
17
1,887,128
2,337,727
-
Other liabilities
18
7,205,185
3,831,874
1,310,139
Other borrowed funds
19
1,164,946,948
-
-
Current tax liabilities
29
1,371,496
-
-
2,787,905,424
280,711,460
1,310,139
Total liabilities
SHAREHOLDERS’ EQUITY
Stated capital
20
269,650,528
269,650,528
67,222,260
Capital contribution
21
8,333,349
-
-
Investment revaluation deficit
Share application monies
(517,907)
22
-
-
-
-
182,956,058
Retained earnings/(accumulated losses)
100,772,146
(12,807,747)
Total equity
378,238,116
256,842,781
245,145,595
3,166,143,540
537,554,241
246,455,734
124,500
120,000
-
Total liabilities and equity
(5,032,723)
CONTINGENT LIABILITIES
Guarantees
35
Approved by the Board of Directors on ………………….and signed on its behalf by:
Mr. Jagdish Capoor
Chairman
Mr. Sanjiv Singhal
Vice-Chairman
Mr. Gopakumar Puthenveettil
Chief Executive Officer
The notes on pages 28 to 70 form an integral part of these financial statements.
23
BanyanTree Bank Limited
Statement of comprehensive income for the
year/period ended 31 December
Period from 11
Year ended
Year ended
June 2012 to
31 December
31 December
31 December
2014
2013
2012
Rs
Rs
Rs
Interest income
137,409,586
16,375,091
517,983
Interest expense
(66,872,717)
(3,414,875)
-
Notes
Net interest income
23
70,536,869
12,960,216
517,983
Fee and commission income
24
801,445
8,362,774
-
Other income
27
50,390,673
933,000
-
121,728,987
22,255,990
517,983
Operating income
Personnel expenses
25
(19,460,479)
(9,377,503)
(422,424)
Operating lease expenses
34
(2,345,640)
(2,211,361)
(291,057)
Other expenses
26
(37,194,552)
(8,989,859)
(1,621,332)
(1,949,560)
(3,429,578)
Pre-operative expenses
-
Finance charges
28
(3,195,142)
(5,258,146)
-
Depreciation
13
(1,165,634)
(758,541)
(28,070)
57,590,909
(2,380,537)
-
115,958,449
(8,669,517)
(5,274,478)
Net foreign exchange gain/(loss)
Operating profit/(loss) before tax
Income tax (expense)/credit
29
(2,378,556)
894,493
241,755
Profit/(loss) for the year/period
30
113,579,893
(7,775,024)
(5,032,723)
The notes on pages 28 to 70 form an integral part of these financial statements.
24
BanyanTree Bank Limited
Statement of comprehensive income for the
year/period ended 31 December (Contd)
Period from 11
Notes
Year ended
Year ended
June 2012 to
31 December
31 December
31 December
2014
2013
2012
Rs
Rs
Rs
Other comprehensive income:
Items that will not be reclassified subsequently to
-
-
-
(517,907)
-
-
(517,907)
-
-
113,061,986
(7,775,024)
(5,032,723)
4.09
(0.37)
(0.75)
profit or loss
Items that will be reclassified subsequently to profit
or loss
Fair value loss on available-for-sale financial assets
Other comprehensive loss for the year/period, net of
tax
Total
comprehensive
income/(loss)
for
the
year/period
Profit/(loss) per share
31
Approved by the Board of Directors on ………………………and signed on its behalf by:
Mr. Jagdish Capoor
Chairman
Mr. Sanjiv Singhal
Vice-Chairman
Mr. Gopakumar Puthenveettil
Chief Executive Officer
The notes on pages 28 to 70 form an integral part of these financial statements.
25
BanyanTree Bank Limited
Statement of changes in shareholders’ equity for
the year ended 31 December
Retained
Investment
Share
earnings/
(accumulated
Stated
revaluation
Capital
application
capital
deficit
contribution
monies
losses)
Total
Rs
Rs
Rs
Rs
Rs
Rs
269,650,528
-
-
-
year
-
-
8,333,349
-
-
8,333,349
Transactions with the owners
-
-
8,333,349
-
-
8,333,349
Profit for the year
-
-
-
-
Other comprehensive loss
-
(517,907)
-
-
-
(517,907)
-
-
113,579,893
113,061,986
269,650,528
(517,907)
8,333,349
-
100,772,146
378,238,116
At 01 January 2014
(12,807,747) 256,842,781
Funds received during the
113,579,893
-
113,579,893
(517,907)
Total comprehensive
(loss)/income for the year
At 31 December 2014
At 01 January 2013
Issue of shares
67,222,260
-
-
182,956,058
(5,032,723)
245,145,595
202,428,268
-
-
(127,400,490)
-
75,027,778
-
-
-
(55,555,568)
-
(55,555,568)
202,428,268
-
-
(182,956,058)
-
19,472,210
-
-
(7,775,024)
(7,775,024)
Refund of share application
monies
Transactions with the owners
Loss for the year
-
Other comprehensive income
-
-
-
-
-
-
-
-
-
-
(7,775,024)
(7,775,024)
269,650,528
-
-
-
(12,807,747)
256,842,781
Total comprehensive loss for the
year
At 31 December 2013
The notes on pages 28 to 70 form an integral part of these financial statements.
26
BanyanTree Bank Limited
Statement of changes in shareholders’ equity for
the year/period ended 31 December (Contd)
Retained
Investment
Share
earnings/
(accumulated
Stated
revaluation
Capital
application
capital
deficit
contribution
monies
losses)
Rs
Rs
Rs
Rs
Rs
Rs
Issue of shares
67,222,260
-
-
-
-
67,222,260
Funds received
-
-
-
182,956,058
-
182,956,058
67,222,260
-
-
182,956,058
-
250,178,318
-
-
-
-
-
-
-
-
-
-
-
-
(5,032,723)
(5,032,723)
67,222,260
-
-
182,956,058
(5,032,723)
245,145,595
Total
Transactions with the
owners
Loss for the period
(5,032,723)
(5,032,723)
Other comprehensive
income for the period
-
-
Total comprehensive
income for the period
At 31 December 2012
The notes on pages 28 to 70 form an integral part of these financial statements.
27
BanyanTree Bank Limited
Statement of cash flows for the year/period ended
31 December
Note
Year ended
Year ended
31 December
31 December
2014
2013
Rs
Rs
Period from 11
June 2012 to
31 December
2012
Rs
Operating activities
Profit/(loss) before tax
113,579,893
(8,669,517)
(5,274,478)
Adjustments for:
Depreciation
1,165,634
758,541
-
4,166,666
-
3,013,712
968,558
-
Fair value on derivative financial instruments
25,210,359
(933,000)
-
Foreign exchange (loss)/gain
(78,425,131)
Premium on refund of share application monies
Amortisation of premium paid on corporate bonds
64,544,467
3,842,638
133,886
28,070
(5,246,408)
Changes in operating assets and liabilities
Change in loans and advances to customers
Change in other assets
Change in deposits from banks
Change in deposits from customers
Change in deferred tax assets and liabilities
Change in borrowed funds
Net cash from/(used in) operating activities
(42,466,890)
(1,199,556)
(218,542,835)
(44,123,540)
(1,025,149)
75,940,355
151,500,000
1,237,735,094
123,041,859
-
5,751,867
2,521,735
1,310,139
1,164,946,948
-
2,287,909,006
231,874,384
-
(4,961,418)
Investing activities
Purchase of plant and equipment
(3,135,953)
Sale of securities
Redemption of investments
Purchase of investments
Net cash used in investing activities
(1,638,504)
(517,598)
2,621,712,509
-
-
15,227,286
-
-
(4,415,457,009)
(447,550,221)
(1,783,653,167)
(449,188,725)
(517,598)
Financing activities
Repayment of finance lease
(450,599)
(245,664)
-
Proceeds from issue of shares
-
75,027,778
67,222,260
Proceeds from share application monies
-
-
182,956,058
-
-
Capital contribution
8,333,349
Refund of share application monies
(59,722,234)
Net cash from financing activities
Net change in cash and cash equivalents
Cash and cash equivalents, beginning of year/period
Cash and cash equivalents, end of year/period
9
-
7,882,750
15,059,880
250,178,318
512,138,589
(202,254,461)
244,699,302
42,444,841
244,699,302
-
554,583,430
42,444,841
244,699,302
The notes on pages 28 to 70 form an integral part of these financial statements.
28
BanyanTree Bank Limited
Notes to the financial statements
For the year ended 31 December 2014
1.
General information and statement of compliance with International Financial Reporting
Standards (“IFRS”)
BanyanTree Bank Limited, the “Bank”, was incorporated in the Republic of Mauritius under the Mauritius
Companies Act 2001 on the 11 June 2012 as a private company with liability limited by shares. The Bank’s
registered office is 13 NexTeracom 1, Cybercity, Ebene, Republic of Mauritius.
The Bank holds a Banking Licence issued by the Bank of Mauritius on 06 September 2012 and it started its
operations on 18 February 2013.
The principal activity of the Bank is to provide commercial banking services.
The financial statements have been prepared in accordance with IFRS as issued by the International
Accounting Standards Board (“IASB”).
2.
Adoption of new and revised International Financial Reporting Standards
2.1
New and revised standards that are effective for the annual year beginning on 01 January 2014
In the current year, the Bank has applied the following new and revised Standards issued by the
International Accounting Standards Board (“IASB”) that are mandatory for the first time for the financial
year beginning on 01 January 2014:
IAS 39
IAS 36
IFRS 10, 12
and IAS 27
IAS 32
IFRIC 21
Novation of Derivatives and Continuation of Hedge Accounting (Amendments to IAS 39)
Recoverable Amount Disclosures for Non-Financial Assets (Amendments to IAS 36)
Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27)
Offsetting Financial Assets and Financial Liabilities (Amendments to IAS 32)
Levies
The directors have assessed the impact of these revised standards and amendments and concluded that
none of these have an impact on these financial statements.
2.2
Standards, amendments and interpretations to existing Standards that are not yet effective and
have not been adopted early by the Bank
At the date of authorisation of these financial statements, certain new Standards, Amendments and
Interpretations to existing Standards have been published but are not yet effective, and have not been
adopted early by the Bank.
Management anticipates that all of the relevant pronouncements will be adopted in the Bank’s accounting
policies for the first period beginning after the effective date of the pronouncements. Information on new
Standards, Amendments and Interpretations is provided below.
IFRS 9
IAS 19
IFRS 14
Financial Instruments (2014)
Defined Benefit Plans: Employee Contributions (Amendments to IAS 19)
Regulatory Deferral Accounts
29
BanyanTree Bank Limited
Notes to the financial statements
For the year ended 31 December 2014
2.
Adoption of new and revised International Financial Reporting Standards (Contd)
2.2
Standards, amendments and interpretations to existing standards that are not yet effective and
have not been adopted early by the Bank (Contd)
IFRS 11
IFRS 15
IAS 16 and
IAS 38
IFRS 10
and IAS 28
IAS 27
IAS 16 and
IAS 41
Various
Accounting for Acquisitions of Interests in Joint Operations (Amendments to IFRS 11)
Revenue from Contracts with Customers
Clarification of acceptable methods of depreciation and amortisation (Amendments to IAS
16 and IAS 38)
Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
(Amendments to IFRS 10 and IAS 28)
Equity Method in Separate Financial Statements (Amendments to IAS 27)
Agriculture: Bearer Plants (Amendments to IAS 16 and IAS 41)
Annual Improvements to IFRSs 2010-2012, 2011-2013 and 2012-2014 cycles
These new standards, interpretations and amendments are not expected to have a material impact on the
Bank’s financial statements except for IFRS 9 Financial Instruments (2014).
The IASB recently released IFRS 9 Financial Instruments (2014), representing the completion of its project to
replace IAS 39 Financial Instrument: Recognition and Measurement. The new standard introduces extensive
changes to IAS 39’s guidance on the classification and measurement of financial assets and introduces a
new ‘expected credit loss’ model for the impairment of financial assets. IFRS 9 also provides new guidance
on the application of hedge accounting.
The Bank management have yet to assess the impact of IFRS 9 on these financial statements. The new
standard is required to be applied for annual reporting periods beginning on or after 01 January 2018.
3.
Summary of accounting policies
3.1
Overall considerations
The financial statements have been prepared using the significant accounting policies and measurement
bases summarised below.
3.2
Cash and cash equivalents
Cash and cash equivalents consist of cash in hand, balances with banks in the Republic of Mauritius and
unrestricted balances with the Central Bank and short-term loans and placements with banks. Cash and
cash equivalents do not include the mandatory balances with the Central Bank.
30
BanyanTree Bank Limited
Notes to the financial statements
For the year ended 31 December 2014
3.
Summary of accounting policies (Contd)
3.3
Financial instruments
Recognition, initial measurement and derecognition
Financial assets and liabilities are recognised when the Bank becomes party to the contractual provisions of
the financial instruments and are measured initially at fair value adjusted by transaction costs, except for
those carried at fair value through profit or loss which are measured initially at fair value. Subsequent
measurement of financial assets and financial liabilities are measured as described below.
Financial assets are derecognised when the contractual rights to the cash flows from the financial asset
expire, or when the financial asset and all substantial risks and rewards are transferred. A financial liability is
derecognised when it is extinguished, discharged, cancelled or expires.
Classification and subsequent measurement of financial assets
For the purpose of subsequent measurement, financial assets other than those designated and effective as
hedging instruments, are classified into the following categories upon initial recognition:




loans and receivables
financial assets at fair value though profit or loss (“FVTPL”)
held-to-maturity investments
available-for-sale financial assets.
All financial assets, except for those at fair value through profit or loss, are assessed for impairment at least
at each reporting date to identify whether there is any objective evidence that a financial asset or a group of
financial assets is impaired. Different criteria to determine impairment are applied for each category of
financial assets, which are described below.
All income and expenses relating to financial assets that are recognised in profit or loss are presented within
interest income, finance charges and other income.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted on an active market, other than: (a) those that the Bank intends to sell immediately or in the short
term, which are classified as held for trading; or (b) those for which the Bank may not recover substantially
all of its initial investment, other than because of credit deterioration.
Loans and receivables are initially recognised at fair value - which is the cash consideration to originate or
purchase the loan including any transaction costs - and measured subsequently at amortised cost using the
effective interest rate method. The Bank’s cash and cash equivalents, loans and advances to customers,
investments in non-convertible debentures and other assets fall into this category of financial assets.
Interests on loans and non-convertible debentures are included in the statement of comprehensive income
and are reported as ‘Interest income’. In the case of impairment, the impairment loss is reported as a
deduction from the carrying value of the credit facility and recognised in the statement of comprehensive
income as ‘Net impairment loss on financial assets’.
31
BanyanTree Bank Limited
Notes to the financial statements
For the year ended 31 December 2014
3.
Summary of accounting policies (Contd)
3.3
Financial instruments (Contd)
Classification and subsequent measurement of financial assets (Contd)
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include financial assets that are either classified as held
for trading or that meet certain conditions and are designated at fair value through profit or loss upon initial
recognition. All derivative financial instruments fall into this category, except for those designated and
effective as hedging instruments, for which the hedge accounting requirements apply.
Assets in this category are measured at fair value with gains or losses recognised in profit or loss. The fair
values of derivative financial instruments are determined by reference to active market transactions or using
a valuation technique where no active market exists.
Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and
fixed maturity other than loans and receivables. Investments are classified as held-to-maturity investments if
the Bank has the intention and ability to hold them until maturity. The Bank currently holds corporate
bonds designated into this category.
Held-to-maturity investments are measured subsequently at amortised cost using the effective interest
method. If there is objective evidence that the investment is impaired, determined by reference to external
credit ratings, the financial asset is measured at the present value of estimated future cash flows. Any
changes in the carrying amount of the investment, including impairment losses are recognised in the
statement of comprehensive income. Accrued interest income on held-to-maturity investments is
accounted for in the statement of comprehensive income as interest income. Premium paid on Held-toMaturity investments are amortised over the period of the investment till maturity.
If the Bank was to sell or reclassify more than an insignificant amount of held-to-maturity investments
before maturity (other than in certain specific circumstances), the entire category would be tainted and
would have to be reclassified as available-for-sale. Furthermore, the Bank would be prohibited from
classifying any financial asset as held-to-maturity during the following two years.
Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that are either designated to this
category or do not qualify for inclusion in any of the other categories of financial assets. The Bank’s
available-for-sale financial assets include corporate bonds, compulsory convertible debentures and equity
investment in a company.
The equity investment and the compulsory convertible debentures are measured at cost less any impairment
charges, as its fair value cannot currently be estimated reliably. Impairment charges are recognised in the
statement of comprehensive income.
32
BanyanTree Bank Limited
Notes to the financial statements
For the year ended 31 December 2014
3.
Summary of accounting policies (Contd)
3.3
Financial instruments (Contd)
Classification and subsequent measurement of financial assets (Contd)
Available-for-sale financial assets (Contd)
Corporate bonds are initially recognised at fair value plus, in the case of those not at fair value through
profit or loss, transaction costs. Available-for-sale unlisted equity securities are estimated using maintainable
earnings or net assets bases refined to reflect the specific circumstances of the issuer. Unrealised gains and
losses arising from changes in the fair value of securities classified as available-for-sale are recognised in
statement of comprehensive income.
Classification and subsequent measurement of financial liabilities
The Bank’s financial liabilities include deposits, obligations under finance lease and other liabilities.
Financial liabilities are measured subsequently at amortised cost using the effective interest method.
All interest-related charges on financial liabilities are included within interest expense.
Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the statement of financial position
when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle
on a net basis, or realise the asset and settle the liability simultaneously.
3.4
Derivative financial instruments
Derivative financial instruments include mainly foreign exchange forward contracts. These are initially
recognised at fair value on the date a derivative contract is entered into and subsequently remeasured at their
fair value. Fair value of derivatives between two external currencies are based on interest rate differential
between the two currencies. All derivatives are carried as assets when fair value is positive and as liabilities
when fair value is negative. Transaction costs are charged immediately through profit or loss.
The Bank’s derivative transactions, while providing effective economic hedges under the Bank’s risk
management policies, do not qualify for hedge accounting under the specific rules of IAS 39 and are
therefore treated as derivatives held for trading with fair values gains and losses reported in profit or loss.
The fair values of derivative financial instruments is disclosed in Note 12.
3.5
Plant and equipment
Plant and equipment are initially recognised at acquisition cost or manufacturing cost, including any costs
directly attributable to bringing the assets to the location and condition necessary for them to be capable of
operating in the manner intended by the Bank’s management. Plant and equipment are subsequently
measured using the cost model that is cost less subsequent depreciation and impairment losses.
33
BanyanTree Bank Limited
Notes to the financial statements
For the year ended 31 December 2014
3.
Summary of accounting policies (Contd)
3.5
Plant and equipment (Contd)
Depreciation is calculated on the reducing balance method to allocate the cost of each asset, to their
residual values over their estimated useful lives as follows:
Computer equipment and software
Fixtures and fittings
Motor vehicle
-
33%
20%
20%
Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down
immediately to its recoverable amount. Gains and losses on disposal of plant and equipment are
determined by reference to their carrying amount and are taken into account in determining operating
profit. On disposal of an asset, the difference between the carrying value of the asset and sale
consideration taken to the statement of comprehensive income.
The assets’ residual values, useful lives and methods of depreciation are reviewed and adjusted, if
appropriate, at each reporting date. Repairs and maintenance costs are expensed as incurred.
Plant and equipment under finance leases are depreciated over their expected useful lives on the same basis
as owned assets.
3.6
Interest income and expense
Interest income and expense are recognised in the statement of comprehensive income for all interest
bearing instruments using the effective interest method. The effective interest method is a method of
calculating the amortised cost of a financial asset or a financial liability and of allocating the interest income
or interest expense over the relevant year.
3.7
Fees and commissions
Fees and commissions are recognised on an accrual basis, when the service has been provided, unless
collectability is in doubt.
3.8
Foreign currency translation
(a)
Functional and presentation currency
The financial statements are presented in the Mauritian Rupee (“MUR” or “Rs”), which is also the
Bank’s presentation and functional currency.
(b)
Foreign currency transactions and balances
Foreign currency transactions are translated into the functional currency of the Bank, using the
exchange rates prevailing at the dates of the transactions (spot exchange rate). Foreign exchange
gains and losses resulting from the settlement of such transactions and from the re-measurement
of monetary items denominated in foreign currency at year-end exchange rates are recognised in
the statement of comprehensive income.
34
BanyanTree Bank Limited
Notes to the financial statements
For the year ended 31 December 2014
3.
Summary of accounting policies (Contd)
(b)
Foreign currency transactions and balances
Non-monetary items are not retranslated at year-end and are measured at historical cost (translated
using the exchange rates at the transaction date), except for non-monetary items measured at fair
value which are translated using the exchange rates at the date when fair value was determined.
3.9
Taxation
Tax expense recognised in the statement of comprehensive income comprises the sum of current tax,
deferred tax, Corporate Social Responsibility Fund (“CSRF”) and Special Levy not recognised in other
comprehensive income or directly in equity. The Bank is also subject to the Advance Payment System
(APS) whereby it pays income tax on a quarterly basis.
(a)
Current tax
Current income tax assets and/or liabilities comprise those obligations to, or claims from, fiscal
authorities relating to the current or prior reporting period, that are unpaid at the reporting date.
Current tax is payable on taxable profit, which differs from profit or loss in the financial
statements. Calculation of current tax is based on tax rates and tax laws that have been enacted or
substantively enacted by the end of the reporting year.
(b)
Deferred taxation
Deferred income taxes are calculated using the liability method on temporary differences between
the carrying amounts of assets and liabilities and their tax bases.
Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected
to apply to their respective year of realisation, provided they are enacted or substantively enacted
by the end of the reporting year.
Deferred tax assets are recognised to the extent that it is probable that they will be able to be
utilised against future taxable income, based on the Bank’s forecast of future operating results
which is adjusted for significant non-taxable income and expenses and specific limits to the use of
any unused tax loss or credit. Deferred tax liabilities are always provided for in full.
Deferred tax assets and liabilities are offset only when the Bank has a right and intention to set off
current tax assets and liabilities from the same taxation authority.
Changes in deferred tax assets or liabilities are recognised as a component of tax income or
expense in the statement of comprehensive income, except where they relate to items that are
recognised in other comprehensive income or directly in equity, in which case the related deferred
tax is also recognised in other comprehensive income or equity, respectively.
35
BanyanTree Bank Limited
Notes to the financial statements
For the year ended 31 December 2014
3.
Summary of accounting policies (Contd)
3.9
Taxation (Contd)
(c)
Special Levy
Following the publication of the Finance Act 2013, Special Levy is calculated as follows:
(i)
3.4 per cent on book profit and 1.0 per cent on operating income with regard to income
derived from banking transactions with non-residents and corporations holding a Global
Business Licence under the Financial Services Act 2007 ; and
(ii)
10 per cent on the chargeable income with regard to its income derived from sources other
than from transactions referred in subparagraph (i).
Corporate Social Responsibility Fund (“CSRF”)
The Bank is subject to CSRF and the contribution is at a rate of 2% on the chargeable income of the
preceeding financial year.
3.10
Post employment benefits and short term employee benefits
State plan
Contributions to the National Pension Scheme are expensed to the statement of comprehensive income in
the year in which they fall due.
Short-term employee benefits
Short-term employee benefits, including passage benefit are included in personnel expenses.
3.11
Provisions
Provisions are recognised when the Bank has a present legal or constructive obligation as a result of past
events and it is probable that an outflow of resources will be required to settle the obligation and the
amount can be estimated reliably. Timing or amount of the outflow may still be uncertain.
Provisions are measured at the estimated expenditure required to settle the present obligation based on the
most reliable evidence available at the reporting date, including the risks and uncertainties associated with
the present obligation. The increase in the provision due to passage of time is recognised as interest
expense in the statement of comprehensive income.
Where there are a number of similar obligations, the likelihood that an outflow will be required in
settlement is determined by considering the class of obligations as a whole.
36
BanyanTree Bank Limited
Notes to the financial statements
For the year ended 31 December 2014
3.
Summary of accounting policies (Contd)
3.12
Leases
Finance leases
Management applies judgment in considering the substance of a lease agreement and whether it transfers
substantially all the risks and rewards incidental to ownership of the leased asset. Key factors considered
include the length of the lease term in relation to the economic life of the asset, the present value of the
minimum lease payments in relation to the asset’s fair value, and whether the Bank obtains ownership of
the asset at the end of the lease term.
Refer to Note 3.5 for the depreciation methods and useful lives for assets held under finance leases. The
interest element of lease payments is charged to profit or loss, as finance costs over the period of the lease.
Operating leases
All other leases are treated as operating leases. Where the Bank is a lessee, payments on operating lease
agreements are recognised as an expense on a straight-line basis over the lease term. Associated costs, such
as maintenance and insurance, are expensed as incurred.
3.13
Impairment of assets
At each reporting date the Bank reviews the carrying amounts of its assets to determine whether there is
any indication that those assets have suffered an impairment loss. When an indication of impairment loss
exists, the carrying amount of the asset is assessed and written down to its recoverable amount.
3.14
Equity and reserves
Stated capital is determined using the value of shares that have been issued.
Capital contribution represents premium payments received from Terra Mauricia Limited, a shareholder,
towards existing capital of the Bank upon achievement of certain milestones by the Bank. This amount was
not included under stated capital since the appropriate filing was not executed with the Registrar of
Companies at the reporting date.
Share application monies represents funds received for which shares have yet to be allotted. Any refund of
share application monies at a premium is deducted from the share application monies with the premium
being recognised in the statement of comprehensive income within finance charges.
Retained earnings/(accumulated losses) include all current and prior periods’ results as disclosed in the
statement of comprehensive income.
3.15
Operating expenses
Operating expenses are recognised in the statement of comprehensive income upon utilisation of the
service or as incurred.
3.16
Related parties
The Bank considers related parties as key management personnel, directors and members.
37
BanyanTree Bank Limited
Notes to the financial statements
For the year ended 31 December 2014
3.
Summary of accounting policies (Contd)
3.17
Segment reporting
A segment is distinguishable component of the Bank that is engaged either in providing products or
services (business segment), or in providing products or services within a particular economic environment
(geographical segment), which is subject to the risks and rewards that are different from those of other
segments. Segment income, segment expenses and segment performance include transfers between
business segments and between geographical segments.
The Bank have prepared its separate financial statement in line with the requirements of the Bank of
Mauritius Guideline on ‘Segmental Reporting under a Single Banking License Regime’ which requires that
segment information and should be provided by Segment A and Segment B banking businesses.
Segment B
Segment B activity essentially relates to the provision of international financial services that give rise to
‘foreign source income’. Such services may be fund based and/ or non-fund based. Segment B asset will
generally consist of placements with and advances to foreign resident companies, institutions as well as
individuals including stocks and debt instruments and claims on non-resident and/ or entities holding
Global Business Licence (‘GBLs’). Segment B liabilities will normally arise from deposits, borrowings,
funds deposited by non-residents and GBLs.
Segment A
Segment A activity relates to all banking business other than Segment B activity. The financial services
provided under Segment A may be refund and/ or non-fund based. Segment A business will essentially
consist of transactions with residents of Mauritius, both on the liability side and asset side.
3.18
Guarantees
In the normal course of business, the Bank issues various forms of guarantees to support its customers and
employees. These guarantees are kept off-balance sheet unless a provision is needed to cover probable
losses. These guarantees are disclosed as contingent liabilities.
3.19
Comparatives
Where necessary, comparative figures have been adjusted to conform to changes in presentation in the
current year.
4.
Significant management judgment in applying accounting policies and estimation uncertainty
When preparing the financial statements, management undertakes a number of judgements, estimates and
assumptions about the recognition and measurement of assets, liabilities, income and expenses.
Significant management judgement
The following is a significant management judgment in applying the accounting policies of the Bank that
have the most significant effect of the financial statements.
38
BanyanTree Bank Limited
Notes to the financial statements
For the year ended 31 December 2014
4.
Significant management judgment in applying accounting policies and estimation uncertainty
(Contd)
Significant management judgement (Contd)
(i)
Determination of functional currency
The determination of the functional currency of the Bank is critical since recording of transactions and
exchange differences arising therefrom are dependent on the functional currency selected. The directors
have considered those factors and have determined that the functional currency of the Bank is the MUR.
(ii)
Recognition of deferred tax assets
The extent to which deferred tax asset can be recognised is based on an assessment of the probability of
the Bank’s future taxable income will be available against which the deductible temporary differences and
tax loss carry forwards can be utilised.
(iii)
Held-to-maturity investments
In accordance with guidance in IAS 39, Financial Instruments: Recognition and Measurement, the Bank classifies
some non-derivative financial assets with fixed or determinable payments and fixed maturity as held-tomaturity. This classification requires significant judgement. In making this judgement, the Bank evaluates
its intention and ability to hold such investments to maturity. If the Bank were to fail to keep these
investments to maturity other than for the specific circumstances – for example, selling an insignificant
amount close to maturity – the Bank is required to reclassify the entire category as available-for-sale.
Accordingly, the investments would be measured at fair value instead of amortised cost.
(iv)
Segment reporting
The Bank has prepared it financial statements in line with requirements of the Bank of Mauritius Guideline
on ‘Segment Reporting under a Single Banking Licence Regime’ which requires the segment information
should be provided by Segment A and Segment B banking business (Note 3.17). The directors determine
the revenues and expenses directly attributable to each Segment. For those revenues and expenses that
cannot be directly allocated to their specific segment, the classification between Segment A and Segment B
involved significant judgement.
Estimation uncertainty
Information about estimates and assumptions that have the most significant effect on recognition and
measurement of assets, liabilities, income and expenses is provided below. Actual results may be
substantially different.
(i)
Useful lives of depreciable assets
Management reviews the useful lives of depreciable assets at each reporting date. At 31 December 2014,
management considered that the useful lives represent the expected utility of the assets to the Bank. The
carrying amounts are analysed in Note 13. Actual results, however, may vary due to technical obsolescence,
particularly relating to computer equipment.
39
BanyanTree Bank Limited
Notes to the financial statements
For the year ended 31 December 2014
4.
Significant management judgment in applying accounting policies and estimation uncertainty
(Contd)
Estimation uncertainty (Contd)
(ii)
Available-for-sale financial assets
The Bank follows the guidance of IAS 39 on determining when an investment is other than temporarily
impaired. This determination requires significant judgement. In making this judgement, the Bank
evaluates, among other factors, the duration and extent to which the fair value of an investment is less than
its cost and the financial health and near-term business outlook for the investee, including factors such as
industry and sector performance, changes in technology and operational and financing cash flow.
(iii)
Fair value measurement
Management uses valuation techniques to determine the fair value of financial instruments (where active
market quotes are not available) and non-financial assets. This involves developing estimates and
assumptions consistent with how market participants would price the instrument. Management bases its
assumptions on observable data as far as possible but this is not always available. In that case management
uses the best information available. Estimated fair values may vary from the actual prices that would be
achieved in an arm’s length transaction at the reporting date (Note 11).
(v)
Limitation of sensitivity analysis
Sensitivity analysis in respect of market risk demonstrates the effects of a change in a key assumption while
other assumptions remain unchanged. In reality, there is a correlation between the assumptions and other
factors. It should also be noted that these sensitivities are non-linear and larger or smaller impact should be
interpolated or extrapolated from these results.
Sensitivity analysis does not take into consideration that the Bank’s assets and liabilities are managed. Other
limitations include the use of hypothetical market movements to demonstrate potential risk that only
represent the Bank’s view of possible near-term market changes that cannot be predicted with any
certainty.
(vi)
Impairment losses on loans and advances
The Group reviews its individually significant loans and advances at each reporting date to assess whether
an impairment loss should be recorded in the statements of comprehensive income. In particular
judgement by management is required in the estimation of the amount and timing of each future cash flows
when determining the impairment loss. In estimating these cash flows, the Group makes judgements about
the borrower’s financial situation and the net realisable value of collateral. These estimates are based on
assumptions about a number of factors and actual results may differ, resulting in future changes to the
allowance.
5.
Changes in accounting estimates
Last year, the Bank has changed its depreciation method from the straight line method to the reducing
balance method for its plant and equipment and this related into a change in accounting estimate. The
financial effect of the change in the method is insignificant.
40
BanyanTree Bank Limited
Notes to the financial statements
For the year ended 31 December 2014
6.
Financial instrument risk
Risk management objectives and policies
The Bank’s financial assets and liabilities by category are summarised in the note below.
2014
2013
2012
Rs
Rs
Rs
-
933,000
-
826,122,897
352,623,794
-
554,583,430
42,444,841
244,699,302
Investment in Non-Convertible Debentures
41,148,816
53,350,000
-
Loans and advances to customers
43,666,446
1,199,556
-
262,695,208
44,648,689
315,954
902,093,900
141,643,086
245,015,256
1,397,138,907
-
-
33,739,131
36,765,231
-
1,430,878,038
36,765,231
-
3,159,094,835
531,965,111
245,015,256
-
Financial assets
Financial assets at fair value through profit or loss:
Forward exchange contracts
Held-to-maturity:
Investments in corporate bonds
Loans and receivables:
Cash and cash equivalents
Other assets
Available-for-sale financial assets:
Investments in corporate bonds
Investments in Equity Shares and Compulsory Convertible
Debentures
Total financial assets
Financial liabilities
Financial liabilities measured at amortised cost:
Deposits from banks
Deposits from customers
Derivative financial instruments
Obligations under finance lease
Other borrowed funds
Other liabilities
Total financial liabilities
227,440,355
151,500,000
1,360,776,953
123,041,859
-
24,277,359
-
-
1,887,128
2,337,727
-
1,164,946,948
-
-
7,205,185
3,831,874
1,310,139
2,786,533,928
280,711,460
1,310,139
41
BanyanTree Bank Limited
Notes to the financial statements
For the year ended 31 December 2014
6.
Financial instrument risk (Contd)
Risk management objectives and policies (Contd)
The Bank’s activities expose it to a variety of financial risks and those activities involve the analysis,
evaluation, acceptance and management of some degree of risk or combination of risks. Taking risk is core
to the financial business and the operational risks are an inevitable consequence of being in business. The
Bank’s aim is therefore to achieve an appropriate balance between risk and return and minimise potential
adverse effects on the Bank’s financial performance.
The Bank’s risk management policies are designed to identify and analyse these risks, to set appropriate risk
limits and controls, and to monitor the risks and adherence to limits by means of reliable and up-to date
information systems.
The Bank’s risk management is coordinated by management in close cooperation with the Board of
Directors and Committees set by the Board, and focuses on actively securing the Bank’s short to mediumterm cash flows by minimising the exposure to financial markets.
Risk management is carried out by the Risk and Monitoring Committee under policies approved by the
Board of Directors. The Risk Monitoring Committee identifies, evaluates and hedges financial risks in
close co-operation with the Bank’s operating units. The main types of risks faced by the Bank are market
risk, credit risk, liquidity risk and operational risks.
6.1
Market risk analysis
Market risk is the risk of loss resulting from adverse movements in the value of the financial instruments.
The Bank is exposed to market risk through its use of financial instruments and specifically to currency
risk, interest rate risk and other price risks, which results from both operating and investing activities.
6.1.1
Foreign currency sensitivity
The Bank is exposed to foreign exchange risk arising from its currency exposures, primarily with respect to
the US Dollar (“USD”) and the Indian Rupee (“INR”). Consequently, the Bank is exposed to the risk that
the exchange rates of the Mauritian rupee relative to the USD and INR may change in a manner which has
a material effect on the reported value of the Bank’s assets and liabilities which are in USD and INR.
The Bank manages its foreign currency exposures by forecasting its need for foreign currencies and
retaining such amounts that will be necessary to settle transactions denominated in foreign currencies.
Foreign exchange exposures are reported to the Bank of Mauritius as per the guidelines established.
To mitigate the Bank’s exposure to foreign currency risk, non-MUR cash flows are monitored and forward
exchange contracts are entered into in accordance with the Bank’s risk management policies and these
contracts are approved by both the Risk and Monitoring Committee and the Credit Committee set by the
Board.
The Bank’s reporting currency is the Mauritian Rupee (MUR) but it has assets, liabilities, income and
expenses in other currencies. The following table summarises the Bank’s exposure to the foreign exchange
rate risk at 31 December 2014. The Bank has available-for-sale financial assets denominated in INR and
these are stated at cost in the financial statements and hence no retranslation adjustment is required. As a
consequence, these have not been included in the table below:
42
BanyanTree Bank Limited
Notes to the financial statements
For the year ended 31 December 2014
6.
Financial instrument risk (Contd)
Risk management objectives and policies (Contd)
6.1
Market risk analysis (Contd)
6.1.1
Foreign currency sensitivity (Contd)
At 31 December 2014
MUR
USD
INR
Total
Rs
Rs equivalent
Rs equivalent
Rs equivalent
7,029,839
546,789,743
763,848
554,583,430
385,316
43,281,130
-
43,666,446
Assets
Cash and cash equivalents
Loans and advances to customers
Investments:
- Held-to-maturity
-
826,122,897
-
826,122,897
- Available-for-sale financial assets
-
1,397,138,907
33,739,131
1,430,878,038
41,148,816
- Loans and receivables
Derivative financial instruments
Other assets
Total assets
-
-
41,148,816
-
-
-
-
92,200,908
170,254,978
239,322
262,695,208
99,616,063
2,983,587,655
75,891,117
3,159,094,835
-
227,440,355
-
227,440,355
Liabilities
Deposits from banks
Deposits from customers
1,086,788,619
273,988,334
-
1,360,776,953
Derivative financial instrument
-
24,277,359
-
24,277,359
Obligation under finance lease
1,887,128
-
-
1,887,128
-
1,164,946,948
-
1,164,946,948
Other borrowed funds
Other liabilities
7,205,185
-
-
7,205,185
Total liabilities
1,095,880,932
1,690,652,996
-
2,786,533,928
Net on-balance sheet position
(996,264,869)
1,292,934,659
75,891,117
372,560,907
Guarantees
124,500
-
-
124,500
124,500
-
-
124,500
-
919,560,000
-
919,560,000
Total assets
20,587,203
414,871,789
59,740,888
495,199,880
Total liabilities
83,778,695
196,932,765
-
280,711,460
(63,191,492)
217,939,024
59,740,888
214,488,420
Guarantees
120,000
-
-
120,000
Net off-balance sheet position
120,000
-
-
120,000
-
72,720,000
-
72,720,000
59,344,680
185,670,576
-
245,015,256
91,664
1,218,475
-
1,310,139
59,253,016
184,452,101
-
243,705,117
Net off-balance sheet position
Forward exchange contracts
At 31 December 2013
Net on-balance sheet position
Forward exchange contracts
At 31 December 2012
Total assets
Total liabilities
Net on-balance sheet position
43
BanyanTree Bank Limited
Notes to the financial statements
For the year ended 31 December 2014
6.
Financial instrument risk (Contd)
Risk management objectives and policies (Contd)
6.1
Market risk analysis (Contd)
6.1.1
Foreign currency sensitivity (Contd)
The Bank is exposed to foreign exchange risk arising from its currency exposure, primarily with respect to
the United States Dollar (“USD”) and the Indian Rupees (“INR”). Consequently the Bank is exposed to
the risk that the exchange rate of the Mauritian Rupee relative to the USD and the INR may change in a
manner which has a material effect on the reported values of the Bank’s assets and liabilities. The Bank
entered into forward contracts to mitigate the Bank’s exposure to foreign currency risks.
The following table illustrates the sensitivity of loss for the year and equity in regards to the Bank’s financial
assets and liabilities and the USD/MUR exchange rate and INR/MUR exchange rate ‘all other things being
equal’. It assumes a 0.46% change of the MUR/USD exchange rate (2013: 2.20% and 2012: 0.38%) and
1.66% change of the MUR/INR exchange rate (2013: 7.74% and 2012: not applicable) for the year ended 31
December 2014.
If the MUR had strengthened against the USD by 0.46% (2013: 2.20% and 2012: 0.38%) and INR by 1.66%
(2013: 7.74% and 2012: not applicable) respectively, then this would have the following impact:
2014
2013
2012
Profit
Equity
Loss
Equity
Loss
Rs
Rs
Rs
Rs
Rs
Equity
Rs
USD
(1,350,165)
(7,777,004)
3,174,293
(3,174,293)
700,000
(700,000)
INR
(1,259,793)
(1,259,793)
4,623,945
(4,623,945)
-
-
If the MUR had weakened against the USD by 0.46% (2013: 2.20% and 2012: 0.38%) and INR by 1.66%
(2013: 7.74% and 2012: Nil) respectively, then this would have the following impact:
2014
Profit
Rs
6.1.2
2013
Equity
Rs
Loss
Rs
2012
Equity
Rs
Loss
Rs
Equity
Rs
USD
1,350,165
7,777,004
(3,174,293)
3,174,293
(700,000)
700,000
INR
1,259,793
1,259,793
(4,623,945)
4,623,945
-
-
Interest rate sensitivity
The Bank has interest bearing financial assets in the form of corporate bonds, compulsory convertible
debentures, non-convertible debentures, money market placements and loans to customers which are at
fixed rates, and has interest bearing financial liabilities in the form of deposits and finance lease which are
also at fixed rates. Consequently, it is not exposed to interest rate risk on these financial assets and
liabilities.
44
BanyanTree Bank Limited
Notes to the financial statements
For the year ended 31 December 2014
6.
Financial instrument risk (Contd)
Risk management objectives and policies (Contd)
6.2
Credit risk analysis
The Bank takes on exposure to credit risk, which is the risk that counterparty will cause a financial loss for
the Bank by failing to discharge an obligation. Credit risk is an important risk for the Bank’s business;
management therefore carefully manages its exposure to credit risk. The Bank is exposed to this risk for
various financial instruments.
The credit risk management and control are centralised in the Board Credit Committee which reports to
the Board of Directors on a quarterly basis or when necessary.
6.2.1
Credit risk measurement
Credit risk is the possibility of losses associated with changes in the credit profile of borrowers or
counterparties. These losses, associated with changes in portfolio value, could arise due to default or due
to deterioration in credit quality.





Default risk
Recovery risk
Spread risk
Concentration risk
Correlation risk
:
:
:
:
:
obligor fails to service debt obligations
recovery post default is uncertain
credit quality of obligor changes leading to a fall in the value of the loan
over exposure to an individual obligor, group or industry
concentration based on common risk factors between different
borrowers, industries or sectors which may lead to simultaneous default.
The Bank ,through its Credit Committee, structures the levels of credit risk it undertakes by placing limits
on the amount of risk accepted in relation to one borrower, or groups of borrowers, and industry
segments. Such risks are monitored on a revolving basis and subject to an annual or more frequent review,
when considered necessary. Exposure to credit risk is also managed through regular analysis of the ability
of borrowers and potential borrowers to meet interest and capital repayment obligations.
Some other specific control and mitigation measures are outlined below.
6.2.2
Risk limit control and mitigation policies
(a)
Collateral
The Bank employs a range of policies and practices to mitigate credit risk. The most traditional of these is
the taking of security for funds advanced, which is a common practice. The Bank implements guidelines
on the acceptability of specific classes of collateral or credit risk mitigation. The principal collateral types
for loans and advances and non-convertible debentures are:


Charges over the gold purchased for the customer; and
Charges over business assets such as accounts receivable and personal guarantee.
The Bank has pledged part of its bonds for its borrowings taken from J.Safra Sarasin Ltd during the year.
45
BanyanTree Bank Limited
Notes to the financial statements
For the year ended 31 December 2014
6.
Financial instrument risk (Contd)
Risk management objectives and policies (Contd)
6.2
Credit risk analysis (Contd)
6.2.3
Impairment and provisioning policies
The Bank assesses at each reporting date whether there is objective evidence that loans and advances are
impaired. The criteria that the Bank uses to determine that there is objective evidence of an impairment
loss include:






6.2.4
Delinquency in contractual payments of principal or interest;
Cash flow difficulties experienced by the borrower (eg equity ratio, net income percentage of sales);
Breach of loan covenants or conditions;
Initiation of bankruptcy proceedings;
Deterioration of the borrower’s competitive position; and
Deterioration in the value of collateral.
Maximum exposure to credit risk before collateral held
Credit risk exposures relating to on balance sheet assets are as follows:
Maximum exposure
Cash and cash equivalents
Loans and advances to customers
2014
2013
2012
Rs
Rs
Rs
547,780,627
37,638,817
244,699,302
43,666,446
1,199,556
-
-
933,000
-
826,122,897
352,623,794
-
41,148,816
53,350,000
-
1,430,878,038
36,765,231
-
159,629,704
30,374,179
315,954
3,049,226,528
512,884,577
245,015,256
Derivative financial instruments
Investments:
- Held-to-maturity investments (Corporate Bonds)
- Loans and receivables (Non-Convertible Debentures)
- Available-for-sale financial assets (Corporate bonds, equity shares
and Compulsory Convertible Debentures)
Other assets
Credit risk exposures relating to off balance sheet items are as follows:
Maximum exposure
2014
Guarantees
2013
2012
Rs
Rs
Rs
124,500
120,000
-
46
BanyanTree Bank Limited
Notes to the financial statements
For the year ended 31 December 2014
6.
Financial instrument risk (Contd)
Risk management objectives and policies (Contd)
6.2
Credit risk analysis (Contd)
6.2.4
Maximum exposure to credit risk before collateral held (Contd)
The above table represents a worse case scenario of credit risk exposure to the Bank as at 31 December
2014, 2013 and 2012, without taking account of any collateral held or other credit enhancements attached.
For on-balance sheet assets, the exposures set out above are based on net carrying amounts as reported in
the statement of financial position.
The Bank continuously monitors defaults of customers and other counterparties, identified individually or
by the Bank, and incorporate this information into its credit risk controls. Where available, external credit
ratings and/or reports on customers and other counterparties are obtained and used. The Bank’s policy is
to deal only with creditworthy counterparties and no allowance for credit impairment on loans and
advances noted at the reporting date.
The credit risk of the Bank’s cash and cash equivalents, financial assets at fair value through profit or loss,
held-to-maturity investments, loans and receivables (non-convertible debentures) and available-for-sale
financial assets is considered to be reasonable since the counterparties are reputable institutions with high
quality external credit ratings.
The Bank’s management considers that all of the above financial assets are of good credit quality. No
customers have defaulted their contractual obligations during the year under 31 December 2014.
6.2.4.1 Concentration of loans and advances with credit risk exposure
The following table breaks down the Bank’s main credit exposure for loans and advances at their gross
amounts, as categorised by the industry sectors.
31 December
31 December
31 December
2014
2013
2012
Rs
Rs
Rs
Manufacturing
31,900,200
-
-
Investment Company
10,287,570
-
-
Personal
1,478,676
-
-
43,666,446
-
-
6.2.4.2 Country risk management
Cross-border exposures subject banks to country risk, that is the possibility that sovereign borrowers of a
particular country may be unable or unwilling, and borrowers unable to fulfill their foreign obligations for
reasons beyond the usual credit risk which arises in relation to all lending.
47
BanyanTree Bank Limited
Notes to the financial statements
For the year ended 31 December 2014
6.
Financial instrument risk (Contd)
Risk management objectives and policies (Contd)
6.2
Credit risk analysis (Contd)
6.2.4.2 Country risk management (Contd)
In April 2010, the Central Bank issued its first guideline on Country Risk Management. The Bank has put
in place its policy on Country Risk Management which is a comprehensive document approved by the
Board of Directors and which contains the risk appetite of the Bank together with a set of techniques on
the measurement and monitoring of the Bank’s country risk exposures.
The assessment of country risk involves the determination of the nature of risks associated with individual
country exposures and the evaluation of country conditions. In this context, the Bank monitors its country
risk exposures at the level of the Risk and Monitoring Committee and Credit Committee.
6.3
Liquidity risk analysis
Liquidity risk is defined as ‘the risk that, at any time, the Bank does not have sufficient realisable financial
assets to meet its financial obligations as they fall due’. The management of liquidity risk in the Bank is
undertaken under the guideline on Liquidity Risk Management issued by the Bank of Mauritius.
The objective of the Bank is to ensure that it can meet its financial obligations as they fall due in the normal
course of business and it maintains an adequate stock of highly liquid assets to enable it to meet unexpected
funding needs at short notice.
The Chief Executive Officer, the Head of Treasury and the Chief Operations Officer of the Bank manage
the day-to-day cash flows of the Bank and the overall liquidity is under the close supervision of the Bank’s
Finance Committee.
The following table analyses the Bank’s assets and liabilities into relevant maturity groupings based on the
remaining year at reporting date to the contractual maturity date.
48
BanyanTree Bank Limited
Notes to the financial statements
For the year ended 31 December 2014
6.
Financial instrument risk (Contd)
Risk management objectives and policies (Contd)
6.3
Liquidity risk analysis (Contd)
At 31 December 2014
Up to 1
1-3
3-6
6-12
1-3
Over 3
Non-Maturity
month
months
months
months
years
years
items
Total
Rs
Rs
Rs
Rs
Rs
Rs
Rs
Rs
Assets
554,583,430
-
-
-
-
-
-
554,583,430
Loans and advances to customers
Cash and cash equivalents
-
-
-
385,316
43,281,130
-
-
43,666,446
Derivative financial instruments
-
-
-
-
-
-
-
-
- Held-to-maturity investments
-
-
-
-
822,746,827
3,376,070
-
826,122,897
- Loans and receivables
-
-
-
-
41,148,816
-
-
41,148,816
- Available-for-sale financial assets
-
-
700,000,000
730,878,038
-
-
-
1,430,878,038
Other assets
-
239,322
45,035,235
113,385,743
-
-
104,034,908
262,695,208
554,583,430
239,322
745,035,235
844,649,097
907,176,773
3,376,070
104,034,908
3,159,094,835
Investments
Total assets
Liabilities
Deposits from banks
-
81,434,281
80,015,028
65,991,046
-
-
-
227,440,355
Deposits from customers
10,953,412
334,115,970
458,736,390
493,310,850
63,660,331
-
-
1,360,776,953
Derivative financial instruments
24,277,359
-
-
-
-
-
-
24,277,359
Obligations under finance lease
-
-
-
-
-
1,887,128
-
1,887,128
Other borrowed funds
-
-
151,946,948
170,000,000
843,000,000
-
-
1,164,946,948
Other liabilities
-
-
-
-
-
-
7,205,185
7,205,185
35,230,771
415,550,251
690,698,366
729,301,896
906,660,331
1,887,128
7,205,185
2,786,533,928
519,352,659
(415,310,929)
54,336,869
115,347,201
516,442
1,488,942
96,829,723
372,560,907
Total liabilities
Net liquidity gap
49
BanyanTree Bank Limited
Notes to the financial statements
For the year ended 31 December 2014
6.
Financial instrument risk (Contd)
Risk management objectives and policies (Contd)
6.3
Liquidity risk analysis (Contd)
Up to 1
1-3
3-6
6-12
1-3
Over 3
Non-maturity
month
months
months
months
years
years
items
Total
Rs
Rs
Rs
Rs
Rs
Rs
Rs
Rs
2,156,810
15,394,560
3,737,462
10,632,420
259,613,417
169,788,108
70,642,334
531,965,111
472,096
73,961
132,277,328
146,000,783
1,023,833
863,459
-
280,711,460
1,684,714
15,320,599
(128,539,866)
(135,368,363)
258,589,584
168,924,649
70,642,334
251,253,651
At 31 December 2013
Total assets
Total liabilities
Net liquidity gap
At 31 December 2012, the Bank had not yet formulated its liquidity risk policy as it had not yet commenced operation. Furthermore, the Bank was not faced with
any liquidity risk at 31 December 2012 since it was able to meet its financial obligations as they fell due.
50
BanyanTree Bank Limited
Notes to the financial statements
For the year ended 31 December 2014
7.
Capital management policies and procedures
The Bank’s objectives when managing capital, which is a broader concept than the ‘equity’ on the face of
statement of financial position, are:



To comply with the capital requirements set by the Central Bank;
To safeguard the Bank’s ability to continue as a going concern so that it can continue to provide
returns to shareholders and benefits for other stakeholders; and
To maintain a strong capital base to support the development of its business.
Capital adequacy and the use of regulatory capital are monitored on a regular basis by the Bank’s
management, employing techniques based on the guidelines developed by the Basel Committee as
implemented by the Central Bank, for supervisory purposes. The required information is filed with the
Central Bank on a quarterly basis.
The Central Bank requires each bank to maintain a ratio of total regulatory capital to the risk-weighted assets
(the ‘Capital Adequacy Ratio’) at or above a minimum of 10%. The Bank’s regulatory capital as on
31 December 2014 is Tier 1 capital: which comprises of share capital, statutory reserve and retained
earnings created by appropriations of retained earnings.
The risk-weighted assets are measured by means of a hierarchy of risk weights classified according to the
nature of and reflecting an estimate of credit, market and other risks associated with each asset and
counterparty, taking into account any eligible collateral or guarantees. A similar treatment is adopted for offbalance sheet exposure, with some adjustments to reflect the more contingent nature of the potential losses.
The following table summarises the composition of regulatory capital and the ratios of the Bank for the
period/years ended 31 December 2012, 2013 and 2014 respectively. During those three periods, the Bank
complied with all of the externally imposed capital requirements to which it is subject.
2014
2013
2012
Rs
Rs
Rs
269,650,528
269,622,731
67,222,260
8,333,349
-
-
-
182,956,058
Tier 1 Capital
Paid up capital
Capital contribution
Share application monies
-
Retained earnings/(accumulated losses)
100,254,239
(12,807,747)
Total qualifying Tier 1 Capital
378,238,116
256,814,984
245,145,595
Total regulatory capital (Rs)
378,238,116
256,814,984
245,145,595
2,674,921,000
409,350,436
-
14.14%
62.74%
N/A
Risk Weighted Assets (Rs)
Capital Adequacy Ratio (%)
(5,032,723)
51
BanyanTree Bank Limited
Notes to the financial statements
For the year ended 31 December 2014
8.
Fair value measurement
8.1
Fair value measurement of financial instruments
Financial assets and financial liabilities measured at fair value in the statement of financial position are
grouped into three Levels of a fair value hierarchy. The three Levels are defined based on the observability
of significant inputs to the measurement as follows:
-
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly or indirectly ; and
Level 3: unobservable inputs for the assets or liability.
The financial assets measured at fair value in the statement of financial position are grouped into the fair
value hierarchy as follows:
31 December 2014
Level 1
Level 2
Level 3
Total
Rs
Rs
Rs
Rs
-
1,397,138,907
-
1,397,138,907
-
24,277,359
-
24,277,359
Level 1
Level 2
Level 3
Total
Rs
Rs
Rs
Rs
-
933,000
-
933,000
Assets
Available-for-sale financial assets
Liabilities
Derivative financial instruments
31 December 2013
Assets
Derivative financial instruments
Measurement of fair value
Where derivatives and corporate bonds are traded either on exchanges or liquid over-the-counter markets,
the Bank uses the closing price at the reporting date. Normally, these transactions entered into by the Bank
are not traded in active markets. The fair values of these contracts are estimated using a valuation technique
that maximizes the use of observable market inputs, e.g. market exchange and interest rates (Level 2). Most
derivatives entered into by the Bank are included in Level 2 and consist of foreign currency forward
contracts and corporate bonds.
8.2
Fair value measurement of financial instruments not carried at fair value
The following describes the methodologies and assumptions used to determine fair values for those
financial instruments which are not already recorded at fair value in the financial statements:
Financial instruments for which fair value approximates carrying value
For financial assets and financial liabilities that have a short term maturity (within one year), it is assumed
that the carrying amount approximates their fair value.
This assumption is also applied to accounts without a specific maturity.
52
BanyanTree Bank Limited
Notes to the financial statements
For the year ended 31 December 2014
8.
Fair value measurement (Contd)
8.2
Fair value measurement of financial instruments not carried at fair value (Contd)
Financial instruments for which fair value approximates carrying value (Contd)
Long term financial assets are stated at their carrying values and disclosed at fair values where available.
Set out below is a comparison, by class, of the carrying amounts and fair values of the Bank’s financial
instruments that are not carried at fair value in the financial statements.
31 December 2014
31 December 2013
Carrying value
Total fair value
Carrying value
Total fair value
Rs
Rs
Rs
Rs
826,122,897
826,122,897
352,623,794
352,623,794
554,583,430
554,583,430
51,174,841
51,174,841
43,666,446
43,666,446
1,199,556
1,199,556
262,695,208
262,695,208
35,918,689
35,918,689
Financial assets
Held-to-maturity:
Corporate Bonds
Loans and receivables:
Cash and cash equivalents
Loans and advances to customers
Other assets
Non-Convertible Debentures
41,148,816
41,148,816
53,350,000
53,350,000
902,093,900
902,093,900
141,643,086
141,643,086
1,397,138,907
1,397,138,907
-
-
Available-for-sale financial assets:
Corporate Bonds
Investment in Equity shares and
Compulsory Convertible Debentures
Total financial assets
33,739,131
33,739,131
36,765,231
36,765,231
1,430,878,038
1,430,878,038
36,765,231
36,765,231
3,159,094,835
3,159,094,835
531,032,111
531,032,111
Financial liabilities
Financial liabilities measured at
amortised cost:
Deposits from banks
227,440,355
227,440,355
151,500,000
151,500,000
1,360,776,953
1,360,776,953
123,041,859
123,041,859
Derivative financial instruments
24,277,359
24,277,359
-
-
Obligations under finance lease
1,887,128
1,887,128
2,337,727
2,337,727
3,831,874
Deposits from customers
Other liabilities
8.3
7,205,185
7,205,185
3,831,874
Other borrowed funds
1,164,946,948
1,164,946,948
-
-
Total financial liabilities
2,786,533,928
2,786,533,928
280,711,460
280,711,460
Fair value measurement of non-financial instruments
The Bank’s non-financial assets comprise of plant and equipment and deferred tax assets and non-financial
liabilities comprise of current tax liabilities. For these non-financial instruments, fair value measurement is
not applicable since these are not measured at fair value on a recurring or non-recurring basis in the
statement of financial position.
53
BanyanTree Bank Limited
Notes to the financial statements
For the year ended 31 December 2014
9.
Cash and cash equivalents
2014
2013
2012
Rs
Rs
Rs
9,524
23,435
9,357
131,928,708
37,615,382
244,689,945
6,802,803
4,806,024
-
138,741,035
42,444,841
244,699,302
Segment A:
Cash in hand
Balances with banks in Mauritius
Unrestricted balances with the Central Bank (Note (i) below)
Segment B:
Balances with banks abroad
161,705,715
-
-
Repo margin (None (ii) below)
254,136,680
-
-
415,842,395
-
-
554,583,430
-
-
Total
(i)
Unrestricted balances with the Central Bank represents amount above the cash reserve requirements.
(ii)
It represents balances held with the custodian, J.Safra Sarasin. During the year and pursuant to an agreement
entered between the Bank and the custodian, the Bank entered into a repo transaction with its custodian for
sale of securities during the year and agreed to buy back the same securities subsequent to the reporting date.
These securities were sold for a consideration of USD 32,169,200 and an amount of USD 24,126,900 was
remitted to the Bank with a remaining balance of USD 8,042,300 (Rs 254,136,680) held with the custodian.
10.
Loans and advances to customers
2014
2013
2012
Rs
Rs
Rs
1,478,676
1,199,556
-
42,187,770
-
-
-
230,136
-
385,316
969,420
-
43,281,130
-
-
43,666,446
1,199,556
-
Segment A:
Retail customers
Segment B:
Retail customers
Remaining term to maturity
Over 3 months and up to 6 months
Over 6 months and up to 12 months
Over 1 and up to 3 years
The Bank’s management considers that the loans and advances to customers are of good credit quality. No
customers have defaulted their contractual obligations during the year ended 31 December 2014.
54
BanyanTree Bank Limited
Notes to the financial statements
For the year ended 31 December 2014
11.
Investment securities
2014
2013
2012
Rs
Rs
Rs
826,122,897
352,623,794
-
Segment B:
Held-to-maturity investments (Note (i) below)
Available-for-sale financial assets (Note (ii) below)
Loans and receivables (Note (iii) below)
(i)
1,430,878,038
36,765,231
-
41,148,816
53,350,000
-
2,298,149,751
442,739,025
-
826,122,897
352,623,794
-
Held-to-maturity investments
Corporate Bonds
Out of the corporate bonds valued at Rs 826,122,897, USD 22,500,000 (equivalent to Rs 711,000,000) was
invested through a Fund with the investment decisions resting with the Bank and not the Fund. Consequently,
the corporate bonds were recognised as financial assets.
The bonds have been pledged as securities by the custodian of the Bank to obtain additional loans to make
investments in similar corporate bonds.
The bonds carry interest rates varying between 3% and 9.75% per annum and the maturity periods vary
between 3 to 7 years.
Premium paid on these investments are amortised from acquisition till maturity date. Premium amortised for
the year ended 31 December 2014 amounted to Rs 3,013,712 and are recorded within finance charges.
(ii)
Available-for-sale financial assets
Corporate Bonds
Equity shares and Compulsory Convertible Debentures
2014
2013
2012
Rs
Rs
Rs
1,397,138,907
-
-
33,739,131
36,765,231
-
1,430,878,038
36,765,231
-
The Bank has invested in the Equity Shares and Compulsory Convertible Debentures in a company
incorporated in the Republic of India.
As per the Subscription Agreement drawn among the company, the Bank and the Promoters of the company,
the Compulsory Convertible Debentures bear interest at the rate of 12% per annum and these debentures shall
be compulsorily converted into Equity Shares of the Company and shall not be redeemable in any other way.
The Bank has entered into an Option Deed where the Bank has the option to sell the shares acquired on
conversion of the Compulsory Convertible Debentures.
55
BanyanTree Bank Limited
Notes to the financial statements
For the year ended 31 December 2014
11.
Investments securities (Contd)
(iii)
Loans and receivables
2014
Non-Convertible Debentures
2013
2012
Rs
Rs
Rs
41,148,816
53,350,000
-
The Bank has invested into 1,100 Non- Convertible Debentures (“NCDs”) at INR 100,000 each in a company
incorporated in the Republic of India.
The NCDs bear interest at a rate of 12.20% per annum and are secured on the company’s book receivables, to
the extent of 125% of the outstanding NCDs amount shall be maintained at all times and by personal
guarantee of the managing director of the company. The NCDs are listed on the Bombay Stock Exchange at
its face value of INR 100,000 each. The NCDs are redeemable in four equal instalments annually beginning
from 31 March 2014. During the year, 225 NCDs were redeemed for a consideration of Rs 12,201,184 (INR
27,500,000).
12.
Derivative financial instruments
Contractual/
Fair value
Fair value
nominal amount
assets
liabilities
Rs
Rs
Rs
897,951,050
-
24,277,359
72,555,000
933,000
-
-
-
-
Derivative held-for-trading
Year ended 31 December 2014
Foreign Exchange Derivatives
Segment A
Currency forwards
Year ended 31 December 2013
Foreign Exchange Derivatives
Segment A
Currency forwards
Year ended 31 December 2012
Foreign Exchange Derivatives
Segment A
Currency forwards
The Bank has entered into several forward exchange contracts during the year ended 31 December 2014 and
the exercise dates of these contracts are due in the financial year 2015.
56
BanyanTree Bank Limited
Notes to the financial statements
For the year ended 31 December 2014
13.
Plant and equipment
Computer
equipment and
Furniture
Motor
software
and fittings
vehicle
Total
Rs
Rs
Rs
Rs
2012
264,738
252,860
-
517,598
At 01 January 2013
264,738
252,860
-
517,598
Additions during the year
921,543
280,078
3,020,274
4,221,895
At 31 December 2013
1,186,281
532,938
3,020,274
4,739,493
At 01 January 2014
1,186,281
532,938
3,020,274
4,739,493
Segment A:
Cost
Additions during the period and at 31 December
Additions during the year
At 31 December 2014
175,378
16,000
2,944,575
3,135,953
1,361,659
548,938
5,964,849
7,875,446
17,460
10,610
-
28,070
Accumulated Depreciation
Charge for the period and at 31 December 2012
17,460
10,610
-
28,070
Charge during the year
At 01 January 2013
304,593
99,791
354,157
758,541
At 31 December 2013
322,053
110,401
354,157
786,611
At 01 January 2014
322,053
110,401
354,157
786,611
Charge during the year
306,094
85,910
773,630
1,165,634
At 31 December 2014
628,147
196,311
1,127,787
1,952,245
733,512
352,627
4,837,062
5,923,201
At 31 December 2013
864,228
422,537
2,666,117
3,952,882
At 31 December 2012
247,278
242,250
-
489,528
Net Book Values
At 31 December 2014
The net book value of plant and equipment held under finance lease comprise of:
Motor vehicle
2014
2013
2012
Rs
Rs
Rs
2,132,894
2,666,117
-
57
BanyanTree Bank Limited
Notes to the financial statements
For the year ended 31 December 2014
14.
Other assets
2014
2013
2012
Rs
Rs
Rs
28,789,849
8,730,000
-
103,065,504
14,274,510
-
996,316
500,000
709,195
-
1,046,952
-
969,404
555,992
315,954
-
Segment A:
Money market placements (Note (i) below)
Mandatory balances with Central Bank (Note (ii) below)
Prepayments
Amounts due from related parties
Others
Segment B:
Money market placements
30,962,952
-
Interests receivable on investments
45,035,235
7,721,203
-
Amounts due from custodians
13,577,713
6,834,759
-
Others
40,294,551
5,485,273
-
263,691,524
45,148,689
1,025,149
(i)
Money market placements with banks and a financial institution are balances with maturity period up to one
year and carry interest rate ranging from 2.65% to 3% per annum.
(ii)
At 31 December 2014, the minimum average cash balance to be maintained by the Bank as per the Banking
Act 2004 amounted to Rs 103,065,504 (2013: Rs 14,274,510 and 2012: Nil). These funds were not available for
the Bank’s daily business.
15.
Deposits from banks
2014
2013
2012
Rs
Rs
Rs
Segment B:
Time deposits with remaining term maturity:
-
Within 3 months
81,434,281
-
-
-
Over 3 months and up to 6 months
80,015,028
121,200,000
-
-
Over 6 months and up to 12 months
65,991,046
30,300,000
-
227,440,355
151,500,000
-
58
BanyanTree Bank Limited
Notes to the financial statements
For the year ended 31 December 2014
16.
Deposits from customers
2014
2013
2012
Rs
Rs
Rs
Current accounts
964,779
400,442
-
Savings accounts
54,852
-
-
Retail customers:
Segment A:
Segment B:
Time deposits with remaining term maturity:
-
Up to three months
3,165,920
1,000
-
-
Over 3 months and up to 6 months
2,437,370
2,272,500
-
9,933,781
34,307,917
-
Corporate customers:
Segment A:
Current accounts
Segment B:
Time deposits with remaining term maturity:
17.
-
Up to 3 months
330,950,050
-
-
-
Over 3 months and up to 6 months
456,299,020
6,060,000
-
-
Over 6 months and up to 12 months
493,310,850
80,000,000
-
-
Over 1 and up to 3 years
63,660,331
-
-
1,360,776,953
123,041,859
-
2014
2013
2012
Rs
Rs
Rs
1,887,128
2,337,727
-
2014
2013
2012
Rs
Rs
Rs
Obligations under finance lease
Segment A:
Obligations under finance lease
Obligations under finance lease
Not later than 1 year
Later than 1 year and not later than 5 years
631,862
631,862
-
1,552,835
2,184,697
-
2,184,697
2,816,559
-
Future finance charges
(297,569)
(478,832)
-
Present value of finance lease liabilities
1,887,128
2,337,727
-
2014
2013
2012
Rs
Rs
Rs
Apportioned as follows:
Portion repayable within one year
Portion repayable after more than one year
490,250
450,435
-
1,396,878
1,887,292
-
1,887,128
2,337,727
-
59
BanyanTree Bank Limited
Notes to the financial statements
For the year ended 31 December 2014
17.
Obligation under finance lease (Contd)
Leasing arrangement
Finance lease relates to a motor vehicle with lease period of 5 years. The Bank has the option to purchase the
lease asset for a nominal amount at the conclusion of the lease arrangements. The Bank’s obligations under
finance lease are secured by the lessor’s title of the leased assets.
18.
Other liabilities
2014
2013
2012
Rs
Rs
Rs
-
-
1,218,475
7,205,185
436,000
91,664
-
3,395,874
-
7,205,185
3,831,874
1,310,139
2014
2013
2012
Rs
Rs
Rs
1,164,946,948
-
-
Segment A:
Due to a related party (Note (i) below)
Other accruals
Segment B:
Interests payable on deposits
19.
Other borrowed funds
Segment B:
Bank borrowings
Pursuant to a Credit facility agreement dated 20 January 2014 and 07 February 2014 between the Bank and J.
Safra Sarasin Ltd (Sarasin), Sarasin has granted an uncommitted credit facility to the Bank whereby the
interest rates and repayment must be agreed before utilisation of a fixed advance.
20.
Stated capital
Issued and fully paid up with no par value
Issued and unpaid with no par value
2014
2013
Rs
Rs
2012
Rs
269,622,731
269,622,731
67,222,260
27,797
27,797
-
269,650,528
269,650,528
67,222,260
2014
2013
2012
27,797,588
6,722,226
-
-
21,075,362
6,722,226
27,797,588
27,797,588
6,722,226
Number of shares
Opening balance
Issued during the year/period
Closing balance
60
BanyanTree Bank Limited
Notes to the financial statements
For the year ended 31 December 2014
21.
Capital contribution
Capital contribution represents premium payments received from Terra Mauricia Limited, a shareholder,
towards existing capital of the Bank upon achievement of certain milestones by the Banks. This amount was
not included under stated capital since the appropriate filing was not executed with the Registrar of
Companies at the reporting date.
22.
Share application monies
2014
2013
2012
Rs
Rs
Rs
Opening balance
-
182,956,058
-
Funds received
-
-
182,956,058
Refund
-
(55,555,568)
-
Converted into shares
-
(127,400,490)
-
Closing balance
-
-
182,956,058
Last year, the Bank has refunded share application monies to two potential shareholders and one of them
were entitled to a premium on refund. The premium amounted to Rs 4,166,666 has been expensed off in
finance charges. The premium has been paid out from funds received from a shareholder during the year
ended 31 December 2013.
23.
Net interest income
Year ended
Year ended 31
Period from 11
31 December
December
June 2012 to 31
2014
2013
December 2012
Rs
Rs
Rs
Interest income
Segment A:
Loans and advances to customers
Placements with banks
699,211
69,408
-
1,042,158
642,046
517,983
125,986,451
12,129,069
-
4,479,573
2,140,844
-
Segment B:
Investment securities:
Corporate bonds
Compulsory convertible debentures
Non-convertible debentures
Total interest income
5,202,193
1,393,724
-
137,409,586
16,375,091
517,983
61
BanyanTree Bank Limited
Notes to the financial statements
For the year ended 31 December 2014
23.
Net interest income (Contd)
Year ended
Year ended 31
Period from 11
31 December
December
June 2012 to 31
2014
2013
December 2012
Rs
Rs
Rs
4,864,900
2,770,928
-
Deposits from customers
47,228,701
643,947
-
Deposits from customers
14,779,116
-
-
Total interest expenses
66,872,717
3,414,875
-
Net interest income
70,536,869
12,960,216
517,983
Interest expense
Segment B:
Deposits from banks
24.
Fee and commission income
Short Term Benefit
Year ended
Year ended
Period from 11
31 December
31 December
June 2012 to 31
2014
2013
December 2012
Rs
Rs
Rs
148,423
138,586
-
Segment A:
Commission on loans, advances and guarantees
Segment B:
Brokerage and arrangement fees
Other
25.
-
8,224,188
-
653,022
-
-
801,445
8,362,774
-
Personnel expenses
Year ended
Year ended
Period from 11
31 December
31 December
June 2012 to 31
2014
2013
December 2012
Rs
Rs
Rs
3,842,228
1,840,978
365,849
49,868
34,523
56,575
15,368,912
7,363,910
-
199,471
138,092
-
19,460,479
9,377,503
422,424
9
9
1
Segment A:
Salaries and other allowances
Compulsory social security contributions
Segment B:
Salaries and other allowances
Compulsory social security contributions
Number of employees
62
BanyanTree Bank Limited-
Notes to the financial statements
For the year ended 31 December 2014
26.
Other expenses
Year ended
Year ended
Period from 11
31 December
31 December
June 2012 to 31
2014
2013
December 2012
Rs
Rs
Rs
1,088,835
661,562
933,078
200,000
300,274
315,068
3,550,035
136,207
271,123
Utilities
272,039
248,545
66,351
Travel expenses
447,823
69,867
23,425
46,515
27,669
8,664
5,680
47,731
3,623
118,355
97,500
-
80,748
363,356
-
-
57,993
-
Segment A:
Professional fees
Licence fees
General administration expenses
Bank charges
Stationeries
Directors’ fees
Business promotion and marketing expenses
Car rental expenses
Repairs and maintenance
32,497
80,365
100,719
158,487
-
1,737,287
-
-
4,355,340
656,211
-
800,000
801,096
-
12,938,627
277,563
-
Utilities
1,088,154
994,182
-
Travel expenses
1,791,294
279,468
-
186,060
110,675
-
22,720
190,925
-
473,421
390,000
-
6,949,148
720,851
-
322,990
1,453,426
-
Swift expenses
Brokerage and custody fees
Segment B:
Professional fees
Licence fees
General administration expenses
Bank charges
Stationeries
Directors’ fees
Brokerage and custody fees
Business promotion and marketing expenses
Car rental expenses
27.
53,400
231,973
Swift expenses
402,877
633,933
-
Repairs and maintenance
129,988
-
-
37,194,552
8,989,859
1,621,332
Other income
Period from 11
Year ended
Year ended
June 2012 to
31 December
31 December
31 December
2014
2013
2012
Rs
Rs
Rs
1,098,000
-
-
Segment A:
Realised gain on maturity of derivative financial instruments
Fair value on derivative financial instruments
-
933,000
-
1,098,000
933,000
-
49,292,673
-
-
50,390,673
933,000
-
Segment B:
Gain on sale of available-for-sale financial assets
63
BanyanTree Bank Limited
Notes to the financial statements
For the year ended 31 December 2014
28.
Finance charges
Period from 11
Year ended
Year ended
June 2012 to
31 December
31 December
31 December
2014
2013
2012
Rs
Rs
Rs
181,427
122,922
-
-
4,166,666
-
3,013,715
968,558
-
3,195,142
5,258,146
-
Segment A:
Interest on finance lease
Premium on refund of share application monies (Note 22)
Segment B:
Amortisation of premium paid on corporate bonds (Note 11(i))
29.
Income tax expense
(i)
Income tax
The applicable tax rate in the Republic of Mauritius is 15% for the year ended 31 December 2014 (2013 and
2012: 15%). As at 31 December 2014, the Bank has an income tax liability of Rs 1,371,496 (2013: tax losses
Rs 8,504,037 and 2012: tax losses Rs 2,054,444).
The Bank is subject to a Special Levy, the Alternative Minimum Tax (AMT) and the Advanced Payment
Scheme (APS).
Special levy is calculated as follows:
(i)
3.4 per cent on book profit and 1.0 per cent on operating income with regard to its income derived
from banking transactions with non-residents and corporations holding a Global Business Licence
under the Financial Services Act 2007 ; and
(ii)
10 per cent on the chargeable income with regard to its income derived from sources other than from
transactions referred in subparagraph (i).
The AMT applies where a company’s “normal tax payable” is less than 7.5% of its book profit. It is not
applicable where a company is exempt from tax or where 10% of any dividend declared does not exceed the
“normal tax payable”. At 31 December 2014, the AMT did not apply to the Bank since no dividend had
been declared.
Contribution to the CSR Fund is at a rate of 2% on chargeable income of the preceeding financial year (2013:
2% of the book profit of the preceeding year). No contribution to the CSR during the year since the Bank
did not have any chargeable income in the preceeding year.
Under the APS, the Bank is required to submit an APS Statement and pay tax quarterly on the basis of either
last year’s income or the income for the current quarter.
64
BanyanTree Bank Limited
Notes to the financial statements
For the year ended 31 December 2014
29.
Income tax expense (Contd)
(ii)
Statement of comprehensive income
Income tax on adjusted profit for the year
(i)
Year ended
Period from 11
31 December
June 2012 to 31
2014
2013
December 2012
Rs
Rs
Rs
-
-
-
Special Levy
1,371,496
-
-
Deferred tax movement
1,007,060
894,493
241,755
2,378,556
894,493
241,755
Statement of financial position
Current tax liabilities
Year ended
Year ended
Period from 11
31 December
31 December
June 2012 to 31
2014
2013
December 2012
Rs
Rs
Rs
At 01 January
-
-
-
Income tax on adjusted profit for the year
-
-
-
Special Levy
Deferred tax movement
(ii)
Year ended
31 December
1,371,496
-
-
-
-
-
1,371,496
-
-
Deferred taxation
2014
Opening balance
Movement during the year/period
Closing balance
2013
2012
Rs
Rs
Rs
1,136,248
241,755
-
(1,007,060)
894,493
241,755
129,188
1,136,248
241,755
2014
2013
2012
The deferred tax asset is made up of:
Accelerated capital allowances
Rs
Rs
Rs
(260,562)
(139,358)
(55,352)
Tax losses carried forward
389,750
1,275,606
297,107
At 31 December
129,188
1,136,248
241,755
65
BanyanTree Bank Limited
Notes to the financial statements
For the year ended 31 December 2014
29.
Income tax expense (Contd)
(v)
Income tax reconciliation
The tax charge on the Bank’s profit/(loss) before tax differs from the theoretical amount that would arise
using the basic tax rate of the Bank as follows:
Profit/(loss) before tax
Year ended
Year ended
Period from 11
31 December
31 December
June 2012 to 31
2014
2013
December 2012
Rs
Rs
(8,669,517)
(5,274,478)
17,393,768
(1,300,428)
(791,172)
Tax at 15%
Non-allowable items
1,049,646
Exempt income
(8,638,636)
744,385
578,636
(224,668)
Annual allowances
(290,142)
(228,132)
Unutilised losses
(389,750)
-
Foreign tax credit
30.
Rs
115,958,449
(29,219)
-
(9,124,886)
-
-
Others
-
114,350
-
Tax credit
-
(894,493)
(241,755)
Profit for the year/period
Year ended
Year ended 31
Period from 11
31 December
December
June 2012 to 31
2014
2013
December 2012
Rs
Rs
Rs
1,165,634
758,541
28,070
250,000
175,000
57,500
36,500
35,000
-
Profit for the year/period is arrived at after charging/(crediting):
Depreciation
Payable to auditors:
- Audit fees
- Taxation fees
- Other services
Staff costs (Note 25)
Operating lease rentals
Pre-operative expenses
Net foreign exchange (gains)/losses
90,000
-
11,500
19,460,479
9,377,503
422,424
2,345,640
2,211,361
291,057
-
1,949,560
3,429,578
2,380,537
-
(57,590,909)
66
BanyanTree Bank Limited
Notes to the financial statements
For the year ended 31 December 2014
31.
Profit/(loss) per share
The profit/(loss) and number of ordinary shares in issue used in the calculation of profit/(loss) per share are as
follows:
Profit/(loss) for the year/period
Year ended
Year ended
Period from 11
31 December
31 December
June 2012 to 31
2014
2013
December 2012
Rs
Rs
Rs
113,579,893
(7,775,024)
(5,032,723)
Number
Number
Number
27,797,588
20,995,563
6,722,226
Number of ordinary shares/weighted average number of
ordinary shares in issue
Profit/(loss) per share
32.
Rs
Rs
Rs
4.09
(0.37)
(0.75)
Related party transactions
The Bank’s related parties include key management personnel, entities in which directors have significant
interest, entities holding at least 10% interest in the Bank, companies with common directorship and companies
with common shareholders/promoters.
32.1 Entities in which directors have a significant interest
2014
2013
2012
Rs
Rs
Rs
32.1.1 Transactions during the year/period:
100,171,544
54,545,000
-
Interest expense
Deposits
1,143,503
528,193
-
Capital contribution
8,333,330
-
-
-
-
182,956,058
42,077,000
-
1,218,475
Share application monies
-
-
182,956,058
Payables
-
-
1,218,475
8,333,330
-
-
102,768,305
55,073,193
-
2014
2013
2012
Rs
Rs
Rs
436,087
2,668,652
-
-
33,582
-
10,946,673
7,954,219
-
12,360,082
2,702,234
-
Share application monies
Financing
32.1.2 Balance at 31 December:
Capital contribution
Deposits and interest payable
32.2 Key management personnel
32.2.1 Transactions during the year/period:
Deposits and current accounts
Interest expense
Salaries and other emoluments (Short term benefits)
32.2.2 Balance at 31 December
67
BanyanTree Bank Limited
Notes to the financial statements
For the year ended 31 December 2014
32.
Related party transactions (Contd)
32.3
Companies with common directorship
32.3.1
2014
2013
2012
Rs
Rs
Rs
Transactions during the year/period:
Purchase of plant and equipment
-
230,000
-
10,287,570
1,046,952
-
Pre-operative expenses
-
1,949,560
-
Consultancy fees
-
362,645
-
10,287,570
1,046,952
-
Financing
32.3.2
Balance at 31 December
32.4
Companies with common shareholders/promoters
32.4.1
2014
2013
2012
Rs
Rs
Rs
Transactions during the year/period:
Deposits
Interest expense
32.4.2
Balance at 31 December
33.
Events after the reporting period
139,467,826
35,683,430
-
1,093,369
20,672
-
140,561,195
35,704,102
-
There have been no other material events after the reporting year which would require disclosure or
adjustment to the financial statements for the year ended 31 December 2014.
34.
Operating lease commitments
Bank as a lessee
Year ended
Year ended 31
Period from 11
31 December
December
June 2012 to 31
2014
2013
December 2012
Rs
Rs
Rs
2,345,640
2,211,361
291,057
Minimum lease payments under operating leases recognised in
statement of comprehensive income for the year/period
68
BanyanTree Bank Limited
Notes to the financial statements
For the year ended 31 December 2014
34.
Operating lease commitments (Contd)
Bank as a lessee (Contd)
At the reporting date, the Bank had outstanding commitments under non-cancellable operating leases,
which fall due as follows:
2014
2013
2012
Rs
Rs
Rs
Within 1 year
2,616,326
2,496,212
1,352,712
After more than 1 year
2,460,326
1,495,897
1,352,712
5,076,652
3,992,109
2,705,424
Operating lease payments represent rentals payable for office space and apartments. Leases are negotiated
for an average of 3 years and rentals are fixed for an average of 3 years.
35.
Contingent liabilities
Segment B
At 31 December 2014, the Bank has bank guarantees of Rs 124,500 (2013: Rs 120,000) in favour of third
parties and for which no material adverse effect on the Bank’s financial position or results of operation is
anticipated by the directors.
36.
Litigations
At 31 December 2014, the Bank had no material litigation claim outstanding, pending or threatened against
it, which could have a material adverse effect on its financial position or financial performance.
37.
Segmental reporting
The Bank classifies its assets and liabilities into two segments: Segment A and Segment B. Segment B
activity is essentially directed to the provision of international financial services that give rise to “foreign
source income”.
Segment B assets will generally consist of investments made in foreign countries and income receivables
from these investments.
Segment B liabilities will normally arise from deposits, borrowings and funds deposited by non-residents,
global business companies and residents. These liabilities have been used exclusively to provide international
financial services that generate “foreign source income”.
Segment A activity relates to all banking business other than Segment B activity.
Expenditure incurred by the Bank but which is not directly attributable to its income derived from Mauritius
or its foreign source income is apportioned in a fair and reasonable manner.
Details for period ended 31 December 2012 have not been provided since all assets, liabilities, income and
expenses related to Segment A.
69
BanyanTree Bank Limited
Notes to the financial statements
For the year ended 31 December 2014
37.
Segmental reporting (Contd)
37.1 Statement of financial position as at 31 December 2014
Notes
2014
2014
2014
2013
2013
2013
Total
Segment A
Segment B
Total
Segment A
Segment B
Rs
Rs
Rs
Rs
Rs
Rs
ASSETS
Cash and cash equivalents
9
554,583,430
138,741,035
415,842,395
42,444,841
42,444,841
-
Loans and advances to customers
10
43,666,446
1,478,676
42,187,770
1,199,556
1,199,556
-
Investments
11
2,298,149,751
-
2,298,149,751
442,739,025
-
442,739,025
Derivative financial instruments
12
-
-
-
933,000
933,000
-
Plant and equipment
13
5,923,201
5,923,201
-
3,952,882
3,952,882
-
Deferred tax assets
29
129,188
129,188
-
1,136,248
1,136,248
-
Other assets
14
263,691,524
133,821,073
129,870,451
45,148,689
25,107,454
20,041,235
3,166,143,540
280,093,173
2,886,050,367
537,554,241
74,773,981
462,780,260
Total assets
LIABILITIES
Deposits from banks
15
227,440,355
-
227,440,355
151,500,000
-
151,500,000
Deposits from customers
16
1,360,776,953
10,953,412
1,349,823,541
123,041,859
34,708,359
88,333,500
Derivative financial instruments
12
24,277,359
24,277,359
-
-
-
-
Obligations under finance lease
17
1,887,128
1,887,128
-
2,337,727
2,337,727
-
Other liabilities
18
7,205,185
7,205,185
-
3,831,874
436,000
3,395,874
Other borrowed funds
19
1,164,946,948
-
1,164,946,948
-
-
-
Current tax liabilities
29
1,371,496
1,371,496
-
-
-
-
2,787,905,424
45,694,580
2,742,210,844
280,711,460
37,482,086
243,229,374
Total liabilities
SHAREHOLDERS EQUITY
Stated capital
20
269,650,528
269,650,528
-
269,650,528
269,650,528
-
Capital contribution
21
8,333,349
8,333,349
-
-
-
-
-
(517,907)
-
-
Retained earnings/(accumulated losses)
Investment revaluation deficit
100,772,146
(25,823,940)
126,596,086
(12,807,747)
(12,807,747)
-
Total equity
378,238,116
252,159,937
126,078,179
256,842,781
256,842,781
-
3,166,143,540
297,854,517
2,868,289,023
537,554,241
294,324,867
243,229,374
Total liabilities and equity
(517,907)
-
70
BanyanTree Bank Limited
Notes to the financial statements
For the year ended 31 December 2014
37.
Segmental reporting (Contd)
37.2 Statement of comprehensive income for the year ended 31 December 2014
Notes
Interest income
Interest expense
Net interest income
2014
2014
2014
2013
2013
2013
Total
Segment A
Segment B
Total
Segment A
Segment B
Rs
Rs
Rs
Rs
Rs
Rs
137,409,586
1,741,369
135,668,217
16,375,091
711,454
15,663,637
-
(66,872,717)
(3,537,797)
(122,922)
(3,414,875)
68,795,500
12,837,294
588,532
12,248,762
(66,872,717)
23
70,536,869
1,741,369
Fee and commission income
24
801,445
148,423
653,022
8,362,774
138,586
8,224,188
Other income
27
50,390,673
1,098,000
49,292,673
933,000
933,000
-
25
(19,460,479)
(3,892,096)
Operating income
Personnel expenses
51,192,118
1,246,423
Operating lease expenses
34
(2,345,640)
(2,345,640)
Other expenses
26
(37,194,552)
(7,438,910)
-
-
Finance charges
28
(3,195,142)
(181,427)
Depreciation
13
(1,165,634)
(233,127)
57,590,909
465,771
Pre-operative expenses
Net foreign exchange gain/(loss)
Operating profit/(loss) before tax
49,945,695
9,295,774
(15,568,383)
(9,377,503)
-
1,071,586
(1,875,501)
(2,211,361)
(2,211,361)
(8,989,859)
(2,249,556)
-
(1,949,560)
(1,943,560)
(3,013,715)
(5,135,224)
(4,166,666)
(932,507)
(758,541)
(758,541)
57,125,138
(2,380,537)
(29,755,642)
564,785
8,224,188
(7,502,002)
(6,740,303)
(968,558)
(2,945,322)
115,958,449
(10,637,637)
126,596,086
(8,669,517)
(10,986,282)
Income tax (expense)/credit
29
(2,378,556)
(2,378,556)
-
894,493
894,493
2,316,765
Profit/(loss) for the year
30
113,579,893
(13,016,193)
126,596,086
(7,775,024)
(10,091,789)
2,316,765
-
Other comprehensive income:
Items that will not be reclassified subsequently to profit or loss
-
-
-
-
-
Items that will be reclassified subsequently to profit or loss
(517,907)
-
(517,907)
-
-
-
Other comprehensive loss for the year, net of tax
(517,907)
-
(517,907)
-
-
-
113,061,986
(13,016,193)
126,078,179
(7,775,024)
(10,091,789)
2,316,765
Total comprehensive income/(loss) for the year
71
BanyanTree Bank Limited
Management Discussion and Analysis
Economic Review:
Domestic Economy The Mauritian economy has weathered the global slowdown relatively well in spite of its exposure to the Euro area
which accounts for nearly 60% of its exports and tourists. Growth in 2014 was 3.3%, a shade higher than 3.2%
registered in 2013, albeit lower than World Bank’s forecast of 3.8% projected at the beginning of the year. This is
due to more than anticipated contraction in the textile and construction sectors.
Overall, the macro-economic policies are supportive of sustainable growth at current rates, although fiscal
consolidation needs to be accelerated further to meet Government’s debt-to-GDP target of 50% by 2018.
Political review
By the end of the year, the Country witnessed a change in government. From an economic perspective, the newly
elected government is determined to steer a second new economic miracle as inspired by the first one that took
Mauritius to higher phase of development in the 1980s. The Government is committed to implement new policies
which will be implemented to boost GDP growth and create jobs. The business community is optimistic and
hopeful of a sleuth of long pending reforms to revive the economic sentiment.
The new Government is also expected to revisit and unlock several investment projects that have been stuck in the
pipeline for too long. These projects will be executed on a joint venture basis with the participation of local private
sector and international investors.
Challenges
One of the biggest challenges in 2014 was the sharp movement in currency. The Mauritian Rupee strengthened
sharply against the Euro by more than 7% from the beginning of the year and weakened by more than 3% against
the US Dollar in the same financial year. With trade accounting for 120% of the GDP, the country’s balances may
tilt heavily as a result of currency fluctuations. This fluctuation may impact adversely on certain sectors that
recognises its revenue in Euros or has imports in US dollars, like the hospitality industry, the sugar industry and the
textile industry.
Growth Ahead
Forecasts in 2015 show a rebound in growth to 4.1%. Having the region's best business environment and most
competitive economy, Mauritius is well placed to build on the progress it has made by participating in the global
industry and services value chains.
The Bank aims to focus on the following key areas to grow the business:
1. By offering innovative products and services, the Bank proposes to increase its wallet share within the
Mauritian corporate segment, parastatals and high net-worth individuals.
2. The Bank intends to rollout out Private Banking Products and services to tap into the High Networth
Individuals (HNI) segment. The Bank will differentiate by positioning itself as an India/emerging markets
specialist. In addition to traditional fixed income products, the Bank will offer structured products to
enhance yields.
72
BanyanTree Bank Limited
Management Discussion and Analysis (Contd)
Growth Ahead (Contd)
3. The Bank’s Treasury activities this year will seek to offer new products in line with requirements of
Corporate and Private Banking customer needs.
4. The Bank is working to increase its Current Account and Savings Account balance in its effort to increase
its Net Interest Margin.
5. The Bank stands by its commitment to be relevant to the local economy. The Bank wants to approach it in
a novel way by introducing niche services to boost the domestic economy. The Bank is likely to explore
financing for domestic SME customers and under-served customers.
6. The Bank abides by its unflinching effort to expand its services for the unbanked/underserved segment
with its project of financial inclusion. With a novel idea of reaching out to the customers at their doorstep,
the Bank facilitates ease of convenience.
7. The Bank has and will further leverage technology to offer services through a “self-service” model. This
will continue to help in reducing costs and significantly improve banking access for the customers.
Performance and activities during financial year 2014:
During 2014, the Bank focused on raising foreign currency and local currency deposits. As on 31 December 2014,
the Bank successfully raised total deposits of 42.7 M (in USD: 8.32 M and in MUR: 1,086 M) and inter-bank
placements at USD 7.15 M.
In the financial year 2014, the Bank clearly demonstrated its short term strategy execution. The Bank built local
networks and developed deeper understanding of Mauritius and Africa.
The Bank also worked on building client relationships, improving correspondent banking relationships, hiring a
team, fine-tuning the Core Banking Solution (“CBS”), investing in fixed income bonds and lending to Corporates
internationally.
Products and Services:
Deposits
The Bank is accepting fixed term deposits in U.S Dollar and Mauritian Rupee currency. The minimum deposit
amount is of USD 50,000 & MUR 3,000,000 with a minimum term of 12 months. Fixed term deposits pay higher
interest rates than savings accounts, and the Bank offers attractive interest rates to the clients.
Doorstep Banking product
This product, primarily aimed at unbanked/underserved segments across Mauritius offers a no-frills zero balance
account through a “doorstep banking” delivery model.
Gold Savings Plan
The Gold Saving Plan allows customers to buy gold bars at spot price and pay over a period of 12 months. The
Gold Bars are sourced from Bank of Mauritius and come in certified packaging. Further, the Gold bars are kept in
the safe custody of Bank of Mauritius.
73
BanyanTree Bank Limited
Management Discussion and Analysis (Contd)
Products and Services: (Contd)
Fund Transfers
The Bank provides remittance services via SWIFT (Society for Worldwide Interbank Financial
Telecommunications) transactions. SWIFT is a global communication network that facilitates 24-hour secure
international exchange of payment instructions between banks, central banks, multinational corporations, and major
securities firms. Payments at the Bank are processed on a straight-through (STP) basis with minimum human
intervention. We are able to offer extended cut-off times; prompt delivery by email of SWIFT advices and
remittance charges that benefit from everyday low prices. Through the SWIFT enabled remittance product,
customers can send and receive monies in both local and international currencies.
Leverage Technology
The Bank leverages technology to the fullest and customers are able to submit their account opening applications
online. The customers benefit from monitoring account activity from the convenience of their personal computers
or laptops. The online portal is equipped with a state of the art security system.
Significant Control & Risk procedures / processes implemented in 2014:
The Bank had implemented significant control and risk procedures in the financial year ended 2014 including
Maker-Checker controls in Core-banking system, firewall and antivirus installation at the branch server, uploading
signature / KYC documents for all accounts and regulatory reports streamlining with control sheets.
During 2014, the Bank has strengthened its KYC/AML procedures by subscribing to a robust screening software
for screening the customers/transactions against the negative lists. The Bank has also reviewed its KYC/AML
policy to include the additional requirements of the Wolfsberg Principles/PEP’s and the W8Ben. There were
several enhancement to the policies during the year keeping in mind the guidelines issued by the Bank of Mauritius.
The Bank started with an independent Internal Audit function in 2014 and the auditor conducted detailed audit of
the Bank’s operations/policies and procedures. The audit was conducted twice during the year in August and
December and the findings were duly submitted to the Audit Committee.
The Bank also introduced daily/weekly/fortnightly and monthly checklists for its operations team to inculcate a
system of discipline and control among its staff members.
Going forward the Bank shall continue to invest in Risk & Compliance Management Solutions and automate its
regulatory report generation.
74
BanyanTree Bank Limited
Management Discussion and Analysis (Contd)
Risk Management Philosophy:
Mission:
The mission of risk management at the BanyanTree Bank Limited is to identify, assess and manage the credit,
operational and market risks to which the Bank is exposed, thereby improving the risk-return profile of its activities
while upholding an environment conducive to attracting and promoting business opportunities.
Risk management policies and controls
The Bank has implemented a comprehensive system to understand and manage the risks it faces in conducting its
banking operations. Different Committees gauge, evaluate and monitor the occurrence and management of each
type of risk and consider risk management policies and measures.
The Credit Committee of the Board approved all credit proposals of the Bank. The Bank is subject to credit risk
through its lending and investing activities and all credit proposals are discussed in detail at the Credit Committee
and approvals sought. In addition, a review of all credit proposals is undertaken at the Credit Committee meetings.
The Risk and Monitoring Committee works very closely with the Board of Directors and Management to identify,
monitor and measure the risk profile of the Bank (including market risk, operational risk and credit risk).
Market Risk:. All fixed income bond instruments are subject to market risk, i.e., the risk that future changes in
market conditions may make an instrument less valuable or more onerous. The instruments are recognised at fair
value and all changes in market conditions directly affect the Bank’s income. In line with international norms, the
Bank defines market risk as the risk of gain or loss arising from activities undertaken in, or impacted by, financial
markets generally. This includes both market price risk as well as ancillary risk such as liquidity and funding (liability)
risk.
Operational Risk: The Bank is exposed to operational risk, which is the potential for loss from a failure in business
processes, internal control systems and technology. Losses can be financial and/or non-financial such as reputation.
The Bank manages its operational risks by establishing policies and control procedures as set out in the ‘Operation
manuals’, which are periodically reviewed and updated. These manuals are in compliance with regulatory
requirements.
Credit Risk: The Bank is subject to credit risk through its lending and investing activities. The Bank’s primary
exposure to credit risk arises through its loans and advances. The Bank is exposed to credit risk on other financial
assets including debt investments. The current credit exposure in respect of these instruments is equal to the
carrying amount of these assets in the statement of financial position.
Related party transactions:
The Conduct Review Committee reviews transactions connected with related parties to ensure that they are carried
out on terms and conditions that are at least as favourable as market terms and conditions.
Disclaimer
Several forward-looking statements about the Bank’s future plans have been made in this document. Readers are advised not to place
undue reliance on the forward-looking statements as many internal and external factors may cause actual results to differ from targets,
expectations and estimates made. As a general rule, BanyanTree Bank Limited does not update any forward-looking statements that
appear in this document.
75
BanyanTree Bank Limited
ADMINISTRATIVE INFORMATION
Board of Directors
The composition of the Board was as follows:
Mr. Jagdish Capoor
Chairman (Non-Executive)
Mr. Capoor is a post graduate in Commerce from Agra University and has also done his fellowship from the Indian
Institute of Banking and Finance. He has more than 40 years of work experience in banking and finance. He has in
the past worked as the Deputy Governor of the Reserve Bank of India, Chairman of HDFC Bank, Bombay Stock
Exchange, Deposit Insurance and Credit Guarantee Corporation of India, Unit Trust of India and also as a
Director on the boards of several commercial banks. Mr. Capoor is currently on the Board of Indian Hotels
Company Limited (a TATA enterprise) amongst others.
Mr. Sanjiv Singhal
Vice-Chairman & Managing Director
Mr. Singhal is the founder and Managing Director of BanyanTree Capital Advisors. Mr. Singhal is also the Banyan
Tree Growth Capital Fund’s nominee director on the boards of Axiom, Trimax, GEI, Deepak, Dee and Beaver
Engineering.
Mr. Singhal has previously worked with Standard Chartered Bank Limited (SCB) for 8 years, where he headed
structured finance for India and later South East Asia out of Singapore. During his time within the Indian business,
Sanjiv was involved in a number of complex financings for companies in special situations with total deal value of
about USD 500 million. Mr. Singhal has spent 13 years in banking (firstly with Citibank and later with SCB) and he
spent the first three years of his working life as an entrepreneur wherein he took over and turned around an ailing
automobile components manufacturing company.
He holds a MBA from Wharton Business School (USA), an MA with distinction from the University Of Essex, UK
and a BA with honours from Delhi University. In 2001, Mr. Singhal was selected by the British Council for a
Chevening Scholarship to spend 10 weeks at the London School of Economics, during which time he wrote a
book, Internet Banking: The Second Wave, published by McGraw-Hill.
Ms. Ackbaree Aumeerally Arekion
Director (Independent)
Ms. Arekion has more than 17 years of work experience in the Human Resource Management area. Her experience
includes working for institutions such as Standard Bank, Mauritius Union Assurance Co Ltd, Air Mauritius, General
Construction Co Ltd, and Fuel Sugar Estates. She is a laureate of Mauritius and a graduate of the Massachusetts
Institute of Technology (MIT), Boston.
Mr. Arvind Sailendre Soobashchand Issur
Director
Mr. Issur is the Managing Director of Toyota Mauritius Ltd, which is a 50:50 joint venture between The Beechand
Company Limited and Toyota Tsusho Corporation of Japan. He is also a Director in Gold Crest Hotel, General
Managing Agencies Ltd, Shakti Company Ltd and Rubber Industries Ltd.
Mr. Ashoke Roy
Director (Independent)
Mr. Roy is an eminent tax and accounting consultant. He has received his fellowship in Chartered Accountancy
from the Chartered Institute of Management Accountants, United Kingdom. He is also director in various other
companies including Mauritius College Company Ltd, Roy Beach Equity Partners, Obelix Ltd, and Société Trishul.
76
BanyanTree Bank Limited
ADMINISTRATIVE INFORMATION (Contd)
Board of Directors (Contd)
Mr. Baljinder Sharma
Director
Mr. Sharma is the Director & CEO of Singhi Advisors (Mauritius) Ltd. Mr. Sharma has 24+ years experience in the
ICT, financial services and telecommunications sector. Mr. Sharma worked for one of India’s largest IT Services
Company. He holds a Bachelor’s degree in Electronics and Electrical Engineering from Malviya National Institute
of Technology, India and an MBA from University of Mauritius. He has also attended executive programs at the
Indian School of Business, Hyderabad and at the Harvard Business School, Boston. He serves as the President of
TiE Mauritius.
Mr. Lekhram Nundlall
Director
Mr. Nundlall is one of the eminent businessman in the Republic of Mauritius. He is from the reputed Nundlall
family in the Republic of Mauritius, which was instrumental in starting Triolet Bus Service Ltd (‘TBS’) way back in
1954. Mr. Nundlall is currently the Managing Director of TBS, which is one of the largest private bus operators in
the Republic of Mauritius with more than 900 employees.
Mr. Om Prakash Gahrotra
Director (Independent)
Mr. Gahrotra holds Masters in Financial Management from Jamnalal Bajaj Institute of Management and from
Birmingham University, United Kingdom. He belongs to the 1969 batch of Indian Administrative Service. After his
retirement, he was associated with Rewas Ports Limited as the Chief Executive Officer and Managing Director
where he was responsible for overall management and setting up of a green-field port project. He is presently
working as the Managing Director of Synergy Li Power Resources India Pvt. Ltd. where he is assisting in setting up
a 2000 MW gas based Power Plant in Maharashtra. He held several responsible positions in the Government.
During the period from September 2004 to December 2006, he was designated as an Additional Chief Secretary of
the Finance Department of the Government of Maharashtra where he was responsible for the overall budgeting,
planning and fiscal management of the State of Maharashtra. Mr. Gahrotra was an Additional Chief Secretary and
Managing Director of the Maharashtra State Textile Corporation, a state government undertaking, from May 2001
to November 2004. He was a Senior Executive Director in the Securities and Exchange Board of India from
February 1996 to April 2001 where he was responsible for regulating foreign institutional investors, corporate
takeovers, technology, overseas coordination and interacting with the International Organisation of Securities
Commission ("IOSCO") members as well as regulation of the Primary Markets in India. Presently, Mr. Gahrotra is
the Chairman of the board of Onang Management Advisory Services Private Limited, a director on the boards of
Elan Vascular Technologies Pvt. Ltd, Kalpataru Limited, Trimax IT Infrastructure and Services Limited and Uttam
Galva.
Mr. Sebastien Mamet
Director
Mr. Mamet joined the Corporate Finance division of PricewaterhouseCoopers Mauritius in 2004 after working in
the audit department of Ernst & Young, London and Mauritius for eight years. He currently works as Senior
Manager of Mergers & Acquisitions, business plans, finance raising and financial restructuring among others. He
advises Terra Mauricia Ltd. on its strategic orientation and is responsible for implementing new business
developments.
77
BanyanTree Bank Limited
ADMINISTRATIVE INFORMATION (Contd)
Key Management Team
Mr. Gopakumar Puthenveettil
Chief Executive Officer
Mr. Puthenveettil has over 28 years of experience in retail, commercial, transaction and investment banking both in
India and the United States of America (USA).
Mr. Puthenveettil was the Chief Operating Officer of the Corporate & Institutional business of ICICI Securities
from 2009 to 2012. He was the President & Chief Executive Officer of ICICI Securities Inc, based in New York
from 2006 to 2009, with management responsibility for branches in London and Singapore. During this tenure, he
successfully grew the firm's Equity sales, Corporate Finance, Wealth Management, Investment Management and
India product distribution in the USA, Europe and Singapore. He also led the acquisition of an Investment advisor
in the US. Before moving to the USA, he was the Global Head of the Overseas Indian (NRI) business of ICICI
Bank. He built ICICI Bank’s international retail franchise, making the bank the market leader in the Overseas
Indian business in India. He set up ICICI Bank’s International Private and Wealth Management business with
offices in Singapore, Dubai and London.
He has also held various senior level assignments as Regional Head of Cash Management Services and Product
Head, Cash Management Services at Standard Chartered Bank Limited.
Mr Parvin Kumar Jain
Head of Treasury
Parvin Kumar Jain has over 19 years of experience in banking in India specialising in Financial Markets. Most
recently, he was the Head, Structured Products in the Business Banking vertical of Indusind Bank. After graduating
from Indian Institute of Management, Bangalore in 1995, he spent many years of his career at various
multinational banks like BNP, American Express and Standard Chartered Bank. In his last 10 years at Standard
Chartered Bank as Deputy Head of Financial Markets in North India, he was instrumental in manifold increase in
the bank’s business in foreign exchange, interest rate and commodity derivatives.
Mr. Ritesh Abbi
Chief Operating Officer
Mr. Abbi has over 16 years of experience in banking in India, the Middle East and Mauritius specialising in
Corporate and Institutional banking, trade finance, fund management and advisory.
He was most recently the Chief Executive Officer of ICICI International Ltd. Mr. Abbi holds a Master Financial
Planner (MFP) Degree from the American Academy of Financial Managements and a Post Graduate Diploma in
Business Management specializing in Finance. He is also an Associate member of Insurance Institute of India.