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Capital Intelligence affirms ratings of BMCE Bank

August 31, 2014

Capital Intelligence (CI) affirmed the ratings of BMCE Bank, based in Casablanca, Morocco. The Financial Strength Rating (FSR) is maintained at 'BBB-'. It is supported by the improved profitability in 2013, steady if modest capital adequacy, and slight growth in liquid assets. The FSR remains constrained by the growth in non-performing loans (NPLs) in 2013, tight loan-based liquidity ratios and still low returns. The Outlook for the FSR is affirmed at 'Stable'. BMCE's Long and Short-Term Foreign Currency Ratings (FCR) are affirmed at 'BBB-' and 'A3' respectively, with a 'Stable' Outlook. The Support Rating is maintained at '2', reflecting the Bank's franchise and likely support from the shareholders initially and from the Central Bank.

BMCE holds a solid banking position in the Moroccan banking sector, controlling a significant share of sector assets, deposits and loans. It ranks within the top three banks for most lending and deposit market segments. BMCE's profitability performance improved sharply in 2013, albeit from a low base, following strong net interest and non-interest income. Despite the improvement, its returns continue to be modest, a factor of a low yield on its earning assets together with a high provision charge relative to operating profit. The cost of risk increased in 2013 following a rise in NPLs. The rise reflects the challenges within the Moroccan economy whereby some economic sectors have been hit by subdued economic growth.

Loan-based liquidity ratios have tightened as loan growth again outpaced deposit growth in 2013. Customer deposit growth remains very weak, as it does for the sector with market liquidity overall remaining low. Slight improvement in liquid assets occurred in 2013 and net liquid assets also grew from a low level. BMCE's capital adequacy is modest, but considered adequate.

Established in 1959 as a state-owned institution specialising in trade finance, BMCE Bank (formerly Banque Marocaine du Commerce ExtÉrieur) was privatised in 1995. While the Bank has long been a depository for retail deposits, it is now targeting that sector for lending and services. BMCE's total assets amounted to MAD167 billion at end 2013 ($20.5 billion equivalent).

BMCE Bank is the flagship domestic Moroccan bank of the BMCE Group. It has a strong position in all areas of retail, commercial and corporate banking in Morocco. At the Group level, consolidated companies include BMCE International Bank, the London-based institution, BMCE International Madrid, and Bank of Africa (Luxembourg).

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Source: CPI Financial

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