Our higher growth rate, stable inflation and other positive economic fundamentals make South Africa and particularly South African financial services a compelling attraction for investors.

170

Although the earnings of the private bank did not increase from those of the comparable period, this entity met expectations after taking account of the restructuring exercise. The restructuring enables the delivery of an enhanced service offering to a larger number of customers.

158

The improved margin can be attributed primarily to the implementation of IFRS, which requires certain fee income directly related to the acquisition of loans to be treated as part of the net interest margin.

152

The group's cost-to-income ratio is in line with the ratio reported for March 2005 if the costs relating to the Barclays transaction and synergy initiatives are excluded. However, if the Barclays related costs are included, the cost-to-income ratio deteriorated from 56.6% in March 2005 to 58.0% in December 2005 owing to top-line income growth, at 17.9%, lagging expenditure growth over the period.

102

Increased transaction volumes continued to drive non-interest income growth. Price increases contributed moderately as they were kept well below the inflation rate. The growth in transaction volumes emanated from the increased activities of existing customers and growth in the retail customer base from 6.9 million in March 2005 to 7,6 million in December 2005.

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