Credit concentration risk Concentrations of credit risk arise when a few clients are engaged in similar economic characteristics or operate in the same geographical areas or industry sectors, so that their collective ability to meet contractual obligations is uniformly affected by changes in economic, political, or other conditions. Several controls and measures are used to minimise undue concentration of exposure in our portfolios. • CFSL has adopted a very prudent approach with respect to customer concentration limits (both single and group of closely related customers), which are more prudent than the levels recommended by local regulators to bank and non-banks in Mauritius. • Prudential limits set at borrower level, product level, industry level and by quality of credit, and these are independently monitored by an independent risk management function. • CFSL has a very well diversified portfolio of customers, with 270,000+ customers. The largest single and group of closely related customers was at 8.1% of the Group’s Tier 1 Capital as at 30 September 2023 (Sep 22: 7%). The Top 20 group of closely related customers was 14% of the Group’s Tier Capital at the financial year end (Sep 22: 16%). • With consumer finance being the core business, exposures to households represented the largest portion of the total credit book at 81% at end of September 2023 (Sep 22: 78%). • Exposures to the industry sectors other than to households are diversified as follows: Manufacturing 8.0% Transport 6.5% Accommodation 2.5% Construction 18.1% Other 10.8% Professional, scienti c and technical activities 2.5% Administrative & Support 20.6% Wholesale and Retail Trade 28.6% Risk Management Report Continued 72 CIM FINANCE ANNUAL REPORT
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