S&P upgrades Banque Centrale Populaire’s outlook to stable
Standard & Poor (S&P)'s Ratings Services has revised its outlook on the BB long-term foreign currency counterparty credit rating on Banque Centrale Populaire (BCP) to stable from negative, following a similar revision of the outlook on the Kingdom of Morocco.
BCP is the central body of the Banques Populaires group, morocco's flagship banking entity, which is 77 percent-controlled by the government. At the same time, S&P's affirmed the BB long-term and B short-term foreign currency and local currency counterparty credit ratings on BCP. The outlooks on the long-term foreign currency and local currency ratings on BCP are now equalized at stable.
The outlook change on the sovereign reflects Morocco's declining deficits and economic growth, both of which have eased pressure on the general government's debt burden and are expected to continue during the next few years.
The outlook on BCP reflects both that on Morocco and the stability of the bank's financials, which are expected to remain unchallenged during the next few years. The bank has significant direct exposures to the sovereign, and its shareholding structure will remain directly and indirectly dominated by the government for the foreseeable future. A strong customer franchise and large retail deposit base should enable BCP group to maintain its leading commercial position.
"We expect the group to preserve a generally stable financial performance, as well as strong capitalization. The group remains challenged by the need to improve its automation, efficiency, and asset quality," said S&P's credit analyst Emmanuel Volland. "Standard & Poor's will closely monitor the impact of any changes in shareholding structure on the group's strategy and cohesion."
The ratings on the bank continue to reflect the Banques Populaires group's leading position in the Moroccan banking system, high liquidity, and strong capitalization. Although the government wishes to reduce its direct participation in BCP's capital, the bank will remain a public-sector entity in the foreseeable future as the regional banks and the state are by law obligated to own at least 51 percent of BCP's shares.
"The bank's public ownership, as well as its public missions and importance to the economy, should ensure state support if required. That said, the volatile nature of the Moroccan economy, which is subject to variable agricultural output, and the sluggish business environment in which the bank operates severely constrain the ratings," added Volland. — (menareport.com)
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