Capital Intelligence (CI), the international credit rating agency announced 25 August 2014 that it has affirmed the credit ratings of Crédit du Maroc (CM), based in Casablanca, Morocco. CM’s Financial Strength Rating (FSR) is affirmed at ‘BB+’, supported by the improved capital position and steady liquidity. It is constrained by a high level of non-performing loans (NPLs) and weak profitability. The Outlook for the FSR is ‘Stable’. CM’s Foreign Currency Ratings are maintained at ‘BBB-’ Long-Term and ‘A3’ Short-Term, with a ‘Stable’ Outlook. Foreign Currency Ratings are constrained by CI’s internal assessment of sovereign credit risk. The Support Rating is maintained at ‘2’, reflecting majority ownership by Crédit Agricole and the high likelihood of support from the Parent in case of need.
CM is majority owned and managed by the French institution Crédit Agricole. The Bank holds a reasonably solid position in the Moroccan banking sector. However, its financial profile has been hit over the last few years through increasing NPLs – due to weakness in the corporate loan book – and falling profitability. The Bank’s NPLs continued to rise in 2013 and the level of NPLs is high. However, the Bank’s provision coverage is comfortable and remained steady in 2013. The cost of risk has impacted CM’s returns, which again fell last year as the provision charge rose. CM’s low returns also reflect a weak level of gross income, which is also due to lacklustre asset growth – particularly loans – over the past few years. In turn, yields have come under pressure and the Bank’s margin fell in 2013, although it remains relatively sound.
Capital adequacy strengthened in 2013 following a capital increase and is at a comfortable level. Effective coverage of free capital against unprovided NPLs remains somewhat high. CM has an adequate liquidity profile; funding is nearly all sourced from domestic customer deposits and the base of liquid assets is reasonable. Loan-based liquidity ratios recorded a slight improvement in 2013. Deposit growth was modestly higher in 2013, but challenging market conditions remain.
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. 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), which holds a 10% stake. In 2008, Crédit Agricole S.A. signed an agreement with Morocco’s AWB to sell its stakes in some African operations to AWB. The transaction included selling assets in Congo, Cameroon, Gabon, Senegal and some other countries for an amount of EUR250 million. In turn, Crédit Agricole purchased another 24% of Credit du Maroc held by Wafa Assurance for EUR144mn, raising its share in CM to 77%.
At end 2013, CM had total assets of 49,726 million Moroccan dirhams (US$ 6.101million).
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