MCB Group — Financing the growth of African economies

MCB Group (SEM: MCBG.N0000)

Last close As at 07/03/2025

GBP4.70

−0.50 (−0.11%)

Market capitalisation

GBP120,205m

More on this equity

Research: Financials

MCB Group — Financing the growth of African economies

MCB Group (MCB) has reported solid H1 results, with 25.7% y-o-y EPS growth and an annualised return on equity of 18.4% (H124: 16.6%), continuing its strong double-digit earnings growth, while maintaining a solid capital structure. Its assets have crossed the MUR1tn (£17bn) mark, consolidating its position as one of the largest banks in Africa. Mauritius Commercial Bank Ltd makes up over 90% of MCB’s assets, driving its results with continued loan book expansion (up 16.4% in H125), both domestically and abroad, paired with prudent cost control (the cost to income ratio was 32.3%, down 3.1pp y-o-y). MCB distributes dividends to shareholders (which shareholders may elect to receive as a scrip dividend), with the latest payments implying a yield of 4.9%.

Milosz Papst

Written by

Milosz Papst

Director of Content, Investment Trusts

Financials

QuickView

10 March 2025

Price MUR470.50
Market cap MUR122,022m
Share details
Code MCBG.N0000
Listing MAU

Shares in issue

259.3m

Business description

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

Bull points

  • Strong capital position.
  • Continuous growth path.
  • Ease of doing business in Mauritius.

Bear points

  • Investing in frontier markets is inherently risky.
  • Increasing geopolitical tensions may hinder global flow of capital.
  • Tourism is an important part of Mauritius’s economy, which is vulnerable to disposable income in developed countries.

Analysts

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

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MCB continued its strong growth in H125

MCB’s net interest income increased by 16.7% y-o-y in H125, supported by growth in interest-earning assets, and the net interest margin improved to 3.15% in Q225 (Q224: 3.11%). The company continues its solid loan book growth momentum, averaging 13% pa over the last seven years, predominantly outside Mauritius, and the share of foreign-sourced loans in its portfolio increased to 61% at end-FY24 (end-FY20: 44%). As at end-H125, 80% of MCB’s portfolio is in corporate banking. Its major clients include energy and commodities entities, as well as global institutions investing in Africa. The quality of the loan book remains healthy and is improving, with the gross non-performing loans ratio at just 2.9% at end-H125 (down from 3.1% at end-FY24, continuing a longer trend), and cost of risk at 67bp in H125, down 13bp y-o-y. Provision coverage improved to 81%, supported by strong recoveries in H125, which further assisted the bottom line. The bank has room for further expansion as its loan to deposit ratio stood at just 62.1% at end-H125.

Mauritius is Africa’s financial hub

Mauritius ranks highly in terms of the ease of doing business (13th in the world) due to its stable political system and well-developed financial sector, and the International Monetary Fund expects its GDP growth to continue at 4% pa. MCB shares are listed on the Stock Exchange of Mauritius and currently trade at 1.1x P/BV and 6.6x P/E (LTM). This compares to 0.9x and 6.9x quarterly averages over the last five years, respectively. MCB’s business includes its bank, as well as overseas banking entities, trading activities and other financial services. The bank has US$300m of outstanding fixed-rate bonds (7.95% coupon) listed on the LSE, which mature in 2028. It has a strong capital position, with tier 1 capital and capital adequacy ratios at end-H125 of 17.7% (up 0.4pp vs end-FY24) and 20.2% (up 0.9pp), respectively, well above the regulatory requirements of 13% and 15%.

Source: MCB Group, EDI. Note: NII, net interest income.

Historical financials

Year end NII (MURm) EPS (MUR) DPS (MUR) ROE (%) P/E (x) Yield (%)
6/21 14,665 33.48 16.75 11.8 14.1 3.6
6/22 15,191 40.13 13.90 12.8 11.7 3.0
6/23 19,790 57.66 20.25 16.9 8.2 4.3
6/24 24,239 63.65 23.00 16.6 7.4 4.9

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