confidence - Investing In Africa

Management Discussions & AnalysisOperation Review (cont’d)• Banque SBM Madagascar(BSBMM)The financial year under review wasa satisfactory year for the SubsidiaryBank. In spite of increasedcompetition and tightenedmonetary policy, BSBMM continuedto build on its increasing profits.Profit before provisions and taxincreased by MGA 1.6 Bn or 60% toMGA 4.3 Bn in 2005. However, profitafter tax increased by MGA 0.6 Bnmainly due to higher provisionsmade over last year. BSBMM’s chargefor specific and general provisions forbad and doubtful debts increased toMGA 4.1 Bn, up by MGA 2.0 Bn fromlast year.90The growth in profit is mainly due toan increase in net interest incomeand non interest income, coupledwith better management of costs.Deposits increased by MGA 14.9 Bnor 30% over last year to reach MGA64.8 Bn as at June 30 2005. Growthin deposits was satisfactory taking intoconsideration the competitive rateson the Treasury bills market.Advances registered a growth of 45%representing an increase from MGA39.8 Bn to MGA 57.6 Bn at June 302005. Growth was particularly high inshort term credit. Credit mixremained unchanged.BSBMM went live in September 2004with the new core system, Flexcube,and Oracle GL. This enormouschange in terms of its hardware“Our operations in Madagascar are now fullyautomated with the implementation of thenew core IT system.”platform and operating systemsoccurred in a short span of just 8months. Key staff were deputed toSBM Mauritius for seven months to betrained on the new system. TheFlexcube system was set up to acceptthe new currency Ariary (MGA) as abase currency for a smooth swapfrom the existing Malagasy Franc(MGF) currency to Ariary (MGA) on1st January 2005. With theimplementation of Flexcube andOracle, operations in Madagascarare now fully automated.