confidence - Investing In Africa

Directors’ Report to the Shareholders18The Board is pleased to report thatthese trusts are now operational.The Independent Trustees and theAdvisory Committees had severalworking sessions and have finalisedthe modalities to fulfill the objectivesof the Trusts. The Bank donated theincome earned on the capital sum ofRs100M set aside for this purpose tothe above Trusts.AWARDS, RATINGS AND ACHIEVEMENTSThe Board is pleased to share thatEuromoney, a leading global financialmagazine, has for the secondconsecutive year awarded SBM“Best Bank in Mauritius” for 2005. TheBank was awarded Best Bank inMauritius for Euromoney’s first AfricanAwards for Excellence 2004.Moody’s Investors Service rates theBank Baa2/P2 for long and shortterm foreign currency deposits, thehighest rating any Mauritian entitycan be rated. Further, Moody’sadjudicated a D+ for Financialstrength to SBM.During the year, the Bank launched afully operational Europay-MasterCard-Visa (EMV) Chip Card. SBM is the firstBank in the Sub-Saharan Africanregion to implement EMV Chip Card.The Bank obtained a ten year loanfacility of Euro 20M from the EuropeanInvestment Bank at favourable terms.The Board is pleased to report that thisis the first global loan agreement thatthe European Investment Bank hasentered into with a commercial bankin Mauritius.CHALLENGES FOR THE FUTUREThe Banking Act 2004 which waspromulgated on November 10, 2004eliminated separate licencing forCategory 1 (onshore) and Category 2(offshore) banks and provided for asingle banking licence. All banks inMauritius can now uniformly target allthe markets. With a single bankinglicencing in Mauritius, there will bestiffer competition for business andfurther narrowing in interest marginand foreign exchange margin. Onthe other hand, the Bank can takeadvantage of the favourabletreatment enjoyed by former offshorebanks, namely the lower tax rate andopportunity to tap new customers.The changed regulatory andeconomic environment willundoubtedly influence thelandscape of banking in Mauritius inthe years to come.The dismantling of the MultifibreAgreement which came into effectas from January 01, 2005, coupledwith the proposed reduction in thesugar price enjoyed by Mauritius fromthe European Union as from nextyear, pose the greatest challenges forthe Mauritian economy.The Board believes that the Bankneeds to position itself to furtherleverage its superior service deliverychannels to generate transactionalfees and explore new services andgeographical markets, besidesreducing its cost of operationsthrough migration to cheaperelectronic delivery channels.