confidence - Investing In Africa

Management Discussions & AnalysisOperation Review (cont’d)• TreasuryMauritiusMargins are narrowing as competition is becoming more and more fierce.Foreign Exchange profits are down by 11% against the previous year, mainlydue to the illiquid local foreign exchange market conditions.Income from dealings in local securities was as expected, lower than last yearas the trend in local currency interest rates are on the rise.An international bond trading desk was successfully launched in December2004 and provides a further diversification of the income streams ofTreasury operations.IndiaLimited trading opportunities were present in the local securities market asinterest rates continued their upward trend and it is envisaged that this willcontinue into the coming year.An equities trading desk has recently been set up to take advantage of thebuoyant local stock market.MadagascarTreasury operations had a good year with profits up 20% over the previous yearas foreign exchange volumes picked up significantly.• Indian OperationsIndian Operations focused on mobilizing deposits to reduce the cost of funding aswell as reliance on Money Market funds. Average deposits have shown asubstantial growth of 33%. Cost of funding has been brought down by 89 bps.89Terminal Advances were maintained at more or less the same level as last year.However, average advances grew by 16%. Interest spread also improved by 98 bps.Profit after Tax registered a growth of 30% against last year. The quality of the loanbook has improved with Net impaired advances to Net Advances down from 4.8%last year to 3.5% as at June 30, 2005.