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Fitch Affirms Morocco's BMCE Support Rating at '3'

Fitch Ratings, London/Paris/Tunis - Fitch Ratings has today affirmed Morocco-based BMCE Bank's (BMCE) Support rating at '3'.
BMCE 's Support rating reflects Fitch's opinion that, given BMCE 's strong franchise in Morocco, support from the state would be forthcoming if needed, although there are uncertainties regarding the sovereign's ability to do so.
BMCE is Morocco's third-largest bank by total assets, with a 14% market share of deposits and a 13.5% of loans at end-2007. It is 38%-owned by FinanceCom, a holding company controlled by a prominent local family. France's Credit Industriel et Commercial (rated 'AA-' (AA minus)/'F1+'/Outlook Stable) owns 15% and the rest is widely held.
While consolidating its presence in the corporate lending market, BMCE is now targeting retail and professional clients. It also aims to establish a regional presence in Africa, mainly by increasing its stake in African Financial Holding/Bank of Africa to 51% by 2009 from 35%. Its UK-based CIB subsidiary, MediCapital Bank, will also help BMCE acquire new clients.
Large trading gains, inflated by the gain on the sale of a 5% of its own equity stake to Caja de Ahorros del Mediterraneo (CAM; rated 'A+'/'F1'/Stable) in H107 for MAD696m, and capital gains on non-core equity stakes (MAD624m) once again enabled BMCE to post an extremely good but potentially volatile performance. Despite rising operating expenses, its cost/income ratio has declined to 57%. Net loan loss provision charge was quite low at 70bps, which may prove difficult to sustain as loans season.
Customer deposits are BMCE 's major funding source (76.5%). BMCE is a major market maker in local government bonds and holds a MAD4.5bn bond portfolio used for proprietary trading and asset-liability management purposes.
Its Basel I core equity ratio was a small 5.3% at end-2007. Early in 2008 BMCE issued two subordinated debt notes. Extra Tier 1 capital relief was ensured by a 20% IPO of its consumer finance subsidiary, Salafin, in Q108. Further subordinated debt issues are planned in 2008. The bank is also considering securitising part of its residential mortgage loan book.
Updated research on BMCE is available on the agency's subscription website, www.fitchresearch.com under Financial Institutions/Banks/Summary Pages.
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Note to Editors:
Fitch's National ratings provide a relative measure of creditworthiness for rated entities in countries with relatively low international sovereign ratings and where there is demand for such ratings. The best risk within a country is rated 'AAA' and other credits are rated only relative to this risk. National ratings are designed for use mainly by local investors in local markets and are signified by the addition of an identifier for the country concerned, such as 'AAA(mar)' for National ratings in Morocco. Specific letter grades are not therefore internationally comparable.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
For more information, please contact:
Sophie Martin-Glinel
London
Tel: + 44 207 682 7657
Sonia Trabelsi
Tunis
Tel: +216 71 840 902
Francoise Alos
Paris
Tel: +33 1 44 29 91 22
Hannah Warrington
London
Tel: +44 (0) 207 417 6298

© Press Release 2008

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