At an analyst meeting held last Friday 24th October 2003, Mr C. Gunness, CEO of State Bank of Mauritius Limited (SBM) presented the bank?s results for the year ended 30th June 2003. For the year under review, SBM?s net profits rose by 6.9% to reach Rs1bn mark for the first time. Mr. Gunness pointed out that such a performance was reached in a difficult economic situation, at both domestic and international levels.

SBM?s net interest income grew by 6.5% to Rs1.4bn in 2003, compared to a 14.5% growth in 2002. This was mostly due to declining yields on gilt-edged securities, since interest rates were cut by 1.25% from November 2002 to June 2003. Other factors that dampened the bank?s interest income were continued pressure for lower interest rates on advances, limited expansion of its credit portfolio and lower endowment income. Despite these setbacks, SBM managed to marginally increase its net interest margin (net interest income as a percentage of average interest earning asset) from 4.54% in 2002 to 4.56% in 2003. This reflected an efficient asset and liability management. The year 2003 saw a strong progression of SBM?s non-interest income, which grew by 25.1% to Rs584m. This performance was achieved on the back of higher level of contribution from the bank?s foreign exchange (+27.8% to Rs239m) and in its dealings (+146.9% to Rs79m) divisions. Compared to other domestic commercial banks, SBM possesses the lowest cost-to-income ratio (39.2%), which is a measure of efficiency in the banking industry. The bank also enjoyed the second best cost-to-income ratio in the Sub-Sahara Africa region by ?The Banker? magazine in its July 2003 edition.

Going ahead, Mr. C. Gunness expects that SBM will face another challenging year in 2004, characterized by high liquidity, weak corporate credit growth and competitive retail banking. While maintaining a high level of credit quality, Mr. Gunness aims at increasing the bank?s fee-based income and also expects to drive revenue growth through a pro-active approach and cross selling. On the expenses side for the year 2004, the bank will also see higher maintenance costs on computer hardware and software (+25% increase) and also a rise in staff costs (new salary scales were effected as from December 2002). SBM climbed by 2.1% during the week under review.

For the week ended Monday 27th October 2003, investors pushed the local bourse to new highs. The total return index, the SEMTRI, reached 1115, up by 1.8% for the week. Last week, both the Semdex, the broad equity index, and the Sem-7 index, which tracks the performance of share prices of the seven largest listed companies, rose by 1.6%. All economic sectors ended the week in positive territory, led by the sugar (+3.0%) and banks&insurance (+2.6%) stocks. The two largest stocks, the MCB and SBM rose by 3.2% (to Rs29.00) and by 2.1% (to Rs19.70) respectively. Sugar concern Mon Désert Alma Limited surged by 8.5% to Rs115 on thin trading. On the commerce counter, Courts Ltd. and Rogers &Co. Ltd. appreciated by 2.2% (to Rs4.60) and by 1.1% (to Rs93.50) respectively. Hotels stocks posted mixed performance, as highlighted by the 1.3% rise (to Rs 39.50) of NMH shares and 0.7% decline (to Rs43.30) of shares of Sun Resorts Limited. Demand for investment stocks remained generally strong amid the good performance both the Mauritian and international bourses.

Contribution by Confident Asset Management