CPI Financial

BCP

Capital Intelligence (CI) has affirmed the ratings of Banque Centrale Populaire (BCP), based in Casablanca, Morocco. BCP’s Financial Strength Rating (FSR) is maintained at ‘bbb’. This reflects BCP’s good level of capital adequacy, adequate overall provisioning and operating position in the Moroccan banking sector. It is constrained by rising non-performing loans (NPLs), falling returns and a tight liquidity profile. The Outlook for the FSR remains ‘Stable’. BCP’s Foreign Currency Ratings are affirmed at ‘bbb-‘ Long-Term and ‘a3’ Short-Term, together with a ‘Stable’ Outlook. The Support Rating is affirmed at ‘2’, indicating that BCP would possibly receive support from the authorities in case of need.

BCP is the flagship government-controlled bank in Morocco. Over the past couple of years, the Treasury has sold stakes in the Bank to both the IFC and French financial group BPCE. However, the Treasury’s and regional banks’ total stake remains above 50 per cent. BCP has a unique profile, existing primarily as a ‘central bank’ and ‘back-office’ substitute for its member banks within the overall Groupe Banque Populaire structure.

Groupe Banque Populaire dominates the customer-deposit market in Morocco because of its network of ten regional co-operative banks, an associated substantial number of branches, and its historic edge in collecting deposits from Moroccans residing abroad. Funds and deposits are placed by the regional banks with BCP. As a result, BCP has a high proportion of ‘interbank’ liabilities. As the proportion of customer deposits is low in BCP’s balance sheet, the loan to customer deposit ratio is very high. Customer deposits at BCP registered a small increase in 2013, and market conditions remain tough, with tight liquidity throughout the banking sector. BCP displays a good level of liquid assets − the result of interbank deposits accepted from the regional banks which are partly channeled into Moroccan government securities, cash and deposits with Bank Al-Maghrib (Morocco’s Central Bank).

NPLs grew sharply in 2013, reflecting pressure in the domestic economy with the commercial and corporate sectors hit. Provisioning coverage remains adequate with specific provisioning supplemented by general provisions on the liabilities side of the balance sheet.

BCP’s profitability weakened again in 2013 on account of lower net interest income and flat gross income. Although the provision charge fell, the cost of risk remains high. Despite the fall however, the return on average assets (ROAA) is slightly above the peer group average.

The Bank’s capital position is currently at a good level – despite the capital adequacy ratio (CAR) falling in 2013 – and provides some capacity to support balance sheet growth and absorb potential deterioration in asset quality, although not to any great extent.

BCP is part of Groupe Banque Populaire, which has circa $36 billion in total assets. BCP is the Group’s principal legal and operating entity, responsible for executing policy, acting as the regional banks’ legal representative, and conducting much of their asset liability activities. The Group also holds investments in numerous companies, mostly in the financial services field, both in Morocco and abroad. At end 2013, BCP had total assets of MAD 175 billion ($21.4 billion).