BMED.L Regulatory News (BMED)

BMCE BANK GROUP FINANCIAL COMMUNICATION

FIRST HALF 2014

30 June 2014

STRONG PERFORMANCE IN THE FIRST HALF OF 2014

BMCE Bank's Board of Directors, chaired by Mr Othman BENJELLOUN, met on Friday 26 September 2014 at the Bank's head office in Casablanca. It examined the business activity of the Bank and of the Group for the first half ended 30 June 2014 and drew up the financial statements for the period in question.

The first half 2014 financial statements under IAS/IFRS are published on the bank's website www.bmcebank.ma.

CONSOLIDATED FINANCIAL STATEMENTS

Net banking income

+15%

MAD 5.6 billion

EUR 499 million

Gross operating income

+31%

MAD 2.6 billion

EUR 234 million

Net income attributable to shareholders

+51%

MAD 902 million

EUR 80 million

Significant growth in earnings and profitability in line with corporate strategy

Conservative approach to risk management resulting in increased provisioning

Improved operational efficiency due to cost savings both in Morocco and overseas

African subsidiaries, especially BOA Group, continue to perform strongly

Increased contribution from European operations to Group earnings

PARENT FINANCIAL STATEMENTS

Net banking income

+20%

MAD 3 billion

MAD 265 million

Gross operating income

+30%

MAD 1.6 billion

MAD 140 million

Net income

+15%

MAD 805 million

MAD 72 million

FINANCIAL PERFORMANCE - GROWTH TREND INTACT

CONSOLIDATED FINANCIAL STATEMENTS: NET INCOME UP 51%

Strong growth in net income attributable to shareholders (+51%) to MAD 902 million -EUR 80 million-at end-June 2014 due to increases in consolidated net banking income and gross operating income of 15.5% and 31% respectively.

Positive contribution to Group earnings from all BMCE Bank business lines:

- Profits up across all domestic banking activities including (i) BMCE Bank SA, whose contribution increased 71% and (ii) specialised subsidiaries, whose contribution to earnings rose by 34% compared to first half 2013;

- Significant growth in the contribution (+37%) from the Group's international operations driven by sub-Saharan African operations which accounted for 28% of BMCE Bank Group earnings.

Strong growth (+15.5%) in consolidated net banking income to MAD 5.6 billion -EUR 499 million- in 2013, driven primarily by net interest income as well as the positive impact from lower rates on the mutual fund portfolio's value.

Significant increase in gross operating income (+31%) to MAD 2.6 billion --EUR 234 million-at end-June 2014 in line with corporate strategy.

21% increase in provisioning -net cost of risk- from MAD 875 million -EUR 78 million-to MAD 1,055 million -EUR 94 million-.

Growth in customer deposits of 4% year-on-year to MAD 152.7 billion --EUR 13.6 billion-and in customer loans of 6% to MAD 148.4 billion -EUR 13.2 billion-.

DOMESTIC BANKING OPERATIONS: GROWTH REMAINS FIRMLY ON TRACK

Parent net income rises by 14.6% to MAD 805 billion -EUR 72 million-at end-June 2014 versus MAD 703 million -EUR 63 million-at end-June 2013.

20% growth in net banking income to almost MAD 3 billion -EUR 265 million- due to a strong commercial performance and favourable conditions for market activities which saw revenues almost double.

Strong sales growth registered by both the Personal & Professional Banking as well as the Corporate Banking networks with an 8.6% increase in net banking income due to growth of 9% in net interest income and 8.3% in fee income.

Improvement in operational efficiency with a 6.5 percentage points contraction in the cost-to-income ratio to 48.6% due to a combination of net banking income growth and good cost control.

Rise in expenses at domestic banking operations limited to 6% despite a high level of investment with 13 new branches opened year-on-year and a number of major projects launched, aimed at improving commercial and operational efficiency.

30% increase in gross operating income to MAD 1,572 million -EUR 140 million- at end-June 2014 versus MAD 1,211 million -EUR 108 million- at end-June 2013.

Non-performing loan ratio rises to 5.51% in June 2014 versus 5.22% in December 2013 due to increased provisioning, although the ratio remains well below the industry average of 6.52%.

Strong ability to attract savings with resources registering 5% growth to almost MAD 112 billion -EUR 10 billion- versus only +3% at industry level. As a result, BMCE Bank saw its market share rise by 24 basis points compared to end-June 2013 to 14.08%.

Further contribution by the Bank to financing the Moroccan economy as illustrated by 7.2% growth in total loans to more than MAD 103 billion -EUR 9.2 billion-, resulting in a 43 basis points year-on-year gain in market share to 13.81% at end-June 2014.

FURTHER IMPROVEMENTS IN RISK MANAGEMENT

Proactive approach to cleaning up the credit portfolio and provisioning at Group level resulting in a cost of risk of more than MAD 1 billion. -EUR 94 million-

The Bank has maintained a safety buffer with general risk provisions of almost MAD 1 billion -EUR 87 million-.

Under the aegis of the Group Audit and Internal Control Committee, the Group has been implementing, since March 2013, the "Convergence" restructuring plan aimed at standardising risk management and control across all Group entities.

FORTHCOMING MEETING

30 September 2014 at 16:00

Meeting with analysts and the press to present first half 2014 results.

NET INCOME ATTRIBUTABLE TO SHAREHOLDERS

AT 30 JUNE 2014 BY GEOGRAPHICAL REGION

66% Morocco

28% Africa

6% Europe

STRONG PERFORMANCE BY ALL BUSINESS LINES

PERSONAL & PROFESSIONAL BANKING: CUSTOMERS AT THE HEART OF THE BANK'S STRATEGY

- BMCE Bank registers market share gains in consumer loans and housing loans of 174 basis points and 55 basis points to 20.23% and 14.16% respectively;

- Bank-insurance contracts rise by 13.8% with revenue growth of 20.8%;

- Branch network implements a voluntary contributions policy targeting private banking clients in the wake of the government's recent tax amnesty;

- Pack Free launched making it easier for customers to use the Bank's services when travelling abroad in either a professional or personal capacity;

- Young Students product offering extended with the launch of Students Abroad in partnership with CM-CIC in Europe and Caisse Desjardins in Canada, making it easier to transfer school fees and guaranteeing rental payments;

- Security enhanced for online payments with the introduction of a digital code to validate online transactions.

CORPORATE BANKING: STRONG COMMERCIAL PERFORMANCE

- BMCE Bank registers a market share gain of 10 basis points in corporate loans to 13.3% at end-June 2014 versus 13.2% at end-December 2012;

- Support for small businesses by signing agreements with FINEA and RESEAU ENTREPRENDRE MAROC;

- BMCE Business Express and BMCE Dev Industries, two new financing solutions for small businesses launched in partnership with the Central Guarantee Fund;

- Exceptional growth (+24.5%) of foreign trade flows to MAD 57.1 billion -EUR 5 billion-, at a much faster pace than at industry level (+4.8%);

- BMCE Bail Entreprise, a new credit solution, launched in partnership with Maghrebail, to fund a range of capital goods;

- Cash management solutions such as BMCE Direct Valeurs and BMCE Direct Report enhanced, resulting in market share gains (ranked third);

- Financing a number of the nation's large-scale projects in key industries such as renewable energy and tourism.

INVESTMENT BANKING: A LEADING INSTITUTION IN FINANCIAL MARKETS

- Improvement in the services provided by BMCE Capital Markets with the introduction of a second, enhanced version of its electronic trading platform, BMCE FX Direct, with two new modules for FX options and EURUSD cross;

- High level of resilience shown by BMCE Capital Bourse, with its market share unchanged at 13% at end-June 2014, despite a decline in equity prices and volumes in second quarter 2014;

- BMCE Capital Gestion obtains ISO 9001: 2008 certification from Bureau Veritas for its Quality Management System covering its entire processes;

- Solid performance by BMCE Capital Gestion Privé after implementing a strategy based on a proactive sales approach and offering a bespoke service for high net worth individuals;

- BMCE Capital Conseil advises Bank of Africa, the Group's African subsidiary, on a number of strategic M&A deals;

- BMCE Capital Titres' assets under custody grow by 7% over the first six months of the year to MAD 183 billion -EUR 16.3 billion-in 2013.

SPECIALISED FINANCIAL SERVICES: SOLID PERFORMANCE

MAGHREBAIL

- Sharp rise in net income (+50.6%) to MAD 38.5 million -EUR 3.43 million- and further gain in market share from 21% to 22%;

- Strong sales momentum with production up 10.8% to MAD 1.3 billion -EUR 115.9 million-versus a 4% decline at industry level due to increased synergies with BMCE Bank's branch network.

SALAFIN

- Strong growth (+11%) in net banking income driven by a 27% rise in fee business revenues and 23% growth in net income to almost MAD 54 million -EUR 4.8 million-;

- While production at industry level rose by 3% to end-June 2014, SALAFIN posted 8% growth in production to MAD 603 million -EUR 53.8 million- (auto financing +7% and personal loans +11%);

MAROC FACTORING

- 51% rise in net income from MAD 9.1 million -EUR 811 thousands-at end-June 2013 to MAD 13.7 million -EUR 1.22 million-at end-June 2014;

- Solid growth in production (+31%) to MAD 4.86 billion -EUR 433 million-due to increased intra-Group synergies.

RM EXPERTS

- Improvement in RM Experts' debt recovery business as illustrated by a 20% rise in debt recovered to MAD 153 million -EUR 13.6 million-at end-June versus MAD 128 million -EUR 11.4 million-at end-June 2013;

- ISO 9001 certification renewed in respect of its debt recovery business;

- Organisational structure enhanced with the creation of two separate branches, one specialising in corporate debt recovery and the other in small businesses.

 AFRICAN OPERATIONS: REMAINS A GROWTH DRIVER

BANK OF AFRICA

- Positive financial performance with (i) 14% growth in net banking income to €182.8 million and (ii) growth of 33.5% in net income attributable to shareholders to €30.6 million, contributing almost a quarter to BMCE Bank Group's earnings;

- Respectable sales performance with customer deposits rising by 8% to €3.7 billion and customer loans by 18.5% to €2.8 billion;

- Further expansion of Bank of Africa's branch network with 38 new branch openings in the various countries in which the Bank has operations, taking the total number of Bank of Africa branches to 425 at end-June 2014. The Bank of Africa network has almost doubled in size since being acquired by BMCE Bank in 2008;

LA CONGOLAISE DE BANQUE

- La Congolaise de Banque's contribution to Group earnings rose by 21% to MAD 11.2 billion at end-June 2014 versus MAD 9.3 billion at end-June 2013;

BANQUE DE DEVELOPPEMENT DU MALI

- Banque de Développement's contribution to Group earnings, accounted for under the equity method, rose by 3% to MAD 25.1 million at end-June 2014.

EUROPEAN PLATFORM: A GROWING CONTRIBUTION

BMCE BANK INTERNATIONAL HOLDING

- European operations consolidated within BMCE International Holding, bringing together the Group's two European banking subsidiaries based in London and Madrid, resulting in a contribution of 6% to net income attributable to shareholders.

BMCE BANK INTERNATIONAL

- Earnings in the black despite the lukewarm economic recovery with net banking income broadly unchanged on the previous year at €5.6 million at end-June 2014, driven by 15% growth in fee income and a 12% rise in net interest income.

BMCE BANK INTERNATIONAL LONDON

- Positive performance by BBI London for the third consecutive year with net income of €2.3 million and two-digit growth in net banking income.

A BANK SERVING SOCIAL INNOVATION

- Expansion of the Medersat.Com network with the opening of a new school in Bni Chiker in the Nador region with a new pupil intake scheduled for September 2014;

- The BMCE Bank Foundation's status confirmed as an "advanced laboratory of educational innovation for the education system" with Chinese taught in 5th and 6th grades in Medersat.com Bouskoura in partnership with the Confucius Institute based in Greater Casablanca's Hassan II University;

- Renewed certification for the Group's Environmental Management System (EMS) by Bureau Veritas in May 2014 after initial certification in May 2011, reflecting good control of direct and indirect environmental impacts;

- Synergies across business lines to develop "green" and socially responsible products and services in line with the Bank's CSR policy in areas such as energy efficiency and renewable energy;

- First bank in Morocco to publish its Sustainable Development and CSR report in accordance with the Global Reporting Initiative reporting framework comprising indicators measuring the Bank's economic, environmental and social impacts. 

 2014 HIGHLIGHTS

- Representative office opened in Canada in partnership with Mouvement Desjardins aimed at promoting Canadian investment in Morocco and providing support to Moroccans living in Canada and Moroccan students studying there;

- BMCE Euroservices' network expanded with new offices opened in Holland, Germany and in Antwerp, Belgium;

- Named "Best Banking Group in Africa" by The European, a British magazine;

- BMCE Bank named "Top Performer CSR Morocco" for the second consecutive year in recognition of its commitment to the community and local development in relation to the initiatives undertaken by the BMCE Bank Foundation;

- Named "Best Performer CSR Morocco" in recognition of its high quality human resources management, human capital development, training initiatives, career progression and promoting staff employability;

- BMCE Bank organises the first ever China Africa Investment Meetings in conjunction with the China Africa Joint Chamber of Commerce and Industry;

- BOA Capital gains CFC status and starts operations in partnership with BMCE Capital.

FINANCIAL COMMUNICATION

Tel: +212 522 49 80 03/04 - Fax: +212 522 26 49 65

E-mail: relationsinvestisseurs@bmcebank.co.ma

Website: www.bmcebank.ma 

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