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FINANCIAL COMMUNICATION

OF BMCE BANK GROUP 

2009 FIRST HALF RESULTS

DOMESTIC AND INTERNATIONAL GROWTH

DYNAMICS RESTRAINED BY A DIFFICULT

ENVIRONMENT

The Board of Directors of BMCE Bank, chaired by Mr. Othman BENJELLOUN, was held on Thursday, September 24th, 2009, at the Credit Mutuel-CIC Group's Head Office in Strasburg. It examined the Bank's activities during the first half of 2009 and closed the related accounts.

The 2009 first half accounts are presented under IAS/IFRS. A complete version of the IAS/IFRS financial statements as of June 30, 2009, is available on the bank's website www.bmcebank.ma

AS OF JUNE 30, 2009

CONSOLIDATED GROSS

OPERATING INCOME

+7.3%

Over MAD 1.3 billion

(EUR 118 million)

CONSOLIDATED NET

BANKING INCOME

+7.6%

MAD 3.3 billion

(EUR 295 million)

CONSOLIDATED TOTAL

ASSETS

+10.7%

Over MAD 158 billion

(EUR 14.1 billion)

IMPACTED BY IMPAIRMENT LOSSES

• +7.6% increase in the consolidated Net Banking Income to more than MAD 3.3 billion (EUR 295 m), driven by a positive growth in market activities and net interest income, that is +17% and +2% respectively.

• +7.3% growth in Gross Operating Income to MAD 1.33 billion (EUR 118 m), reflecting the development dynamic in the Group's core business.

• Performance significantly impacted by sizeable provisions in a context of increasing risk in a difficult international economic environment, inducing a slight decrease in Net Income Group Share by -3.4% to 453.4 mMAD (EUR 40.2 m).

• Sustained rise in BMCE Bank Group's total assets, up by +10, 7% compared to end of June 2008, attaining MAD 158.8 billion (EUR 14.1 bn), mainly due to the growth in the loan book.

• Strengthening of the Shareholder's Equity Group Share by +1.2% to over MAD 7 billion (EUR 633 m).

• Positive growth in Customer Loans and Deposits, up by +13.5% and +6.3% to MAD 88.8 billion (EUR 7.9 bn) and MAD 113 billion (EUR 10 bn), respectively.

ACTIVITY IN MOROCCO: GOOD GROWTH IN NET BANKING INCOME AND CONTROL OVER EXPENSES

• Rise in Net Banking Income for the domestic activity by about +10% to MAD 1.88 billion (EUR 167 m), generated by a strong increase in market activities by +65,4%, thanks to capital gains realised on fixed income mutual funds.

• Measures for overheads control undertaken during the first half of 2009 bearing their fruits as proved by an increase of less than 5% in General Operating Expenses. 2.8 percentage points improvement in the cost to income ratio to 58%, in a context where important investments in terms of recruitment, telecommunication and real-estate continued to fuel the Group's growth :

•  Opening of 92 new branches over the June 2008-2009, bringing the number of branches to 521 as of end of June 2009 ;

•  Hiring of 737 persons over the June 2008- 2009 period that is more than 15% of the total number of the Bank's employees. Growth of about +15% in Gross Operating Income, as a result of a dynamic banking activity and control of overheads.

• A -4.4% decrease in net income for the activity in Morocco to 485.2 mMAD (EUR 43.1 m), given significant provisions and a debt collection activity marked by exceptional recoveries during the first half of the previous year. 

• +13.3% increase in Customer Loans to MAD 60.7 billion (EUR 5.4 bn), coupled with an improvement in the average yield of the loan book from 5.36% to 5.58%. Likewise, Customer Deposits went up from MAD 84 billion (EUR 7.5 bn) in June 2008 to MAD 88 billion (EUR 7.8 bn) in June 2009.

• Slight drop in Deposits and Loans market shares to 13.6% and 12.85% respectively, with gains of +0.3 %p and +0,26%p in July 2009 compared to June 2008.

STRENGTHENED FINANCIAL BASE

• Reinforcement of regulatory capital and liquidity, in a context of tightened liquidity having impacted the cost of funding and thus the Net Banking Income through a couple of actions initiated in 2008 : 

•  Issue of a MAD 1 billion (EUR 88.8 m) subordinated perpetual debt on the local market in May 2009;

•  Issue of certificates of deposit of 175 mMAD (EUR 15.5 m);

•  Continued branch extension programme, accelerating the pace of deposits collection. A balanced liquidity profile, with a liquidity ratio of 115% as of June 30, 2009, that is well above the regulatory limit.

CONSOLIDATION OF RISK MANAGEMENT SYSTEM

• Significant progress in the implementation of the compliance project with the Basel II provisions :

•  Notable development in the migration process to the advanced approach ;

•  Implementation of stress testing, in addition to an internal rating system in compliance with Basel II ;

• Enrichment of the operational risks mapping and deployment of an operational risk management tool for the Group's subsidiaries in Morocco ;

• Reinforcement of the management of concentration risk through the acquisition of a dedicated tool.

SCOPE OF CONSOLIDATION: NEW ENTRANTS

• The first half of 2009 marked by the extension of the consolidation scope, with the entry of 3 new subsidiaries :

• EURAFRIC INFORMATION : joint-venture specialised in IT, created by BMCE Bank, RMA Watanya, and Crédit Mutuel-CIC Group ;

•  LOCASOM : specialised subsidiary in short and long term car rental services ;

•  HANOUTY SHOP: player in the food distribution business.

CONSOLIDATION OF A MULTIDIMENSIONAL BANKING GROUP DRIVEN BY THE INTERNATIONAL EXPANSION STRATEGY

ENCOURAGING COMMERCIAL PERFORMANCE IN MOROCCO DESPITE A DIFFICULT ENVIRONMENT

Continued development of the Individuals and Professionals market

• Sustained growth in the customers portfolio, with a +9.1% increase in the number of accounts to about 2 million, compared to June 2008. +0.4p% market share gain in mortgage loans, from 13.23% to 13.66% over the June 2008-2009 period, despite the slowdown in this market segment.

• More than 9% increase in the number of bank cards, reaching nearly 1 million and +16% extension in the ATMs network to 576 units.

• Rise in the number of bank insurance contracts to about 549 000, that is a +4.4% growth rate compared to the first half of 2008. 

• +5.1% increase in the Moroccans Living Abroad (MLA) deposits to more than MAD 12 billion (EUR 1.1 bn), with a stable market share at 10.4%, in a difficult economic environment in the host countries.

• Consolidation of BMCE Bank's position on the MLA market through (i) the reinforcement of synergies with the foreign shareholders, CIC and CAM, especially with the set up of BMCE Bank desks within these two foreign banks' networks (ii) the extension of the MLA international network by the opening of two branch offices in France and Italy.

• Revitalisation of the Professionals market driven by the deployment of the '' CAP Clients Professionnels'' project.

• Ongoing efforts of BMCE Bank in terms of spreading access to banking services through the development of a range of dedicated products catering to the needs of low and or irregular income customers, especially with the launch of BMCE Lilkoul, an offer of banking services backed by the use of a prepaid card in a first time.

Enterprises and SMEs market: development of the customer portfolio

• Creation of 2 new business centers in Mohammedia and Kenitra, bringing the number of these specialized branches up to 19.

• Prospection of the Enterprises and SMEs market leading to a +9% increase in the number of current accounts.

• +32.6% rise in investment loans to MAD 7 billion (EUR 621.4 m) and +5.4% in operating loans to MAD 12.7 billion (EUR 1.1 bn).

• Decrease in the bank's Import and Export domiciliation by -12% and -13%, at a less sustained pace than that of the national foreign trade (-17% and -27% respectively).

• Fostering of relations with the Enterprises by the launch of three new products, (i) BMCE Croissance for the financing of investments, (ii) BMCE Appui Export to support the exporting companies (textile, leather, and auto supplies) and (iii) BMCE Relancia relating to debt structuring for enterprises.

Corporate Market: development of synergies and consolidation of the Bank's position in Project Finance

• +14% growth in corporate loans to about MAD 30 billion (EUR 2.6 bn), particularly thanks to the revitalisation of the institutional investors clients and project finance

• Fruitful synergies with the Retail Bank, with boosted dynamism for the 'agreement loans ', recording a +30% increase in real-estate loans and +17.2% in consumer loans.

• Reinforcement of the role of BMCE Bank in the development of the Moroccan economy through the arrangement and financing, as a lead manager, of several projects in the port handling, railways infrastructure and tourism …

INTERNATIONAL ACTIVITY: GROWING MOMENTUM IN THE AFRICAIN ACTIVITIES

• Reinforced contribution of the international activities to the Bank' earnings, representing about 25% of the Net Income Group Share, thanks to the african and offshoring activities. 

• Significant increase in the contribution of the african subsidiaries to Net Income Group Share to 19.2% as of end of June 2009 versus 12.9% a year earlier, especially thanks to the performance of Bank of Africa, the spearhead of the Group's strategy in Africa, which represents by itself about 13%.

• MediCapital Bank's business activity impacted during the first half of 2009 by international financial turbulences; outlook to remain positive for the second half of the year thanks to the strengthening of its equity base and the finalisation of advisory mandates.

• Good performance of BMCE Internacional Madrid, as shown by +18% growth in its Net Banking Income, despite the economic downturn in Spain.

• Noteworthy results of BMCE Bank Offshore in terms of its contribution to Net Income Group Share, standing at 62 mMAD (EUR 5.5 m) in June 2009 versus 15.3 mMAD (EUR 1.4 m) in June 2008.

SPECIALISED FINANCIAL SERVICES: INCREASING RESULTS

• A nearly +6% growth in the contribution of Salafin to BMCE Bank Group's consolidated Net Banking Income and +3% increase in its net earnings to 55.7 mMAD (EUR 4.9 m), despite a -8% and -10% decrease in the consumer loans and auto financing markets, respectively.

• +3% and +8.7% increases in Maghrebail's net banking income and net income as of end of June 2009, respectively.

• Reinforcement of Maroc Factoring's contribution to Net Income Group Share by more than 21% to 6.3 mMAD (EUR 0.6 m).

ASSET MANAGEMENT AND OTHER INVESTMENT BANKING ACTIVITIES: SATISFACTORY COMMERCIAL PERFORMANCE IN A DIFFICULT STOCK MARKET

• BMCE Capital Markets' activity marked by a positive performance of the fixed income business line, the real start of structured products and the consolidation of offshore revenues.

• BMCE Capital Bourse's market share maintained at about 20.2% in a difficult stock market, marked by a decrease in trading volumes.

• A nearly +21% growth - versus +9% for the industry - in BMCE Capital Gestion's assets under management exceeding MAD 20 billion (EUR 1.8 bn), driven by the interest of investors in fixed income mutual funds; a 1.2%p gain in Market share to 12.1%.

• BMCE Capital Titres' assets under custody at MAD 143 billion (EUR 12.7 bn) and improvement of its market share on the mutual funds segment to about 23%.

A RISING COMMITMENT TO SUSTAINABLE DEVELOPMENT AND FINANCE

• Ongoing endeavors of BMCE Bank Foundation in terms of fighting against poverty in rural areas through the promotion of microcredit, sustained by partnership agreements with specialised Associations and renowned foreign partners.

• Introduction by BMCE Bank Foundation of the information technology in the Medersat.com schools with the implementation of the ''e-School'' programme in rural areas.

• Development within the Bank of a Social and Environmental Management System (SEMS), for apprehending and managing social and environmental risks for clients' projects, ensuring the promotion of sustainable investments.

ENDIR EAXNEDLDNEFE