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Credit du Maroc Rating Action

Capital Intelligence (CI), the international credit rating agency, today announced that it has affirmed the ratings of Credit du Maroc , based in Casablanca, Morocco. The Long-term Foreign Currency rating is affirmed at 'BBB-' and the Short-term Foreign Currency rating at 'A3', with a 'Stable' Outlook. At the same time, CI affirmed the Bank's Financial Strength rating at 'BBB-', but the Outlook is changed to 'Negative' from 'Stable', reflecting recent pressure in loan asset quality. The rating could be revised downwards if the deterioration in asset quality is not stabilised or reversed.

Credit du Maroc 's (CM) overall financial profile has come under some pressure due to a significant rise in non-performing loans in 2010, linked mainly to its corporate loan book. The need for additional provisioning impacted returns which are at a modest level. Provisioning coverage fell, but remains at an adequate level. Returns in 2011 are likely to remain modest due to subdued loan asset growth.

The Bank has an adequate liquidity and funding profile; funding is nearly all sourced from domestic retail customer deposits and the base of liquid assets is sound. The expansion of deposits, particularly low-

cost deposits in absolute terms, has been achieved over the past year and, together with the fall in market rates, has benefited margins. The capital adequacy ratio, although above the regulatory minimum of 10%, is considered low and CM would benefit from increased tier one capital in order to strengthen its position.

While Morocco has not avoided the unrest seen in neighbouring North African and Middle East countries, the country is in a position of relative strength, and risks to the monarchy and government currently appear minimal. Economic growth in Morocco may slow slightly this year but is expected to be above four per cent.

CM was established in 1963, when the 34-year-old branch of France's Crédit Lyonnais (CL) was incorporated as Crédit Lyonnais Maroc, adopting its present style in 1966. The Bank was founded as a joint-venture wherein local investors, including the then state-owned BMCE, held a minority interest. Current ownership consists principally of France's Crédit Agricole S A. Wafa Assurance, one of the largest Moroccan insurance companies and owned by Attijariwafa Bank ( AWB ), holds a 10% stake. In 2004 Wafa Bank was acquired by Banque Commerciale du Maroc (BCM), while in France CL was acquired by Crédit Agricole S.A. The latter event meant that CL's 51% stake in CM passed to Crédit Agricole S.A. In May 2004 BCM announced its intention to merge with its newly-acquired WB subsidiary, creating a successor bank ( AWB ). That merger took place in September 2004.

In 2008, Credit Agricole S.A. signed an agreement with Morocco's Attijariwafa Bank to sell its stakes in some African operations to Attijariwafa. The transaction included selling assets in Congo, Cameroon, Gabon, Senegal and some other countries for an amount of EUR250mn. In turn, Credit Agricole purchased another 24% of Credit du Maroc , held by Wafa Assurance for EUR144mn to raise its share in CM to 77%. At end 2010, CM had total assets of MAD44,368mn (USD5,384mn).

-Ends-

CONTACT
Primary Analyst
Darren Stubing
Senior Adviser
Tel: +357 2534 2300
E-mail: darren.stubing@ciratings.com

Secondary Analyst & Rating Committee Chairman
Thomas Kenzik
Senior Credit Analyst
E-mail: tom.kenzik@ciratings.com

The ratings have been initiated by Capital Intelligence. However, the issuer participated in the rating process. The information sources used to prepare the credit ratings are the rated entity and public information. Capital Intelligence had access to the accounts but no other relevant internal documents of the issuer for the purpose of the rating, but considers the quality of information available on the issuer to be satisfactory for the purposes of assigning and maintaining credit ratings. Capital Intelligence does not audit or independently verify information received during the rating process.

The rating has been disclosed to the rated entity and released with no amendment following that disclosure. Ratings on the issuer were first released in January 1996. The ratings were last updated in March 2010.

The principal methodology used in determining the ratings is Bank Rating Methodology. The methodology and the meaning of each rating category and definition of default, as well as information on the attributes and limitations of CI's ratings, can be found at www.ciratings.com

© Press Release 2011