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CI: BMCE bank's ratings affirmed.

Capital Intelligence (CI), the international credit rating agency, today affirmed the ratings of BMCE Bank, based in Casablanca, Morocco. BMCE's Financial Strength Rating (FSR) remains at 'BBB-'. It is supported by the improved profitability in 2014, increased liquidity as measured by loan-based liquidity ratios, and slightly higher capital.

The FSR remains constrained by the increase in non-performing loans (NPLs), low net liquid assets and modest 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 FCRs are constrained by CI's internal assessment of sovereign credit risk. The Support Rating is maintained at '2', reflecting the Bank's franchise and likely support from BMCE's shareholders initially - and from the Central Bank.

BMCE holds a good banking position in the Moroccan banking sector, controlling a significant share of sector assets, deposits and loans. It ranks third largest for loans and customer deposits in Morocco. BMCE's profitability performance again improved in 2014 on the back of higher net interest and non-interest income. Operating expenses continue to be well held. Although much improved, its returns continue to be modest. This is due to a low yield on its earning assets together with a high provision charge relative to operating profit. The cost of risk increased again in 2014 following a rise in NPLs, although the latter at a lower rate than the previous year. However, provisioning has also increased - albeit slightly - and, in addition, BMCE has general risk provisions on the liabilities side of the balance sheet.

Loan-based liquidity ratios improved sharply in 2014 as customer deposits grew solidly and above the sector rate, whilst the loan book declined. Liquid assets remained fairly steady overall although net liquid assets fell to a low level. BMCE's capital adequacy ratio based on Basel III also increased year-on-year. The Bank will issue further subordinated debt in 2015 and plans to increase core capital in 2016.

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Publication:CPI Financial
Date:Aug 30, 2015
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