confidence - Investing In Africa

Management Discussions & AnalysisFINANCIAL REVIEWThe audited financial statements for the Group and the Bank for the year endedJune 30, 2005 are presented on pages 26 to 73. The following financial analysisis included for the benefit of the stakeholders. It should be noted that in thefinancial year 2004/05, the Bank revised its depreciation estimates on CoreBanking IT systems implemented in 2002 and 2003 from 10% to 20% per annumof their net book value standing at June 30, 2004. Land and buildings are statedat open market value basis in 2005.Table 5 - Performance against objectives by key areasObjectives for Actuals Objectives for2005 2005 20061.RAROC(%) To improve by Decreased To improve byaround 500 bp by 100 bp around 200 bp2.Return on Average Tier 1 Capital (%) To maintain/improve Decreased To maintain/improvemarginally by 216 bp marginally3. Return on Average Assets (%) To improve by Decreased by To improvearound 20 bp around 26 bp by 10 bp4.Net Income available to Shareholders To grow by Grew by 5.7% To grow byaround 10% around 12%5. Non Interest Income to Average Assets (%) To improve Decreased To improveby 15 bp by 41 bp by 20 bp6.Cost to Income Ratio excluding one-time items(%) To improve by Deteriorated by To improve byaround 100 bp around 200 bp around 300 bp7.Average Non-Bank Advances To grow Grew by 3.1% To growby around 8% by around 7%8.Average Non-Bank Deposits To grow Grew by 0.8% To growby around 5% by around 5%9.Assets Quality: Impaired assets to Advances (%) (Net) To improve Increased by To improveto around 0.50 around 52 bp to around 0.5099ResultsThe Group achieved a satisfactory performance for the year ended June 30,2005 despite the difficult market environment in Mauritius characterized byexcess liquidity and low demand for credit. The average interest rate onTreasury bills portfolio dropped substantially in 2005 compared to the averageinterest rates on deposits.Net Income before income taxes registered a growth of 9.94% from Rs1,365.5Mfor the year ended June 30,2004 to Rs1,501.3M for the year ended June 30,2005. Net Income available to shareholders grew by 5.74% from Rs1,126.5M toRs1,191.2M over the same period due to a higher effective tax rate.