SBM Mauritius Shares Tank on Tripling of Bad-Debt Provisions

PORT LOUIS (Capital Markets in Africa) – SBM Holdings Ltd. shares sank to a 4 1/2-year low after the owner of Mauritius’s second-biggest bank said a tripling in bad-debt provisions halved profit last year.

The stock fell as much as 2.7 percent and closed down 2.3 percent at 5.86 rupees in Port Louis, the Mauritian capital. That’s the lowest since October 2014, according to data compiled by Bloomberg.

“Sentiment on SBM remains weak as investors continue to ask what’s next in terms of impairments,” Bhavik Desai, head of research at Port Louis-based AXYS Stockbroking, said in a phone interview.

SBM earlier posted a 51 percent decline in full-year profit to 1.25 billion rupees ($36 million), as its provisions for bad debts surged to 3.56 billion rupees from 1.11 billion rupees a year earlier. The lender cited impairments on loans to non-Mauritian clients for the drop and said it’s implemented “significant corrective measures” to ensure a turnaround in the year ahead.

Chief Executive Officer Andrew Bainbridge is scheduled to discuss the results at a briefing to analysts on Thursday.

“Should first-quarter results, due in six weeks, and first-semester earnings thereafter show a return of impairments to normal levels, we expect negative sentiment to wane,” said Desai, who has a hold rating on the stock.

Source: Bloomberg Business News