Premchand Mungar : “We are building strong systems to make SBM bank a financial powerhouse’’

In this exclusive interview, Premchand Mungar, who was appointed chief executive of SBM Bank (Mauritius) Ltd in November 2023, shares his vision for the bank and his commitment to transform the banking institution in a financial powerhouse. He also discusses the evolution of the banking industry and how SBM is leveraging technology to better meet the needs of customers across all segments.

After playing a leading role in the turnaround of MauBank, you chose to return to SBM Bank (Mauritius) Ltd, where you started your career. Was this an easy or difficult decision?

Both. Hard, because we have achieved much during my time at MauBank. It would only be natural to continue on our journey. On the other hand, it was easy because I started at SBM and have always believed in the potential of the bank.

If we nurture the right culture, select the correct path and execute our strategies with excellence, SBM will be a formidable institution. More than any other, SBM contributed to the access to credit of a significant proportion of our population that needed it. That was our purpose back then, and I think my job is to ensure that we all understand that this is still relevant.

Your main task is to continue the transformation journey on which the bank has embarked in recent years. Can you tell us more?

Before we talk about transformation, we need to understand the fundamental values and principles and think about our purpose. The business landscape evolves rapidly but if we are anchored by our values and understand our purpose clearly, we have a solid basis to be able to respond to any shocks that can challenge us.

The bank has been on a journey to redefine its values. This is ongoing but it is clear that we are now focused on customer-centricity, excellence and sustainability.

We have a long way to go, and we continue to develop our strategy to make our operations more efficient and to redesign our customer journey. Our colleagues are working on several exciting projects, and I look forward to telling you more later this year.

SBM Bank (Mauritius) Ltd went through a difficult period due to bad debts linked to cross-border loans, but it has managed to bounce back and, since 2021, has posted solid results in terms of both profitability and capital adequacy ratio. What factors have contributed to this renewed energy?

We are living in a period of growth, so naturally if your business fundamentals are right, you will be profitable. But I have to give credit to the work previously done at SBM so I don’t think that it would be fair to attribute the growth merely to a rising tide lifting all boats.

Instead, I think that my colleagues genuinely want our institution to be better and stronger. That is an incredible starting point; everything else is then about nurturing this customer-centric culture, directing it within the framework of the right strategies and giving them the resources to achieve our aims.

We also have to remember that SBM is fundamentally a strong and resilient institution. Of course, I want to ensure that the errors of the past are not repeated, and we are building strong systems to make us a financial powerhouse.

Following the episodes of bad debts linked to Segment B, the bank thoroughly overhauled its internal control system. Are you satisfied with the improvements that have been made?

SBM has made progress following the issues it has faced in the past. However, it is not an area where you can rest on your laurels. An institution will always be developing new strategies or new areas of operations, and we need to be adapted to these. Banking failures may have different causes but the common root behind all of them is a lack of understanding from leadership of the activities of the institution. With data and technology being at the heart of what we do now, we need to understand the risks which stem from these activities. Only then can we adequately build a stronger SBM.

In line with the principles of good governance, we have strengthened our risk management and internal control mechanisms. In doing so, we want to maintain the highest standards of asset quality and ensure the stability and resilience of our operations.

We have made significant progress, yet we remain vigilant. We are prudent in the expansion of our activities. Our approach is based on market analysis, adequate risk evaluation and strong control and governance tests. We monitor economic trends and changes in regulatory frameworks and geopolitical dynamics.

We are able to take advantage of growth opportunities while ensuring that we fully understand our risk profile to ensure the sustainability of our operations.

What is the share of Segment B in your deposits?

I can’t share that, but I understand the point, which is to ask if we are well positioned in the global business segment. I believe that we can do much better. To do that, I think we need to go back to our purpose. Are we doing enough to service our customers on this front? I don’t think so.

This isn’t just about SBM, but it relates to the Mauritian banking sector generally. When you look at the number of foreign banks providing services in the global business sector you have to ask yourself why can’t we do that? Clearly, it’s about expertise and relationships because collectively we have the balance sheet capacity.

As an industry, we have to strive to do more. The types of financing required by the global business sector are more specific and specialised than the domestic market.

We are lucky in that our group has a presence on the ground in a number of emerging markets. This gives us the means to understand the geopolitical risk in these markets. So, let’s accompany our clients better, let’s understand their needs better and let’s see how our products can serve them better.