The state of savings and loan offerings in Mauritius post-COVID-19

July 3, 2020

Shehryar Ali, Head of Retail Banking at Bank One, is interviewed by Défi Plus.

Savings Rate

Should we expect individuals to save less money this year given that we are in a crisis situation?

So far, we have not seen any major change in behaviour from our customers with regards to savings which remains stable at Bank One. We believe that it can be explained by the current period of uncertainty which incites Mauritians to control their expenses and keep a safe financial buffer as far as possible.


What will be the impact on the national savings rate? Should we expect the situation to worsen compared to 2019?

The current Monetary Policy favours mainly the financing of projects and is also expected to relieve cash flows for the existing borrowers due to moratoriums. As a result, we foresee a re-injection of cash in the economy and the national savings rate, currently at less than 10% of GDP, is expected to remain stable in the best case scenario.


What measures is Bank One taking to encourage people to save? With the monetary easing policy, the savings rate is at its lowest level – between 0.25% and 0.4%. Does this mean that there is little to no incentive to save?

Despite the prevailing low interest rate environment, the regular savings account is still pertinent for customers given that it remains one of the rare investments that is fully liquid and 100% safe.

From a Bank One perspective, we are one of the few banks that are paying interest on a quarterly basis instead of half-yearly, which ultimately gives customers a better return on their savings accounts. We also remain committed to offer individual advice and personalised support for our customers to help them plan for a sound financial future.


Should we also expect customers to draw more from their savings this year?

Based on the current behaviour, we do not foresee any considerable decrease in our savings pool during this year. During the lockdown, we even saw a slight increase in overall savings which reflects the financial resilience of our customers.


Is there a risk of ending up with a savings rate of 0% if the repo rate is lowered again at the next meeting of the Monetary Policy Committee?

Given that the macro-economic environment is not yet stabilised, it’s difficult to predict the outcome of the next MPC meeting. We are confident that the MPC will weigh all considerations to preserve monetary stability and foster recovery within the broader economy.


Loan facilities

Will Mauritians (individuals) reduce or increase their demand for (1) personal loans & (2) housing loans? In this period of crisis and given the low interest rate environment, what should be the percentage increase or decrease in demand for (1) personal loans & (2) housing loans compared to 2019?

We are positively surprised by the demand resumption post lockdown. To give you a better idea, the volume of loans disbursed in June is higher than our March 2020 figure and has bounced back to reach 75% of pre-COVID sales. We are inclined to believe that we will achieve a similar performance compared to 2019 provided that there are no further lockdown or crisis.


Will Bank One be more rigid in granting loans in the current environment?

As a responsible lender, we need to ensure that each customer has the capacity to repay his financial obligations and that every request is assessed by an independent and experienced team based on lending criteria including past account behaviour, the sector of activity and the creditworthiness of the customer. We shall apply the same process whilst taking into account the recent impact of the COVID-19 pandemic in some economic sectors.


Are customers expected to have difficulty repaying their loans? Is this already the case?

The great majority of our customers are able to honour their loan obligations and we expect this positive trend to continue. In some specific sectors, we have noticed a degree of financial stress due to the COVID-19 pandemic and a tailor-made solution has been proposed to the concerned customers.


What solutions does Bank One propose if this is the case?

Where a customer is impacted by the COVID-19 pandemic, we will propose either a moratorium or a rescheduling depending on their individual circumstances.