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BmCe BanK grOUP BmCe BanK in mOrOCCO BMCE Bank
Chairman’s Message.................................................................................................................... 2 BMCE BANK GROUP BMCE Bank within FinanceCom ................................................................................... 4 Group’s Profile............................................................................................................................... 6 Bmce Bank Group Throghout the World...................................................... 7 Group’s Structure...................................................................................................................... 8 Board of Directors ................................................................................................................ 10 BMCE Bank’s Shareholding............................................................................................ 12 BMCE BANK IN Figures ............................................................................................................ 13 Performances of Bmce Bank Group in 2011 ............................................ 14 2011 Highlights................................................................................................................................ 18 A Bank in Transformation.............................................................................................. 19 BMCE BANK IN AFRICA..................................................................................................................20 BMCE Bank in Morocco The Retail Bank ........................................................................................................................... 22 The Corporate Bank ............................................................................................................. 26 The Investment Bank ........................................................................................................... 30 Resources at the service of development............................................. 34 BMCE Bank Specialized Financial Subsidiaries .................................. 38 Bank of Africa................................................................................................................................40 Other African Subsidiaries ........................................................................................... 64 BMCE BANK IN EUROPE AND ASIA...................................................................................... 66 BMCE BANK AND ITS ENVIRONMENT................................................................................ 71 The World Economy .............................................................................................................72 The Moroccan Economy ................................................................................................... 74 Sub-Saharan Africa ...............................................................................................................76 BMCE BANK AND ITS GOVERNANCE................................................................................. 77 Board of Directors’ Activities ................................................................................ 78 Senior Management Resumes ................................................................................... 80 Group’s Organizational Chart................................................................................ 84 Management Abroad ............................................................................................................ 86 Management of Subsidiaries in Morocco ................................................ 87 Corporate Governance ................................................................................................... 88 BMCE BANK AND ITS SHAREHOLDERS ......................................................................... 95 BMCE Bank Stock......................................................................................................................... 96 Investor Relations................................................................................................................ 100 BMCE Bank Rating .................................................................................................................... 101 2012 Financial Communication Agenda ...................................................... 102 RISK MANAGEMENT & FINANCE......................................................................................... 103 SOCIAL & ENVIRONMENTAL RESPONSIBILITY ........................................................117 BMCE Bank Foundation..................................................................................................... 120 Human Capital ............................................................................................................................. 118 Sustainable Development .......................................................................................... 122 Patronage ........................................................................................................................................ 125 FINANCIAL REPORT........................................................................................................................ 127 Management Report............................................................................................................ 128 Resolutions.................................................................................................................................... 134 Statutory Auditors Reports Accounting Principles .................................................................................................... 135 Notes Outlining the Rules, Accounting Principles and Valuation Methods used .............................................................................................. 136 Consolidated Accounts ................................................................................................ 145 General Report of the Statutory Auditors......................................... 153 SPECIAL REPORT OF THE STATUTORY AUDITORS............................................ 154 Accounting Principles..................................................................................................... 159 Aggregated Accounts ...................................................................................................... 162 INDIVIDUAL ACCOUNTS .......................................................................................................... 180 BMCE BANK’S NETWORK ABROAD.................................................................................. 184 BMCE BANK’S SUBSIDIARIES CONTACT........................................................................185 BMCE BANK’S HISTORY.............................................................................................................. 186 BMCE BANK GROUP Chairman’s Message BMCE Bank’s performance, for the FY 2011 and again, show the Banking Group’s solidness which is growing over the continent and continues undeniably to grow. It is evidenced by the strong growth of 11% in total assets crossing the 200 billion MAD threshold for the first time, 8% growth in consolidated Net Banking Income, and an increase of aggregated Net Banking Income which did exceed 4 billion MAD, as well as the 4% growth in Net Income Group Share at 850 million MAD. It was driven by over one-third, 36%, due to the Group’s African activities of which Bank of Africa Group represents an essential part. Similarly, the fiscal year 2011 was marked by substantial provisioning effort using prudential approach vis-a-vis sectoral developments in Morocco and BMCE Bank accounted Provision for General risks with approximately 250 million MAD especially for this purpose. Without this provision, the net aggregated income, which increased by 4.4% to 545 million MAD, would have increased by 35%. The year 2011 was internationally marked by BMCE Bank increasing its capital in BOA Group up to almost 60%, reinforced control of subsidiaries and expanding our presence and business in sub-Saharan Africa. At the same time, the optimization of our presence in Europe continued to take the Group’s growth at continental level and strengthen euro-african trade and investment. Our Banking Group is also committed to Morocco under a proactive development program so as to improve commercial and operational efficiency, simplify its operational mode, optimize expenses and strengthen risk management. Regionalization remains the most emblematic factor across an organization spread over eight regions aiming to bring the decision-making centres close to the customer and thus bring about a real cultural change through empowerment of human resources in the region. Our Group, and BMCE Bank within it, continues to mobilize human, financial, and strategic means despite an increasingly uncertain global economic context, in order to play a preeminent role in the banking sector in Morocco and Africa. ANNUAL REPORT 2011 Othman Benjelloun Chairman & CEO 3 BMCE BANK GROUP BMCE Bank within FinanceCom A regional leader Group resolutely turned to international activities, FinanceCom acts in a variety of high growth potential sectors joining together Banking, Insurance, Technology, Media, Telecoms and Services. Core Business BMCE Bank : Universal Bank, 2nd largest private bank in Morocco with loan and deposit market shares of 12.83% and 14.56%, respectively. RMA Watanya : Among Morocco’s leaders in insurance with nearly 20.1% market share. RMA Capital : asset mamagement unit of RMA WATANYA. Growth Relays Méditel : 2nd global telecommunications operator in the Kingdom with more than 10 million subscribers. Atcom : Africa Teldis & Communications, a key player in the media and communications sectors in Morocco and Africa (Mosaik...). Agribusiness : Ranch Adarouch, Africa’s largest ranch and Bio Beef the leading unit of slaughtering, cutting and processing of red meat in Morocco. Private Equity Argan Capital : Management of investment funds of FinanceCom Group. Finatech : Moroccan IT Group with 8 companies focusing on Infrastructures and networks, Payment Systems and Security, Offshoring and IT Services as well as Innovation Technologies. Other Investments : CTM, Air Arabia Maroc, RISMA, Brico Invest and Jaguar Maroc. Property Management CAP ESTATE : Group Real Estate subsidiary with registered capital of 500 million MAD. REVLY’S : Tourism financing company equally owned by FinanceCom Group and AMAN RESORT. AOS Maroc : A firm Specialized in project management. International FinanceCom International : Support and strategic coordination entity of the principal Business Units for international development in Africa, the Middle East and Europe. INTERN ATIONA L financeco Internatio m nal financecom capital GROWTH RELAYS meditelec om ATCOM Core business bmce bank bmce capital maghrebail sci financecom olkad fcom-l agroalimentaire bio beef ranch adarouch salafin bmce bank international rma watanya rma capital PRIVATE EQUITY argan CAPITAL CAP ESTATE FINATECH aos maroc other investments revly’s bank of africa ctm maroc factoring air arabia locasom PROPERTY MANAGEMENT risma jaguar maroc brico invest ANNUAL REPORT 2011 blackpeark finance 5 BMCE BANK GROUP Group’s Profil rd 3 bank in terms of total assets, with respective market shares of about 13% and 15% in loans and deposits rd 3 in electronic banking, with a market share of 14.4% nd 2 in bancassurance with a market share of nearly 30% rd 3 in asset management, with a market share of 13.9% rd 3 in mortgage loans, with a market share of about 14% Key player in foreign trade and corporate banking Reference player in capital market, investment and advisory Bmce Bank Group Throghout the World EUROPE ASIA AFRICA EUROPE ASIA Morocco Benin Burkina Faso Burundi Cameroon Congo Brazzaville Cote d’Ivoire Djibouti Ghana Kenya Mali Madagascar Niger Uganda Democratic Republic of Congo Senegal Tanzania Tunisia Germany Spain France Italy Portugal United Kingdom United Arab Emirates China ANNUAL REPORT 2011 AFRICA 7 BMCE BANK GROUP Group’s Structure At the forefront of Moroccan Banks, BMCE Bank Group stands as a reference player in Morocco and abroad, with a large domestic network of 620 branches, including 21 business centers and one corporate branch and more than 10 500 employees worldwide, and enjoys optimised synergies with its subsidiaries and developed expertise in investment banking activities. International Activities Investment banking BANK OF AFRICA 59.48% BMCE CAPITAL NBI Second largest bank in the MAD 2 840 m WAEMU region, Bank of Africa Group founded in 1982 in Mali, is Total Asset currently present in 15 countries via MAD 42 860 m a network of pan African commercial banks and financial companies. Staff 100% 4 204 LA CONGOLAISE DE BANQUE 25% NBI La Congolaise De Banque MAD 291 m (LCB) created in 2004 further to the privatisation of Credit pour Total Asset l’Agriculture, l’Industrie et le ComMAD 4 437m merce (CAIC) employs nearly 250 staff members spread out over a network of Staff 16 branches. 247 BMCE CAPITAL BOURSE 100% BANQUE DE DEVELOPPEMENT DU MALI 27.4% NBI The Banque de DevelopeMAD 405 m ment du Mali (BDM) is among the leading banks in Mali with Total Asset a network of 33 branches. BMCE MAD 7 101 m Bank currently holds 27.38% of BDM’s capital. Staff 100% BMCE BANK international plc 100% activities of BMCE Bank abroad for Corporate Banking, Investment Banking and capital Markets. Total Asset MAD 3 987 m Staff 33 BMCE INTERNATIONAL MADRID 100% NBI Based in Madrid, BMCE InternaMAD 113 m cional is a bank operating under Spanish law and created in 1993 by Total Asset BMCE Bank and national partners. Today held at 100% by BMCE Bank Group. MAD 1 807 m Staff 49 NBI BMCE Capital Bourse, the stock MAD 23 m brokerage firm of BMCE Bank Group, was set up in 1994. A dynaTotal Asset mic player on the Moroccan equity MAD 175 m market with a 25% market share, it ranks 2nd among the existing stock bro- Staff kerage firms. 19 BMCE CAPITAL GESTION 414 NBI Based in London, BMCE Bank MAD 224 m International Plc federates all NBI The Group’s investment bank, MAD 199 m BMCE Capital coordinates, develops synergies and optimizes Total Asset costs with its 6 business lines: MAD 293 m Capital markets, advisory, asset management,stock brokerage, cusStaff tody , and wealth management. 199 NBI Created in 1995, BMCE Capital MAD 78 m Gestion is a 100% subsidiary of BMCEBank.Itmanagesapproximately Total Asset MAD 30 billion in assets corresponding MAD 85 m to a market share of 14%. This Asset Management firm in 2007 obtained the rating Staff M2 granted by Fitch Ratings 29 CASABLANCA FINANCE MARKETS 24.6% NBI Tied to Casablanca Finance MAD 6 m Group, and independent investment bank, Casablanca Finance Total Asset Markets acts on the negotiable debt MAD 283 m securities market. Capitalizing on its historical mission to promote foreign trade, BMCE Bank Group reinforced its openness, endorsing strong and shared values of proximity transfer of know-how, transparence and citizenship ; as shown in its resolute commitment in social and environmental responsability. Specialised Financial Services Autres activites EURAFRIC INFORMATION MAGHREBAIL 51% NBI in 1972, MAGHRE MAD 230 m one of the leading Created BAIL is leasing companies in Morocco, with a market share of 18.4%. Total Asset MAD 8 178 m 41% Staff 80 Staff 206 SALAFIN 74.5% LOCASOM NBI Subsidiary of BMCE Bank Group MAD 274 m , SALAFIN is a finance company offering a complete range of consuTotal Asset mer credit services through three maMAD 3 271 m jor product categories : personal loan, car loan, and revolving loan. Staff 97.3% MAROC FACTORING 100% Factoring, a fully owned subsidiary, is a pioneer in factoring activities in Morocco. Total Asset MAD 1 443 m Staff 38 Created in 1980, Locasom is a leader in long term car rental services in Morocco. Turnover MAD 241 m Total Asset MAD 390 m Staff 60 210 NBI Created in 1988 upon the MAD 33 m initiative of BMCE Bank, Maroc Turnover IT Platform created as a MAD 228 m jointed venture with RMA Watanya and Crédit MutuelTotal Asset CIC Group in order to establish MAD 225 m a state of the art banking and insurance IT system. Conseil Ingenierie et Developpement 38.9% Turnover Multidisciplinary engineering MAD 294 m company involved in civil engineering projects, building, transTotal Asset portation and hydraulics. MAD 481 m EULER HERMES ACMAR 20% NBI Leader of the credit insurance MAD 35 m companies, EULER HERMES ACMAR is a subsidiary of the Total Asset EULER HERMES Group which holds MAD 445 m 55% of its capital. Staff 129 100% Created in 2011, RM Experts is the Group’s subsidiary specialized in debt collection. NBI MAD 21 m Total Asset MAD 28 m Staff 26 ANNUAL REPORT 2011 RM EXPERTS 9 BMCE BANK GROUP Board of Directors Othm an BEN JELLO UN Miche l LUCAS Mario MO SQUEIRA AMARAL DO Anass ALAMI David SURATGAR Zouheir BENSAÏD Othman BENJELLOUN Chairman & Chief Executive Officer Group Credit Mutuel - CIC Represented by Michel LUCAS BANCO ESPIRITO SANTO Represented by Mario MOSQUEIRA DO AMARAL CAISSE DE DEPOT ET DE GESTION Represented by Anass ALAMI David SURATGAR FINANCECOM Represented by Zouheir BENSAÏD Azeddine GUESSOUS Mamoun BELGHITI Adil DOUIRI Brahim BENJELLOUN-TOUIMI ABID Amine BOU Mohamed BENNANI RMA WATANYA Represented by Azeddine GUESSOUS Adil DOUIRI Amine BOUABID Mamoun BELGHITI Director & Delegate General Manager Brahim BENJELLOUN - TOUIMI Director & Delegate General Manager RAPPORT ANNUEL 2011 Mohamed BENNANI 11 BMCE BANK GROUP BMCE Bank Shareholding As of April 30, 2012 Free Float 15.98% RMA Watanya 28.08% BMCE Employees 1.62% FinanceCom Group 37.8% Banco Espirito Santo 2.56% CIMR 4.31% FinanceCom 9.23% MAMDA/MCMA 5.09% SFCM 0.53% CDG Group 8.68% BFCM - CM-CIC Group 24.64% Renowned shareholders in the capital of BMCE Bank : FinanceCom Group : multi-business Moroccan Group BFCM-Holding of CIC Group : one of the leading banking groups in France CDG Group : first institutional inverstor of the kingdom, and a major player of the moroccan economy Banco Espirito Santo Group : 3rd Bank in Portugal CIMR : first private sector pension fund in Morocco MAMDA / MCMA : leading player in insurance sector Bmce Bank Group in Figures ANNUAL REPORT 2011 Deposits : 139 billion MAD Stockholders’ Equity : 16.4 billion MAD MAD Total Assets : 208 billion 1 billion MAD Net Banking Income : 8. n MAD Loans : 121 billio ountries Presence : 26 C mployees e 0 0 5 0 1 n tha ranches b 0 Staff : more 0 0 1 more than : k r o w t e N 13 BMCE BANK GROUP Performances of Bmce Bank Group in 2011 2011 : Increasing Activity Indicators Consolidated Activity Growth in the main financial aggregates Net ting pera o ss me inco Gro me inco 850 3 016 819 +4% 2010 king ban Net me inco 7 552 2 898 2011 2010 +4% 2011 s sset +18% lA a% t8 +1 To 88 187 1 % +11.1 NET INCOME GROUP SHARE Gross operating income +4% growth in Net Income Group Share to MAD 850 m thanks to : • +19% increase in the share of the Sub-saharan African subsidiaries in the Group’s earnings to 36% ; • +28% increase in the share of Specialized Financial Services in the Group’s earnings to 18% ; • The significant improvement in the deficit of the European activities; • … but constrained by the underperformance of the stock brokerage activities in a sluggish market with the nonrenewal of exceptional operations. +4% growth in Gross operating income to MAD 3 billion, in a context of managing a transformation program as well in Morocco as on the international arena 88 207 9 2010 2011 +18% +8% 2010 8 140 2011 up area Gro hic me o c grap n o I e Net+18% by G Share enne aroc ahari 65% m ique Subs fr A % 6 3 urope -1% E +18% Net banking income Total Assets Net Income Group Share by Geographic area +8% growth in Net Banking Income to more than MAD 8 billion - especially driven by the Sub-saharan African subsidiaries , accounting for 41% of the Group’s revenues in 2011 versus 35% in 2010, in line with the African development strategy of BMCE Bank. Consolidated total assets exceeding for the first time the MAD 200 billion cap, up +11% from MAD 187 billion to MAD 208 billion. Enhancement in Africa’s contribution from 32% in 2010 to 36% in 2011 Improvement of business deficit in Europe thus taking their contribution to -1% against -32% in 2010. EURO In million 2010 2011 2010 USDMAD Var 10-11 MAD ASSETS Cash and amounts due from central banks and post office banks 575 746 6 392 -20% 8 033 Financial assets at fair value through profit or loss 2 856 3 705 31 732 14% 27 751 Available for sale financial assets 210 272 2 330 26% 1 847 Loans and receivables due from credit institutions 2 144 2 781 23 823 4% 22 971 Loans and receivables due from customers 10 922 14 167 121 343 13% 107 368 Held to maturity financial assets 863 1 120 9 591 15% 8 321 Investment property 49 64 547 5% 521 Tangible fixed assets 456 591 5 064 6% 4 795 Intangible fixed assets 58 75 645 -1% 651 Goodwill 75 97 83257% 531 Other assets 512 665 5 689 29% 4 399 TOTAL ACTIF 18 722 24 283 207 988 11% 187 188 Liabilities & Shareholder’s equity Net interest income Net fee income Income from market transactions Net Miscellaneous Net banking income General operating expenses Provision for amortization and depreciation Gross operating income Cost of risk Operating income Pretax income Income tax Net earnings Minority interest Net earnings - Group share Exchange rate as of december 31st, 2011 : Euro/MAD 11.1095 - USD/MAD 8.5650 473 128 94 37 733 413 49 271 78 193 196 60 136 59 77 613 166 122 49 950 536 62 352 102 250 255 79 176 77 99 5 254 1 423 1 047 416 8 140 4 589 535 3 016 872 2 144 2 182 674 1 508 658 850 8% 5% -6% 81% 8% 10% 11% 4% 6% 3% 7% 10% 6% 9% 4% 4 857 1 353 1 117 225 7 552 4 170 484 2 898 819 2 079 2 037 612 1 425 606 819 ANNUAL REPORT 2011 Due to credit institutions 2 237 2 901 24 849 83% 13 603 Due to customers 12 525 16 247 139 152 5% 132 019 Debt securities 1 081 1 402 12 009 5% 11 444 Provisions for contingencies and charges 41 53 457 31% 350 Subordinated debts and special guarantee funds 441 573 4 904 6% 4 634 Shareholders equity 1 475 1 913 16 385 4% 15 819 Group share 1 119 1 451 12 429 0% 12 390 Minority Interest 356 462 3 956 15% 3 429 Other liabilities 922 1 194 10 232 10% 9 319 Total liabilities & shareholders’ equity 18 722 24 283 207 988 11% 187 188 Income Statement 15 BMCE BANK GROUP Aggregated Activity* Improvement of Result Indicators Net ting Opera ss Gro me Inco me inco 1 301 545 522 +4.4% 2010 king ban Net me inco 3 951 4 064 1 153 2011 +18% % +12.8 2010 2011 +18% +2.8% 2010 2011 +18% Net income Gross Operating Income +4.4% growth in aggregated net earnings of BMCE Bank to about MAD 545 m - held back by a +30% increase in allowances for provisions net of write backs of MAD 462 m –for some businesssectors. Excluding an allowance for general risks of MAD 160 m –net earnings would grow by +35%. +13% increase in Gross Operating Income to MAD 1.3 bn in a context of: • A nearly 3% growth in the aggregated net banking income, driven by a nearly 5% rise in net interest income, but hampered by the underperformance of market activities down -13% ; • +8% increase in general operating expenses due to payroll up +12.5% arising from non recurring items. Cost control measures have already borne fruit as other operating expenses decreased by nearly -1%. • Strong decrease in allowances on equity portfolio (divided by about 3). * Activity including BMCE Bank’s individual accounts - Morocco, BMCE Paris and Tangier Offshore EURO In million 2010 2011 2010 USDMAD Change 10-11 MAD Assets Cash and amounts due from Central Banks 154 200 1 712 -56% 3 852 Loans and receivables due from credit institutions 1 520 1 971 16 881 7% 15 796 Loans and receivables due from customers 7 790 10 105 86 548 13% 76 839 Transaction and marketable securities 2 830 3 671 31 443 12% 28 153 Investment securities 136 176 1 509 7% 1 405 Equity investment 444 575 4 928 18% 4 165 43 56 479 60% 299 188 244 2 090 3% 2 031 251 325 2 783 39% 1 996 Intangible assets Tangible assets Other assets TOTAL Assets Liabilities 13 374 17 347 148 573 10% 134 536 Due to credit institutions 1 676 2 174 18 618 124% 8 315 Due to customers 9 072 11 767 100 781 3% 98 046 663 860 7 367 3% 7 136 19 25 216 - 25 Regulatory provision 397 516 4 416 0% 4 423 Subordinated debts 155 201 10 996 0,3% 10 961 556 722 6 180 10% 5 630 Debt securities Provisions for contingencies and charges Other liabilities Total liabilities COMPTE DE RESULTAT Net interest income 13 374 17 347 148 573 10% 134 536 222 288 2 463 5% 2 355 Net fee income 55 72 615 -1% 624 Income from market transactions 77 100 860 -13% 987 Net miscellaneous 11 15 125 - -14 Net banking income 366 474 4 064 3% 3 951 Net income from equity investments -12 -16 -135 - -376 Net non-banking revenues 1 1 9 - 20 General operating expenses 237 308 2 636 8% 2 442 Gross operating income 117 152 1 301 13% 1 153 Net allowances to provisions 42 54 463 30% 356 Income tax 26 34 294 6% 276 Net Earnings 49 64 545 4% 522 Exchange rate as of december 31st, 2011 : Euro/MAD 11.1095 - USD/MAD 8.5650 ANNUAL REPORT 2011 and post office banks 17 BMCE BANK GROUP 2011 Highlights Increase in Bank of Africa Group’s capital to reach up to 59.48% since March 2012 (*) Increase of the equity stake in Maghrebail to 51% and in Locasom to 89.5% BMCE Bank named «Best Bank in Morocco» in 2011 for the 2nd time by British magazine EMEAFINANCE First Bank in Morocco and in the MENA region to get the ISO 14001 certification for environment BMCE Bank awarded «Top CSR Performers in Morocco» by Vigeo for its environmental strategy and societal commitment in January 2012 (*) Mr. Mohammed AGOUMI’s appointment as new Delegate General Manager in charge of International operations (*) (*) Subsequent events to the end of the fiscal year A Bank in Transformation During the year 2011 BMCE Bank has initiated a transformation program aiming at the improvement of commercial efficiency, the simplification of operational model and the monitoring of risks. This program consists of several structuring projects in Morocco including : The Bank now has 8 territorial divisions covering all the regions of the Kingdom. The organization of BMCE Bank evolved to move closer to the centre of the customer’s decision and improve the Bank’s commercial efficiency. As such, new commercial practices will be implemented facilitating the intensification of synergies between the Bank’s networks of Private individuals, Professionals and Corporate Bank. Besides, the regionalization joins the Bank in its objective to renew the management culture through a model based on higher empowerment at every level. As such, regional Credit committees were created that are endowed with delegation widened by powers. Automation of Processes BMCE Bank implemented the Cap process project aiming at the automation as well as the centralization of Back office functions, and optimization of the value chain that should eventually allows i) freeing up business time in branches, ii) reducing process cost, and iii) better security of transactions particularly related to reducing manual business processing. Restructuring of Permanent Control In 2011, an independent entity was set up that was associated with the Executive committee, in charge of 2nd level controls called «Permanent Control and Conformity». This restructuring of Permanent Control aims at greater efficiency of controls allowing better monitoring of risks, thanks to i) a virtuous organization clearly separating the control levels (1st and 2nd levels), ii) strengthening the positioning of Permanent Control turned to higher value-added activities, iii) implementing a control plan adapted to the Bank’s risk profile and iv) bigger synergy with other players of Internal Control (Audit, Inspection and Risk Management). Return on a Very Promising Experience The transformation program already bore its first fruits in 2011 displayed by i) integrating the regional dimension in the Bank’s business practice with successful start up of territorial divisions, ii) the staff’s association to the transformation program and the mobilization of all stakeholders, as well as iii) the centralization of certain back-offices within Business Service Centers allowing to generate savings in Human resources (about fifty at this stage). So many resources will be redeployed towards the Bank’s Network to strengthen its sales force. Besides, the transformation program’s earliest positive signals have also emerged by a nearly -1% decrease in operating expenses -excluding staff expenses- for the first time given an average annual growth rate of +9% over the last 5 years. ANNUAL REPORT 2011 Regionalization 19 BMCE BANK GROUP BMCE BANK IN AFRICA BMCE BANK GROUP BMCE Bank in Morocco Retail Banking Continued business momentum Enhancing the range of products and services Mortgage loans Growth in Assets Mortgage loans grew by 8.6% to 17.6 billion MAD by December 2011 end. The general structure of mortgage loans remains largely unchanged, with Immo Plus Standard which still holds the top share accounting for 68% of mortgage de loans. With a double-digit growth in 2011, the Salaf products in the social housing range, Salaf Imtilak and Salaf Al Baraka are respectively on 2nd and 3rd ranks with 12% and 11% of total mortgage loans. Moreover, new products are being finalized including (i) BMCE VEFA, incremental financing based on the progress of property construction, (ii) BMCE Immo Prestigia, enabling retail customers to finance the purchase of a property for each range sold by the promoter Prestigia on plan basis and, (iii) BMCE Immo Plus tailored to optimize the cost of loan to maximum and capitalize on the retirement savings plans already started. Hence, several new products will be launched and made available to the Bank’s customers in order to facilitate the purchase of new houses. Consumer Loans Sustained Growth Packages Favourable Developments In terms of market share, BMCE Bank has maintained its position by occupying the 3rd place with 18.3%. The BMCE Decouvert and Credit Pro products have been improved to match the offer with the customers’ need better hence consolidating the offer’s positioning and attractiveness further in the market. Packages for retail customers show an increase of 46.4% to more than 40,000 packs by 2011 end with a success rate of 47.2%. Similarly, the Hissabi pack continued its upward trend with a double-digit 36.5% growth to 91,287 packs. The year 2011 has performed well in terms of marketing corporate packages recording remarkable growth. Other products are scheduled for launch in 2012, and will offer financing solutions for education and automobile purchase. Electronic Banking and New Technologies In 2011, the range of packages has been enhanced by integrating new cards and the new BMCE Direct web portal, which has many advantages such as real time and reliable data flow as well as secure and remote transfers. In the Forefront As regards international business, BMCE Bank is ranked number 1 in terms of transactions made by Moroccan card holders living abroad taking the Bank’s market share to 26.1%. The Internet marketing of cards internationally has promoted the growth of this business which now represents more than twice the withdrawals flow. In terms of market share, BMCE Bank is positioned at 3rd rank in issuing electronic card and 4th place in issuing cards. FY2011 was also the year of innovation with (i) Moroccan promo launch of the new generation of electronic cards out of the country, BMCE e-pay card as well as the rewards program BMCE Fabuleos which is designed to get new customers, especially the youth, (ii) forming a five-year partnership with Visa International to develop electronic banking business, whose primary challenge is to reward the level of performance achieved by the Bank over a period of 5 years, (iii) launching new electronic banking offer within the framework of rationalization and migration project towards smart cards in addition to (iv) centralizing ATM management to allow their centralized and dynamic management for marketing and communication campaigns. Savings and Investment Business The range of BMCE mutual funds has been created thanks to the close collaboration between BMCE Capital Management & BMCE Bank and has been materialized by a marketing agreement. It aims to strengthen the Group’s position among customers by offering a diversified range of investment products. The range of BMCE mutual funds has been scheduled to be marketed initially within a circle of thirty offices of BMCE Bank Network. ANNUAL REPORT 2011 Bank cards stood at 1.16 million cards with an increasing trend of electronic banking at national level in terms of issuing cards, payment, e-commerce and withdrawals. 23 BMCE BANK GROUP Bank Insurance Business Revival The number of bank insurance contracts has registered 4.5% increase to more than 641,700 contracts as on December 31, 2011. Within a context marked by the slowdown of this business, the revival of bank insurance business has been a major development in the retail market in 2011. Consequently, several actions have been performed mainly including the redesign of two products namely, BMCE Crescendo and BMCE Epargne Plus integrated into a single product BMCE Crescendo Plus. The latter has been supported by the introduction of minimum annual guaranteed rate as well as payment method and exit options related improvements. As part of improving the authority lines of packages, BMCE PROTECTION products planned to cover overdrafts have been expanded with several intermediate options. Similarly, several actions have been initiated that will be materialized in 2012, such as (i) setting up specialized property insurance outlets RMA Watanya backed by BMCE Bank branches, (ii) redesigning the Sécuriloge product within the framework of developing property insurance products, and (iii) automating the new Bank insurance commissioning system. Finally, BMCE Bank - personal insurance only - market share has grown significantly in recent years. It has reached 31.8% allowing the Bank to reach 2nd place. commercial activities targeted at promising markets Private Individual Market Heading for the Youth and Workers Given the large number of Moroccan students abroad (especially in France), an offer was developed in combination with CM-CIC. It includes a BMCE Bank offer (to the Students abroad) and a CM-CIC offer (to the Moroccan students in Europe) and provides them a banking package, accommodation security and many other benefits. The Hissabi Packages immediate credit renewal and promotion campaign for private individual lies at the heart of employees and officials market energization. This campaign for employees comes under direct marketing channel via mailing or phoning. Furthermore, a proactive approach was undertaken to get and / or win back customers in 2011. In addition to analyzing frozen accounts, it requires reactivating inactive accounts, identifying customers with only one account and preparing to deploy the CRM module related to scoring, targeting and control tools, campaign management and monitoring, business agenda and client meeting management. Professionals Market Revival of Network Activity The professionnals market got network support in marketing the products related to this segment by improving the product range, organizing communication campaigns as well as boosting agreements and partnerships. The package offer for professionals was accordingly updated so as to allow product improvement and revision in ceiling calculation methodology in addition to process improvement. Similarly, promotional activities have been conducted such as the campaign centred on BMCE Package for professionals with a key communication campaign, and the special event Leasing. Similarly, FY2011 was an opportunity to develop an action plan for revitalizing the Moukawalati program to continue the support for young entrepreneurs in selecting promising projects in their areas in addition to finalizing the on-going partnership with bar associations. A partnership is being finalized similarly with RMA Watanya to finance the RMA Watanya Agents and overall management of their accounts. Migrants Market Continued Momentum The unrelenting effort to reinforce Moroccans Living Abroad (MLA) customer portfolio has registered a positive +6.3% growth in FY2011. In addition, MLA deposits added up to MAD 13.2 billion up 1.9% compared to December 2010 end. BMCE Bank has therefore maintained its 3rd position with a nearly 10% market share. The bank transfer business has shown a favourable trend in Spain, Italy and UAE in particular. The transfers via Dirham Express platform also continued their upward trend registering 20.7% growth. Mortgage Loans Uptrend Property loans were up 13.1% at December 2011 end at more than MAD 3 billion. The largest growth in mortgage loans per country was made in case of Great Britain with 28%, followed by Germany with 19% growth. A sales strategy Favouring Proximity The focus was also given on intensifying different sales and marketing activities in 2011. In fact, several sales activities such as participation in Moroccan Real Estate fairs (Paris and Barcelona) were introduced in this year, which had a positive quantitative impact both in terms of images and highlights (including Dawli Pack). These performances are the result of (i) the summer 2011 campaign supported by a key communications campaign, a network incentive policy, growing training activities and a mobile branch set up along several regions for the first time, (ii) improvement in the range of products and services, and (iii) other actions including the search for new partnerships as well as conducting several studies to support the development of MLA business. ANNUAL REPORT 2011 Finally, the year 2011 saw increased presence of BMCE Bank and its visibility both in terms of retail and professionals market through systematic management of (i) - special events for retail customers, New account/loan applications, Savings & Insurance, BMCE Crescendo, Secours Plus and Secours Monde - (ii) communication campaign - BMCE e-pay, BMCE Crescendo Plus, BMCE Direct. 25 BMCE BANK GROUP BMCE Bank in Morocco Corporate Banking With a view to develop Corporate customers portfolio further, several measures were taken during 2011 in order to intensify efforts for prospection, promotion, improving products and achieving synergies with the Group’s subsidiaries. For the Corporate Bank, the strengthening of its business approach has led to commendable performance in terms of financing the economy, foreign trade and collection of deposits. Large Corporations Business Performance Reflecting a Dynamic Business The year 2011 was marked by a 16.2% growth in Corporates market deposits at MAD 15.1 billion. This performance level was mainly because of 6% growth in deposits recorded in December 2011 end. Similarly, disbursement commitments increased 9.6% to MAD 35.7 billion. This growth is attributable to the sales momentum in the segment of multinational companies, finance companies, private owned groups, public sector and investment funds. In addition, the synergies with Group’s subsidiaries such as Maghrebail and Morocco Factoring have intensified. The year 2011 was marked by a renewed dynamism in terms of searching and reactivating accounts. Consolidation of Dimension Business Advisory Strengthening its business base, BMCE Bank has continued to improve the project funding business through the support of various sector-wise plans launched nationally, including the Wind, Solar, Emergency, Fishing and Azur Extension projects. As a partner of the National Pact for Industrial Emergence 2009-2015, BMCE Bank participated in the INMAA program for training SME industrial managers on lean management techniques and integration of Best Practices, hence contributing to creation of added value and increase in productivity. Strengthening Intra-Group Synergies This support was demonstrated by organizing two training sessions around INMAA program in favour of the Bank’s clients. With a view to improve the Bank’s market share in land leasing, a training session as well as a property leasing challenge was organized on property leasing in collaboration with Maghrebail. On another level, the collaboration with Morocco Factoring has resulted in a new commissioning system being established for corporate account managers. A challenge was launched as well to increase production by factoring. SME Market The year 2011 was marked by sustained support to SMEs affirming a new positioning through active involvement in INMAA project and implementation of a more proactive strategy. Enhanced presence of BMCE Bank In SME Market A development strategy was implemented with a view to improve BMCE Bank’s positioning in SME market. It was accompanied by new product launches and reinforced promotional, monitoring and management activities. The initial results of this strategy, which are by the way encouraging, support the strategic choice made by the Bank to position itself in SME segment and essentially show 26% increase in account openings as well as 24% increase in loan yield rate to new customers. Specialization Establishment of a Dedicated Structure In accordance with SME Strategy guidelines, the year 2011 saw the launch of SME Prospection & Development activity to structure the Prospection process, popularize the SME customers’ approach of conquest, organize and restructure the business effort as well as monitor and drive achievement in expanding SME portfolio. A challenge was also organized from September to December 2011, aiming at winning and preparing new SME relationships. Business Centres Network Extension Two new business centres have come up in Temara and Tetouan in order to exploit the growth potential in various economic regions of the Kingdom that are not fully invested yet. Foreign Financial Institutions Banking Correspondent Developing Relations Despite the economic downturn and financial crisis, BMCE Bank has maintained the credit lines granted by foreign correspondents at a significant level. As regards financing Comex operations, the new credit lines have been negotiated with major banks with which BMCE Bank maintains close relations. ANNUAL REPORT 2011 Support Flagship Projects 27 BMCE BANK GROUP Foreign trade Growth in Financing Driven mainly by imports of wheat, gas, petroleum products and various consumer goods, external refinancing business was significantly valued during the year 2011. In addition to short-term financing, BMCE Bank has continued to manage medium and long term credit on behalf of the State and certain state agencies. BMCE Bank Offshore Performance Improvement The business indicators of Bank Offshore branch have generally valued in 2011 with respect to the year 2010. The overall net income grew by 11.9% to MAD 37.6 million. Investment Support To Government Policy BMCE Bank has continued its efforts towards financing the investment within the country in a context marked by the state’s will to encourage investment. In fact, the government has initiated economic and social reforms in view to promote investment as well as employment that have certainly benefited major projects of the country. In this context, the investment activity has made significant funding during 2011 supported by the efforts to strengthen business approach and develop synergies with the government agencies and Bank’s partners in the field of investment funding. Expanding the range of Products In 2011, BMCE Bank developed the range of products and services for businesses with the launch of BMCE Moussanada Pack (with fixed fee and business commission), and new remote banking solution BMCE Direct. This service is a highly secure business solution, which is accessible from the Bank’s web portal. It allows monitoring and managing the company accounts as well as provides real-time remote view of the company accounts’ situation, secure access to new transactional services and a set of highly value added management tools. Similarly, BMCE Bank offers the E-Trade option for importers / exporters to allow opening import documentary credits and remotely initiate international transfers. The range of services will be expanded upon. BMCE Bank has also introduced a new range of business cards dedicated solely to Corporates. Moreover, BMCE Bank is the first Moroccan bank to launch a new corporate business and meetings platform TRADE Morocco. The portal is free-content and is hosted outside BMCE Bank universe. The aim is to give it a national reach and make it the benchmark business platform for Moroccan companies. The registration to this portal is reserved for Moroccan traders from all sectors. Increased visibility among SME and Investors Reinforced closeness Among SME BMCE Bank has organized and participated in several events aimed at improving the Bank’s presence in corporate segment including the first conference in favour of SME customers organized in partnership with the Ministry for Industries, Trade & New Technologies and ANPME. BMCE Bank also launched the 3rd and 4th edition of IMTIAZ program in order to benefit SMEs from this program’s many benefits and 2nd regional SME tour under the theme «Regional Campaign for better SME support for regional development and investment». With a view to increase awareness of BMCE Bank among corporates, the Bank has strengthened its presence at events and tradeshows. Among the highlights where the Bank was represented, appears (i) SIAM that allowed promoting BMCE Agrivert and Trade Morocco, and (ii) Interbat fair, the International Construction Trades Exhibition, held with ENR Morocco, Renewable Energy Exhibition and Bativert. Export Caravan of Africa Better Visibility BMCE Bank participated in the 4th and 5th editions of Export Caravan of Africa. This event helped to explore new export opportunities for nearly 125 companies representing nearly 15 industries (Food, Construction, Textiles ...). Electricity, ICT, Pharmaceuticals, This second appearance of BMCE Bank was made in partnership with the organizer Morocco Export and seamlessly with BOA Group and Congolese Bank. Several measures have been introduced to mark the Group’s presence in Africa and its commitment to supporting the businesses in the continent for the success of their projects. Moreover, an extensive communication campaign under the «BMCE Bank, Your Partner in Africa» theme was run to support these caravans: print ad in the Caravan catalogue, foreign trade leaflets and guide, CD of sector-wise ICE studies, roll-up, video, e-mailing... ANNUAL REPORT 2011 Events and Trade Shows Strong Presence 29 BMCE BANK GROUP BMCE Bank in Morocco Investment Banking Adaptability skills in an unfavourable national and international milieu BMCE Capital In a national and international milieu marked by European debt crisis’ negative amplification and the uncertainty in Moroccan stock market, BMCE Capital has once again distinguished itself by its ability to adapt - capitalizing on the accumulated expertise, competence and market knowledge developed by the teams who are on the lookout for every opportunity. Most of its subsidiaries have therefore met the challenge of consolidating their operations, and even strengthening their market positions for some. Yet again, the synergistic efforts developed during the year 2011 were the basis of this performance that was supported also by continued investment in human capital, innovation and sales drive. Capital Markets Activities BMCE Capital Markets High Performance Resilience In a difficult environment in 2011, BMCE Capital Markets managed to pull out of the game capitalizing on its strengths in terms of skills, business expertise and product innovation. Through aggressive marketing and product differentiation, the market share in money and bond market has been reinforced to an average 28% in inter-banking as well as secondary activities. The same holds true for Private Debt Investment business whose market share amounted to 37% in 2011. BMCE Capital Bourse Awarded Best Broker in Morocco BMCE Capital Gestion Privée New Phase of Development The year 2011 has disappointed the hopes of accelerating growth in the Casablanca Stock Exchange. The market decline has been accompanied by a strong weakness in terms of volume that has rubbed off heavily on the intermediation business. In a challenging market context and despite the company’s continued restructuring, BMCE Capital Gestion Privée posted growth in business aggregates both commercially and financially. In fact, the income of BMCE Capital Bourse shrank to $ 24.1 million dirhams after the significant drop in strategic operations. Given this situation, BMCE Capital Bourse has focused more on process optimization. With this in mind, the intermediation Business Line has maintained its investment effort to enhance the quality of its services as well as identify new levers to capture and retain customers through a multitude of actions including the implementation of a real time stock market order system across the entire BMCE Bank network. In 2011, the efforts were directed towards enhancing the quality of services through improvement of management processes and consolidation of internal procedures. Capitalizing on the experience and reputation gained in the market in terms of discretionary management, BMCE Capital Gestion Privée has proven its resilience despite unfavourable market conditions in 2011. Moreover, and in light of the efforts and major operations conducted by BMCE Capital Bourse, the intermediation subsidiary was awarded the Best Broker in Morocco prize in 2011 by the British magazine EMEA Finance. BMCE Capital Gestion Proven Resilience BMCE Capital Gestion strategy of strengthening its position in its home market has paid off. In fact, the market share of BMCE Capital Gestion has appreciated and stands end at 13.9% in December 2011. It is an improvement of 40 basis points from a year earlier. Qualitatively, the year 2011 was a structuring year in terms of business organization with the culmination of several strategic development projects. ANNUAL REPORT 2011 As such, total assets under management of BMCE Bank Group’s Asset Management subsidiary reached the MAD 32 billion level for the first time. It is a remarkable annual growth of over 5.3% against only 2.7% at the sector level. 31 BMCE BANK GROUP Management and Custody Activities BMCE Capital Titres Cyclic Decline in Business Activities to enhance performance Achievements of the Business Platform During this exercise Market conditions have been unfavourable for BMCE Capital Titres and have heavily influenced the dwindling volumes on the stock market. Through the deployment of its new organizational structure, the business platform has managed to establish a real synergy between BMCE Bank and BMCE Capital in 2011whose potential is constantly growing. In this context, the level of assets under custody as well as the transaction volume processed by BMCE Capital Titres has seen a decline in terms of trading outcome compared to last year. As such, the launch of the electronic platform BMCE FX Direct has enhanced the offer’s competitiveness, thus attracting substantial flows, particularly at the level of Bank’s customer. However, with a market share stabilized at approximately 29% of the business of BMCE Capital Titres fund depositary has continued its upward trend, with its assets under custody valued up 9% at December 2011 end. In addition, on behalf of BMCE Capital Gestion, the average increase in invested funds was 11% over the same period in 2010 standing at 4.2 billion MAD. For FY2012, BMCE Capital Titres has planned to introduce new services both qualitatively as well as to improve the securities processing chain. Corporate Finance BMCE Capital Conseil Concretizations Strong Evidence Despite the tougher competitive conditions in a market that did not lend itself to strategic transactions, BMCE Capital Conseil managed to be successful in supporting several major operators both in the context of mergers and acquisitions as well as issues in private debt market. Positive Scopes of the Analysis & Research Activities This partnership culminated in the joint organization of a seminar between BMCE Capital Bourse and CM-CIC Securities held in Paris with 200 international investors. Analysis & Research has ensured the publication of several flashes and notes in addition to regular supports with quality that meets the most advanced standards in this area. The Development of synergy with various lines of business has also mobilized the efforts of the platform. Strengthened Risk Management Market risk management has been improved in 2011 within a challenging milieu to protect against market fluctuations. As such, new pricers, models, creative strategies and limits have been established. Moreover, the preparations for upcoming conversion to the advanced method have been initiated. This would allow a substantial saving of term equity. ANNUAL REPORT 2011 As usual, even taking advantage of very mixed context Analysis & Research has not failed in its mission to cover stock market in order to initiate process improvements and publications, with the active support from CM-CIC Securities. 33 BMCE BANK GROUP Resources and Means To match ambitions Human Capital Human Resources In perpetual Development In the context of strategic orientations of the transformation program carried out by BMCE Bank, a voluntary staff stabilization policy has been carried out in order to keep employees at practically the same level as last year. In this view, like during previous years, BMCE Bank Group has strengthened employability reinforcement and competence development throughout internal mobility and training. HR Policy At the Service of Regionalization In a regionalization phase of structuring projects mostly impacting human resources, strong commit- ment of BMCE Bank employees to change and active preparation for the future have been demonstrated. Hence, principles and actions have been implemented in order to grow the feeling of corporate belonging and motivation amongst employees, such as (i) working conditions translating the values conveyed by the RSE Group Policy, (ii) performance measurement according to homogeneous criteria throughout an internal evaluation process as well as skills and behavioral reference standards specific to Bank business lines, (iii) long-term staff development in the framework of a Talents and high potential management program, (iv) identification, development, expertise recognition, (v) vocational training to improve competences, (vi) performance, individual merit remuneration and incentives. Technological Tools Positive Evolutions In order to support regionalization of BMCE Bank Group, the enlargement of the Geographical Information System to the whole kingdom has been initiated, and should be finalized by the first semester of 2012. This new technological innovation should enable a large number of entities to benefit from high added value services, therefore easing decision-making processes. Entrepreneurship Observatory (ODE) Giving Momentum The Entrepreneurship Observatory (ODE), created in February 2009 by BMCE Bank Group provides innovative services in order to support Moroccan companies at each step of their life cycle. This is why ODE offers a set of high added value services, using this support as a reference for all those who wish to develop their company, drawing benefit from the best. In order to reinforce ODE’s notoriety, an innovative approach has been declined in 2011, including, inter alia, partnerships with schools and universities. A first partnership agreement was signed with University Hassan II, besides a partnership underway with the Centre of Young Entrepreneurs (Centre des Jeunes Dirigeants). These will give light to training and scientific exchanges between different institutions. Besides, the participation to two students forums, the launch of a new interactive communication campaign, the multiplication of newsletters or the presence on social networks, translated into a 200% increase of the number of website subscribers, with a monthly affluence peak of 20,000 web users and the publication of over 70 press releases regarding ODE. On the other hand, ODE’s website got enriched by a new section named “Sustainable development and CSR”, in order to support entrepreneurs in their daily management tasks, giving them advice and sharing best practices. Strategic Projects for the Bank Stronger Immersion In 2011, Economic Intelligence largely contributed to a few major projects of the BMCE Bank Group, such as the CRM, Regionalization and geographical extension towards Sub-Saharan Africa. Therefore, the implementation of CRM was supported by clientele stratification segmentation between private and corporate clientele. Besides, BMCE Bank Group’s territorial strategic development was grounded on the achievement of regional monographs, highlighting social, demographic, economic and banking characteristics specific to each individual region. Likewise, the African development strategy was supported by macroeconomic and banking ratings aiming to identify settlement potentials in Africa and focus on a few financial institutions. Group Communication Policy Emergence of a Banking Brand Strong and Well-Recognized Umbrella In 2011, institutional communication within BMCE Bank rather focused on the universal and multi-business line Bank Brand image for the general public. The objective was to grow BMCE Bank’s brand image, whilst capitalizing on its richness, diversity, and international offer dimensions. Therefore, in order to support voluntary development of the Group in Africa, targeted campaigns have been carried out, at the occasion of prize granting ceremonies from EMEA Finance to BMCE Bank Group entities and to BOA Group entities in more than 5 different African countries. Likewise, at the occasion of specialized fairs, broadcastings of the institutional campaign called “give more room to the future” have been programmed. Such communication further confirms the Bank’s historic positioning towards its core values: Sustainable Development at African scale, access to new technologies, environmental concern, educational promotion and investment incentives. ANNUAL REPORT 2011 Business Intelligence 35 BMCE BANK GROUP In parallel, participations strongly contributed, through different Bank-sponsored actions and events, to strengthen the Bank’s brand image amongst civilian societies and the general public, as a Citizen-focused Bank which for many years has been committed to cultural, social and sports promotion. Rather focused on outreach communication with clients, events-oriented communication imposed itself as a relay to commercial communication through targeted actions in order to draw and grow fidelity among Network clients. Commercial Communication Harmony in Action In terms of commercial communication, year 2011 was marked by the progressive development of the new communications territory in all advertising concepts connected to Bank products and services, publication supports/PLVs, while respecting provisions of the new Consumer Protection Law. This harmonization favored investment optimization, initiated in 2010, thus proving the efficiency of committed commercial communication. Hence, during 2011, digital and direct communication actions have been privileged while maintaining sufficient media presence in: Radio, Written Press and Urban Media Supports. Interactive Communication A Line of Influence All institutional and commercial communication campaigns have been deployed into large scope actions on via direct channeling, through the Internet, automated banking cashiers, and giant screens of the Bank’s Head Office. In parallel, the mailing action was reinforced, with a growth over 14%, thus enabling to reach over 9 million clients/prospects directly. Structuring Projects Commercial Efficiency Drawn by a Regionalization Program In 2011, BMCE Bank deployed a major Network Regionalization a program, which as such became a national priority. Furthermore, regionalization aims to make decision-making centers as close as possible to the existential values, focus, and reason of being of BMCE Bank, namely its clients, in order to improve commercial efficiency and service quality. On the grounds of a de-concentration of activities connected to contracting, legal and permanent control tasks together with decentralization of steering activities, moderation and support coordination, regionalization translates into the implementation of common Regional Directorates for both Private/Professional and Corporate departments, with enhanced autonomy and responsibilities regarding all regional management aspects. The ultimate challenge of BMCE Bank’s action plan is to concretize value creation potentials within each Region. In parallel, Head Office structures shall focus on supporting commercial strengths, since they are at the service of clients, by reshaping their fundamental mission of practice and standards definition, expertise implementation, evaluation systems, monitoring and control. In this context, important investments have been agreed in terms of human, logistical, and IT support, in order to guarantee success to this program and enable each region to become a performance, profitability and excellence model. Therefore, 2011 witnessed the launch of Pilot Regional Directorates, namely: Southerner Center, Casablanca North and Casablanca South before being deployed over the whole Kingdom after the first positive feedbacks. Clients’ Relationship Management Support to Commercial Action In the framework of the RMA Watanya partnership and CM-CIC Group, the Management project for Clients Relationship, launched in 2009, aims to improve commercial efficiency of the sales force through enhanced knowledge of the client, which in fine enables to better meet clients’ needs. Over half of CRM functionalities have been deployed over the whole Moroccan Network in 2011, thus bringing real added value through (i) a unique Third party basis, shared by all players, combined to the implementation of best practices for further reliability of clients’ data, (ii) an automated first contact process, (iii) access to 360° Vision gathering all commercial administrative data and third party equipment, (iv) realtime reporting of balances and outstanding amounts (v) implementation of a multi-product offer gathered in under single contract (packages), and (vi) a generalized portfolio handling system, enabling to prepare all upcoming CRM batches. Cash Management A Solution to Corporate Needs A global Cash Management system has been rolled out, including the implementation of a Cash Pooling application (direct, indirect and mixt), that is the Swift Net solution for the treatment of salary transfers, payments to providers in Morocco and abroad as well as an E-trade solution for import-related documentary credits. BMCE Direct Enhanced Outreach Always committed to provide its clients with innovative products, BMCE Bank launched BMCE Direct; a multi-segments and multi-products website aiming to cover a large number of services in real time. BMCE Direct gives clients direct access to their financial situation, provides account search and statement downloads, credit card blockage options, checkers ordering forms, International Bank Account details, records of all operations, securities portfolios, as well account alerts. Likewise, this service offers new smartphones applications. ANNUAL REPORT 2011 Besides, the Hotline platform is now operational and covers all demands for functional assistance and incident reporting. In addition, the document management system of the Bank is now operational. 37 BMCE BANK GROUP Specialized Financial subsidiaries of BMCE Bank Adaptive capacity in an unfavourable national and international environment Salafin Salafin demonstrated 3% growth in revenues with MAD 1.14 billion in a sector-wise environment of 6% fall in 2011. It was possible due to the constant development in automobile financing business at 11% against 6% growth for the sector. Despite the growth in revenues from new financing, the average financial assets were down 5% at MAD 2.52 billion by 2011 end compared to last year. In this unfavorable climate, Salafin focused its efforts on developing new activities in order to diversify its sources of income - the services provided to third parties in particular. They include recovery activities as well as sharing credit management platform. The revenues from these «high-growth» activities have experienced a 145% jump in 2011 to 7.8 mMAD. In terms of financial performance, the Net Banking Income amounted to 274 mMAD and Net Income amounted to 93 mMAD. The operating expenses were at 85 mMAD up 11% drawn by the increase in payroll in support of the strategic plan to develop the service business. However, the cost to income ratio still remains controlled at 31% level. As regards risk management, the reinforcement of recovery teams, process re-engineering and improvement of information systems combined with quality improvement of new loans has allowed to bring the cost of risk down by 15% to 51 mMAD maintaining a 92% coverage level for nonperforming loans. Salafin has reinforced synergies with the entities of BMCE Bank Group in Morocco and abroad, through expanding partnerships particularly related to automobile financing as well as recovery and dispute management. Maghrebail In 2011, the leasing sector posted an aggregate output of MAD 14.8 billion up 3.7% compared to the previous year. The new leases, which consists up to 81% of equipment leasing, was pulled down 0.46% by the equipment leasing sector to MAD 12 billion in 2011. This decrease was however reduced by property leasing which grew by 25.4 %, to MAD 2.85 billion in 2011. Maghrebail’s new leases went up 6% to MAD 2.8 billion driven by the strong 48% growth from ‘’Property Leasing’ business with total assets of 7.9 billion MAD. The new property leases have surged in particular, marking a 47.9% increase to MAD 790.8 million. Conversely, the equipment Leases fell by nearly 4.6% to 1,988 mMAD. Moreover, efforts to build synergies with the BMCE Bank network have intensified, which is demonstrated by the sharp increase in the network’s contribution to business reaching 43% in 2011 against 37% in 2010. The net oustanding commitments therefore amount to MAD 7.9 billion at December 2011 end up 9.2% from December 2010 end, bringing the market share of Maghrebail up 0.2% points to 19.8%. The financial performance indicators show an overall respectable improvement as shown by the 6% growth in net revenues to 230 mMAD and 4.1% growth in the operating Income to 128 million MAD, or the 4.3% decline in Operating Expenses resulting in nearly 2.7 percentage point improvement in cost to income ratio to 24%. In addition, net allowances to provisions are around 45 million dirhams with nonperforming loans excluding provisions at 54 million dirhams. The NPL coverage ratio stood at 83.8%. In addition, the operating expenses of Morocco Factoring stood up 13% at 15.6 million dirhams, thereby generating a cost to income ratio of 44.6%. RM Experts In 2011 the debt collection activity within RM Experts was placed under process optimization and implementation of information systems. As such, the recoverd assets amounted to 314 million dirhams, cumulating MAD 2.8 billion since 2004. Similarly, the reversal of provisions was recorded at nearly 166 million dirhams. The recoveries are attributable up to 73% to sales activity, 8% to compulsory sales, 7% to renormalization of files, 7% to balance sheet commitments and 5% to the guarantee from guarantor agencies. The administrative platform was reorganized in 2011 focusing on more effective processing of paper files and better support from managers as well as integration of an electronic document management system in the processing method of paper files. Significant efforts were made in 2011 to handle the files downgraded during the year in the interest of reducing the volume of the Bank’s agreement and recovering all related provisions. A quick and rigorous processing was therefore reserved for those files, materialized by an immediate contact with debtors before operating the judicial recovery. New features have also been incorporated into the management system as regards (i) the establishment of a reminder via SMS platform, (ii) expense management for extra control on the commissions paid to partners, and (iii) centralization of reporting statements. Net Income has decreased slightly by 0.97% to 80.4 million dirhams, impacted by a non-operating income. Maroc Factoring As part of this sector’s favourable trend with a 20% market share, Morocco Factoring achieved a factored turnover of MAD 4.4 billion in 2011 up 7.3% from 2010. It was supported by 17.3% growth in assets acquired by factoring to 1.3 billion MAD. The Net Banking Income - NBI rose by 5.4% to 35.1 million dirhams with a predominance of 56% NBI generated from interest income. Similarly, the net profit grew by 22.4% to 11.1 million dirhams. The cost of risk has improved by 7.2% points to 22.8%. ANNUAL REPORT 2011 Factoring is a booming sector in Morocco hiding an enormous growth potential. It is an excellent solution to fund the development of SMEs. 39 BMCE BANK GROUP Bank of Africa Group Bank of Africa posted convincing commercial results, illustrated by the growth in deposits and loans by +10% and +13% to reach € 2.9 bn and € 1.9 bn, respectively, and the growth in number of accounts by +19% to reach 1.2 million. The principal indicators at the consolidated level of the Group saw double digit growth with (i) Net Banking Income NBI increasing by +26% to reach € 252 M, (ii) Gross Operating Income up by +16% to reach € 104 m, and (iii) Net Income up by +23% to reach € 58 M. Hence, the contribution of Bank of Africa in the consolidated results of the BMCE Bank Group has thus gone up from 26% in 2010 to 29% in 2011. the intensification of intermediation efforts, strengthening the Group’s positioning in strong potential markets, managing risk costs and revitalizing the debt collection activity, improving operational and commercial efficiency and the development of synergies between BOA and the BMCE Bank Group. In 2011, Bank of Africa Group pursued its organic growth strategy by opening about 60 branches, thus increasing the size of its network to almost 340 branches, covering more than fifteen countries in Sub-Saharan Africa. Leading African Financial Player The extension of the banking network came along with the incease in staff members by +419 persons, to reach more than 4,200 employees. Besides the geographic extension in Africa, the BOA Group strategy is based on several elements, namely Bank of Africa With Strong Commercial Striking Force • 15 commercial banks in 14 African countries, • A solid network of almost 340 braches and a conti- nuously expanding ATM fleet, • Over a million accounts, • Over 4200 employees, • An extended and diversified range of financial and ban- The Group’s Presence in Africa king products : bank-insurance, personalized financing solutions, potent financial engineering… Well-known Financial Institutions in Bank of Africa’s Shareholding : • BMCE Bank, the major shareholder • Bilateral and Multi-Lateral Financial Institutions: • Proparco, • Dutch Financial Corporation for Development (FMO), • Belgian Investment Company for Developing countries, • IFC, BOAD • Public and Private African Shareholders Significant Events in 2011 2011 Key Figures • Total Assets : 3.8 billion € • Customer Loans : 1.9 billion € • Strengthening of the BMCE Bank Equity stake in BOA to more than 59%, thereby becoming the major shareholder • Customer Deposits : 2.9 billion € • Acquisition of a bank in Ghana–Amal Bank- renamed • Consolidated Net Income : 59.2 million € as BANK OF AFRICA – GHANA Shareholding as of end of March 2012 • Net Banking Income : 263 million € • Net Income - Group Share : 31.4 million € • Number of employees : about 4 500 • Network : about 330 branches Other 28.98% FMO 5.02% BMCE Bank 59.48% ANNUAL REPORT 2011 Proparco 3.84 Bio 2.68% 41 BMCE BANK GROUP Solid Financial Base Bank of Africa Group intends to grow both internally and externally, and has pursued the development of its assets, and saw its financial results improve. The overall consolidated assets stand at € 3.8 billion that is a growth of almost 19%. Deposits and loans have grown by +10% and +13% to reach € 2.9 billion and 1.9 billion, respectively. Profit indicators, in turn, have grown favorably. As indicated by the +26% growth in Net Banking Income of over € 252 million, mainly due to BOA subsidiaries from the UEMOA countries, the Gross Operating Income also increased by + 16% to € 104 million. As regards Net Income Group share, it stand at € 30 million against € 25.6 million a year earlier, that is a growth of more than 17%. Profitable Synergies Initial cooperation with BMCE Bank took place with the first acquisition of a 35% stake in BANK OF AFRICA. Thus, Annual Commercial Action Plans have been launched in UEMOA countries and in Madagascar for Private clients. This project resulted in a commercial reorganization, launch of new products, the implementation of new commercial and managerial practices as well as the launching of sales promotion, performance management and task planning activities. This project will be deployed over all countries where BOA is present. A similar project for the Corporate Customers has already been deployed in BOA-Mali and BOA-Benin, and shall soon be deployed in BOA-Ghana, BOA-Madagascar, BOA-Côte d’Ivoire and BOA-Burundi, and also in Eastern African countries. The activity dedicated to Africans living abroad is also a part of the cooperation with BMCE Bank and deals with structuring the sales approach regarding the Diaspora. Besides, there are strategic projects underway in several fields, namely the debt collection activity, IT security, training, car finance in partnership with Salafin and investment banking in partnership with BMCE Capital. BOA-Benin In a rather unfavorable environment, BANK OF AFRICA – BENIN nevertheless ended the 2011 fiscal year with overall assets growing by more than 13% compared to December 2010. BOA underwent a slight resources increase, generated by its collection campaign of private individual savings and corporate deposits; the Bank is the leader in the national market, with a 29.8% market share. Its Net Banking Income also increased by +10.2% compared to the previous fiscal year. These good results are a consequence of the Network extension policy taking the number of branches to 39. • Launch of 3 new products : Fonxionaria Pack, My Business Pack, and Ambitious Savings Plan. • Implementation of an interbank system called GIMUEMOA : Interbank card payment and withdrawal system in UEMOA countries. • BOA Benin, named the Best Bank in 2011 by The Bankers magazine for the second consecutive year. Country Data GDP (in billion USD) GDP per Capita -PPP (in USD) Number of banks 2011 Key Figures • Total Assets* : 841 million € • Shareholder’s Equity* : 79 million € • Customer Loans* : 583 million € • Customer Deposits* : 336 million € • Net Banking Income* : 48 million € • Net Income* : 11.6 million € • Number of employees : 452 • Network : 39 * 1 EUR = 655,957 F CFA Banque Ouest Africaine de Développement 2.71% BOA Cote d’Ivoire 1.16 % BOA-Burkina Faso 0.91% Private Shareholders 44.63% ATTICA 0.27 % In spite of an Unfavorable Economic Environment During Fiscal year 2011, BOA-Benin achieved good results in spite of the unfavorable economic conditions faced by the country. Thus the Bank showed a strong increase, namely with net income of 11.6 million euros with a growth of 15.8%, and a Net Banking Income of 48 million euros with a growth of 10.2%. In terms of resources, BOA-Benin saw a slight increase in deposits by +1.3% to reach 583 million euro. Thus positioning itself as the leading bank of the country in terms of deposits, with a 29.8% of market share. 112.6 8.8 5.4% 6.6 1587 12 These good results are one of the consequences of the growth policy and the revitalizing of the network, taking the number of branches to 39 today. Also, the bank crossed the threshold of 200,000 accounts at the end of fiscal year 2011. BOA-BEnin, a Citizen Bank As a bank socially committed to sustainable, social and economic development, BOA-Benin initiated several citizen-oriented activities in the field of civic matters, healthcare, and environment. Thus, BOA-Benin took part in the World Desertification Day event, in June 2011, in partnership with the Environment Ministry and the United Nations Development Program (UNDP). The Bank also participated in several events. It took part in the organization of a concert for the disabled, in partnership with the German Embassy, and sponsored several sports events. ANNUAL REPORT 2011 Banking Penetration Rate BOA West Africa 35.89% In terms of loans, these remained at the same level as the previous year, representing 336 million euro by the end of December 2011. BENIN Population (in million) BOA Group S.A 14.43% Growing Profits Significant Events in 2011 Area (in thousands of Km²) Shareholding on March 7th, 2012 43 BMCE BANK GROUP BOA-Madagascar BOA – MADAGASCAR achieved good results, in an unfavorable economic situation, displaying net income of € 8.5 M increasing by +186.3% compared to 2010. Significant Events 2011 In addition, despite the fierce competition the Bank has further boosted its sales initiatives, enabling it to stabilize its market share at 27.5% for deposits and at 25.5% for loans. the Year - Madagascar” title from “The Banker” magazine. Besides, fiscal year 2011 was marked by the reinforcement of the financial base of the Bank through a capital increase, to reach € 14.9 M by the end of December, reflecting a dynamism and commitment from all employees of the BOA subsidiary, as well as renewed confidence of its shareholders in the development prospects in their bank’s business. • Obtaining, for the 8th consecutive year, the “Bank of • Appointment of a new Chairman of the Board, Alain RASOLOFONDRAIBE succeeding Paul DERREUMAUX. • Capital Increase of BOA-MADAGASCAR, taking it to € 14,9 M, by converting Propaco’s subordinatd debt to Equity. Country Data Financial Performances Growth in the Indicators Madagascar Area (in thousands of Km2)587 Population (in million) 21.3 Banking Penetration Rate 3% GDP (in billion USD) 8.7 GDP per Capita -PPP (in USD) 933 Number of banks 22 2011 Key Figures Deposits Growth Boosted by Savings Accounts • Total Assets* : 464 million € • Shareholder’s Equity* : 45 million € • Customer Loans* : 384 million € • Customer Deposits* : 176 million € • Net Banking Income* : 34 million € • Net Income* : 8.5 million € Deposits collected form customers increased by 9.8% in 2011, boosted by the strengthening of sales campaigns and the development of the branches network. In this respect, a new and strong growth in Savings Accounts was noticed, attaining € 15.5 M, that is 24.5% in 2011. Resumption in Growth • Number of employees : 935 Loans to Customers • Network : 67 *1 EUR = 2912.14 MGA Shareholding as of february 28, 2012 Other Shareholders 0.4% State of Madagascar 9.4% In tune with the growth in activities, Net Banking Income has increased by 12.7% thanks to the net interest income made on operations and fee-based services. Also, despite a mixed environment, the BOAMadagascar subsidiary outperformed with net income of € 8.5 M by the end of December 2011 with an increase of 186.3% compared to 2010. Proparco 4.4% AFH/OcEan Indien 41% Loans to customers also increased by 6.1%, to support activity sectors that underwent strong recovery during 2011. In terms of investment, BOA-MADAGASCAR continued its geographical expansion, with the opening of five new branches in 2011 and the installation of 19 automated teller machines (ATMs), thereby increasing the overall number of branches to 67 and its ATM fleet to 88 throughout the whole country. FMO 9.5 % Private Malagasy Shareholders 24.9% ANNUAL REPORT 2011 IFC 10.4 % 45 BMCE BANK GROUP BOA-Burkina Faso Fiscal year 2011 was marked by a positive trend in all BOA-BURKINA FASO indicators. Deposits collected from the customers crossed the symbolic threshold of € 300 M, to reach € 340M, thereby posting a 12.7 % growth rate over the rolling year. The credit disbursement activity was also intense, with an achievement of € 212 M, reflecting good performance beyond the forecasted budget objectives. Furthermore, in a market characterized by growing competition, the bank consolidated its position as a major bank on the national banking scene and established itself as the financial institution of reference in the sub-region, specially due to the importance of its operations in the West African Monetary and Economic Union (UEMOA). • New deposits achievement with the crossing of the symbolic threshold of € 300 M in client deposits. • Opening of 5 new branches, 2 of which are in Ouagadougou, and 3 in regions, thereby increasing the network size up to 26 in the framework of an active local sales policy. Country Data GDP per Capita -PPP (in USD) Number of banks • Customer Loans* : 340 million € • Customer Deposits* : 212 million € • Net Banking Income* : 24 million € • Net Income* : 7.5 million € • Number of employees : 232 • Network : 26 * 1 EUR = 655,957 F CFA Attica Sa 3.89 % Private shareholders from the l’UEMOA 24.01% BOA West Africa 52.24% Union des Assurances du Burkina Vie 8.98% Lassine Diawara 10.24 % Other 0.23 % Good Financial Performances Area (in thousands of Km2)274 GDP (in billion USD) • Shareholder’s Equity* : 31 million € Cauris Croissance 0.41 % Burkina Faso Banking Penetration Rate • Total Assets* : 435 million € Shareholding as of march 7, 2012 Significant Events 2011 Population (in million) 2011 Key Figures 16.4 6.2% 8.8 1466 12 In terms of results, the Net Banking Income increased significantly by 29.5 %, enabling, through proper management of operating expenses, to achieve a net income of € 7.5 M, increasing by 60 % compared to the previous year. These achievements have contributed to consolidate the financial strength of the BOA-Burkina Faso subsidiary and increase its operational capacities. Boa-COte d’ivoire Significant Events 2011 • Reopening of BOA-COTE D’IVOIRE in April 2011, after the Bank of International Commerce and Industry of Côte d’Ivoire (BICICI) in December 2011 in the form of budgetary support to re-boost the country’s economy after the post-electoral crisis. Country Data Cote d’ivoire the interruption of activity in February 2011 following the country’s unfavorable socio-political situation. Area (in thousands of Km2)322.4 • Capital Increase of the Bank from 9.1 million euro to GDP (in billion USD) 10.9 million euro in June 2011 ; Population (in million) Banking Penetration Rate GDP per Capita -PPP (in USD) Number of banks • Signing of a € 50 million credit agreement between the Cote d’Ivoire government, BOA-COTE D’IVOIRE and 19.7 14.6% 22.7 1589 23 ANNUAL REPORT 2011 In a difficult socio-political environment due to the post-electoral crisis, leading to a suspension of the Ivorian banking system’s activities for 3 months and the destruction of the production equipment of several companies, BOA-COTE D’IVOIRE, in line with all Ivorian banks displayed a drop in income compared to fiscal year 2010. 47 BMCE BANK GROUP 2011 Key Figures • Total Assets* : 326.1 million € • Shareholder’s Equity* : 24.4 million € • Customer Loans* : 244.3 million € • Customer Deposits* : 176.4 million € • Net Banking Income* : 15.3 million € • Net Income* : -0.7 million € • Number of employees : 217 • Network : 21 * 1 EUR=655.957 F CFA Shareholding as of march 7, 2012 Agora Holding 2.47% BOA-Benin 2.35 % Attica S.A 3.11% BOA West Africa 55.51% BOA Group S.A. 7.19% Other shareholders Private 29.37% Satisfactory Commercial Activity Thanks to the sales activities carried out by the Bank, for a few years, in the private individuals market, clients deposits have grown by +12.5% from 217 million euro in 2010 to 244 million euro in 2011. Likewise, the number of accounts also grew by 32%, to reach 49,279 accounts. Besides, the credit activity had posted, due to a low use of some credit lines and the tightening of credit conditions, a general decrease in the overall credit volume distributed, that is, a total commitment of 206 million euro. Performance Indicators Impacted In spite of a 4.4% increase in the net bank margin, net banking income of BOA-COTE D’IVOIRE decreased by 3.6% to reach 15.3 million euro. Thus, in a worsening situation in terms of quality of the risks leading to provisioning efforts, net income showed a loss of 742K euro during fiscal year 2011. BOA-Mali In a difficult socio-economic environment, marked by a political instability crisis in North Mali, BANK OF AFRICA – MALI nevertheless improved its main performance indicators. 2011 Key Figures In addition, BOA-MALI pursued the densification of its network, which today accounts for 30 sales points, all equipped with Automated Teller Machines (ATM), with the opening of three branches in 2011, two offices and the installation of two off-site ATMs in national deluxe hotels. • Customer Loans* : 230 million € • Total Assets* : 302 million € • Shareholder’s Equity* : 23 million € • Customer Deposits* : 175 million € • Net Banking Income* : 23.2 million € • Net Income* : 3 million € • Number of Employees : 320 Significant Events 2011 • Network : 28 • Increase in the Bank’s share capital from € 8.5 mil- lion to € 11 million. • Opening of 7 branches and Offices, increasing the network size to 28 units. • Launch of 7 new products dedicated to Private and Enterprise clients. * 1 EUR = 655.957 F CFA Shareholding as of march 21, 2012 Other Shareholders 2.95% National Shareholders 20.14% BOA Group S.A. 21.96 % Country Data FMO 15.77% BOA-BENIN 0.05% Attica S.A 2.56 % MaLI BOA West Africa 36.57% Area (in thousands of Km2)1242 Banking Penetration Rate GDP (in billion USD) GDP per Capita -PPP (in USD) Number of banks 15.3 6.6% 9.2 1127 13 Maintaining a Good Position In an economic context of an unfavorable nature compounded by very high nervousness of the people with regard to the devaluation rumors of the local F CFA currency by the end of the year, the funds collected from the clients slightly decreased by 1.3%, that is € 230 million in 2011, against € 233 million in 2010. However, in spite of this decrease, BOA-MALI increased the volume of its commitments by 12 % from € 156 million to € 175 million in 2011. Credits granted were essentially focusing on private individuals and large companies. ANNUAL REPORT 2011 Population (in million) 49 BMCE BANK GROUP Also, the Malian subsidiary underwent a capital increase to € 11 million, leading to an increase of + 18.4% in equity to touch € 23 million. In addition, major efforts at the consolidation of the portfolio and debt recovery were made, which together with the favorable growth trend in loans and the management of operating expenses, led to a strong increase in Net Income of € 1.5 million in 2010 to reach € 3 million in 2011, that is a 98.3 % increase. Commercial Activities On Track Attentive to its customers’ needs, BOA-Mali marketed seven new products in two market segments: Companies and Private individuals. Thus, beyond funding of large companies, the Bank launched factoring services for Small and Medium-sized Companies (SMEs) as well as leasing, thus becoming the first bank in Mali offering leasing, after the merger-takeover of ÉQUIPBAILMALI. This performance is the result of the sales initiative of the sales team, with strategic orientations on our positioning in a highly competitive market, and reinforces the bank’s position as the 5th bank in Mali. Financial Performances Positive Trend During fiscal year 2011, BOA Mali demonstrated its capacity to improve its net income, which is on the increase today. May thus see a significant improvement in Net Banking Income of +7.6% reaching € 23.2 million and the increase in total assets of 5% to reach € 302 million. BOA-Kenya In 2011, the Kenyan banking sector underwent unfavorable market conditions during the second semester, namely macroeconomic and regulatory factors, thereby impacting the profitability of the bank transactions. Under these difficult conditions, BOA-KENYA achieved remarkable results. Extension of Branch Network Income Growing by +22% BOA-KENYA reached a total assets of € 351.93 million and net income of € 5.24 million, thereby posting a +22% increase. In terms of sales performances, the deposits and credit of the customer reached € 217.93 million and € 196.62 million respectively. Besides, in order to support the network’s extension strategy, BOA-KENYA effected a capital increase of € 13.62 million in 2011. In 2011, BOA-KENYA pursued its Network extension strategy with the opening of 5 new branches, thus enlarging its Network to 22 branches. Two branches were refurbished and one was moved, to gain space and serve clients in a more serene atmosphere. In the same way, the Bank’s structure was also reorganized following the growing demand of the re-sized Network, with a centralized processing of transactions by the Head Office, in order to provide enhanced services to customers. ANNUAL REPORT 2011 In parallel, concerted marketing efforts kept on strengthening both the awareness of the logo and the Bank products. 51 BMCE BANK GROUP Corporate Social Responsibility Shareholding as of december 31, 2011 A Deep-rooted Philosophy BOA-KENYA is strongly committed to Corporate Social Responsibility, as demonstrated by the various activities carried out in 2011, namely (i) the opening of new houses for children in Bugoma and Kericho, (ii) contribution of 61K euro to the Kenyans for Kenya association to help fight against hunger, (iii) participation in the All about pink event, a breast cancer awarenessraising day. Country Data kenya Area (in thousands of Km2)581 Population (in million) 40.5 Banking Penetration Rate 42% GDP (in billion USD) GDP per Capita -PPP (in USD) Number of banks 32.1 1745 43 2011 Key Figures • Total Assets : 350.8 million € • Shareholder’s Equity : 42.31 million € • Customer Loans : 217.24 million € • Customer Deposits : 196.00 million € • Net Banking Income : 17.25 million € • Net Income : 3.92 million € • Number of employees : 303 • Network : 22 1 EUR=110.059 KES BOA GROUP SA 10,00% AGORA SA 2.00% AUREOS EAST AFRICA FUND LLC 15.50% NETHERLANDS DEVELOPMENT FINANCE COMPANY (FMO) 20.00% AFH-OCEAN INDIEN 15.00% BANK OF AFRICA COTE D’IVOIRE 11.00% BANK OF AFRICA – BENIN 11.00% BANK OF AFRICA MADAGASCAR 15.50% Boa-Niger In 2011, BOA-Niger confirmed its dynamic position, with significant achievements, both in the private individuals and companies segments, in a stormy political context, exhausting of resources and fierce growing competition. Country Data NIGER Area (in thousands of Km2) 1 267 Population (in million) 15.5 Banking Penetration Rate 2.4% GDP (in billion USD) 5.5 GDP per Capita -PPP (in USD) 727 Number of banks 10 2011 Key Figures • Total Assets* : 241.7 million € • Shareholder’s Equity* : 22.7 million € • Customer Loans* : 136.4 million € • Customer Deposits* : 146.6 million € • Net Banking Income* : 13.5 million € • Net Income* : 4.2 million € • Number of employees : 178 • Network : 16 Growth Indicators Double-digit Growth During fiscal year 2011, BOA-Niger displayed good growth in its main results indicators. Thus, net income increased by 25% to reach € 4.2 M. Net Banking Income also grew by 24.3% to reach € 13.5 M and Gross Operating Income grew by 28.03% to reach € 6.3 M. Sales performances were not lagging, also posting double-digit growth rates: as shown by the increase of +10.7% in deposits of customers at € 136.4 M and client credit accounting for +13.8% to reach € 146.7 M. Similarly, customer accounts steadily grew in 2011, surpassing the threshold of 60,000 accounts, mainly boosted by the 43.8% increase in savings accounts, 13.4% increase in current accounts and the 7.8% in checking accounts. An Innovative Citizen Bank BOA-Niger is known for being innovative and accessible to all. In this respect, in 2011, the Bank enlarged its product range and branches network with the opening of two new branches. In terms of civic involvement, BOA-Niger, built together with the BANK OF AFRICA Foundation, a second Life Center in Mokko, a village located 12 km away from Dosso. * 1 EUR=655.957 F CFA Shareholding as of march 6, 2012 Other 20.78% Nigerian Shareholders 14.19 % Attica SA 8.41 % BOA Group S.A. 22.99 % BOA West Africa 26.45% West African Development Bank 7.31% ANNUAL REPORT 2011 BOA Niger Personnel 0.21% 53 BMCE BANK GROUP BOA-SEnEgal In an unfavorable economic context, BANK OF AFRICA - SENEGAL achieved convincing financial and commercial results in 2011, with a double-digit growth for all main activity indicators. Year 2011 was also marked by the strengthening of equity thanks to a capital increase from € 7.6 million to reach € 10.7 million in order to support the development strategy of BOA–SENEGAL, namely its extension program of the enlarged network of 6 new branches with the launch of the first dedicated corporate business center. Significant Events 2011 • Opening of 6 new branches, including the first dedicated business center of the Group in Dakar. • Capital increase of 2 billion F CFA - corresponding to € 3 million. Country Data BANK OF AFRICA – SENEGAL’s NBI grew by nearly +26%, from € 8.9 million to € 11.2 million, mainly due to the good management of the core business of the Bank, with an increase in interest income and fee income respectively by +23% and +17%. Gross Operating Income grew by nearly +20% to reach more than € 4 million Net Income, in turn, grew by +24% to reach more than € 3 million. Senegal Area (in thousands of Km2)196.2 Population (in million) 12.4 Banking Penetration Rate 19% GDP (in billion USD) 12.8 GDP per Capita -PPP (in USD) 1870 Number of banks 20 2011 Key Figures • Total Assets : 204.9 million € • Shareholder’s Equity : 17.8 million € • Customer Loans : 111.9 million € • Customer Deposits : 169.4 million € • Net Banking Income : 11.2 million € • Net Income : 3.1 million € • Number of employees : 122 • Network : 25 1 EUR = 655.957 F CFA Shareholding as of march 6, 2012 New momentum to Sales Activities Customers deposits increased by nearly +11% to reach more than € 169 million thanks to demand deposits (+13.7%) and savings accounts (+50.5%). Loans followed the same trend, with a +17.8% increase, to reach nearly € 112 million. Besides, BOA–SENEGAL pursued the development of its network, launched in 2006, with the opening of 6 new branches, including a business center created to improve service quality and increase loyalty among large companies and SMEs. The bank has enlarged its customers portfolio as shown by the +37% growth in the number of accounts. In order to best meet its customer needs, BOA–SENEGAL launched two packages, that is ‘’Fonxionaria’’ and ‘’My Business’, two fully-fledged banking services aimed at civil servants and the informal sector, respectively. The Bank also launched a new pre-paid VISA card, called “TUCANA’’, which can be used without a bank account. BOA West Africa 46.1% FMO 3.4% Private Shareholders 26.1% Bank of Africa-Benin Bank of Africa-Côte d’Ivoire 2.1% 0.3% ANNUAL REPORT 2011 BOA GROUP SA 22% Maintenance of Good Performance Indicators 55 BMCE BANK GROUP Bujumbura Credit Bank In 2011, the BUJUMBURA CREDIT BANK – BCB – pursued its network expansion policy with the opening of 2 branches, thereby enlarging the network size to 18 branches, giving priority to sustained sales development. Thus, client credit and deposits have significantly increased by 42% and 5.8% respectively to reach € 71.8 M and € 111.5 M. Country Data Remarkable Financial Performance In an economic environment marked by fierce competition and international crisis, the bank’s financial indicators achieved good results. Thus, the Net Banking Income increased by 51.4% to reach € 15.3 M, with Net Income for the first time crossing the € 4 M threshold, to reach € 4.8 M. Likewise, the total assets grew by 7.6% to € 138.5 M. . Bujumbura Credit Bank Area (in thousands of Km2)27.8 Population (in million) 8.3 Banking Penetration Rate 13% GDP (in billion USD) 1.6 GDP per Capita -PPP (in USD) 614 Number of banks 9 2011 Key Figures Diversification of Customers Portfolio In terms of sales achievements, the bank intensified its diversification efforts on its portfolio on the current target segments, that is Enterprise, SMEs and Retail. Likewise, in the framework of strengthening its technological innovation policy, BCB developed different electronic products. • Total Assets* : 138.5 million € • Shareholder’s Equity* : 15.9 million € • Customer Loans* : 111.5 million € • Customer Deposits* : 71.9 million € • Net Banking Income* : 15.3 million € • Net Income* : 4.9 million € • Number of employees : 324 • Network : 17 * 1 EUR = 1 761.34 BIF Shareholding as of february 28, 2012 Other 12.65 % State of Burundi 10.65% Socabu 21.70% Degroof Bank 17.37 % BOA Group S.A. 20.25 % BIO 17.38 % Social and Environmental Commitment A leader in the Burundian social life and conscious of the role it must play for the improvement of the society, BCB, in 2011, honored its social responsibility by taking part in various social, economic and environmental activities, namely by sponsoring sports events and foundations active in the field of environmental protection. Boa-Tanzania In a stormy economic context, characterized by strong inflation and depreciation of the local currency, BANK OF AFRICA - TANZANIA achieved satisfactory performances during fiscal year 2011, with a +19% NBI growth, total assets growth of +22%, an increase in customer deposits by +16% and client credit by +46%. In the scope of its banking expansion, the Bank enlarged its network with two new branches, thereby increasing its size to 16 branches. In 2012, BOA OF AFRICA - TANZANIA intends to enrich its offer with new electronic money products as well as dedicated SME products. Significant Events 2011 the network size to 16 • Launch in March 20122 of a subordinated loan of 4 million USD concluded with Proparco to support the development of long-term credit. • Signing of a partnership with SFI in November 2011 in order to promote SMEs, achieved by a 4.5 million USD loan. Country Data tanzania Area (in thousands of Km2)945.1 Population (in million) 43.7 Banking Penetration Rate 15% Number of banks 2011 Key Figures • Total Assets : 138.5 million € • Shareholder’s Equity : 12.9 million € • Customer Loans : 110.4 million € • Customer Deposits : 73.7 million € • Net Banking Income : 10.5 million € • Net Income : 0.6 million € • Number of employees : 230 • Network : 16 * 1 EUR = 2 047.89 TZS Other 1.77 % BOA Kenya 24.29% Aureos East Africa Fund Llc 13.83% BIO 22.46 % Aureos East Africa Fund 18.59 % 22.7 1 431 BANK OF AFRICA – TANZANIA’s Net Banking Income has grown by over € 10 million, that is a +19% growth compared to the previous year. This performance is due to the favorable growth in interest and fee-generating activities, of +22% and +23%, respectively. These core business activities represent 85% of Net Banking Income. Conversely, Income on exchange operations have decreased by -18%. The net interest spread increased from 5% in 2010 to 6% in 2011 and the NPL ratio improved by -0.3%p to 2.6% over the same period. Besides, net income has decreased by -38% to reach 0.6 million euro. This below-expectation performance is essentially due to the significant increase in general operating expenses by +29%, following the opening of two branches in the Capital of the country, in a context of high inflation with the rate going from a 6.4% in 2010 to 19.8% in 2011, just like in the three other African countries in East Africa, namely Ethiopia, Kenya, and Uganda. 25 Continuing the Extension of the Network The Bank maintained its investments in the network’s development in order to improve its image and gain additional market share. The Bank opened two new branches during 2011, thereby enlarging its network to 16 branches. In 2012, BOA OF AFRICA - TANZANIA intends to pursue this organic growth in order to enlarge its market share. Client deposits increased to over 110 million euro, representing a +16% growth. Loans also increased by +46%,to reach nearly 74 million euro. ANNUAL REPORT 2011 GDP per Capita -PPP (in USD) FMO 2,76 % Tanzanian Development Finance Limited 10.29% +19% increase in Net Banking Income • Opening of 2 branches in Dar es-Salaam, increasing GDP (in billion USD) Shareholding as of march 6, 2012 57 BMCE BANK GROUP BOA-Uganda During Fiscal year 2011, BANK OF AFRICA – UGANDA significantly increased net income by +71% thanks to a favorable Net Banking Income growth, combined with risk cost management. 2011 Key Figures In 2011, the Bank maintained its banking development efforts by opening 7 new branches, thereby enlarging its network to 28 units, becoming the 3rd network of the Bank of Africa Group, after BANK OF AFRICA - MADAGASCAR and BANK OF AFRICA - BENIN. • Customer Loans : 70.1 million € • Total Assets : 134.1 million € • Shareholder’s Equity : 14.2 million € • Customer Deposits : 86.5 million € • Net Banking Income : 11.3 million € • Net Income : 1.9 million € In order to support its local development plan, the Bank increased its share capital to nearly 4 million €. • Number of employees : 287 Significant Events 2011 1 EUR = 3 217.8 UGX • Expansion of the BANK OF AFRICA-UGANDA network with 7 new branches • Network : 28 Shareholding as of december 31, 2011 • € 2.7 million capital increase to reach € 6.5 million • Launch of a major campaign to collect deposits cal- FMO 17.51% led ‘VIMBA’’ Country Data Area (in thousands of Km2)27.8 Banking Penetration Rate GDP (in billion USD) GDP per Capita -PPP (in USD) Number of banks AFH-OCEAN INDIEN 1.21% AUREOS EAST AFRICA FUND LLC 21.88% Uganda Population (in million) CENTRAL HOLDINGS UGANDA LTD 9.39% 8.3 13% 1.6 614 9 BANK OF AFRICA-KENYA 50.01% Strengthened Capacity to Generate Profits Sales Activity Affirmed Net Income of BOA–UGANDA posted a strong growth of +71% to reach nearly € 2 million. This performance is due to the good handling of the operating activity. Customers deposits have grown by +26%, to reach over € 86 million mainly due to the launch of an innovative resource mobilization campaign from the third quarter of 2011 onwards. Loans has increased by +56%, to 75.5 million euro. Thus, the Net Banking Income grew by +39% to reach over € 11 million essentially due to the increase in net nterest income (+27%), fee income (+49%), and net income on exchange operations (+101%). The Bank also launched new products and services such as e-Utility Payments for the payment of water and electricity bills, and Warehouse Receipt Financing for the support of the agricultural sector. ANNUAL REPORT 2011 Besides, the Bank maintained its net cost of risk at a level comparable to the previous year and improved NPL ratio by 2.7% in 2010 to 2.1% in 2011. 59 BMCE BANK GROUP BOA-Ghana 2011 Key Figures A Difficult Year The Bank posted losses of € -6.58K, an improvement of 20% compared to the previous year, at € -8.14K. The rigorous recovery policy implemented started giving results. Recoveries carried out during the year outperformed objectives of the exercise of due diligence carried out by the BANK OF AFRICA Group, so the amount of bad debts recovery reached € 15.12K. In 2012, BOA-GHANA will maintain good sales performances thanks to the different strategies implemented to cut risk in credit portfolios, as well as the adaptation of credit approval procedures of the Group. The general operating expenses have increased by 12.35% in spite of major investments in order to change the Bank’s logo and staff restructuring. Significant Events 2011 • Total Assets : 189.7 million € • Shareholder’s Equity : 21.2 million € • Customer Loans : 144.4 million € • Customer Deposits : 95.6 million € • Net Banking Income : 17.1 million € • Net Income : -6.6 million € • Number of employees : 561 • Network : 19 branches 1 EUR=2.050 GHS as of december 31, 2011 Shareholding as of march 1, 2012 OTHER 13.18% • BOA Group acquired the Bank’s majority shareholding, with an initial investment of €19.2 million and a second investment of € 11.5 million. • Change of the Bank logo. Country Data BOA WEST AFRICA S.A. 86.82% GHANA Area (in thousands of Km2)238.5 Population (in million) Banking Penetration Rate GDP (in billion USD) GDP per Capita -PPP (in USD) Number of banks 24.3 ND 23.3 3 083 26 BOA-Democratic Republic of Congo AFRICA – RDC, under its second fiscal year, maintained its development activities, as shown by the strong growth of deposits and loans, which virtually multiplied by five, together with the extension of its branch network. Likewise, the range of products and services has been enriched by the launch of the private card called SESAME, the launch of Western Union operations, and the development of a targeted offer of 3 to 4 years credit in favor of select employed customers. Besides, Bank restructuring continued with the doubling of the number of employees, which by the end of 2011 reached 76 employees, most of whom are young women, efficiently supported by a dynamic training policy. 2011 Key Figures • Total Assets : 23.3 million € • Shareholder’s Equity : 9.8 million € • Customer Loans : 6.7 million € • Customer Deposits : 12.5 million € • Net Banking Income : 1.7 million € • Net Income : -2.6 million € • Number of employees : 76 • Network : 6 branches Shareholding as of february 29, 2012 Significant Events 2011 African Financial Holding -Océan indien- 20% • Opening of 5 new branches, out of which an Elite branch, at the Bank’s Head Office. • Bank increased its share capital from 10 M$ to 15 M$. Propaco S.A 20% BIO S.A 20% • Launch of the Salaria Pack and private Sesame Card. BOA Group S.A. 40% Country Data Democratic Republic of Congo Area (in thousands of Km2)2345.4 Banking Penetration Rate 65.9 0.2% GDP (in billion USD) 13.1 GDP per Capita -PPP (in USD) 348 Number of banks 22 ANNUAL REPORT 2011 Population (in million) 61 BMCE BANK GROUP A Year of Investment During its second Fiscal year, BOA-RDC undertook an investment and development policy, with the opening of its first branches, together with a doubling of the staff. The Bank multiplied customer deposits by 4.6, and its loans by 4.8. This year of investments translated into a – € 2.6 million loss, compensated by a capital increase of $ 5 million, from $ 10 million to $ 15 million thus reflecting the shareholders’ trust in this recently created bank. Bank’s Civic-Mindedness Under its social plan, BOA-RDC brought its support to the different associations of people living with a disability in the city of Kinshasa, men and women with reduced mobility, deaf and hard of hearing people, and wounded soldiers. Besides, BOA-RDC intends to support cultural initiatives through partnerships with charity associations and local NGOs. Under the environmental plan, BOA-RDC works for the implementation within its administrative network of socially responsible ecological practices in order to meet new environmental requirements, namely: efficient use of paper, water and power. As part of its Group environmental policy, the BOARDC Group gives special attention to environmental risk analysis in the framework of credit granting, on the grounds of criteria linked to environmental protection, the demonstration of moral and ethical values in the use of funds. Besides, with the perspective of encouraging long term savings, BOA-RDC actively took part in the launch of the International Savings Days, organized by the Central Bank of Congo ant the KFW German Development Agency. Support to these days was also aided by the launch of another savings product, called « FUTURIS », to benefit children. BOA-Mer rouge BANK OF AFRICA – MER ROUGE (BOA-MER ROUGE) met the challenge to replace an existing Bank, which was over one hundred years old, while forging loyalty among customers and employees Country Data Year 2011 was impacted, especially during the first quarter by a period of waiting by the customers, and the public in general, due to its new identity and management. BOA–MER ROUGE is thus the 11th Bank in Djibouti, on a quite tight market. Area (in thousands of Km2)23 Red Sea Population (in million) 0.8 Banking Penetration Rate 5% GDP (in billion USD) 1 GDP per Capita -PPP (in USD) 2641 Number of banks 11 Successful Start In 2011, customer deposits of BOA-MER ROUGE stood at € 239.6 million, whereas loans reached € 67.1 million, decreasing by 5% compared to 2010 due to investment projects impacted during the electoral year and by the consolidation of the commitments portfolio. Net Banking Income reached € 11.8 million, with a 5.5 % decrease compared to 2010. This decrease, combined with mediocre performance in terms of expenses, increasing by 3.7 %, reflects in a reduction of the Gross Operating Margin to € 4.2 million compared to € 5 million by the end of 2010. On the other hand, net income of the fiscal year grew significantly compared to 2010 with € 2.8 million in 2011 compared to € 0.8 million the previous year. 2011 Key Figures • Total Assets : 275.1 million € • Shareholder’s Equity : 14.78 million € • Customer Loans : 236.42 million € • Customer Deposits : 67.1 million € • Net Banking Income : 11.7 million € • Net Income : 2.76 million € • Number of employees : 133 • Network : 3 branches 1 EUR=229.5622 DJF Shareholding as of march 22, 2012 Significant Events 2011 ROUGE, the bank’s new name, following the takeover of INDOSUEZ MER ROUGE by the BANK OF AFRICA Group. • Participation of BOA-MER ROUGE in the International Investors Conference organized in Djibouti by the Ministry of Economy, Finance, Planning and Privatization. Propaco S.A 20% FMO 20% African Financial Holding Ocean Indien 60% ANNUAL REPORT 2011 • Official launch of the name: BANK OF AFRICA – MER 63 BMCE BANK GROUP LA CONGOLAISE DE BANQUE Sound Fundamentals During the year 2011, La Congolaise de Banque has achieved a satisfactory financial performance with an increase of 21% of net banking income, reaching € 25.7 million thanks to the growth in net interest income and net fee income (Western Union and Foreign Exchange). In addition, both the Gross Operating Income and the Net Income have increased by 21% and 25%, respectively amounting to € 13.7 million and € 9.2 million. Likewise, la Congolaise de Banque has seen its equity strengthened by + 26.3% to almost € 30 million. Sound Business Performance During the year 2011, La Congolaise de Banque maintained its sales momentum, as evidenced by the increasingly favorable level of loans and deposits + 33% and +19%; namely, € 168 million and € 356 million, respectively. The customer base has expanded with a 10% increase in the number of accounts to reach nearly 61,000 accounts by the end of 2011. With 4 new electronic payment products, La Congolaise de Banque has also strengthened its position in the electronic payment market, allowing for the uptake rate to rise from 52% to 65%. The number of bank cards issued grew by + 41% to reach nearly 25,600 cards. The Year 2012 Under Continuity The year 2012 will be marked by the inauguration of the new regional headquarters office in Pointe-Noire and the continued development of the Bank’s network through the opening of two new branches in Batignolles and Oyo in Brazzaville. In addition, the range of products and services will be greatly enhanced, more particularly in the areas of mobile and electronic banking. 2011 Key Figures • Total Assets : 399.3 million € • Shareholder’s Equity : 20.5 million € • Customer Loans : 168.5 million € • Customer Deposits : 351.8 million € • Net Banking Income : 25.7 million € • Net Income : 9.2 million € • Number of employees : 247 • Network : 16 1 EUR = 655.957 FCFA Shareholding as of end of december, 2011 Other Shareholders 4% BMCE Bank 25% Private Inverstors 60 % Republic of Congo 11% BANQUE DE DEVELOPPEMENT DU MALI Country Data MALI Area (in thousands of Km2) 1 242 Population (in million) 15.3 Banking Penetration Rate 6.6% GDP (in billion USD) 9.2 GDP per Capita -PPP (in USD) 1 127 Number of banks 13 2011 Key Figures Despite a difficult socio-political environment, the Banque de Développement du Mali -the first bank in the country has maintained a good track record with a favorable growth in its main activity indicators. Thus, loans and deposits increased by +24% and +9% to € 313 million and € 524 million respectively. Similarly, the net banking income rose by 10% to € 36 million. Net Profit, meanwhile, was up more than 27% to € 10.5 million. In addition, the bank has strengthened its equity by +13, 6% to nearly € 61 million in 2011, against € 53 million in 2010. • Total Assets : 639 million € • Shareholder’s Equity : 61 million € • Customer Loans : 524 million € • Customer Deposits : 313 million € • Net Banking Income : 36 million € • Net Income : 10.5 million 1 EUR = 655.957 FCFA Shareholding as of end of december, 2011 Private inverstors and other 8.25 % State of Mali 19.58% MCCI 12.8% *** WADB** 15.96 % BMCE Bank 27.38 % CBWAS* 15.96 % ANNUAL REPORT 2011 *CBWAS : Central Bank of West African States **WADB : West African Development Bank ***MCCI : Mali Chamber of Commerce and Industry 65 BMCE Bank in Europe and Asia BMCE BANK GROUP BMCE Bank in Europe and Asia BMCE Bank International Plc* A Promising Transformation The year 2011 was characterized by the pursuit of restructuring program started in 2010, which aims to make the subsidiary of BMCE Bank profitable after the impact it underwent due to the financial crisis of the past few years. These restructuring actions resulted concretely in staff rationalization and sharing of some support functions between BMCE Bank International UK and the Paris Branch. Improving results Further to the transformation program implementation in Europe, in a gloomy international context, general ope(*) Integrating presence in France and the United Kingdom. rating expenses were reduced by -16%, thus generating savings of £4 M (that is, 53 million MAD). Such rationalization efforts should be further enhanced in 2012. In addition, BMCE Bank International was able to preserve the size of its balance sheet at around £300 M (that is, almost 4 billion MAD). In terms of income, the Net Banking Income stabilized at around £18 M, roughly corresponding to 240 million MAD, largely due to the new strategy of the Corporate Banking activity, oriented towards short term financing, namely Trade Finance. Therefore, deficit was largely reduced in comparison to previous years. In a difficult economic context in Spain, BMCE International Spain achieved a remarkable performance during tax year 2011, as evidenced by the doubledigit growth of main performance indicators. Hence, the NBI grew by +36% to reach, for the first time, the threshold of 11 M€. Likewise, the Net Operating Income increased by +51% to reach almost 8 M€ and Net Profits grew by +10% to 3,6 M€. Tax year 2011 was also characterized by the development of trade relationships, consolidation of foreign trade activity and of BMCE International Spain Correspondent Banking, as proved by the substantial growth by +66% of documentary credit fees. Sturdy financial performance BMCE International Spain saw the progression of its NBI accelerate by +36% compared with +20% last year, exceeding for the first time the threshold of 11 M€. This performance is due to the favorable evolution of all its components, namely: The net interest income grew by 40%, to stand at 3,4 M€ ; The net fee income grew by +27% compared to the previous tax year, reaching 5,6 M€, that is, over 50% of the Bank’s NBI, drawn by the increase in foreign trade operations’ volume and Correspondent Banking activity; Net Banking income breakdown 19% 16% 18% 37% 54% 50% 44% 30% 32% 2009 2010 • Fx income • Net fee income • N et interest income 2011 Net Operating Expenses were contained at +8%, reaching 3 M€, thus inducing an improvement of the cost to income ratio of 34,5% in 2010 to 27,4% in 2011. Consequently the Net Operating Income reported a significant rise of +51% to almost 8 M€. Net profits grew by +10% to stand at 3,6 M€, in an exceptionally bearish context of -1,3 M€, following the deterioration of equity shares value held in a Savings Bank in Spain. Promising 2012 indicators BMCE International Spain has identified several strategic axes for the year 2012, including: Income generated by the exchange activity grew by 58%, to stand at 2 M€. Consolidation of commercial relationships, with a reorganization of the distribution of its products and services per geographic area and cross selling reinforcement; The structure of BMCE International’s NBI reflects strategic orientations favoring the development of sources of income derived from service activities, at the expense of so-called “classical” intermediation activities, in an environment impacted by the increase in cost of credit risk. Strengthening of the Bank’s international positioning, with accrued presence in the geographical zones of Eastern and Western Africa thanks to active participation in investment projects throughout the Bank of Africa network; Coordination of Madrid, London and Paris sales teams, in order to improve commercial efficiency and ensure resource optimization. ANNUAL REPORT 2011 BMCE International Spain 69 BMCE BANK GROUP BMCE Beijing In 2011, BMCE Bank continued to play an active role in the development of Chinese-African economic and commercial cooperation. To this purpose, a $50 M credit line and a credit M.O.U* of $150 M were signed between BMCE Bank and China Development Bank. In parallel, BMCE Bank strove to further strengthen its corporate relationships in China for Companies willing to invest in Morocco and in African countries which form part of the Bank of Africa network. In addition, a watch strategy was actively carried out on the development of Chinese investments in Africa and on commercial exchanges between China and African countries. *M.O.U: Memorandum of Understanding. Finally, considerable contribution was brought to the development of solar energy projects between China and Morocco. This project intends to develop Chinese investments in the solar energy sector in Morocco. In this view, a group of Chinese companies forming part of the Original Energy Technology Beijing group, were approached in the context of the creation of a solar center in Ouarzazate. BMCE BANK AND IT’S ENVIRONMENT BMCE BANK GROUP International Economy 2012 MARKED BY AUSTERITY IN EUROPE In 2011, the global growth slowed down significantly to 3% against the 4.2% growth rate in 2010 hence limiting the prospects of long-expected recovery. The growth rate of world trade drastically dropped further to 6.7% against 13.5% a year ago. If the shocks induced by the earthquake in Japan or the rise in commodity prices contributed to this slowdown among the developed countries, it remains nevertheless largely explained by surplus production capacities, high levels of unemployment and the need to reduce debt among households and States. So, the GDP growth outlook for the Eurozone is revised downwards and is forecasted at -0.3% in 2012. Germany and France will likely lose their status as European «growth engine» with only 0.6% and 0.5% growth rates respectively. The United States Prudent Optimism At the same time, the relative loss of momentum in certain developing economies has confirmed the vulnerability of growth rates and their dependence on commodity prices as well as foreign demand particularly from major economies. With an estimated 1.7% growth rate in 2011, the United States is doing relatively well given the current context. However, the factors that impacted the economy earlier this year do persist. The labor market remains hesitant due to the lack of visibility on macroeconomic, budgetary and tax outlook. The upcoming elections will provide direction to the system to be infused into the system. Besides, the contribution of foreign trade is expected to slow down any sustainable appreciation of the Dollar against the Euro, hence reducing the competitiveness of American economy. In this context, the global growth is expected to record a further slowdown in 2012 and is forecasted at around 2.7% with mixed progress nevertheless. Besides, if household consumption keeps a steady pace all year round, it could however experience a slowdown in the medium-term. Eurozone Main Steps Towards the Recession In Europe, the real economy still continues to suffer from the sovereign debt crisis, particularly with unemployment which continues to deteriorate because of the relations prevailing between financial markets, public finances and banking sector. Besides, the various measures taken to check the lack of market confidence, such as implementing European stability fund or greater role of ECB, have not harvested the expected effects. The austerity plans add up to these problems and further entail waiting-games among companies in terms of production, investment and debt. The rather high debt makes them more vulnerable to any further tightening of credit conditions. Indeed, wages are in fact constrained by the weak labor market which impacts disposable income and leads to a decrease in savings rate. So, the 2012 growth rate would not exceed 2.1% given the domestic consumption’s 2/3 share in GDP growth and continued debt relief for households. The Developing countries will endure the effects of slowdown in European demand and decrease in exports, combined with the new wave of deleveraging by Eurozone banks causing a decrease in investments and financing. Hence, Central / Eastern Europe and Latin America will experience a slowdown because of their high exposure to the old continent - like Czech Republic and Hungary with 85% of the GDP, Romania and Poland with 50% of the GDP, and Chile with 34% of the GDP coming directly or indirectly from trade with Europe. (*) BRICS : Brazil, Russia, India, China and South Africa. The impact would however be limited for BRICS* and Asian countries who are the main contributors to growth in emerging markets. This is mainly due to the significant size of their domestic savings, room for budgetary maneuver and diversification of their business partners. Therefore, the region’s growth for 2012 is expected to be around 5.7% against 6.2% in 2011. ANNUAL REPORT 2011 Developing Countries Resilience of BRICS and Uncertainties for Central Europe and Latin America 73 BMCE BANK GROUP National Economy 2011, YEAR OF RESILIENCE IN THE FACE OF GLOBAL CRISIS Despite the turmoil experienced by most of the developed countries, the Moroccan economy has showed some resilience with a 4.9% growth rate expected in 2011. This performance is based on the fundamentals of consumption and investment indicating a dynamic domestic demand. Consolidation of Growth 4.9% in 2011 In a fragile international context, the growth rate finally settled at 4.9% for the year 2011 after a slight decline in national growth in the second quarter reflecting good performances in service and construction sectors. This progress reflects 5% agricultural growth and 4.6% nonagricultural growth. As regards the primary sector, the agricultural yield performance turned out favorable for 2010/2011. At the end of December, the cereal production was close to 84 million quintals, which is an increase of 12% with regard to the previous yield. Consistently, there has been a significant 48.4% decline in cereal imports at 9.5 million quintals with regard to 18.4 million quintals the previous year. For its part, the manufacturing sector has sustained growth with the mining and construction businesses in the forefront. As for the year 2011 the phosphates exports amounted to 47.3 billion MAD thanks to dynamic foreign demand and favorable world prices. This is 32% increase on year on year basis. Moreover, cement consumption, which is the construction sector, main barometer, increased by 10.7% at the end of December driven by 10% rise in outstanding mortgages amounting to 209 billion MAD over the same period. Finally, the postal and telecommunications sector recorded strongest 18% growth in terms of added value for the first three quarters of the year 2011, within the service sector, with 14.3% and 70.4% increase in mobile and internet parks respectively. At the same time, the tourist sector remained characterized by a positive growth in arrivals. It recorded an increase slightly above 1% and generated 4.3% increase in revenues from travels by the end of December 2011. Domestic Demand Dynamics All year round in 2011, household consumption benefited from good 7.3% performance of NRM remittances, unemployment rate stationary near 9% and good 10.5% performance of consumer loans. At the same time, the measures taken by the government in terms of valuation of wages and subsidy of certain commodities have allowed to support consumer purchasing power. Consequently, the final household consumption expenditure has risen by 7.3% in the third quarter contributing to the growth by up to 4.1 points. Annual Inflation Contained at 0.9% In a context marked by moderation of domestic inflationary factors and stabilization of imported inflation, the consumer price index is up 0.9% by the end of December. At the origin of this rise, the limited 1.3% increase in food prices, 1.6% increase in clothing, and 4.1% increase in education. Besides, the intensifying competition in telecom industry was translated by a marked 5.4% decrease in the costs of this sector. At the same time, underlying inflation is at 1.3% showing a slowdown in the volatility of commodity prices. Trade Balance 2011 Dependent on Food and Energy Prices Trade for the year 2011 was characterized by a fast growth in imports with regard to exports. In fact, the 19% growth in purchases at 355 billion MAD is strongly correlated with 32.7% increase in energy and 30.7% increase in food import expenditure. This frenetic growth rate has altered the import structure bringing the share of finished equipment products down from 22.3% in 2010 to 19.3% in 2011. As for exports, they reached 169 billion MAD up 13% by the end of December. This increase is essentially driven by the 31.5% growth in the sales of phosphates and derivatives, 75.4% growth in industrial cars, and, in a lesser measure, 5.4% growth in hosiery, and 4.3% growth in electric wires and cables. On the other hand, the shipping of either raw or processed food products fell strongly because of supplyside difficulties. In this context, the cover rate by the end of December is at 47.7% declining by 2.5 points with regard to the same period last year bringing trade deficit to 185.7 billion MAD. As regards financial flows, NRM remittances and revenues from travels registered a growth of respectively 7.3% and 4.3%. This performance contrasts with the strong 35% decrease in revenues as regards the IDE, corresponding to a shortage of 13.7 billion MAD. From then on, the net foreign holdings have deteriorated this decrease marked with incoming flows down 12.7% at 166.4 billion MAD by the end of December against 187.5 billion MAD last year. Deceleration of Growth Rate At the same time, the credit to the economy, which represents the main source of monetary creation, was at 791.3 billion MAD by the end of December with a relative 10.2% increase against respectively 11.5% and 10.7% for 2009 and 2010. In the medium term, if the counterparts of the money supply continue to fall, particularly the credit to the economy and foreign holdings, it will result into pressure on interbank interest rates and therefore decrease in investments. Besides, the anticipations of households with regard to a gloomy situation will lead them to reduce their debt and hence increase savings. Liability of Social Compensations and Agreements Pressure on Budget 2011 After two years of decrease in budgetary revenues due to fallout from the financial crisis, the revenues have increased again during the year 2011. Actually, the ordinary revenues recorded a 7% increase to 207 billion MAD. This favorable growth is attributable to the mark-up of direct and indirect taxes. However, despite this performance there was 6.1% rise in the budget deficit of government finances for 2011 amounting to 50 billion MAD by the end of December. A big part of this rise is attributable to the substantial increase in compensation liabilities. In fact, they are considered at 41 billion MAD at an operating ratio of 269% with regard to the initial expenditure forecasts. This fact particularly reveals the sharp rise in commodity prices. All governmental allowances within the framework of social dialogue as well as the amounts relating to pay rises amounting to 8.6 billion MAD are further added to this expenditure. The year 2011 experienced a slight 6.4% increase year on year in money supply, denoting the absence of monetary inflation pressures. The analysis of M3 aggregate components however indicates segregated growths. In fact, the paper money registered 9.3% increase against 6.1% increase in bank money. This report can be interpreted as a need to print money in order to ease the existing liquidity crisis temporarily. ANNUAL REPORT 2011 Growth in Monetary Aggregates 75 BMCE BANK GROUP Sub-Saharan Africa MAINTAINING GROWTH RATE IN AFRICA Central African Economic and Monetary Community (CEMAC) Hit Hard by the Global Economic Crisis, the Region Recovers Quickly In 2011 this region was marked by strong growth recovery, controlled inflation, surplus public accounts, tinged by an immediate risk of drop in commodity prices. The economic growth should be at approximately 4.8% within the Central Africa Economic and Monetary Community (CEMAC) against 3.9% in 2010 driven mainly by public investments and commodity exports. The outlook is even better for 2012 because the growth rate could even exceed 6%. Besides, the inflationary pressures would ease at 1.7% in 2012 against 2.2% in 2011 and 1.6% in 2010. However, the price increase of food and energy products risks impacting these forecasts. For their part, the balance of public accounts would be surplus and the foreign cover rate of the currency would remain comfortable at around 100%. In view of this quasi-idyllic conclusion, any downward trend of commodity prices would be the crucial blow that the zone could suffer. West - African Economic and Monetary Union (UEMOA) A Difficult Context Marked by Strong Recession in Ivory Coast, Inflationary Pressures and New Pressures on Expenditure The UEMOA Zone has experienced a complex internal context for the countries of the Union with declining GDP growth rate expected at 1.2%, recovering inflation and deteriorating budgetary accounts. In fact, the repercussions of the post electoral political crisis inherent to Ivory Coast were felt in several national economies, mainly because of the weight of Ivory Coast in the Union. The Union’s economic growth estimated at 4.6% in 2011 is now out of reach. Therefore a significant loss of growth is expected in 2011 in connection with 6.3% recession in Ivory Coast. Looking forward to thorough crisis impact analysis for this country, the Union’s growth rate could be around 1.2% in 2011. As regards prices, the increase persists despite the good agricultural yield in 2009-2010. In fact, the annual year on year inflation rate in the first quarter was up 3.9% against -0.2% for the same period in 2010. The outlook to comply with the 3% standard therefore seems difficult to achieve, because of the frenzy of the prices of food products and imported fuels in the absence of suitable measures. Besides, the situation of public finances in the Union looks difficult in relation with the post electoral crisis situation in Ivory Coast and social crisis in Burkina Faso. All in all, the overall deficit at Union level should deteriorate to 4.6% against 2.9% in 2010. East African Community - (EAC) Fastest Growth in the Continent, But Mixed Performances Finally, the EAC Region shows continued growth and recovering inflation among import countries, in relation with the increase in prices of food products and fuels, internal savings impacted by little growth of financial services and dependency still marked by international assistance. In 2011, east Africa continued on its scope carried by the strong growth registered in countries such as Ethiopia, Uganda, Tanzania and Rwanda particularly in industrial services namely telecommunications and constructions. Suffering from the drought, floods and terrorist attacks led by Somali militiamen, Kenya saw its growth rate close to 4% revised downwards below the forecasted growth between 5.5% and 6.1%. At the same time the political impasse continued to damage economic activity in Madagascar and its GDP decreased for the second consecutive year. As for the recovering inflation, Kenya for example registered an increase in its inflation rate year on year in November at 19.7% for the 13th consecutive month. Moreover, less than a third of the population of Rwanda, Uganda and Tanzania have access to formal financial services against approximately two-thirds of the population in South Africa. Finally, the region has also shown strong dependence towards aid at average 3% of the GDP during last decade (excluding debt relief) in contrast to only 1% of the GDP in sub-Saharan Africa. BMCE BANK AND ITS GOVERNANCE BMCE BANK GROUP Board of Directors’ Activities Board of Directors’ Mission & Operation The Board of Directors seeks to guarantee a fair balance between shareholders’ interests and perspectives for growth, long-term value and depositors’ protection. This mission is based on two fundamental elements: decision-making and surveillance. In this respect, the Board of Directors seeks to (i) elaborate, together with General Management, fundamental policies and strategic objectives, (ii) approve some important decisions. In terms of surveillance, the Board of Directors is the ultimate warrantor of systems compliance, policy control and implementation. In line with the provisions of the Bank Al-Maghrib Directive and Good Governance best practices, the Board of Directors is governed by a set of internal Rules of Procedure. These internal rules compile all rules on composition, missions, operation and special Board of Directors’ mandates. Furthermore, a Director’s Charter, in addition to these by-laws, sets rights and obligations, in terms of mission, independence, diligence, Stock Market operations’ code of ethics, obedience to legal prescriptions, conflicts of interest, professional secrecy and loyalty of the Members of the Board. The latter de facto abide by founding principles of the ByLaws and the Director’s Charter. In an exhaustive but non-exclusive manner, the Board of Directors seeks to : Strategic Planning • Supervise orientations ; the elaboration of plans and strategic priorities ; • Ensure the implementation and efficiency of approved strategic and operating plans ; • Review and approve financial objectives and operating plans, as well as measures taken, including capital attributions, expenses and operations which amount exceeds the threshold set by the Board. Governance • Monitor and manage potential conflicts of interests that may lie between its members and Management bodies or shareholders ; • Set up specialized Committees, stemming from the Board, and define their mandates, to support the Board in its role and responsibilities ; • Evaluate Committees regularly and examine their composition in order to guarantee the efficiency and independence of the Board and its members. • Make sure that processes are implemented in order to determine their main activities associated risk; • Examine systems implemented by General Management in order to manage risk; • Examine processes ensuring the respect of applicable requirements linked to regulation, companies, nontangible assets, and other legal commitments. Internal Control • Ensure the implementation and effective operation of the internal control system and embracement of a culture of control and accountability by the entire group ; • Examine the efficiency of internal control systems and information management systems ; • Examine financial statements and verify their compliance in terms of monitoring, accounting and information presentation ; • Prepare dividend proposals to submit to shareholders; • Approve expenses and operations which amounts exceed thresholds set by the Board. Composition of the Board of Directors BMCE Bank’s Board of Directors is today made up of twelve members, 9 of which are non-executive Directors. During tax year 2011, the Board took stock of the Caja del Mediterráneo ‘s resignation, represented by M. Roberto López ABAD as Director – legal entity – of BMCE Bank, resignation simultaneous to the ceding of all of its assets to the benefit of the FinanceCom Group. This divestiture falls within the framework of a global withdrawal operation from its minority shareholding that Caja del Mediterráneo has conducted, in view of regulatory recapitalization imperatives following the difficulties this Spanish financial entity has encountered during the economic crisis in Spain. Works of the Board In 2011, the Board gathered twice, in order to debate and rule over the following issues: • Closing of Accounts and benefits allocation proposal; • Examine Audit Committee and Internal Control reports; • Examine Bank’s activities, incomes and forecasts; • Examine the Group’s International situation and perspectives; • Renew Statutory Auditors’ mandate; • Regulatory Conventions’ Authorization; • Appointment of new General Managers; ANNUAL REPORT 2011 Risk Management 79 BMCE BANK GROUP Senior Management Brahim BENJELLOUN-TOUIMI Director & Delegate General Manager to the Chairman Mr. Brahim BENJELLOUN-TOUIMI is Director & Delegate General Manager to the Chairman in charge of coordinating BMCE Bank Group’s activities since March 2010. He is also in charge of the Chairmanship of the General Management Committee, the Vice Chairmanship of the Senior Credit Committee and the Chairmanship of the supervisory Board of BMCE Capital and Salafin. Likewise, he is on the Board of BOA holding and chairman of the Board of BMCE Euroservices, a business unit dedicated to Moroccans Living Abroad in Europe. After joining BMCE Bank in 1990, his career was marked by the creation of dedicated subsidiaries, the set up of stock brokerage and asset management activities, as well as the launch of the first mutual funds on the Casablanca Stock Exchange. In conjunction with his functions at the Bank, he is Director of the Bank of Africa Mr. Mamoun Belghiti is Director and Delegate General Manager, Chairman and Chief Executive Officer of a Group Subsidiary dedicated to debt collection, RM Experts. Mamoun BELGHITI Director & Delegate General Manager in charge of RM Experts Mr. Belghiti began his career in 1972 in General Services, and later in the Inspection Division. He was appointed manager of the credit and Treasury Division in 1981, and of the investment and credit Division in 1991. In this Capacity on behalf of the Bank Mr. Belghiti negotiated several credit lines, in particular with the World Bank, IFC, IMF, EIB and ADB. In early 1996, he became Manager of the Financial Affairs Division where he actively participated in the establishment of the development strategy – Kenya as well as Chairman of the Supervisory Board of Euroafric Information, a joint venture specialized in IT created by BMCE Bank – RMA Watanya and the Crédit Mutuel CIC Group. Board member of Euro Information in France, the IT subsidiary of Credit Mutuel Group, Mr. Brahim BENJELLOUNTOUIMI chairs the Board of Directors of several IT subsidiaries of BMCE Bank Group. He is also board member of RMA Watanya, the insurance company of FinanceCom Group. Board member of BMCE Bank Foundation and other educational NGOs, he is Chairman of PlaNet.Finance Maroc, an international solidarity organization dedicated to the development of micro finance, as well as Chairman of the National Association of Moroccan Business Corporation (ANMA). Mr. Brahim BENJELLOUN-TOUIMI holds a PhD in money, finance and banking from the University of Paris I/ Pantheon-Sorbonne. During his PhD studies he was selected by the IMF to conduct research on the financial system of one of the member countries. He began his career on the French financial market and headed research on the trading floor of a large French investment bank. Born in 1960, Mr. BENJELLOUN-TOUIMI is married and father of three children. plan and reorganization of the Bank. The same year, alongside with the Chairman and other senior executive, he participated in the GDR issue enabling BMCE Bank to raise capital on international capital markets. In the same fiscal year, Mr. BELGHITI was promoted to Deputy General Manager. In March 2004, Mr. BELGHITI was appointed Director and General Manager in charge of the Remedial Management Group’s. In February 1998 he was appointed General Manager in charge of the Financial Affairs Division as well as Retail Banking. In April 2002, he became the Main Advisor to the Chairman in charge of representation of the Bank to National and international Institutions as well as relations with monetary authorities. He occupies a seat in the organizations in which the Bank is a shareholder. Born in 1948, Mr. BELGHITI is married and father of two children. He has also participated in several seminars that he held in Morocco as well as abroad. Driss BENJELLOUN Delegate General Manager in charge of the Group’s Risk & Finance M’Fadel EL HALAISSI Delegate General Manager in charge of the Enterprise Bank Following the privatization of BMCE Bank, Mr. Driss BENJELLOUN was put in charge of the Banking Production Department, the Back Office of the Bank, and tasked with the mission of rationalizing the entities pertaining to it, and providing them with the Mr. M’Fadel EL HALAISSI is Delegate General Manager in charge of the enterprise Bank. This new General Management Division was set up within BMCE Bank at the beginning of 2010 in order to gather together and boost the Enterprise markets- the small and medium-sized business as well as corporate/ this new responsibility was assigned to Mr. M’Fadel EL HALAISSI after 25 years of career within BMCE Bank where he served in many areas: credit activities; investment financing; credit-restructuring; set up off balance sheet solutions; as well as other activities pertaining to the Enterprise market. necessary tools and means in order to better serve customers. In 1998, Mr. Driss BENJELLOUN was appointed Deputy General Manager in charge of several department within the Bank which make up the Group Support Division – notably, Banking Production; Information Systems; Organization; Logistics; and Security. Indeed the prime mission of the Division consisted on coordinating and harnessing these entities in such a way as to better meet the new challenges facing the bank and its development both at the national and international levels. In 2003, Mr. Driss BENJELLOUN took the reins of the Group’s Financial Division with a view to shoring up the integration of the various BMCE subsidiaries in Morocco, Europe, and AfriWhen he joined BMCE Bank, Mr. M’Fadel EL HALAISSI was entrusted with the creation of an Investments Credit Restructuring Department. He also participated in the negotiation and the implementation of several foreign credit lines- notably, World Bank’s lines; International Finance Corporation’s lines; and European Investment Bank’s lines. Thereafter, in 1998, he was put in charge of the Investment and Corporate Market Division. In April 2002, he was appointed Deputy General Manager in charge of the Corporate Bank, a division which was to be extended to cover international business activities. Moreover, he has steered the process of setting up several entities, such as: BMCE International Madrid; Maroc Factoring; Interbank Card-use Center and Docuprint. In Africa, he participated in the restructuring of the BDM and steered the merger of the latter with the BMCD. Mr. Driss BENJELLOUN started his career as a consultant auditor in various renowned foreign firms and also served as a professor at Picardie University. He holds a doctorate in finance from Paris Dauphine University and a Diploma in Advanced Accounting Studies. Mr. Driss BENJELLOUN, who was born in 1955, is married and a father of three children. Mr. M’Fadel EL HALAISSI has actively participated in the upsurge of Project Finance Deputy, financial advisory Services, and specific follow-through of operators who have resorted to these types of investments. Mr. M’Fadel EL HALAISSI, who holds a doctorate in economics from the University of Lille, is married and father of two children. RAPPORT ANNUEL 2011 Mr. Driss BENJELLOUN is Delegate General Manager in charge of BMCE Bank Group Finances & Risks. He is also Director of Group Subsidiaries notably, BOA Group, BOA Benin & BMCE Capital. When he joined BMCE Bank Group in 1986, Mr. Driss BENJELLOUN was tasked with the project of creating a Management Control Unit for the purpose of improving the steering of activities. In 1990, he was entrusted with endowing the Bank with an Audit and Management Control Department. ca. In parallel to this, Mr. Driss BENJELLOUN was tasked with leading two major structuring projects: the adoption of IFRS standards for the Group’s accounts and the implementation of the standards spelled out by Base1 II. 81 BMCE BANK GROUP Senior Management Mr. Mounir CHRAIBI, Delegate General Manager, in charge of the Group’s Information Technology and Process since March 2010. Mr. Mounir CHRAIBI began his career back in 1987 as a project-manager in charge of the Crédit du Maroc Information Systems master-scheme. He then served as Head of Organization and Information systems at the Harbors’ Operating Office. During this period, he had carried out missions to simplify foreign trade for the benefit of the Ministry in charge of Foreign Trade. Mounir Chraibi Delegate General Manager in charge of the Group’s IT & Finance Process In 1994, Mr. Mounir CHRAIBI was appointed General Manager of the Vocational Training and Employment Promotion Office. His term in the Office was marked by the development of ongoing in-house training and the launch of programs for the recruitment of young people, notably in IT areas. His action within the Office actually Mr. Omar Tazi serves as a Delegated General Manager in charge of the Retail Bank within BMCE Bank Group. OMAR TAZI Delegated General Manager at BMCE Bank Mr. Omar Tazi previously served as manager in charge of customers’ portfolio within Canada Development Bank –a bank specialized in the funding of investment projects launched by small-and-medium sized firm. He then worked as Deputy Credit Manager for the Montreal District. In 1992, he joined Wafa-Bank in the capacity of officer in charge of cash-management. Between 1993 and 2005, Mr. Omar Tazi held several senior positions within the Société Générale Marocaine de Banques (SGMB), notably “Officer in charge of Investment Credit; officer contributed to the creation of the National Agency for the Employment of Young People (ANAPEC). In 2001, Mr. Mounir CHRAIBI was appointed Manager General of the National Social Security Fund (CNSS). And during his term there, CNSS had had its management methods modernized, as seen for instance, in the setting up of tele-declaration of the employees on the payroll of private sector enterprises or the tele-payment of social contributions. This period was likewise marked by the launch of Mandatory Health Insurance – a new branch within the social security scheme. upsurge in private investments as well as the implementation of major structuring public investments throughout the Marrakech region. Mr. Mounir CHRAIBI was graduated as an engineer from the Paris-based Ecole Polytechnique as well as an engineer graduated from the National Higher School of Telecommunications in Paris. He was awarded Leopold Knights Order Medak by the Belgian Kingdom. Mr. Mounir CHRAIBI who was born in 1963, is married and the father of two children. In 2005, Mr. Mounir CHRAIBI was appointed Wali (Governor) of the Marrakech, Tensift, Al-Haouz Region. During his term, the region saw an in charge of operating the network of Private Persons’, Professionals’ and Corporate markets; and Deputy General Manager of the Commercial Bank. During this period, he likewise served respectively as Manager, Vice-President, and President of several SGMB’s subsidiaries, namely: SOGEBOURSE, GESTAR, SOGECREDIT, SOGEFINANCEMENT, and ACMAR MOROCCO. From 2005 to 2010, Mr. Omar Tazi acquired a rewarding experience in the entrepreneurship area as a result of the senior position he occupied in AFMA Group –a Consulting, Brokerage, and Insurance firm—where he served as Director and General Manager. In June 2011, Mr. Omar Tazi joined BMCE Bank Group to give some impetus to the upsurge in competencies among the Bank’s sales-force. In 2012, Mr. Tazi was appointed respectively as member of SALAFIN’S Monitoring Committee and Delegated Administrator of BMCE’s EUROSERVICES. Mr. Omar Tazi is holder of an MSF from the University of Sherbrook in Canada. Born in 1962, Mr. Omar Tazi is married with two children. MOHAMMED AGOUMI General Manager of BMCE Bank in charge of International Activities After working for the International audit firm Peat Marwick (KPMG) for 7 years where he specialized in auditing and advising financial institutions, Mr. AGOUMI integrated Eurogroup in 1987 where he became a partner in 1990 and head of Banking and Finance Division in 1997 where he directed missions related to strategy or business plans, governance, mergers of institutions, IT cooperation industrialization or backoffices with major French banking groups. During the financial market reform in Morocco, he had the opportunity to assist several local institutions in implementing their market activities. More recently, he has led several interventions relating to the organization and implementation of the risk management under Basel II. Mohammed AGOUMI is married and father of 2 children. Since 2010, he has been chairman and Founder of Europa Corporate Business Group - ECBG - specializing in investment banking, strategic consulting and support for SMEs, one of the program of La Passerelle Group for investment advice between Europe and Morocco. He is also Chairman of the ECBG subsidiary created in Morocco and named Financing Access Maroc that provides assistance to SMEs in their banks refinancing. RAPPORT ANNUEL 2011 Mohammed AGOUMI is the Delegate General Manager of BMCE Bank in charge of international activities. From 2006 to 2009, he held various positions and responsibilities within the Crédit Agricole Group France - CASA -. Appointed Delegate General Manager of LCL - Le Crédit Lyonnais in 2006 and member of the Group Executive Committee CASA, he was in charge of the operations, the strategy and of the credit Department. He also completed the integration of LCL in industrial platforms Crédit Agricole Group as well as the reorganization of distribution networks including Private Banking and Corporate Banking. In 2008, he was appointed to the Group Executive Committee to manage CASA International Development. Mohammed AGOUMI graduated from ESSEC (1979) and holds a DEA in Mathematical Economics and Econometrics (1980). He is also a graduated Chartered Accountant in Paris (1993) and taught for two years at ESSEC as Assistant Professor in the Economics Department. 83 Organizational Chart B M C E B A N K gro u p Othman Benjelloun Chairman & CEO GROUP GENERAL CONTROL K. LAABI GROUP PUBLIc RELATIONS R. KABBAJ GROUP GENERAL INSPECTION A. REZKI group audit and internal control committee BMCE Bank FouNDATION DR. L. MEZIAN-BENJELLOUN governance committee Group strategic committee chairman’s office N. ECHCHERKI GROUP internal AUDIT R.TOUBI B M C E B A N K S.A. Othman Benjelloun Chairman & CEO Director & delegate gm to the chairman B. BENJELLOUN-TOUIMI bank audit and internal control committee general management committee GM-INTERNATIONAL M. AGOUMI group coordination risk & control committee GM - corporate bank M. EL HALAISSI h. daouk Delegate C-Manager retail bank gm - Group FINANCE & RISkS D. BENJELLOUN equity holdings & synergies D. BENJELLOUN F. BABY-BERRADA Delegate C-Manager MIGRANTS market A. NADLA atlantic centre s. el m’rini CENTRAL SOUTH FZ. REMMAL MLA foreign network A. MESBAHI center e. benjelloun-touimi means & projects steering M. ZEMMAMA great South F. EL IDRISSI / D. NEJDI PREVENTIVE management of risks M. RYACHI SENIOR BANKER I S. MEZOUAR SENIOR BANKER II A. EL OUAZZANI investment finance M. AFRInE BMCE CAPITAL BOURSE Y. BENKIRANE BMCE CAPITAL GESTION A. AMOR ANALYSis & REsearch F. HOUSNI EULER HERMES ACMAR T. BENZAKOUR BMCE ASSURANCES F. LAHLOU - GM private customers Z. ARAFA South CASABLANCA A. FOUSI RISK MANAGEMENT & QUANTS H. BARAKAT professionals M. BAHRIRE BMCE CAPITAL markets a. BENabdeljalil GENERAL SECRETARIAT M. IDRISSI PRODUcT & SERVICES M. KABBAJ large corporations R. ALAOUI-HAFIDI NORth CASABLANCA A. ALAMI HAMDOUNI development & means S. BENJELLOUN private individuals A. LAHBichI entreprise MARKETING & sales mgt H. BELATIK Credit Insurance Insurance Car Rental Services multichannel products & services M. KABBAJ multichannel M. KABBAJ LOCASOM Y. SENHAJI - GM Factoring MAROC FACTORING S. TAZI chairman of the board of managers SALAFIN Consumer Credit A. BOUABID chairman of the board of managers Remedial Management RM EXPERTS M. BELGHITI chairman & ceo MAGHREBAIL A. GUESSOUS chairman & ceo Leasing Y. BENKIRANE, Deputy Chairman M. Idrissi, General Secretary risk Management O. LAHBABI BMCE BANK INTERNATIONAL U.K M. BIRCHAREF GROUP SECRETARIAT GENERAL H. SBIHI risk management abroad m. zahed project mgt & it system I. EL BOUKHARI group purchasing H. EL AISSAOUI GOVERNANCE & DIRIGEANCE N. REGRAGUI sustainable development & soc. & env. responsibility S. SEBTI credit analysis & monitoring R. ANOUA banking processes & services A. BELAFIA GROUP quality H. BOURAOUI Business INTELLIGENCE M. TAHRI JOUTEI financial communication M. EL AOUFI bank finance K. GUERRAOUI GROUP LOGISTIcs N. BENABDALLAH buildings & property y. benchaaboun east J. EL HACHIMY BMCE CAPITAL TITRES A. FASSI FIHRI logistics H. GOURRAM group IT PLATFORMS Y. KARKOURI NORTH MEDITERRANEAN F. OULAMINE group legal A. BERRADA bank accounting J. TAHRI-JOUTEY EURAFRIC INFORMATION & subsidiaries DOCUPRINT legal corporate t. amma magshore & subsidiaries GNS & subsidiaries corporate COMMUNICATION L. BENKIRANE BMCE CAPITAL CAMEROON S.Y. NANA COMMERCIAL COMMUNICATION M. JAZOULI GROUP HUMAN CAPITAL L. SERAR TAZI HR eNGinEeRIng & internal COMMUNICATION GROUP SECURITy MANAGEMENT A. BENALI YAALA SOCIAL partnership L. KADIRI participative finance BMCE Beijing, Rep. office C. CHONG YANG BOA GROUP S.A. legal private k. ait el moudden GROUP COMMUNICATION Z. FASSI FIHRI HUMAN RELATIONS & DEVELOPMENT A. ZERMOUNI AXIS CAPITAL TUNISIA A. BENGHAZI BMCE BANK INTERNATIONAL FRANCE M. BENCHAIB BMCE BANK INTERNATIONAL spain R. HAMUDEH Chairman & CEO M. BENNANI bank offices & control group m. barka BMCE CAPITAL GESTION PRIVEE M. BOUAZZAOUI BMCE CAPITAL CONSEIL M. DRAFATE foreign financial institutions A. BENYAHYA BMCE BANK INTERNATIONAL GROUP taxation H. SAADANI group FINANCE Z. EL KAISSI group strategic & financial planning Z. EL KAISSI TANGER OFFSHORE B. CHEMLAL gm - GROUP INFORMATION TECHNOLOGY & PROCESS M. CHRAIBI GROUP RISks M. ZAHED BMCE CAPITAL K. NASR, Chairman of the Management Board corporate bank m. tahiri Delegate Manager LEGAL & COMPLIANCE M. HABOUCHA gm - retail BANk O. TAZI Bank permanent control & compliance F. BENNIS RISKS M. HABOUCHA advisor to the general management M. BENNOUNA Y. LAHLOU Delegate Manager FINANCES & SUPPORT M. BIRCHAREF operating committee INTERNAL AUDIT S. RUGHANI Director & delegate General Manager - GM M. BELGHITI BMCE BANk OF AFRICA ACADEMY K. BENCHEQROUN BOA WEST AFRICA AFH OCEAN INDIEN Specialised subsidiaries & equity holdings BOA BENIN T. N’DIAYE BOA KENYA K. AHADZI AGORA BOA BURKINA FASO S. toni BOA MADAGASCAR J.DILET ATTICA BOA COTE D’IVOIRE L. MOULAYE BOA MER ROUGE A. NADIFI BOA ASSET MANAGEMENT BOA GHANA K. ANDAH BOA RD CONGO B. DEGOY SCI OLYMPE BANQUE DE L’HABITAT DU BENIN M. MBENGUE BOA TANZANIA A. OWUSU-AMOAH OLYMPE SA BOA MALI l. basque BOA UGANDA E. MONDAY AISSA BOA NIGER A. IKCHED EQUIPBAIL MADAGASCAR BOA SENEGAL F. AMOUSSOU ACTIBOURSE BOA TOGO* BOA FRANCE P. ROBIN (*) Banking license underway BANQUE DE CREDIT DE BUJUMBURA T. RUTUMO AFH SERVICES BANQUE De DEVELOPPEMENT DU MALI A. DAFFE, Chairman & CEO LA CONGOLAISE DE BANQUE Y. EL MASLOUMI, General Manager BMCE BANK GROUP Management Abroad EUROPE AFRICA ASIA BMCE International UK BANK OF AFRICA BMCE Beijing Mohamed BIRCHAREF General Manager Mohamed BENNANI Chairman & CEO BMCE International France La Congolaise de Banque Mohamed BENCHAIB General Manager BMCE International SPAIN Radi HAMUDEH General Manager Younes MASLOUMI Chairman & CEO Banque de DEveloppement du Mali Abdoulaye DAFFE Chairman & CEO AXIS Capital Ahmed BENGHAZI General Manager BMCE Capital CameroOn Serge Yanic NANA General Manager Chang CHONG YANG Management of Subsidiaries in Morocco bmce Capital SPECIALIZED FINANCIAL SERVICES other ACTIVITiES Investment Bank Leasing Company MAGHREBAIL EuRafric information Chairman of the Board Khalid Nasr Chairman & CEO Azeddine Guessous Chairman of the management Board Younes Karkouri bmce Capital BOURSE RM EXPERTS Stock Brokerage Debt Collection Company Chairman of the management Board Youssef Benkirane Chairman & CEO Mamoun belghiti bmce Capital GESTION Consumer Credits General Manager Amine Amor Chairman of the Board of Managers Amine Bouabid CASABLANCA FINANCE MARKETS Maroc factoring Asset Management Firm Investment Bank General Manager Younes Benjelloun SALAFIN IT Services Locasom Car Rental Services Chairman & CEO younes senhaji Conseil Ingenieurie & Developpement Advisory Services General Manager MONCEF ZIANI Factoring BMCE ASSURANCES General Manager salma tazi General Manager FAHD LAHLOU Euler hermes acmar Credit Insurance General Manager TAWFIK BENZAKOUR ANNUAL REPORT 2011 Investment BankING 87 BMCE BANK GROUP Corporate Governance Audit Committee and Internal Group Control Composition ChairMAN • Azeddine GUESSOUS Intuitu personae periodicity 3 times per year, as a minimum. Ex-Officio Members • FinanceCom represented by M. Zouheir Bensaïd, Vice President and General Manager; • Credit Mutuel - CIC Group represented by Jean-Jacques Tamburini Member of CIC Board of Directors ; • Banco Espirito Santo, represented by Mosqueira DO AMARAL Associate Members • The Director and Delegate General Manager to the Chairman ; • The Delegate General Manager in charge of the Group’s Finances & Risks • M. Mohamed BENNOUNA, Advisor to the General Management • The General Controller of the Group • The Executive in charge of the Group Risk Division • The Executive in charge of the Group Finance Division Invited Members • External auditors; • The committee can invite any member who is part of the managing staff and any executive whose function falls within the scope of its area of intervention for a hearing or for collaboration. SecrEtariat • M. Khalid LAABI Deputy General Manager and General Controller of BMCE Bank Group AUDIT AND INTERNAL BANK COMMITTEE IN 2011 In 2011, CACI Group took care of several issues, namely the examination of the credit risk management system at the level of some international subsidiaries, through the review of credit policies in force, control modalities and risk monitoring. Risk indicators were subject to regular follow-up. Likewise, it contributed to launching the harmonization process of risk management for the Group. MISSIONS Reporting directly to the Board of Directors, the Committee permanently ensures the sustained execution of all following missions and objectives: • Monitoring of operations and internal procedures; •Risk Measurement, Control and Monitoring; • Verification of reliability of collection, appropriate treatment and accounting data keeping; •Effective documentation circulation, both internally and externally; •Evaluation of the consistence and suitability of implemented control systems; •Evaluation of the relevance of corrective measures proposed or implemented; •Ensure compliance of accounting and internal control systems’ consistency within each financial Group entity; •Examination of company and consolidated accounts before presenting them for approval to the Board of Directors; •Elaboration of the yearly activities and profits report of internal control subject to the Board’s examination; •Examination of the relevance of Internal Audit activities within Group entities; •Examination of the compliance status–Compliance within the Group and state of progress of each action in this field for all Group entities; •Presentation, at least twice a year, to the Board of Directors, of the situation of outstanding debt, results from friendly settlements and debt recovery litigation, restructured outstanding debt and the evolution of their reimbursement,; •Ensure the quality and truth of information delivered to Shareholders. The system for verification of Operations and Internal procedures should, in addition, enable to ensure : •Operations and internal procedures’ compliance with legal and regulatory prescriptions, as well as with professional standards and codes of ethics in force; •Respect of management standards and internal procedures set by competent bodies ; Execution and operation modalities should involve, intrinsically, appropriate control procedures and audit trails. Periodic verifications aiming to control compliance with procedures must be carried out at least 3 times per year. Audit Committee and Internal Bank Control Composition ChairMAN • Credit Mutuel - CIC Group represented by Jean-Jacques TAMBURINI, Member of the CIC Board of Directors periodicity Twice a year, as a minimum Ex-Officio Members • RMA WATANYA represented by Mr. Azeddine GUESSOUS • FinanceCom represented by Mr. Zouheir BensaId, Vice-President General Manager ; • Banco Espirito Santo, represented by Mosqueira DO AMARAL Associate Members: • The Director & Delegate General Manager to the Chairman ; • The Delegate General Manager in charge of the Group’s Finances & Risks ; • Mohamed BENNOUNA, Advisor to the General Management ; • The General Controller of the Group; • The Executive in charge of the Group Finances Division ; • The Executive in charge of the Group Risk Division. MISSIONS • Operations and internal procedures verification; • Risk Measurement, Control and Monitoring; • Verification of the reliability of the collection, treatment, broadcasting and accounting data keeping ; • Efficient documentation circulation, both internally and externally, while ensuring the quality of information delivered to shareholders; • Evaluation of suitability and consistency of implemented control systems’ ; • Evaluation of the relevance of corrective measures proposed or implemented; • Ensuring compliance of accounts and internal control systems within each Group entity with financial vocation; • Examination of corporate and consolidated accounts before submitting them to the Board of Directors; • Elaboration of the yearly activities report and results of the internal control subject to scrutiny from the Board; • Reporting, at least twice a year to the Board of Directors of any outstanding debt, results from corporate friendly settlements and judiciary procedures, as well as restructured debt and the evolution of their refund; • Ensuring the quality and reliability of the information delivered to shareholders. Invited Members • External auditors • Executives in charge of the entities related to the items on the agenda of the Committee session may be invited to attend the meetings SecrEtariat M. Khalid LAABI Deputy General Manager and General Controller of BMCE Bank Group WORKS OF THE AUDIT AND BANK INTERNAL CONTROL COMMITTEE IN 2011 ANNUAL REPORT 2011 BMCE Bank’s CACI was held three times. The CACI works essentially focused on examination of the External Auditors’ report, the General Control’s activities balance sheet, the state of progress of the implementation of recommendations from previous CACIs, the Bank portfolio and prudential situation, as well as of Bank and Group financial performances. Likewise, the Committee followed the implementation of the transformation program, namely in its regionalization and reform dimension of Permanent Control (1st and 2nd level controls). In addition, the internal rating project soon to be developed was also examined, which would enable enhancement of the Bank’s risk profile management. Monitoring of actions implemented to enhance the Bank’s commitments’ risk profile was also part of the Committee’s work. 89 BMCE BANK GROUP Governance Committee Composition Chairman • Credit Mutuel - CIC Group, represented by M. Michel LUCAS, President Permanent Members • Caisse de Dépôt et de Gestion • Mr. David SURATGAR • Mr. Adil DOUIRI Invited Members • This Governance Committee can, at its own discretion, invite any person member or non-member of BMCE Bank or its Group, depending on the issues on the day’s agenda, in particular with regard to commissions dealing with certain items related to examination of agreements, appointments or remuneration. Committee Secretary • The Director and Delegate General Manager to the Chairman periodicity Quarterly or any time necessary at the discretion of the commitee members. MISSIONS • Ensure the respect of good governance principles and legal and regulatory provisions in force and communicate to shareholders on these points ; • Examine and make recommendations on the composition, missions and tasks of the Board of Directors and its Specialized Committees ; • Foresee and ensure the resolution of potential conflicts of interest that may arise between the members of the Board of Directors, linked to operations or transactions involving managers or shareholders ; • Suggest procedures for the cooptation of Directors and members or the General Management and formulate recommendations to the Board to appoint new members ; • Suggest a remuneration policy for Directors and members of General Management, in line with criteria pre-established by the Board of Directors. Group Strategic Committee Composition ChairMAN • Mr. Othman BENJELLOUN, Chairman Chief Executive Officer Vice President • M. Azeddine GUESSOUS, President of BMCE Bank Group’s AICC OTHER Permanent Members • The appointed representative of the Crédit Mutuel Group –CIC • The appointed representative of FinanceCom Associate Members • The Director and Delegate General Manager to the Chairman ; • The Chairpersons and General Managers of the Group’s major subsidiaries - Bank of Africa Group, - Maghrebail - Salafin - RM Experts • The Honorary Chairman of BOA Group • The Delegate General Manager in charge of the Group’s Finances and Risks ; • The Degelate General Manager in charge of the Entreprise Bank ; • The Degelate General Manager in charge of the Retail Bank ; • The Delegate General Manager in charge of the Group’s Information Technology and Process Division ; Secretariat periodicity Quarterly, or if necessary, upon the request of the Chairman or two standing members MISSIONS The Strategic Committee is in charge of the moderation of BMCE Group’s strategic think tank and issues recommendations to the Board of Directors regarding the Group’s strategy. Its mission revolves around four main priorities : Views and definition of Strategic orientations within the BMCE Bank Group : • Build and formalize the Group’s strategic plan; • Coordinate strategic thinking between the Group’s different entities; • Evaluate relevant growth scenarios for the Group, examining both Moroccan and international options; Cross-functional initiation & execution of Strategy and launching of large crossover projects : • Seek strategic harmonization within the Group both in Morocco and internationally; • Ensure good implementation of the Group’s strategic plan and follow-up of strategic partnership agreements; • Identify and launch major structuring transformation projects for the Group; Evaluation, for the Board, of new Group Strategy operations • Opportunities for development, investment, strategic stake and BMCE BANK Group synergies; • Opportunities for the expansion of BMCE Bank Group’s activities (internal/external growth, divestments and diversification); Monitoring of the competitive environment and its strategic development, nationaly and Internationaly : • Analysis of competitors’ strengths and weaknesses; • Analysis of large trends in bank industry; • Benchmarking of best professional practices ANNUAL REPORT 2011 • Excutive of the Group Finance Division 91 BMCE BANK GROUP General Management Committee Composition ChairMAN Mr. Brahim BENJELLOUN-TOUIMI Permanent Members • The Director & Delegate General Manager in charge of RM Experts ; • The Delegate General Manager in charge of Finances & Risks • The Delegate General Manager in charge of the Group’s Information Technology and Process • The Delegate General Manager in charge of the Enterprise Bank; • The Delegate General Manager in charge of the Bank for Private Individuals and Professionals ; • The Delegate General Manager in charge of the Enterprises Network ; • Mr. Mohamed BENNOUNA, Advisor to the General Management; • The General Controller of the Group; periodicity • On a weekly basis • The General Management Committee meetings will be held on a quarterly basis to review issues related to groups synergies. The subsidiaries’ managers in Morocco and abroad will be invited to attend these meetings. Associate Members • The Chairman of the Board of Managers of BMCE Capital. • The other Delegate General Managers and Deputy General Managers of BMCE Bank Committee secretariat • Group General Secretary ACHIEVEMENTS OF THE GENERAL MANAGEMENT COMMITTEE IN 2011 The General Management committee proceeded to an in-depth analysis of issues facilitating the implementation of the Bank’s strategic orientations aiming to improving commercial and operational efficiency. Topics related to the steeting of financial and commercial performances’ and to risk monitoring represented half of the Committee’s works. During the 57 sessions held, this Committee has dealt with the 150 points listed on the meetings’ agenda and ruled over nearly 500 decisions and recommendations. Finance-wise, the Committee proceeded in particular to the elaboration of a strategic development plan for the period 2011-2015. In this view, the Committee followed the execution of the transformation program. Whilst fulfilling its steering and commercial development role, this Committee reviewed or performances of branches and implemented an action plan for less performing profit centers, in order to further strengthen the Bank’s position over the Retail Banking Market. In addition, the Premium and SME’s development strategy was subject to an indepth review, similarly to the Migrants’ market. Likewise, the Committee also momoted the development of intra-group synergies. In terms of risk management, besides a regular examination of main risk indicators, the Committee enhanced the risk management system. MISSIONS The General Management Committee is the operational relay of the Group’s Strategic Committee, in the elaboration of proposals of lines of development and strategy implementation such as those validated by the Board of Directors. It steers activities and rules over any operational and functional issue under the competence of internal management and committees. Activity Steering • Monitors the elaboration of the strategic plan, in line with decisions of the Group’s Strategic Committee’s decisions and ensures its implementation; • Impel and examines progress and deployment of big crossfunctional projects impacting operation and development ; • Translates the strategic plan into clear budget objectives for each entity; • Validates yearly budgets, monitors the allocation and ensures resources’ optimization; • Seeks the effective implementation of the budgetary plan and ensures the implementation of corrective measures in case of discrepancy; • Decides upon a tariffs policy for products and services, whilst ensuring business lines’ profitability; • Evaluates opportunities for launching new activities or products and services, and ensures their monitoring and implementation; • Rules over operational issues stemming from Departments, Management and Internal Committees, and sets their objectives; • Ensures the effectiveness of the organization, implementing actions necessary to human resources, organization, IT, logistics and security contributing to development. Internal control, audit and risk management • Ensures risk monitoring and management as well as definition of realistic risk exposure, the reglarly evaluating its relevance ; • Ensures regular monitoring and implementation of defined policies and strategies and makes the necessary corrective actions if need be; • Seeks the respect of prudential ratios and regulations in terms of internal control, risk and compliance; • Informs the Audit and Internal Control Committees regularly, as well as the Board, of key events and main lessons learnt from risk analysis and follow-up associated with the Group’s results; Human Resources • Examines the policy for staff remuneration, training, mobility and recruitment; • Ensures consistency between operational priorities and recruitment and training policies; • Monitors high potential career management; Other prerogatives • Ensures a consistent commercial, institutional and financial communication policy; • Rules over potential conflicts of interests and all unsettled cases falling within the competence of internal committees and entities; • Suggests development axes to the Group’s Strategic Committee; Operating Committee Composition ChairMAN • Mr. Mounir CHRAIBI Delegate General Manager in charge of the Information Technology and Process Division. Permanent Members • Individual & Professionals Bank ; • Entreprise Bank ; • Group’s General Control ; • Group Risks ; • Group’s Logistics ; • Group Finances ; • Group’s Human Capital ; Associate Members • Permanent members aside, all the executives in charge of divisions and directorates are considered associate members. As such, they attend the sessions as full-fledged members in order to discuss all the topics they propose for deliberation by the operation Committee, at the time the topics are scheduled on the agenda. Committee secretariat • Group Quality periodicity On a weekly basis MISSIONS The Operating Committee is the reporting body, responsible for sharing information and ruling over any issue related to the Bank operations. It contributes to business/technical expertise and issues recommendations for the General Management Committee in order the ease the decision-making process over these aspects. • See to the rationalization of the Bank’s projects portfolio (organizational, IT, logistics, quality…) and sharing of implemented resources and means ; • Determines priorities, defers and interrupts projects to adapt them to strategic orientations and validated budgets ; • Monitors progress of deployment of projects impacting the Bank’s operation and development ; • Ensures the timely process of program development of new producted and services, with due respect to time to market activity, sorting out any operational and functional issue thereof ; • Monitors progress of the Network’s development plan (opening branches, off-site GAB settlements, branch closings…) ; • Analyzes the Bank’s main operating indicators and operational risk periodically (quality, incidents, production, safety…), and suggests corrective actions ; • Rules over decisions concerning operational aspects of technical, organizational and logistic issues ; • Reports potential conflicts of interest to the General Management Committee as well as all unsettled cases falling within the competence of Bank entities and internal committees ; • Monitors General Group Control recommendations in the said fields of competences. OPERATIONS COMMITTEE ACHIEVEMENTS IN 2011 ANNUAL REPORT 2011 The Operations Committee held 41 sessions, during which almost sixty topics were examined, with regard to operational, technical and organizational aspects. Amongst issues tackled, some Cap Process’ implementation and the Regionalization program are included amany others, flat-rate billing of bank charges and commissions for Corporate Customers, Electronic documents’ processing, delivering of pre-crossed check formulas and optimizing of bank insurance and electronic money are included among others. 93 BMCE BANK GROUP Risk and Control Coordination Committee Composition ChairMAN • Chairman of the General Management Committee, otherwise the General Controller of the Group Permanent members • The Delegate General Manager in charge of Finances & Risks • The General Controller of the Group • The Manager in charge of Group Risks • The Manager in charge of Group Finances • The Manager in charge of bank permanent control and compliance Associate members • The Committee, at its discretion, may invite any member or non-member of the Group or of BMCE Bank, based on issues scheduled on the agenda Committee Secretariat • The Manager in charge of bank permanent control and compliance periodicity Quarterly MISSIONS The Risk and Control Coordination Committee, stemming from the General Group Executive Committee, seeks to coordinate the Group’s Internal and Risk Control System, its consistency and efficiency. To this purpose, the Committee : • Ensures the effective development of the global system of Internal Control within the BMCE Bank Group ; • Regularly informs the General Management Committee on the evolution of the Group’s Internal Control system and formulates areas for improvement and major risk reduction ; • Coordinates formalization of the yearly report over internal control, in view of regulatory provisions and ensures the respect of principles for works interaction and articulation for the different subsidiaries participating in its elaboration (General Group Control, Permanent Control and Bank Compliance, Group Finance and Risk, PCA) ; • Sees to the good circulation of information related to the Internal Control System, at all levels ; • Shares and exchanges risk mapping and identifies new risk and corrective measures ; • Integrates analysis of main incidents observed and results of controls performed ; • Reports to the General Executive Committee all observed significant malfunctions ; • Shares mapping evolutions (risks, controls) and has them updated ; • Guarantees total coverage of risk by the implementation of necessary measures ; • Suggests updates and validation of the control plan and/or permanent control procedures ; • Prioritizes and coordinates yearly plans for permanent controls and for compliance, and their evolution ; • Follows control results and suggests readjustments ; • Defines efficiency and effectiveness measurement indicators of controls and steers them ; • Prescribes corrective actions in case of malfunctions stemming from controls together with bank entities and instances ; • Examines and validates the Statutory Auditors’ Annual Report ; • Coordinates corrective action plans. BMCE BANK AND ITS SHAREHOLDERS BMCE BANK GROUP BMCE Bank Stock Capital Trends Type of transaction Number of shares issued Capital increase Share capital in MAD after increase in MAD 1990 1991 1991 1992 1992 1996 1996 2000 2010 2010 Cash subscription Scrip issue Cash subscription Scrip issue Cash subscription Scrip issue subscription reserved to foreign institutional investors Scrip issue Subsciption reserved to CM-CIC Group Subscription reserved to the Group’s Pesonnel 1 200 000 750 000 1 750 000 750 000 1 750 000 2 857 142 1 369 394 1 443 194 10 712 000 2 500 000 120 000 000 75 000 000 175 000 000 75 000 000 175 000 000 285 714 200 136 939 400 144 319 400 107 120 000 25 000 000 500 000 000 575 000 000 750 000 000 825 000 000 1 000 000 000 1 285 710 000 1 422 653 600 1 587 513 900 1 694 633 900 1 719 633 900 Changes of the Shareholding Structure 2010 Acquisitions de parts de capitalPurchase price YearsShareholderNumber of shares % of share capital in MAD 2000 Banco Espirito Santo 400 113 2.52% 670 2001 Commerzbank 800 000 5.04% 450 Union Bancaire Privée 184 200 1.16% 425 2002 Finance.Com 652 210 4.11% 420 Interfina 489 914 3.09% Various prices 2003 Finance.Com 800 107 5.04% 400 Stock repurchase programme 795 238 5.01% 400 Stock employee programme 750 000 4.72% 400 Al Wataniya 250 000 1.57% 400 2004 Finance.Com 792 169 4.99% 400 Credit Industriel et Commercial-CIC 1 587 514 10.00% 500 Morgan Stanley 476 000 3.00% 445 2005 Stock employee programme 530 129 3.34% 525 2006 Stock repurchase programme 448 142 2.82% Various prices BES / FUNDO PENSOES 400 402 2.52% 985 2007 Caja de Ahorros del Mediterraneo 793 757 5.00% 1869.15 Stock repurchase programme 327 670 2.06% 2750 2008 CIC 800 000 5.04% 3000 BFCM 23 875 040 15.04% 270 Stock repurchase programme - 3.11% Various prices 2009 BFCM 7 778 762 4.9% 290 Stock repurchase programme 5 564 981 3.05% Various prices 2010 CDG 12 700 111 8.00% 267 2010 Credit Mutuel-CIC Group 10 712 000 5.00% 235 2010 Group employees 2 500 000 1.64% 200 2011 Finance.com 7 937 500 4.62% 200 Disposal of shares 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Nomura Interfina Commerzbank Interfina Commerzbank Finance.Com Stock repurchase programme Group employees Group employees Union Bancaire Privée Banco Espirito Santo Stock repurchase programme Group employees CIMR CIC Group employees Stock repurchase programme RMA Watanya Stock repurchase programme Caja de Ahorros del Mediterraneo Taux de conversion au 31 décembre 2011 , EUR/MAD: 11,1095 - USD/MAD: 8,5650 323 597 652 210 1 595 345 750 000 792 169 1 587 514 664 507 356 266 367 093 132 765 400 402 793 757 327 670 115 205 23 875 040 - 6 350 000 1 428 762 12 589 826 7 937 500 2.24% 4.11% 10.05% 4.72% 4.99% 10.00% 4.19% 2.24% 2.31% 0.84% 2.52% 5.00% 2.06% 0.73% 15.04% 1.98% 4.00% 0.90% 7.93% 4.62% 400 420 400 400 400 500 Various prices Various prices Various prices Various prices 985 1869.15 2750 Various prices 270 Various prices 290 290 267 200 BMCE BANK STOCK PERFORMANCE IN 2011 VERSUS MASI & BANKING INDEX Banking index MAIN INDICATORS OF BMCE BANK STOCK 2011 Highest price Lowest price Closing price EPS* P/E as of december 31,* P/B as of december 31* Dividend yield* Average daily trading volume (buy & sell) Number of shares Market cap as of end of december (million MAD) 263.9 197 213.5 4.9 MAD 43.6x 2.1x 1.41% 7 282 036 MAD 171 963 400 36 714.2 1 * Calculated based on 2011 performances 2011 Main Ratios Liquidity* Volatility 6 months 1 year 5 years 4.46% 4.77% 5.57% 6 mois Bank stock liquidity is defined as the annualised turover rate of shares *BMCE 4,46% 33.4% 29.2% 28.9% 33,4%ans5,57% 1 bmce bank stock performance in 2011 BMCE BankMASIMADEX -18.20% -12.86%-12.81% Banking index -13.40% ANNUAL REPORT 2011 28,9% 97 BMCE BANK GROUP Price Trends and Monthly Volumes for 2011 Highest January February March April May June July August September October November December 263.9 251.5 242 226.9 223.0 220 208.0 217.4 230 226.4 216.0 227 LowestNumber of sharesIn capital 240.0 227.0 230.0 215.0 213.1 197.0 200.0 198.0 210.3 212.5 202.0 203.1 GDR Program BMCE Bank raised in 1996 its capital through the issue of 60 M$ of GDRs (Global Depositary Receipts) listed on the London Stock Exchange. The GDRs are convertible in ordinary shares and each GDR is equivalent of 1/3 of an ordinary share. As end of April 2010, the GDR programme represents 0.3% of share capital, that is 1 409 550 GDRs, made of two classes of securities : Reg S and 144A. GDR Program as of december 31, 2011 GDR Type Reg S* TickerBMED Number of shares 1 409 370 GDR Type 144 A** Ticker69IR Number of shares 180 1 490 166 212 684 1 171 665 105 075 119 022 1 260 662 64 783 373 172 362 558 380 498 92 791 2 563 340 369 409 560 50 587 414 281 065 690 23 229 343 26 204 421 260 250 793 13 294 413 75 741 745 80 261 937 81 936 833 19 300 603 553 790 437 In Number of transactions 976 462 297 345 433 689 323 630 630 303 266 1 115 • (**) 144A : 180 GDR (equivalent of 60 ordinary shares). These securities can be held by private individuals or institutions outside of the United States • (*) Reg S : 1 409 370 GDR (equivalent 469 790 ordinary shares). ‘‘Qualified Institutional Buyers’’, QIBs, are the only eligible investors to hold these securities . The QIBs are institutions managing for their own account at least $ 100 million securities. The QIBs cannot be privte individuals. Shareholders Rights Right of communication and access to information particularly regarding the capital increases or reductions as well as the conditions of merger, if any. One or several shareholders representing at least 5 % of the share capital have the right to ask for the registration of one or several resolution drafts in the agenda of General Body Meetings. Right to dividends During the period of company’s existence, Advertising and info procedures have been prescribed to inform the shareholders about important activities of the company irrespective of their level of stockholding. They should be particularly informed about all new facts that are likely to incite a variation in the stock market price. Each shareholder has the right to the company incomes in the form of a dividend as far as distributable profits have been made and their distribution was decided in General Body Meeting. The distributable dividend is established by the financial year’s net profit minus previous losses as well as the sums to be carried in reserve and increased by the retained profit brought forward the previous financial years. The shareholder also has a permanent and temporary right to information. Consequently, the annual accounts of the last three financial years must be ready to be accessible to the shareholders any time at their company’s head-office. The net income of each financial year constitutes as the financial year’s net profits or losses on the contrary once the company’s expenses and other charges, including any depreciation and reserve are deducted. In addition to the company financial statements, the annual report, the statutory auditors’ report, the list of Administrators and the appropriation draft of the last fiscal year’s net income must be accessible at least fortnight before the General Body Meeting each year. Previous losses, if any, are deducted from the net profits of each financial year; then five percent (5 %) amount is taken to create the legal reserve fund; this deduction is not considered mandatory when the aforementioned reserve fund reaches one tenth of the capital. However, it takes its course when the legal reserve fund falls below this fraction for some reason. In publicly held companies, the Board of directors’ annual management report must emphasize the value and relevance of the investments undertaken by the company as well as their predictable impact on its development. The risks inherent to these investments are also mentioned as the case may be. Besides, it indicates and analyzes the risks and events known to the company management or administration that may have a favorable or unfavorable influence on its financial situation. The shareholders can also question the managers during the General Body Meeting or ask prior written questions to the Board of directors. Right to vote Every shareholder has the right to participate in the collective decisions in person or proxy - exclusively, another shareholder, an antecedent or descendant or spouse - except in the assumption of holding investment certificates or preferred shares that are deprived of voting right. The principle during the General Body Meeting is one vote per ordinary share held. The voting right must be practiced at least once a year on the occasion of General Body Meeting, which is held to rule on annual accounts. The Extraordinary General Body Meetings also allow the shareholders to approve the changes in company agreement, The retained profit brought forward, if any, is then added to the balance, which then constitutes the distributable profit and the first dividend is thus allocated. Then the General Body Meeting has the right to fix and take the sums it deems appropriate, and assign them to endowment of all optional ordinary or extraordinary reserve funds. The purpose may be to allocate them to bonus dividend or to carry them forward again - in any proportion it decides. Besides, the General Body Meeting can decide on the distribution of sums taken from the optional reserves, either to take out a dividend from it or make an exceptional distribution. In such an assumption, the decision must specify specifically the reserve funds from which the deductions are made. After the approval of accounts by the Annual General Body Meeting, the losses, if any, are listed on a special ledger to be allocated on the profits of later financial years till they vanish. The dividends are allocated subject to five-year period. ANNUAL REPORT 2011 As equity holder, the shareholder is directly associated with the company. The share’s par value cannot be lower than fifty dirham. However, the minimum par value is fixed at ten dirham for the companies whose securities are listed in the stock exchange. The rights associated to the share are the right to information, the contribution to company’s proper functioning by participating in collective decisions as well as the right to dividends. 99 BMCE BANK GROUP Headline Fiscal year Payout ratio on aggregated basis Payout ratio on individual basis % Change 2011 Net Income – Domestic Activity522.7 -20.7% Aggregated Net Income 544.7 +4.4% Total Dividends 515.9 94.7% 98.7% Dividend per share (*) 3 2010 Net Income – Domestic Activity 659.6 +30% Aggregated Net Income 521.7 +3.7% Total Dividends 508.4 97.4% 77.1% Dividend per share (*) 3 2009 Net Income – Domestic Activity 506.8 -37.6% Aggregated Net Income 502.9 -37.7% Total Dividends 476.2 94.7% 93.9% Dividend per share (*) 3 (*) Stock split in 2008, with nominal value reduced from MAD 100 to MAD 10 INVESTOR RELATIONS During the financial year 2011, the stress was given on the strengthening of the Bank’s visibility in Casablanca stock market. BMCE Bank shall ensure the Vice-presidency of Moroccan Association of Investor relations (AMRI) from now on; this association was recently created and it aims to promote the best practices in financial communication with the issuers in Morocco. Investor profiles have been built according to their management strategy within this framework and perspective of a proactive approach leaning towards the financial community. Continued business development In addition to participating in press kits and interviews, a mailing database for analysts / journalists has consequently been created to intertwine contacts in terms of press relations. A financial communication guide was prepared in 2011, including all the business practices as applied within the Bank in order to assist the new employees better. The Bank conducted also satisfaction surveys in the form of questionnaires that were adapted according to the target (media, analysts, investors, and rating agencies). The purpose was to assess the quality, completeness, transparency and relevance of the information within the financial community. Besides, a bigger visibility in Casablanca stock exchange did show in 2011 thanks to the active participation in the works of Moroccan Association of Investor relations (AMRI), particularly by proposing a web site for AMRI, building a Benchmark for the associations of the sector, as well as preparing a questionnaire as regards financial communication practices in Morocco. Re-energizing relations with the financial community One-on-one meetings were organized in favor of foreign investors in order to consolidate Investor relations, particularly the investment funds dedicated to MENA region. In the same way, the relation with rating agencies has further consolidated, with support to personalized requests and follow-up of the BMCE Bank’s rating reports. Spreading information The publication of various financial communication media such as the annual report, RSE report, institutional presentation, and press releases in several languages - French, English, Arabic, Spanish and Amazigh has been continued to meet the needs of investors. Besides, the aforementioned media were enriched by the information related to governance, risk management as well as social and environmental involvement of the BMCE Bank Group, including the Group’s development strategy in SubSaharan Africa, and were made accessible to the investors via several distribution channels (mailing, internet…). Within this framework, the section related to the Bank’s financial communication on the corporate site was reorganized - creating personalized spaces per target, shareholder, investor, and press - to guarantee them better access to the relevant information that answers their requirements. BMCE Bank Rating Moody’s Standard & Poor’s Fitch Capital Intelligence june 2011 april 2012 Ratings February 2012 May 2011 Bank Deposits –Domestic currency : Baa3/P-3 (Investment grade) BBpi support : 3 Financial Strength : BBB deposits in foreign currency Bank Deposits –Foreign currency : Ba2/NP • short term : A3 Financi al Strength : D • Long term : BBB- Outlook : Stable Support : 2 Perspectives : Stable “The success of the ongoing restructuring exercise could push earnings higher” ‘’BMCE Bank is the third largest bank in Morocco in terms of total assets.’’ ‘’BMCE Bank enjoys a strong financial base, with a capital adequacy ratio of 12.62% as of end of december 2010.’’ ANNUAL REPORT 2011 ‘’The Bank enjoys a well established franchise in its home market and is among the leading institutions in corporate banking, capital market operations and project finance… African operations appear full of untapped opportunies for the Bank’’ 101 BMCE BANK GROUP 2012 Financial Communication Agenda March Holding of the Board of Directors Meeting on March 23, 2012 Publication of the Press Release as of December 31, 2011 Publication of IFRS Financial Statements as of December 31, 2011 Press-Analyst Meeting : presentation of 2010 annual results Publication of the notice for the Extraordinary General Shareholders’ Meeting on as of December 31, 2011 April Publication of the notice for the Ordinary General Meeting on May 24, 2012 May Holding of the Ordinary General Meeting on May 24, 2012 June Publication of the 2011 activity report in 5 languages (Arabic, Amazigh, French, English and Spanish) July Publication of the 2011 Annual Report and CSR report in French September Publication of the 2011 Annual Report and CSR report in English Holding of the Board Meeting Publication of the 2012 first half Press Release Publication of the 2012 first half IFRS financial statements Press-Analyst Meeting : Presentation of BMCE Bank’s 2012 first half results October Publication of the 2012 first half summary report November Publication of the 2012 Annual Report and CSR Report in Arabic RISK MANAGEMENT & FINANCE BMCE BANK GROUP Risk Management System Risk Management Organization Entities Under the Control System BMCE Bank has a Group General Control mandated to undertake inspection and audit tasks in the different operational entities both in Morocco and abroad. The Group Risk Unit The Group Risk Unit seeks to manage the credit, market and operational risks, by actively contributing to : As regards this, the Committee constantly seeks to pursue and achieve all objectives and tasks defined hereunder : • Operations and internal procedures monitoring ; • Measuring, controlling and monitoring of risk; • Monitoring the reliability of the collection, processing, distribution and storage of accounting data ; • Effective documentation and information circulation both internally and externally ; • Definition of a risk policy for BMCE Bank Group ; • Relevance and suitability evaluation of all control systems in place ; • Implementation of a risk control system for credit, market and operational risks ; • Relevance evaluation of all proposed or implemented corrective measures • Definition and management of the process of making commitments and their follow-up. The Group Risk Unit is made up of 3 entities : • Ensure accounting compliance and consistency of internal control systems of each entity with a financial role within the Group ; • Risk Management (Morocco, International) is in charge of risk monitoring (credit, market and operational risks), at the Group level. • Examination of corporate and consolidated accounts before submitting them to the Board of Directors ; • Analysis and monitoring of Commitments examines the procedures of credit granting for BMCE Bank customers. Governance Bodies Audit and Internal Control Committee Under the direct supervision of the Board of Directors, the Audit and Internal Control Committee (AICC), ensures a 3rd level control through the Bank structures. In other words, AICC (i) assesses the relevance and sustainability of applied accounting methods, (ii) checks the existence, suitability and application of internal procedures as well as customized systems, systems to sufficiently manage and monitor bank risk and prudential ratios, (iii) examines corporate and consolidated accounts before submitting them to the Board of Directors, (iv) while ensuring the quality of the information delivered to shareholders. • Preparation of a yearly activities report and internal control system results report, which will further be submitted to the Board of Directors for approval ; • Reporting, at least twice a year, to the Board of Directors as to outstanding credits due, results from friendly settlement or legal suits regarding corporate clients, as well as restructured outstanding credits and the progress of their repayment ; • Ensure the quality of information delivered to shareholders. In July 2007 moreover, the Board of Directors internally created the AICC Group. Its mission is to ensure the testing of the integrity of the accounts, the respect of legal or regulatory obligations through the Bank and subsidiaries’ structure in Morocco and abroad. AICC Group’s task completes AICC Bank’s task, extended to include the entities of the consolidation, besides (i) examination of appointment or renewal proposals of Statutory Auditors of the Group’s entities, through the analysis of their intervention program, their verifications results, Major Risks Monitoring Committee Major Risks Monitoring Committee stems from the Audit and Internal Control Committee. It gathers non-executive Directors (members of AICC). Periodicity of meeting is quarterly. Within its prerogatives, the Committee must: Board of Directors of BMCE Capital and other Deputy Executive Officers of BMCE Bank, as well as Group Finances Unit Managers, Group Legal Managers and Group Human Resources Managers. The weekly General Management committee should seek to : • Steer the Activity • Evaluate risk and issue recommendations on risk quality ; • The preparation of the strategic policy, in line with the decisions of the Group’s Strategic Committee and provide the follow-up of its implementation; • Ensure that management standards and internal procedures set by competent bodies are being respected, as regards credit risk ; • Stimulate and examine the progress of the deployment of large crossover projects impacting operation and development; • Monitors credit risk thresholds (sectoral, Major risks…). • Translate the strategic plan into clear budgetary objectives for entities; Group Risk Committee • Validate yearly budgets, follow-up the allocation and monitor the resources optimization; The Group Risk Committee controls the efficiency of the risk management system of BMCE Bank Group, as well as its suitability versus the risk management policy defined under the Credit, Market and Operational risk aspects. For this purpose, it : • Monitor the effective achievement of the budgetary plan, and ensure the implementation of corrective actions in case of discrepancy; • Ensures the implementation of the credit, market and operational risk management policy at BMCE Bank Group level ; • Evaluate launch opportunities for new products and activities, and ensure the follow-up of their implementation; • Validates any modification related to credit, market and operational risk management, implemented in the different entities of the group ; • Decide upon operational questions stemming from the Departments, Managements and Internal Committees and set their objectives; • Shall remain informed of the evolution of the different valuation indicators regarding credit, market and operational risks ; • Obtains information related to key events since the last Committee, particularly: • Decide upon the tariff policy of products and services, while ensuring the profitability of the business ; • Seek organizational efficiency, implementing all necessary actions related to human resources, organization, IT, logistics and security contributing to development; • Internal Control, Audit and Management of Risks - Results of works stemming from the regulatory and methodological monitoring ; • Provide monitoring and control of risks as well as definition of the level of risk exposure of which the relevance is regularly evaluated; - Works carried out in connection with transverse projects of organizational or IT nature inherent in risk management. • Ensure regular monitoring of the implementation of predefined policies and strategies and, if need be, take necessary corrective measures; General Management Committee The General Management Committee is chaired by the Director & Delegate General Manager to the Chairman and includes the Delegate General manager in charge of RM Experts, the Delegate General Managers, the Counselor of the Executive Management and the General Controller. Associate members are the Chairman of the • Seek to respect prudential ratios and regulation as regards internal control, risk and compliance; • Inform the Audit and Internal Control Committee regularly as well as the Board of Directors the key elements and main lessons learnt from the analysis and followup of risks associated with the activities and the Group results; ANNUAL REPORT 2011 theirs as well as corrective measures proposed or implemented and (ii) the possibility to request any internal or external audit. 105 BMCE BANK GROUP • Human Resources • Examine the remuneration, training, mobility and staff recruitment policies ; • Ensure the suitability between operational priorities and recruitment and training policies ; a) Use of an auto-checking sheet which formats approval criteria, based on which risk evaluation is carried out. This auto-checking sheet lists credit conditions and verifies compliance and respect of credit standards. Should a credit not conform to the set standards, the request must be rejected, except in case of a special exemption authorized by the Committee. • Seek to implement consistent commercial, institutional and financial communication policies ; b) A delegation system appointing the levels of credit granting authorization powers is set up. It ensures compliance of decisions taken in the credit process and the integrity of the person holding such power. Each credit request shall be processed by all subordinated entities until its approval by the due responsible decision making entity. • Arbitrate over potential conflict of interests and all unsettled disputes under the responsibility of entities and internal committees ; 2- Individual approach according to specificities and needs of companies which rests on three leading principles: • Suggest development principles to the Strategic Group Committee - Credit management portfolio that enables Senior Management to hold enough information to evaluate the client’s risk profile; • Monitor the management of careers with high potential ; • Other Prerogatives Credit Committees • Senior Credit Committee This Committee is chaired by the Chairman of the Bank and deputy-chaired by the Director & Delegate General Manager to the Chairman. It is specialized per market through two committees, one in charge of Companies and Large Companies and the other of Private Individuals & Professionals, meeting twice a week and made up of Bank Senior Managers. • Regional Credit Committee The Regional Credit Committee (RCC) meeting is held weekly. • Downgrading Committee This Committee meets monthly in order to examine faulty accounts. Credit Risk Decision-Making Procedure The credit granting procedure implemented by BMCE Bank is based on two approaches : 1- Standard approach for products to private individuals subject to Product Programs which define, per product type, the risk management rules governing the product’s sale. In fact, the risk policy is articulated on two pillars : - The delegation of approval powers to individuals intuitu personae based on their experience, judgment, skills, education and professional training; - The balance of powers, the facilities being given based on the judgment of at least three people called Troïka. For some levels of risk, approval of the Senior Credit Committee or the Bank’s Chairman must be requested. Also to be noted that independent credit quality control and procedural obedience is ensured by the Group’s General Control and external auditors. Similarly, the Group’s Risk Department ensures the quality of risk management and the respect of internal rules and procedures. Per Counterparty Diversification Credit portfolio diversification, evaluated taking into account all commitments over a single beneficiary, is a constant concern of the Bank’s risk policy. Potential integrations are subject to constant scrutiny leading, if need be, to corrective actions Sectoral Diversification Sectoral diversification of the credit portfolio is also subject to special attention, supported by prospective analysis enabling dynamic management of the Bank’s exposure. It is based on studies expressing an opinion on sectoral evolution and identifying factors explaining the risks incurred by the main players. Surveillance The Group Risk Unit via the entity in charge of Group Credit Risk Management, provides for BMCE Bank Group tasks of: • Prevention of credit risk; • Contribution to global credit policy; • Continuous credit risk surveillance. Key function in the risk management process, this preventive management consists in anticipating risk deterioration situations and making necessary adjustments. In the exercise of this function, this entity shall: Substandard loans, doubtful loans and loss loans lead to the constitution of provisions equal, at least to 20%, 50% and 100% of their amounts respectively, deduction made of reserved bank charges and collateral credit guarantees. Provisions related to loss loans are constituted on a case per case basis, whereas those related to Substandard and doubt ful loans, are globally constituted. Guarantees according to their nature are deducted, according to the portions set forth by the circular of Bank Al-Maghrib, the base for calculation of provisions. Provisioning is checked and followed-up by the Group’s General Control, External Auditors and the Audit and Internal Control Committee. remedial Management In order to improve the efficiency of debts collection an amicable recovery system has been implemented within the Bank, the system with two entities, one dedicated to the Corporate network, the other to the Private/ Professional network. • Monitor the regularity of the commitments: conformity to the purpose of the credit and respect of authorized credit rating, examination of payment incidents, review of due files… • Detect outstanding debts presenting ongoing signs of weakness; • Follow the evolution of main risks within the Network, (doubtful debt, most important and/or most sensitive commitments); • Determine files eligible for downgrading in view of the regulations in force regarding outstanding debts. In order to identify susceptible credit and those eligible for provisioning in view of the regulations in force, an exhaustive review of the Bank’s portfolio is carried out monthly thanks to a risk account report conceived by reference to outstanding credit classification criteria set by circular n°19 of Bank Al-Maghrib, as well as other additional criteria adopted by the Bank. Besides, additional risk management criteria have been implemented in order to detect upcoming risk profile degradation signs. ANNUAL REPORT 2011 Non Performing Loans 107 BMCE BANK GROUP • Constantly monitor the regularity and quality of all Bank commitments; From July 2008 onwards, in order to pursue its risk rating tool optimization and sophistication for all Basel segments and counterparts, except the « Retail » segment, as well as for the transactions rating. • Seek regularizations of any faulty payment, mainly through the Network or directly with the customers concerned; This project which falls within the scope of the BMCE Bank Group perimeter, is currently in phase of deployment in view of fulfilling both these objectives: • Adopt a pro-active attitude, aiming to avoid any degradation of outstanding debt. • Prepare the coming into force of advanced Basel II methods, by the previous implementation of internal rating systems for the calculation of risk weighed assets as per Basel regulation; These entities aim to : Internal Rating System Decision-Making Procedures BMCE Bank is equipped since 2004 with a rating system for all counterparties of the Corporate segment, based on a tool commonly known as ANAFI. This system enables to have access to a decision-making tool in the credit authorization process with the generation of a rating system resulting from the combination of financial and quality-based information. • Operationally anchor internal rating to the Bank’s business lines and subsidiaries’ processes (example: use of rating for the system of delegation, tariff, sales targeting and marketing), thereby easing credit authorization decision-making processes. By the same token, a Scoring project has already been initiated in order to cover the whole Basel segmentation. The rating scale today comprises 6 risk categories: category 1 to 4 corresponding to good or average risk; beyond this threshold, risk is considered as critical and monitoring is constant. 1.5 2 2.5 3 3.5 4 4.5 5 5.5 6 Category Extremely stable in the short and middle term; very stable in the long term; bankable even after serious turmoil. Very stable in the short and middle term; stable in the long term; bankable enough even during persistent negative circumstances. Limited Bankable in the short and middle term even after serious difficulties ; slight negative Risk downturns may be absorbed in the long run Very stable in the short term ; no modifications threatening the credit expected in the year to come ; sufficient substance in the mid term to survive ; still uncertain long term evolution Stable in the short term ; no modifications threatening the credit expected in the year to come, can only absorb small negative downswings in the mid term Average Limited capacity to absorb expected negative downswings Risk Very limited capacity to absorb expected negative downswings Limited capacity to refund the interests and the principal in time. Any change in the internal and external economic and commercial conditions will make commitments difficult to fulfil High Risk Incapacity to refund interests and the principal in time. Respect to the commitments is linked to the evolution of both internal and external commercial and economic conditions. Very high risk of default, incapacity to refund the interests and the principal in time. Very Partial default of payment of both the interests and the capital. High Risk Total payment default of both the interests and the capital Investement Grade 1 Definition Sub-Investment Grade Grade Committments per risk category 2 2,5 3 3,5 4 4,5 5 5,5 6 2011 2010 No rating 1,5 Individuals 1 Subtotal 100% 100% 2.68% 7.3% 15.88% 13.30% 5.05% 4.2% 4.34% 2.9% 5.09% 6.47% 6.97% 6.06% 19.84% 9.71% 2.49% 5.59% 1.07% 3.46% 1.05% 2.01% 3.84% 4.11% 68.32% 65.5% 0.97% 3.36% 30.71% 31.14% Counterparty Limits Limits on counterparties are managed according to two approaches, of which the bases, principles and methodologies differ: • For non-formatted credits, counterparty limits are ruled by decision-making instances as per customers’ needs and risk exposure. Total Risk Coverage and Reduction Policy Guarantees and Security For private customers, the Bank requires for any credit request an irrevocable salary domiciliation. Real Estate loans are further guaranteed by first rank mortgage of the purchased asset. Besides, for credits granted to the Bank’s customer companies in connection with agreements, the Bank shall further benefit from a moral guarantee from the employer. Maximum threshold is set up to 20% of the Equity. • For formatted credits, counterparty limits for this type of credit are envisaged by the Product Program. In relation to budget implementation, per product limits are defined during the preparation of provisional budgets. Commitments Distribution The concentration risk management system of the Bank is based on quantity-based measurements of different concentration risk types and their comparison with their respective limits (per sector of activities, group of counterparties…). This strategy, validated by the Bank’s decision-making instances is reviewed each year. For corporate customers, the guarantees policy is based on the detailed analysis of collaterals and risk exposure. Generally credit risk coverage of large companies is operated through the presentation of external guarantees for each deal. Nevertheless, for some Corporate customers, the Bank holds collaterals (real or bank guarantees). For SMEs and Very Small Companies, the usual guarantee is backed by a systematic use of a Central Bank Guarante (CCG). Regarding project financing, any funded tangible asset is taken as security. Moreover, securities guarantee funds are required as per the project size and the sector of activity. These limits are defined based on the historical number of claims and the Equity consumption optimization. These limits are established according to a portfolio vision and are broken down per sector, type and maturity. ANNUAL REPORT 2011 Sectoral Concentration Limits 109 BMCE BANK GROUP Market Risk Commitments by Industry The exposures - domestic activity - by industry in 2011 are as follows : 2.26% 4.53% 1.70% 0.69% 6.70% 16.75% 2.14% 2.42% 0.77% 0.06% 3.31% Risk typologies on Market Activities 3.23% 2.02% 1.50% 11.51% And three risk typologies on market operations: • Issuer’s risk; • Counterparty Risk; • Risk of delivery payments; 34.39% Real Estate Transport Communications Extractives industries Financial Activities Hotels & Restaurants Water & Electricity Instruments Mapping Products mapping dealt within the BMCE Bank Group portfolio is distributed per risk factor as follows: Fx instruments Exposure Level Table related to the Counterparty Risk in Line with the Methods Applied on Off-Balance Sheet Items Type of Exposure Balance-sheet item Risk Weighted Assets 98 127 289 Balance-sheet item Off balance sheet Items : financing commitments 4 587 507 Off balance sheet item : Collateral Commitments 9 182 689 Counterpart Risk : temporary transfer of securities pertaining to the banking portfolio Counterpart Risk temporary transfer of securities pertaining to the trading portfolio 104 710 Counterpart risk : derivaties products pertaining du to the trading portfolio 121 729 Other assets settlement risk Total Let us differentiate four typologies of Market Risk within the BMCE Bank Group : • Interest rates risk ; • Risks on titles of ownership ; • Exchange rates risk ; • Commodities’ Risk; 5.71% Textile & Leather Administration Commerce Food & Tobacco Building & Public works Agriculture Fisheries Other manufacturing industries Metallurgical, Mechanical, Electrical & Electronic industries Chemical industries Others The Market Risk Management system within the BMCE Bank Group is ruled by regulatory standards as defined by supervision authorities and the application of healthy market risk management practices defined internationally, namely by Basel agreements. 16 664 430 128 788 353 Spot exchange Forward exchange Fx derivatives Fx Swaps Equity instruments Equity shares Derivatives on equity or and Indices Mutual funds on equities Fixed income I- Corporate and Interbank loans and borinstruments rowing Fixed rate (in MAD and Foreign Currency) Floating Rate (in MAD and Foreign Currency) II- Negotiable Debt Securities and bonds II-1 Sovereign Debt (Including bonds issued by the Kingdom of Morocco) Fixed rate (in MAD) Floating Rate (in MAD and Foreign Currency) II-2 Securities issued by Credit Companies and Companies Fixed rate (in MAD and Foreign Currency) Floating Rate (in MAD and Foreign Currency) III- Loans / borrowing of Securities Loans / borrowing of securities Repo / Reverse repo IV- Rate Derivatives Rate Swaps Rate Futures Forward Rate Agreement V- Fixed income mutual funds Money market mutual funds Debt mutual funds Commodity Commodity futures Commodity futures options products Credit derivatives Credit defaut Swaps (CDS) Credit Linked Note (CLN) Market Risk Management System Governance Main players of the market risk management system within BMCE Bank Group are : • General Management, which sets up market risk management policies and strategies approved by the Board of Directors, • The Group Risk Committee, which ensures efficiency of the policy of market operations risk management within the BMCE Bank Group and its consistency with the Group’s risk management policy. • The Group’s market risk department centralizes the whole Group market risk management. BMCE Bank, as an independent function of Front Offices of the Group’s different entities, enjoys maximum objectivity in the management of market risk. • Risk Management Units of BMCE Bank Group, which ensure market activities’ control within their entity, report to Group Risk Management. • Internal Audit ensures the implementation of the market risk management system and the respect of procedures in force. Description of the Market Risk Management System The market risk management system of the BMCE Bank group is based on three main pillars: • Limits ; • Risk Indicators ; • Equity consumption ; Limits ment Entity which ensures the monitoring and consolidation of exposure over Group market operations. Market Limits In order to manage market risk within the BMCE Bank Group and for negotiation portfolio diversification purposes, a set of market risk limits was implemented, with both Group Risk Management and Risk Management Unit of each entity. These market limits reflect the BMCE Bank Group risk profile and enable optimum market risk management through arbitrage between the different market activities. Limits related to BMCE Bank Group market risk are described as such : • Per activity stop/loss limits on different horizons ; • Per activity position limits ; • Transaction limits. VaR limits are being developed in order to implement a dynamic system taking into account risk factors fluctuations on the markets as well as existing relationships in order to better evaluate portfolio diversification. Risk Indicators Different risk indicators permitting to assess the level of market risk exposure have been set up within the BMCE Bank Group. These indicators are as follows: • Global and per asset category Value at Risk (VaR): Value-at-Risk is an overall and probability measure of market risk. It enables to summarize risk exposure through possible potential loss calculations over a given timeframe and given probability index. Contrary to traditional risk indicators, Value at Risk combines several risk factors and measures their interactions, thereby taking into account the portfolio diversification. Counterparty Limits on Market Operations Monitoring of authorized limits and overrun on counterparts is ensured individually and daily by the Risk Management Unit within each BMCE Bank Group entity as well as consolidated level by the Risk Manage- ANNUAL REPORT 2011 The counterparty limits authorization process and request for threshold increase on market operations is governed within the BMCE Bank Group via a powers delegation system regulated by differentiated procedures according to the counterparty category. 111 BMCE BANK GROUP Stress Testing per risk factor: a stress test battery is simulated every day for each negotiation portfolio activity. These stress tests are based on hypothetical scenarios and reflect the Group’s negotiation portfolio loss exposure in case of moderate, average and extreme fluctuations or extreme market risk factors over a duration corresponding to the time necessary to untangle or cover positions at stake. • Global portfolio or per activity sensitivity and duration for positions over rates ; • Delta, Gamma, Vega, Theta and Rho sensitivities, for positions on derivatives ; Capital Requirements Calculation of Capital requirements in standard approach for market risks is ensured for the BMCE Bank Group through the Fermat software, which enables to both respond to reporting regulatory requirements and internal standards in terms of equity requirements monitoring and negotiation portfolio of the Group. Consolidated Capital requirements to cover market risk were established at the end of December 2011 : Capital Requirement for Market Risk Commodity Risk Interest Rate Risk Risk on Property Investment Fx Risk Total Capital Requirement Total Market Risk Weighted Assets Amount (in KMAD) 731 1 246 946 62 118 94 372 1 404 166 17 552 079 A passage to advanced approach project is underway according to the schedule set by the regulatory authorities in order to optimize Equity requirements calculation with regard to market risk through the implementation of an internal Bank model based on the VaR approach. Evaluation Method for Negotiation Portfolio Elements Bond and Monetary Values in MAD Market values are calculated on Kondor+ for bond and monetary assets, based on the dirham rate curve published by Bank Al-Maghrib and on each transaction’s characteristics. Monetary and Bond Mutual Fund Some mutual fund have daily updated net asset values and others have weekly updated net asset values. Fx Instruments Fx Instruments are valued on Kondor+, based on the concerned foreign exchange yield curves and on each transaction’s characteristics. Fx Options The reevaluation of FX options is carried out on the basis of the following data: volatility curve, yield curve (EUR, MAD and USD) and crossed exchange rates of the three currencies. The position on the FX option is integrated in the global exchange position, according to the “Delta Equivalent” method. Global Exchange Position The reevaluation of positions does not include the 0.2% withheld by BAM on each spot operation (the client being billed the 0.2%, in any case). The operations that are carried out in the branch are processed on a fixing basis (non-negotiated). The final execution order statement is transmitted to the FX Desk in D which enters it forthwith, in D+1 in the morning. The Middle Office receives a statement comprising possible modifications in network positions and undertakes updating on K+. Positive Fair Value of Contracts (Guarantees) Guarantees related to market risk concern Repo Contracts. These are securities delivered under repurchase to raise funds. Operational Risk Operational Risk Management Policy The operational risk management system implemented within the Group aims to meet the following objectives: • Operational Risk Evaluation and Prevention; ted by the aforementioned entities. These are: • Control Evaluation; • Operational Risk Correspondents (CRO); • Implementing preventive and/or corrective actions in case of major risks; • Operational Risk Coordinators (CORO); Operational risks or losses may be analyzed and classified into two categories: causes, consequences, in terms of financial impact or other, which are classified per type of Basel event. Links With Market Credit Risks Operational risk management is potentially linked to the management of market credit risk, namely at two levels: • Globally speaking, the reflection about the Bank’s global level of aversion to risk (and in the long run on allocations on Equity) must be “trans-risk” analyzed and monitored. • In detail, some operational risks can be directly linked to credit and market risk management. Operational Risk Management Organization The framework enabling the management of operational risk within the BMCE Bank Group is structured around three leading principles: • Define a target system, consistent with the Business organization of the BMCE Bank Group and inspired by best practices; Operational Risk Management scope also concerns Group subsidiaries (BMCE Capital, Maghrébail, Salafin, Morocco Factoring, BMCE Bank International Plc, BMCE International Madrid, and La Congolaise de Banque, Eurafric Information (EAI), Tanger Offshore TOS). Operational Risk Management Governance Operational risk governance within the BMCE Bank Group is structured into three Operational Risk Committees: • The Group’s Operational Risk Committee; • The Business Line Operational Risk Follow-up Committee; • The Subsidiaries’ Operational Risk Committee. Tasks of these Committees deal with the periodic review of: • Evolution of Operational Risk Exposure and control environment of such risks; • Identification of the main risk areas, in terms or activities and risk categories; • Definition of preventive and corrective actions to implement in order to reduce the level of risk; • Involve and raise responsibility among subsidiaries and business lines in the daily Operational Risk management; • Amount of Equity to allocate to operational risks, the cost of preventive actions to implement as well as the cost related to insurances subscriptions. • Ensure the segregation of Audit/Control functions and Operational Risk management; Fundamental ciples BMCE Bank Group operational Risk management involves four major entities: Priority strategic objectives of the BMCE Bank Group through its operational risk management system are twofold: • The Group’s Operational Risk Department centralized at BMCE Bank; • The BMCE Bank network; • BMCE Bank Business Lines Management; • Subsidiaries. Operational risk intervening parties have been appoin- Methodological Prin- • Reduction of Operational Risk Exposure; • Optimization of Equity requirements related to Operational Risk; ANNUAL REPORT 2011 Classification • Operational Risk Relays (RRO); 113 BMCE BANK GROUP The internal Operational Risk measurement system is closely connected to daily management of risk within the Bank through: • Collection of risk events; • Operational Risk Mapping; • Operational Key Risk Indicators; Operational Risk Exposure and losses undergone are regularly notified to the concerned Unit’s Management, General Management and the Board of Directors. The management system is duly documented, thus enabling to respect a set of formalized controls, internal procedures and corrective measures in case of non-compliance. Internal and/or External Auditors are called to periodically examine the management processes and the operational risk measurement system. Operational risk management within the BMCE Bank Group has been totally automated through a dedicated tool. Therefore, risk event collection, operational risk mapping and key risk indicators are today managed from this tool, which has been deployed within the Bank and in the Moroccan and European subsidiaries. In order to support its deployment, awareness raising and training programs were carried out among 842 RO players at the Group level. Internal data aiming to become major component of the Equity internal calculation model respect the following conditions: • Completeness: internal data loss takes into account all business line activities and exposure, as well as all units and services in all concerned geographical areas. • Consolidation: historical data loss is reported according to the two axes corresponding to the typologies of eight business lines and seven categories of risk decided upon by the Basel Committee, according to duly documented objective criteria. The operational risk management policy is bound to change according to the evolution of operational risk management methodologies. The same is true for the Operational Risk Management Manual, which has been created to guarantee consistency of the system through the Group and serve as a reference guide on that topic. Controlling and Reducing Operational Risk Several types of actions may be envisaged for operational risk management: • Enhanced control; • Risk coverage, in particular through insurance subscribing; • Avoid risk, namely through activities re-deployment; • Build activity continuity plans. The BMCE Bank Group has a very strong control system, enabling strong operational risk reduction. However, in terms of operational risk management and through its dedicated system, it has full scope to identify optimum behavior on a case per case basis, according to the different types of previously expressed risk. Besides, the Group subscribes to insurance policies enabling to reduce risk exposure related to premise damages, fraud, asset thefts and civil liability… Risk Aggregation The organizational system set up, based on Corresponding Operational Risk (COR) enables to report risk events according to the Basel typology (eight business lines) and per loss category, for all business lines, as well as Group subsidiaries. Risk Reduction Any identified major risk is reported to the Bank’ Senior Management and is followed by corrective and/or preventive action plan the implementation of which is followed by the Operational Risk Monitoring Committee, which meets quarterly. Business Continuity Plan The Business Continuity plan is a response to growing demand on minimization of effects of interruption of activities, given the strong correlations between these and resources on which they are based, namely human, IT or logistic. It is a set of measures and procedures aiming to ensure, depending on different crisis scenarios, including in case of extreme shock, the upkeep, sometime only temporary according to a restricted mode, of key banking services followed by a planned re-launch of all activities. Capital Adequacy Main Capital Components Share Capital BMCE Bank is made up of a share capital of MAD 1,719,633,900, divided into 171,963,390 ordinary shares of a 10 MAD face-value, fully paid-up. Each ordinary share grants a voting right. Subordinate Debt The strategic principles of transverse business activities are the following: • BMCE Bank has the social responsibility to enable its customers to have access to the cash which it manages for them. Any breach of this obligation in times of crisis may have an impact on public order. This principle prevails above any other. • BMCE Bank must guarantee its commitments towards the interbank compensation system in Morocco. • BMCE Bank intends to first and foremost respect all legal and contractual commitments it undertook (related to Credit and Commitments), before making any other commitment Amount MAD MAD MAD MAD MAD EURO EURO 1 000 000 150 000 850 000 950 000 50 000 70 000 50 000 Interest rate 4.43% 5.95% 4.50% 4.57% 5.30% 5.86% 5.90% Maturity 10 years Perpetual Perpetual Perpetual Perpetual Perpetual 10 years Amount in MAD 1 000 000 150 000 850 000 950 000 50 000 777 665 555 475 (In thousand) A Subordinated debt amounted in 2011 to about MAD 4.3 bn. • BMCE Bank intends to maintain its international reliability and guarantee its commitments vis-à-vis foreign correspondents. BMCE Bank Group customers are a priority in comparison with other beneficiaries of services. ANNUAL REPORT 2011 Services are considered in their front to back achievement (for example, from the Agency up to the Accounting Department). 115 BMCE BANK GROUP Tier 2 Capital Evaluation of Capital Adequacy The BMCE Bank Group opted for the standard approach such as presented by Bank Al Maghrib circulars (BAM), which are: • Circular n°26/G/2006, on equity regulatory requirements of credit institutions and similar bodies; • Circular n°B3/G/2006 on calculation methods of credit risk-weighted assets; • Circular n°25/G/2006 on minimum solvency ratios of credit and similar institutions; • Circular n°24/G/2006 on Equity; 2011 Elements of Tier 2 capital before ceiling Upper tier 2 capital Reevaluation surplus Investment subsidies Provisions for general risk Undisclosed reserves Perpetual Subordinated debts Lower tier 2 capital Composition of Tier One Capital 2011 Credit risk weighted assets Market risk weighted assets Operational risk weighted assets 2011 Elements to be included in Tier 1 capital Share Capital Consolidated reserves (including premiums related capital and not included in undisclosed reserves) Retained earnings Net income from the previous accounting year Goodwill –Credit account Minority interest 15 133 058 1 719 635 9 215 733 191 749 49 248 Intangible assets, exclusive of software, net of depreciation and provisions Goodwill- Debit account Trier-1 Capital* (*) Excluding Equity portfolio 385 107 2 777 665 1 885 667 in thousand MAD Capital Requirement by Risk Type These circulars define the global Bank risk exposure and are based on individual criteria for each Group entity and on a consolidated basis for the BMCE Bank Group. Items to be deducted from Tier 1 capital 5 764 580 4 904 408 289 367 241 048 185 725 3 956 693 1 065 701 233 231 832 470 14 067 357 in thousand MAD Total risk weighted assets Tier 1 Capital 128 788 17 552 13 213 159 553 13 931 Tier 1 Capital ratio 8.73% Total capital 19 559 Capital adequacy ratio 12.26% in thousand MAD The capital adequacy ratio of BMCE Bank Group Stood at 12.26% in 2011. Social & Environmental Responsibility BMCE BANK GROUP BMCE Bank Foundation Excellence At The Heart The Foundation’s Aspirations Concerned about training pupils that stand out for their knowledge and the quality of their education, BMCE Bank Foundation has stepped up its efforts to improve the quality of learning and enhance the excellence of the Medersat.com network, through implementing an adapted organization ; embedding a modern information system, reviewing the pedagogical supervision charter; and reinforcing of monitoring of schooling. Accordingly, the role of pedagogical supervision has been bolstered and extended to all schools in the network, thanks to the introduction of innovative administrative and pedagogical practices and the intensification of site visits. These actions, together with enhanced follow-up on schooling throughout the school-network, resulted in a better flow of information, a greater exchange of successful experiences within the network, improved pupil and teacher attendance, and school results. In fact, the overall pass rate among primary school certificate pupils attained an impressive 98.3% by the end of June 2011. Similarly, three schools saw their overall performance improve markedly compared with 2010, auguring highly positive outcomes for this ongoing quest for excellence in which the Foundation has engaged. Promotion Of the status of Advanced Pedagogical Innovation Lab Serving the Educational System True to its status of advanced pedagogical innovation lab in support of the educational system, the BMCE Bank Foundation has pursued its efforts aimed at innovating and promoting the quality of education in its schools it has done so notably through the revision of the preschool experimental package in its two versions, Arabic and Amazigh, as transcribed in Tifinagh (alphabet); the improvement of school time management as well as training of 60 teachers in language and teaching of Amazigh. Expansion Of the Medersat.Com Network In the prospect of further outreach to students living in remote rural areas, the BMCE Bank Foundation has inaugurated three schools located in Immouzzer Marmoucha in the Province of Boulmane ; in Taddart and in Figuig. In the same vein, four other school units are set to open at the beginning of the 2012 school-year, namely: Tafarcit in Driouch, in partnership with the Agency for the Development of the Eastern Region; Tiznit, in the framework of international cooperation with the Principality of Monaco; Tamsaman in Driouch; and finally, Bni Chiger in Nador. Furthermore, the Foundation has given the “go-ahead” for the rehabilitation of six other schools in an attempt to improve and modernize its infrastructures on an on-going basis. Similarly, the equipment of the Medersat.com network was strengthened with interactive computing equipment and internet connection. In addition, about forty administrative coordinators were trained on how to set up equipment and how to make optimal use of digital pedagogical resources. Enhanced Presence In Cultural and Educational Events As has been customary over the previous years, BMCE Bank has made contributions to the main cultural and educational events, notably the 7th Edition of the Amazigh Culture Festival; the Educational Film Festival, which is organized by the Regional Education and Training Academy of Fez-Boulmane; the 3rd Edition of the Women’s Tribune, organized in Essaouira; the publication of a book on Mediterranean Women; the publication of a catalogue on similar Moroccan and Spanish sites; the exhibition of works of arts bearing on the similitude between ancient and modern architectural heritage in the Kingdoms of Morocco and Spain; the World Amazigh Assembly at the Brusselsbased Arab Cultural Center; and the 17th Edition of the International Book Fair held in the Casablanca International Fair. Likewise, in the framework of its mission which resides in the preservation of the environment, the Foundation has subsidized the settlement of the Atlas Lions into their new home at the Rabat Zoological Gardens. ANNUAL REPORT 2011 Furthermore, the Foundation and its partners have initiated several actions designed to support the pupils who are enrolled in the Medersat.com network, as well as to the pupils who have previously attended the network and are now currently pursuing their secondary education. As many as 5,000 school-bags were distributed and some forty lap-top computers were given by Méditel Foundation. Moreover, support was granted to deserving pupils in order to enable them to pursue their secondary school education. 119 BMCE BANK GROUP Human Capital Several levers have been activated so as to foster the fulfillment of staff members, enhance their sense of loyalty, and accelerate their career development, notably by means of a dynamic mobility policy, an academy dedicated to innovative training, federating internal communication actions, in addition to a favorable social policy. Encouraging Staff Self-realization In support of its voluntary policy aimed at stabilizing the work-force, BMCE Bank has privileged internal mobility which facilitates the redeployment of staff while preserving the skills developed and the expertise acquired in banking. To this end, great attention has been given to the analysis of mobility applications which have been tende- red in order to ensure better monitoring and support to Bank staff in the management of their careers. This mobilization resulted in 1,663 internal job mobilities, including 1,298 internetwork swaps. Besides, in order to enable the network to develop business through the hiring of adapted and targeted competencies, BMCE Bank has set up a rigorous mechanism for CV processing and management, thanks to the optimization of a management tool, called Talent Profiler, which centralizes and registers applications. In the same vein, BMCE Bank has taken part in various recruitment fairs and students’ forums, which allowed it to establish its reputation and its image as the Bank of youth. Skill Enhancement Centered on Training Setting in motion one of the most important levers for competency development of its human capital, BMCE Bank allocates the necessary resources to ensure the best training for its personnel. At the end of 2011, more than 70% of employees have benefitted from one training session, at least, and a hundred other staff members are currently following their training at the Banking Techniques Institute, for the purpose of earning their qualifications in banking, or taking language classes. Similarly, roughly 15% of staff-members have attended some fifty seminars. Similarly, e.learning classes were offered to all new recruits as staff-members in charge of operations and advising customers 184 learners. off. In this connection, the HR portal has been renewed with the launch of a new portal dedicated to Group HR, namely, Interlink. Besides, poster campaigns have also been conducted in support of the following : the yearly evaluation process ; the renewal of the social barometer; the implementation of anti-tobacco policy, and awareness raising an sustainable development. Along the same lines, a whole range of events have been organized including: Integration Day; Woman’s Day; BMCE Bank-of-Africa Academy graduation ceremony; and the Music Festival. Fostering Group Synergies With a view to strengthening the Group dimension and to promote exchange of expertise and know-how within the Group’s entities, therebing, paving the way for better human-resource management and optimization, several committees and meetings have been held with the Group’s Human Resources officials. As for BMCE Bank Of Africa Academy, 688 participants attended the trainings. A social Policy To Foster Motivation Besides, in the framework of ISO certification of Human resources management activities, BMCE’s Bankof-Africa Academy has been certified with a zero-variation score, following the renewal audit which took place in November 2011. During FY 2011, several actions were taken so as to improve the quality of Social Welfare Services, including : follow-up on hygiene standards and quality of catering services ; the increase in accommodation capacity within summer-vacationing facilities; the successful organization of summer camps for the benefit of hundreds of staff children at the BMCE Bank Club Center. Intensified In-House Communication At the service of Human Capital, in-house communication has published several aids in order to channel and share information using innovative communication tools, which enhance the Group’s vision, notably. These communication mediums include Internews, Intereso, the Manager’s Compendium, the 2010 Social Report, an Interactive Reception Kit for New Recruits, and Magnews, a video magazine produced in the form of video journal in capsules with images that are accompanied by voice- ANNUAL REPORT 2011 These actions culminated in the recruitment of 162 new resources. As a result, the overall Bank workforce stood at 4,941 employees by the end of 2011. 121 BMCE BANK GROUP Sustainable Development BMCE Bank has consolidated its strategic positioning in the area of sustainable development by incorporating environmental, societal, and governance considerations in its modes of operation –being well aware of their importance in the appreciation made by the community and various stake-holders concerning the Bank’s day-to-day business. Preservation of the environment –a daily commitment through in the embedding of AN EMS Leading a dynamic and innovative corporate social responsibility policy is at the center-stage of the commitments made by the Group, ever since its privatization. In order that this commitment may materialize concretely on the Bank’s day-to-day business, BMCE Bank adopted a pertinent environmental policy in 2010. Translating its commitments at every level, the said policy is deployed in the Environmental Management System which is certified according to ISO 14001 standards. The Bank’s EMS is part of a global process aimed at improving and promoting the Group’s actions on a continuous basis. In 2011, BMCE Bank sought to generalize EMS practices throught the Group. In fact, all of the Group’s entities –central functions, branch network, and business centers—are now fully committed to promoting any initiative aiming to implement EMS in any of the Bank’s main business lines. ISO 14 001 Certification Of the Environmental Management System an Outcome of the Environmental Strategy In June 2011, BMCE Bank earned the ISO 14001 Certification for the environment, thus becoming the first Bank in Morocco and the MENA region to have such distinction conferred by the firm, Veritas Certification, with a score of zero non-compliance. ISO 14001 Certification the mobilization of all the staff-members within the network and BMCE Bank’s central entities for the implementation of an Environmental Management System. This has highlighted the commitment of all staff-members and appropriation of an approach centered on sustainable development and ecology-friendly consumer behavior. This approach is also characterized by a business dimension through the introduction of green financing, which was, in fact, integrated in the Bank’s business model upon adoption of the EMS. This certification highlights the commitment of the Bank to take environmental issues into account in the course conducting its core business. Accordingly, operational measures have been taken to improve environmental performance and to develop products and services which meet economic, environmental, and social requirements, while integrating sustainability criteria in terms of social and environmental risk-management and governance (ESG). BMCE Bank Engages in Green Financing and Investments In a national context favorable to the development of energy-efficiency and renewable energies, and in line with the Group’s resolute commitment in favor of sustainable development, under the aegis of its Foundation, BMCE Bank undertook to promote Green Business. Thus, in 2011, the Bank developed a new green financing mechanism, dubbed BMCE Energico. Intended for corporate customers, this product provides support to imporve their energy performance in a sustainable and profitable way, as well as assist them anticipate regulatory and legal constraints, BMCE Energico is the first green investment credit in Morocco designed to finance the acquisition of equipment with low energyconsumption. The Analysis of Environmental and Social Risk as a Guarantee for better Credit-risk Assessment Keen on conveying its social and environmental values within the Group’s subsidiaries, BMCE Bank deployed an Environmental and Social Managment System (SEMS) by extending it to subsidiaries held to the tune of 75% by the Group (namely, BMCE Capital, BBI Madrid, Locasom, …). In parallel to this, BMCE strives to replicate successful models in sub-Saharan Africa, in the framework of a promising policy centered on the sharing of best practices. At a first stage, the Environmental and Social Management System will be embedded within the Bank of Africa, eventually, followed by the implementation of an Environment Management System. Besides, sustainable development has left its mark on the implementation of a regionalization program which entails an enhanced involvement of the Risk entities in various regions in the process of social and environmental analysis of projects financed by the Bank. Similarly, Regional EMS auditors have been trained and appointed. Commitments which are recognized at the national and international scales As a major player in the Moroccan banking sector, also recognized for being responsible, thourgh social and environmental commitments, BMCE Bank implemented in 2011 a dynamic policy in terms of social and environmental responsibility based on the international guidelines ISO 26 000. ANNUAL REPORT 2011 . 123 BMCE BANK GROUP UNEP Finance Initiative (UNEP FI) A Structured Approach True to the commitments made as of 2000, vis-àvis UNEP FI, BMCE Bank adhered to the UNEP Statement by Financial Institutions on the Environment and Sustainable Development. BMCE Bank Group has continued to implement a structured approach aimed at gauging the social and environmental impacts on financial performance. The Equator Principles A First-order Commitment Following the adoption of the Equator Principles (EP) in 2010, a framework for assessing and managing environmental and social risks in projects financed by the bank, exceeding a given ceiling, BMCE Bank published its first EP report online in 2011. This was a major achievement for a Moroccan bank and from the Maghreb region. The strong commitment on the part of BMCE Bank underscores its resolve to take concrete actions in different areas of activity and spheres of influence, aimed at enhancing its status as a bank that is socially responsible and committed to its stakeholders, particularly its customers and staff. An International Recognition Of CSR Commitments In recognition of the actions undertaken by the Bank in 2011, BMCE Bank was awarded the “Top CSR Performer in Morocco,” by Vigeo in January 2012 –a reward which recognizes achievements in two areas : • Contribution to public interest causes, through the activities : carried out by the Bank’s Foundation, chaired by Dr. Leila Mezian Benjelloun ; • BMCE Bank’s environmental strategy, through the deployment of the SEMS and the EMS. Consistently capitalizing on its proven leadership in terms of its systemic approach which integrates social and environmental considerations in its business model, BMCE Bank is regularly solicited by multilateral as well as development institutions in the area of sustainable finance, particularly, Green Business. Besides, the International Finance Corporation (IFC), member of the World Bank Group, considers BMCE Bank among its “Best in Class,” in the whole MENA region, rewarding the Bank’s efforts in implementing a SEMS in 2008, recently reinforced by an EMS. Similarly, in its 2011 report, “Guide to Banking and Sustainability,” UNEP FI hailed BMCE Bank’s sustainable development approach, as exemplary. And in the framework of an exchange of best practices, BMCE Bank, likewise, participated in many discussions and debates organized both nationally and internationally in the course of 2011, in order to promote the management of social and environmental risks and governance as well as to tap into related business opportunities. Patronage Sustained Cultural Commitment Deeply rooted to Moroccan cultures and traditions, BMCE Bank renewed its support to the following major events : the 17th Edition of the World Sacred Music Festival in Fez, as Official Partner; the 14th Edition of Essaouira Gnaoua and World Music Festival, as Founding Sponsor; the 8th Edition of the Agadir-based Timitar Signs and Cultures Festival, as Silver Sponsor; the 10th Edition of the Mawazine World Rhythms Festival, as Gold Sponsor; the 11th Edition of the Marrakech International Film Festival, as partner; and the 8th Edition of the Fez Forum on Alliance between Civilizations, Cultural Diversity, and the Euro-Mediterranean Partnership. Morover, BMCE Bank has further promoted the arts by taking part in exceptional artistic events, notably the Ex- hibition organized to pay tribute to two painters, the late Meriem Meziane and the late Chaibia Talal; the “Sense and Essence” Exhibition organized by Culture Interface, the Moroccan Agency for Cultural Mediation; and the exhibition organized by the painter, Chabi. Enhanced Social Action BMCE Bank has actively supported several associations and foundations, through granting donations, as well as purchasing tickets for shows, fund-raising receptions, and the like. Accordingly, donations have been made to the following: Liwaa Al-Moukawim (The Veteran Militant League) Association; the Moroccan Association for the Support of Children in Precarious Situations; Al-Adwatain (the two River-banks) Music Association; INSAF (Equity) Association; and Assalam (Peace) Association. ANNUAL REPORT 2011 These initiatives serve to enhance the corporate image of the Bank and its reputation, earning both national and international recognition. 125 BMCE BANK GROUP Patronage Strong Sports Sponsorship Renewed Support to Economic Events BMCE Bank has pursued its investment in the development of sports in Morocco, asserting itself as a partner in the organization of large-scale events such as the 38th Edition of the Hassan II Golf Trophy; the Royal Moroccan Equestrian Federation; the 8th Edition of the International Bridge Festival in Fez; the Rabat Bouregreg Jet-Ski Club; the 2nd Edition of the Bridge Festival in Rabat; the Airports Cultural and Sporting Association; the Mohammed VI Football Academy; and the Swimming Section of the Maghreb Sporting Association in Fez. During the year 2011, BMCE Bank reinforced its role as a major economic player, by means of actions aimed at energizing the local commercial fabric, notably in the tourism, agricultural, agri-business, health, real estate, and construction sectors. BMCE Bank has thus shored up its presence in seminars, as well as in renowned exhibitions and fairs. It has likewise fostered its relations with Chambers of Commerce. FINANCIAL REPORT BMCE BANK GROUP MANAGEMENT REPORT Ladies and Gentlemen, Dear Shareholders, We are honored to gather you in the Annual Ordinary General Meeting, in compliance with the Statutes, Law no. 17-95, relative to public limited companies, as has been modified by Law no. 20-05, notably Chapter IV and V and their respective articles 107 and ensuing ones, and article 29 of BMCE Bank Statutes and the ensuing ones, for the purpose of reporting on the activities of the company during the financial year which was closed on December 31, 2010, on the results of business activity, as well as on future prospects. We also submit the balance sheet and annual accounts pertaining to the said financial year for approval. The accounts are appended to the present report. The notifications that are prescribed by the law have been regularly addressed to the parties concerned and all the documents and items that are provided for by the regulations in force are put at the disposal of shareholders for review within the established time limits. BANK ACTIVITIES AND RESULTS AS OF DECEMBER 31ST, 2011 1. Consolidated Income and Balance Sheet Indicators ✦ Bmce Bank Group’s Financial Performance BMCE Bank Group’s total assets have for the first time exceeded the threshold of 200 MMMAD, thus reaching 208 MMMAD by December 31st, 2011, up by +11.2% against 187 MMMAD by December 31st, 2010. Total assets include a +13% growth in customer loans, rising from 107 MMMAD in 2010 to 121 MMMAD in 2011. In terms of financial performance, The Net Banking Income has increased by +7.8% from 7 552 MMAD in 2010 to 8 140 MMAD in 2011. The Gross Operating Income has increased by +4.1%, to reach 3 016 MMAD by December 31st, 2011. The Net Income Group Share has reached 850.2 MMAD by December 31st, 2011, against 818.9 MMAD by December 31st, 2010, that is a +3.8% increase. The cost of risk increases by +6.4% from 819 MMAD to 872 MMAD. Internationally, BMCE Bank has reinforced its equity stake in Bank of Africa Group to 59.4% in 2011 against 55.8% in 2010. Locally, the Bank has increased its holding in Locasom, to reach 97.3% during the second half of 2011. Besides, the scope of consolidation has enlarged by integrating RM Experts, a newly created subsidiary specialized in debt collection. The equity Group Share has reached 12 428 MMAD by December 31st, 2011. ✦ Net Income Group Share by Business Line Contribution to BMCE Bank’s Net Income Group Share by business line is as follows : Net Income Group % Share Change Domestic Activities BMCE Bank BMCE Bank excluding general contingency reserve Affiliated activities Specialized Financial Services Investment banking activities Other activities International Activities Europe Africa Net Income Group Share Share Share 2011 2010 551 238 342 439 820 186 610 451 -33% -44% 2011 2010 65% 40% 100% 75% 528 163 610 451 -13% 51% 75% 208 799 152 807 37 843 18 149 298 960 -10 723 309 683 850 198 209 735 119 495 68 634 21 606 -1 216 -260 672 259 456 818 971 0% 28% -45% -16% NS 96% 19% 3,8% 25% 18% 4% 2% 35% -1% 36% 100% 26% 15% 8% 3% 0% -32% 32% 100% En KDM La contribution des activités au Maroc s’élève à 65% contre 35% pour les activités à l’international, principalement suite aux performances des filiales africaines. La filière Europe a résorbé son déficit de manière considérable en passant de -260 MDH à -10 MDH suite au plan de restructuration initié par la banque pour optimiser sa présence européenne. AGGREGATED ACTIVITIES : RESULTS AND CONTRIBUTIONS 2. Bmce Bank - Aggregated Activity By December 2011, the Bank’s aggregated total assets amounted to 148.6 MMMAD by the end of 2011, against 134.5 MMMAD by the end of 2010, that is an increase of +10.4%. Customer loans have grown by +11.2% from 79.3 MMMAD to 88.2 MMMAD and customers deposits have increased by a +7.1%, standing at 93.7 MMMAD by the end of December 2011 against 87.4 MMMAD by the end of December 2010. Gross Operating Income displays a +12.8% increase, from 1 153 MMAD in 2010 to 1 301 MMAD in 2011. BMCE Bank’s Aggregated net income went up from 522 MMAD in 2010 to 545 MMAD in 2011, up by +4.4% after having realized a net general contingency reserve of 160 MMAD (255 MMAD in gross value). ✦ Domestic Activity Indicators –Bmce Bank in Morocco- • Customer Deposits ✦ Consolidated Shareholder’s Equity Clients’ resources have grown by +7.1%, from 87.4 MMMAD by the end of 2010 to 93.7 MMMAD by the end of 2011. By December 31st, 2011, BMCE Bank Group’s equity have reached 16 385 MMAD against 15 819 MMAD by end December 31st, 2010, that is a +3.6% increase. Sigh deposits (current and check accounts) have grown by +7.3% to reach 49 073 MMAD in 2011, against 45 722 MMAD in 2010. STRUCTURE OF RESOURCES IN MMAD 2010 2011 +8,1% 26 181 24 215 +6,7% 16 287 15 258 Sight deposits Customer Loans rose by +11.2% to reach 88.2 MMMAD in 2011, against 79.3 MMMAD in 2010. Savings accounts Time deposits Savings accounts went up by +6.7% from 15 258 MMAD in 2010 to 16 287 MMAD in 2011. Besides, time deposits have increased by +8.1% attaining 26 181 MMAD in 2011 against 24 215 MMAD in 2010. BMCE Bank market share in terms of total deposits has increased slightly more than its sector, from 14.20% in 2010 to 14.35% in 2011. MARKET SHARES BY DEPOSITS TYPE Décembre 2010 12,05% Checking account 11,56% Current account 19,80% Décembre 2011 19,25% 16,59% 15,13% - +13.7% increase in Corporate loans (cash and equipment loans) from 32 738 MMAD in 2010 to reach 37 220 MMAD in 2011. - A +9.2% growth in mortgage loans to private individuals, from 17.118 MMAD in 2010 to 18 699 MMAD in 2011. - A +4.7% rise in consumer loans, Customer loans market share has grown by +0,10p%, to reach 13.07% in 2011 versus 12,97% in 2010 : - Corporate loans’ market share (cash and equipment loans) has grown by +0,14p% from 11.08% in 2010 up to 11.22% in 2011. - Real Estate Development loans’ market share has grown by +0,46p%, to stand at 13.61% in 2011 versus 13.15% in 2010; - Consumer loans’ market share amounts to 18,45% versus 19,45% by the end of 2010. Savings accounts Time deposits - Check accounts’ market share amounts to 13,8% by the end of December 2011. - Current accounts’ market share goes from 12,05% by the end of 2010 to 11,56% by the end of 2011, that is -0,5%. - Savings’ accounts market shares has decreased by -0,55% to reach 19,25% at the end of 2011. - Finally, time deposits’ market share increased by 15,13% by the end of 2010 to 16,59% at the end of 2011. - Real Estate Loans’ market share to private individuals has slightly decreased, from 13.61% to 13.51% by the end of 2011. ✦ Net Banking Income By the end of 2011, BMCE Bank’s aggregated Net Banking Income reached 4 063 MMAD versus 3 951 MMAD by the end of 2010, that is +2.8%. This growth has been impacted (i) by the decrease in market activities (-20%, that is -70 MMAD) (ii) by the volatility of Maroc Valeurs’ mutual fund performance, linked to fluctuations on the stock market (+60 MMAD en 2010 versus -43 MMAD en 2011) and (iii) profit on treasury shares registered last year (+30 MMAD). Adjusted for these non recurring items, Net Banking Income should increase by 8.9%. AGGREGATED NET BANKING INCOME -MMAD FUNDING STRUCTURE Interest Bearing This growth is due to : - Loans to finance companies market share has grown by +0,52%p, from 17,85% in 2010 to 18,37% in 2011; By deposit type, market shares are as follows : 13,80% 13,79% • Customer Loans MANAGEMENT REPORT +7,3% 49 073 45 722 In terms of deposit structures including certificates of deposits issued by the Bank, the share of interest bearing accounts remains stable at nearly 49% of overall resources in 2011. 2010 Non interest Bearing 3 951 50,9% 49% 49% 4 063 annual report 2011 51% 2011 129 BMCE BANK GROUP • Net Interest Income Net interest income has increased by +4.6% versus 2010, from 2 354 MMAD up to 2 463 MMAD by the end of 2011. A growth, which can be explained by a +7.1% increase in average loans versus +4.2% increase in average sight deposits along with a decrease in the net interest spread by 0.13% from 3.51% to 3.38%. - Benefits on foreign exchange operations and derivatives have dropped from 232 MMAD by the end of 2010 to 144 MMAD by the end of 2011 ; - Decrease in investment portfolio yields essentially made up of bond mutual funds (3.8% in 2011 versus 4.1% in 2010). • Other Banking Revenues and Expenses Other banking revenues, essentially dividends received on equity holdings, account for 237 MMAD by the end of 2011 versus 168 MMAD by the end of 2010, i.e. +41%. • Net Fee Income Net fee income decreased by -1,5%, from 624 MMAD in 2010 to 615 MMAD in 2011. This decrease has mainly been impacted by non-recurring income in Project Finance (26 MMAD in 2010 versus 6 MMAD in 2011). Adjusted for this, net fee income should go up by+2,0%. Net Fee income is broken down as follows : Besides, expenses on guarantee funds have increased by 3.6% between 2010 and 2011. - Fee received on “account management fees, packages and banking cards” have grown by 4% to reach 237 MMAD by the end of 2011 versus 229 MMAD by the end of 2010. Fees received on packages sales account for 44,2 MMAD by the end of 2011 versus 23,2 MMAD by the end of 2010. - +8,7% increase in fees generated by foreign trade; This is explained by provisions essentially made on Portuguese holdings up to 103 MMAD (versus a 26 MMAD in 2010), on BMCE Bank International for 53 MMAD (versus 291 MMAD in 2010), on RISMA for 14,6 MMAD and on HANOUTY for 10 MMAD (versus 54 MMAD in 2010). Conversely reversals of provisions have been realized, essentially on BMCE Capital for an amount of 46 MMAD. - -14% decrease in fees generated from custody as a result of the gloominess of the stock market; ✦ General Operating Expenses - Bank-insurance fees account for 31 MMAD by the end of 2011 versus 35 MMAD by the end of 2010, down by -14%; General operating expenses amounted by the end of 2011 to 2 636 MMAD versus 2 442 MMAD by the end of 2010, thus increasing by +7.9%. - Fees on Foreign Exchange activities have decreased by -13,7%, from 81 MMAD by the end of 2010 to 70 MMAD by the end of 2011; - Besides, fees on loans dropped from 51 MMAD in 2010 to 29 MMAD in 2011, mainly due to exceptional income perceived in Project Finance in 2010. 2010 -13,7% 81 70 Domestic Service Fx +8,7% 124 114 Trade Finance 2011 -14% 59 53 -43,1% 51 29 Loas Net income from equity investment stood at -135 MMAD in 2011, versus -375 MMAD in 2010. This is essentially due to the increase in payroll by +12.5% from 1 138 MMAD in 2010 to 1 281 MMAD in 2011, following the (i) trade union pay increase during the second half of 2011, (ii) the distribution in 2011 of variable compensation and, (iii) the cost related to employees settlements, which stood at 58 MMAD in 2011 versus 43 MMAD in 2010. Other operating expenses, (representing 1 043 MMAD), have decreased by -0,7% versus 2010 with respect to an average growth of +10% over the last four years, reflecting the first results of cost control. NET FEE INCOME -4% 230 238 ✦ Net Income From Equity Investment -14% 35 31 Custokly Bancassurance • Income from Market Transactions Income from market transactions decreased by -13%, to reach 860 MMAD in 2011 versus 986 MMAD in 2010. This decrease has been impacted by : - Exceptional capital gains on treasury shares in 2010 (+30 MMAD) in a bearish stock market down by -12.8% in 2011 versus +22.1% in 2010 (MASI) ; Hence, the network grew from 613 branches in 2010 to 620 branches in 2011, with the opening of 7 branches in 2011, in line with the decision to take a break in the network’s extension program. The cost to income ratio came to 64.9 % by the end of December 2011 versus 61.8% by the end of December 2010, the net banking income being impacted by the decrease in the contribution from market activities, and regarding expenses, by the increase of payroll further to exceptional elements (variable compensation cost of employees settlements and trade union pay increase). ✦ Cost of Risk A By the end of 2011, Non Performing Loans concerning the Moroccan activity stood at 4,349 MMAD versus 3 666 MMAD a year earlier. The NPL ratio went up from 4.62% in 2010 to 4.93% in 2011 and the NPL coverage ratio went from 73% to 67%. Eventually, the net aggregated cost of risk decreased from -412 MMAD in 2010 to -308 MMAD in 2011. Including the general contingency reserve (for an equivalent gross amount of 255 MMAD), the adjusted cost of risk stands for –563 MMAD, increasing by +36.5%. ✦ Net Income Maroc Factoring’s corporate benefits increased from 10 MMAD by the end of December fin 2010 to 11.2 MMAD by the end of December 2011. RM Experts, a subsidiary created in 2011, specialized in debt collection, was integrated in the Bank’s scope of consolidation. This subsidiary realized a net income of 1.2 MMAD and its contribution to net income group share accounts for -4.9 MMAD. ✦ Asset Management and Investment Banking Contributions NBI General Operating Expenses Net Income Group Share Current income before tax amounted in 2011 to 838 MMAD versus 798 MMAD in 2010, up by +5.1%. In MMAD After deduction of tax expense of 293 MMAD, net income stood in 2011 at 545 MMAD versus 522 MMAD in 2010, increasing by +4.4%. BMCE Capital Gestion 77 994 58 474 33,38% -21 181 -24 181 -14,88% 25 980 22 018 18,00% BMCE Capital Bourse 22 603 79 338 -71,51% -19 638 -26 039 -24,58% BMCE Capital 84 288 112 879 -25,33% -154 966 -157 331 ✦ Specialized Financial Services Contributions In MMAD NBI 2011 2010 Chg General Operating Expenses 2011 2010 Chg Net Income Group Share 2011 2010 Chg Specialized financial services 653 342 596 598 Salafin 272 639 308 647 -11,6% -69 333 -71 117 -2,51% 63 373 65 160 -2,74% Maghrebail 338 967 248 100 36,63% -60 177 -60 726 -0,90% 73 401 47 035 56,06% Maroc factoring RM Experts Heuler Hermes Acmar 41 736 39 824 0 9,51%-145 168-144 108 0,74% 152 807 119 493 27,88% 4,80% -13 569 -12 265 10,63% 14 198 -2 089 6 653 143,46% -4 905 4 740 645 634,88% The Specialized Financial Services registered a 28% increase in the contribution to 2011 net income group share. Salafin had its contribution to consolidated Net Banking Income decrease by -11.7%, from 309 MMAD in 2010 to 273 MMAD in 2011. Its Net Banking Income went down by -4,6% over the same period. Its contribution to Net Income Group Share has decreased by -2.7%, from 65,2 MMAD to 63,4 MMAD. Salafin’s net earnings attained 93.1 MMAD versus 100.4 MMAD last year, down by -7.3%. Besides, Salafin’s cost to income ratio reached 31.1% in 2011 versus 26.7% in 2010. Maghrebail registered a +6.4% increase in its net banking income. Its contribution to net income group share has increased by +56%, from 47 MMAD to 73.4 MMAD. Maghrebail’s net earnings in turn decreased by -1%. Maghrebail’s General operating expenses decreased by -4.3% over the same period, and the cost to income ratio has been significantly improved from 26.6% in 2011 to 23.9% in 2010. Investement Banking CFM 2011 2010 Chg 2011 2010 Chg 2011 2010 Chg 184 886 250 691 -26,25% -195 785 -208 253 -5,99% 37 843 68 634 -44,86% -711 35 295 -102,01 1,50% 12 090 9 997 20,94% 483 1 323 -63,49% MANAGEMENT REPORT Provisions on NPLs passed from 2 661 MMAD in 2010 to 2 933 MMAD in 2011, up by +10,2% (excluding a net general contingency reserve of 160 MMAD / 255 MMAD in gross value). The Asset Management & Investment Banking subsidiaries’ contribution to consolidated net banking income decreased by -26.2%. Therefore, contribution to net income group share decreased from 68.6 MMAD in 2010 to 37.8 MMAD in 2011. BMCE Capital Bourse registered a 71.5% decrease in its contribution to consolidated net banking income, from 79.3 MMAD in 2010 to 22.6 MMAD in 2011. The contribution of BMCE Capital Bourse to net income group share has significantly decreased from 35.3 MMAD to -1 MMAD over the same period in an extremely moody stock market context and in the absence of major operations. BMCE Capital Gestion has increased its net earnings by 20.2% and its contribution to Net income Group share by 18% between 2010 and 2011. Net income of the subsidiary stood at 26.2 MMAD in 2011 versus 21.8 MMAD in 2010. Similarly, contribution to consolidated net income grew by 33.4% from 58.5 MMAD to 77.9 MMAD. BMCE Capital registered a 15% increase in its net banking income from 173,7 MMAD in 2010 to 199,8 MMAD in 2011. Net earnings amounted to 22.9 MMAD in 2011 versus 12.9 MMAD a year earlier. As for its contribution to net income group share, and after consolidation adjustments, it reached 12.1 MMAD in 2011 versus 9.9 MMAD in 2010, that is an increase of +20.9%. This subsidiary’s contribution to net income group share has grown from 6.6 MMAD to 16.2 MMAD. General operating expenses decreased by -4.1% between 2010 and 2011 from 168.1 MMAD to 161.3 MMAD. annual report 2011 As for Maroc Factoring, its contribution to BMCE Bank’s consolidated net banking income stood at 41.7 MMAD, that is an increase of +4.8% compared to last year. 131 BMCE BANK GROUP ✦ Other Activities in Morocco ✦ Activites in Europe The “Other Activities” segment of BMCE Bank Group gathers BBI’s net banking income decreased by -3.9% to reach 224.2 MMAD. General operational expenses also decreased by 33.9%, to 271,5 MMAD in 2011 versus 410.9 MMAD in 2010. the following entities : Contributions In MMAD General Operating Expenses 2011 2010 Chg NBI 2011 2010 Chg Net Income Group Share 2011 2010 Chg Other activities 131202 109191 20,16% -75470 -66282 13,86% 18149 21606 -16,00% Locasom 131202 109191 20,16% -75470 -66282 13,86% 22463 23075 -2,65% EAI -7072 -1044-577,39% CID 13107 13828 -5,21% Hanouty -10349 -14253 27,39% Locasom - a subsidiary dedicated to long-term car lease – had In terms of contribution to net income group share, BBI incurred a loss of -51,2 MMAD in 2011, versus -297,1 MMAD in 2010. The 2011 loss includes depreciation on deferred tax of about 13 MMAD. BMCE Madrid had its net banking income increase by +26.8%, and its contribution to the Group’s consolidated net banking income went up by +15.1%, from 92.3 MMAD to 106.2 MMAD. its contribution to consolidated net banking income increase BMCE Madrid’s contribution to net income group share rose by +11.2%, from 36.4 MMAD to 40.5 MMAD. by +20.2% to attain 131.2 MMAD. In terms of general operating expenses, its contribution stands at 75.5 MMAD, whereas its contribution to net income group share amounts to 22,5 MMAD. BMCE Bank increased its holding in Locasom to now reach 97.3% during the second semester of 2011. EAI - a technology subsidiary created as a joint venture with RMAW and CIC – registered net income of 0.2 MMAD. Besides, Over the same period, its share in BMCE Bank Group’s consolidated general operating expenses has grown by 9.9% from 52.2 MMAD to 57.3 MMAD. BMCE Paris transferred most of its activities to BBI in the framework of the restructuring of BMCE Bank Group activities in Europe, hence its contribution to consolidated net banking income is not significant. Besides, in view of the recognition of an additional 35.8 MMAD allowance on BBI, BMCE Paris’ loss is of the same amount.. contribution to net income group share is of -7.1 MMAD. Hanouty Shop : Hanouty Shop: its contribution to net income group share is negative, that is -10.3 MMAD versus -14.3 MMAD last year at the same period. This subsidiary registered net earnings of -22,7 MMAD by December 31st 2011 versus –31,3 MMAD by 31 December 31st 2010. CID, a subsidiary held at 38.9% by BMCE Bank, contributes to net income group share up to 13.1 MMAD. 3. International Activities : Results and Contributions International activities had their contribution to net income group share significantly increase from -1.2 MMAD to +298.9 MMAD, essentially due to substantial improvement in BMCE Bank International deficit. African subsidiaries (BOA, LCB and BDM), registered increases in their contributions to net income group share by +19.4% from 259.5 MMAD to 309.7 MMAD in 2011. Contributions En MDH NBI 2011 2010 Chg General Operating Expenses 2011 2010 Chg Net Income Group Share 2011 2010 Chg International activities 3 607 699 2 965 469 21,66% -2 226 023 -1 965 900 15,27% 298 960 Africa 3 298 009 2 629 928 25,40% -1 937 155 -1 502 713 28,91% 309 683 259 456 19,36% -29,00% -10 723 -260 669 95,89% Europe 309 690 335 540 -7,70 -328 868 -436 187 -1 21324 751,78% ✦ African Activities Bank of Africa Bank of Africa’s contribution to consolidated net banking income increased from 2 391 MMAD in 2010 to 3 007 MMAD in 2011. In terms of general operating expenses, BOA’s contribution stands at 1 786 MMAD in 2011 versus 1 381 MMAD in 2010, up by +29%. The contribution of Bank of Africa to net income group share thus attained 250 MMAD in 2011, versus 212 MMAD a year earlier, increasing by +17.9%. BOA’s net earnings stood at 651.4 MMAD in 2011 versus 523.5 MMAD in 2010, increasing by +24.4%. La Congolaise de Banque registered a +21.6% increase in its contribution to consolidated net banking income from 239 MMAD to 290.7 MMAD. Its contribution to net income group share stood at 27.2 MMAD in 2011, versus 23,5 MMAD in 2010, increasing by +15,7%. La Banque de Développement du Mali, consolidated under equity method , increased its contribution to net income group share from 23.9 MMAD in 2010 from 32.5 MMAD in 2011. ✦ Annexe ✦ A ssets/Liabilites Management by december 31 2011 • Conribution to consolidated earnings • Interest Rate Risks Net Income Group Share by Subsidiary Results from stress testing carried out on December 31st 2011, as to the impact of a change of 200 basis points in interest rates on net interest income and the economic value of Equity seem to be in line with the thresholds set by the ALCO committee. 2010 Chg 2011 Share 2010 Share Domestic activities 551 239 820 186 -33% 65% 100% BMCE Bank BMCE BANK (Contribution excluding contingency reserves) Affiliated Activities Specialized financial services Salafin 342 440 610 451 -44% 40% 75% 528 164 610 451 -13% 51% 75% 208 799 209 735 0% 25% 26% 152 807 119 495 25% 18% 15% 63 373 65 162 -2,7% 7% 8% Maghrébail 73 401 47 035 56% 9% 6% Maroc Factoring 16 198 6 653 143% 2% 1% RM Experts -4 905 ACMAR -1% 4 740 645 635% 1% 0% Investment banking 37 843 68 634 -45% 4% 8% BMCE Capital 12 090 9 997 21% 1% 1% BMCE Capital Bourse -711 35 295 -102% 0% 4% 25 980 22 018 18% 3% 3% 483 1 323 -63% 0% 0% Others 18 149 21 606 -16% 2% 3% Locasom 22 463 23 075 -2,7% 3% 3% EAI -7 072 -1 044 -2,7% -1% 0% -10 349 -14 253 27% -1% -2% BMCE Capital Gestion CFM Hanouty CID 13 107 13 828 -5,2% 2% 2% International Activities 298 960 -1 216 NS 35% 0% Europe -10 723 -260 672 96% -1% -32% BBI -51 229 -297 083 83% -6% -36% 40 506 36 411 11% 5% 4% Africa 309 683 256 456 19% 36% 32% BOA 250 003 211 994 18% 29% 26% LCB 27 009 23 514 16% 3% 3% BDM 32 471 23 948 36% 4% 3% 850 199 818 971 3,8% 100% 100% BMCE Madrid Net Income Group Share ✦ Net Income Group Share BMCE Bank Group intends to consolidate its growth dynamics both in Morocco, namely through credit growth to support the economy, and internationally through the optimization of the Group’s European presence and consolidation of its African activities. Indeed, the impact on net interest income is estimated at 170 MMAD, that is 4% of the 2012 net banking income (under the 5% ALCO limit), and the impact on the economic value of Equity is estimated at 305 MMAD that is 2,7% of regulatory capital, under the 20% ALCO limit. Capital injections carried out in 2010 stemming from the CDG, the CM CIC Group and BMCE Bank Group Employees for a total amount of 6,3 billion MAD have enabled to strengthen the regulatory capital of the Bank and therefore contribute to limit any impact.. MANAGEMENT REPORT 2011 • Liquidity Risk The liquidity ratio stands just above the 100% regulatory requirement. The liquidity-gap analysis over a 12-month period reveals a liquidity surplus of +9.9 billion MAD in 2011 versus +5.9 billion MAD in 2010. • Structural Foreign Exchange Risk Foreign exchange risks are limited in view of foreign currency volumes, by their exclusively commercial nature with clientele and their almost systematic backing. Foreign currency assets stand at 9% of the overall balance sheet versus 7% of liabilities, essentially denominated in EUR and USD. It is noteworthy to mention that in such growth context, both in terms of commitments and strategic investment, the bank has consolidated its equity base in 2010 by nearly 6 billion MAD. These capital injections allowed the bank to strengthen its equity base and achieve a capital adequacy ratio above the minimum regulatory requirement. annual report 2011 Besides, the Bank pursues its operational efficiency improvement program in order to settle its competitiveness throughout a series of structuring projects, through cost control, the commercial efficiency program (‘Regionalization’), operational efficiency (‘Cap Process’), in addition to other programs which should have a positive impact on additional income generation, such as CRM, the ‘’Poste Agence’’ or E-banking. 133 BMCE BANK GROUP RESOLUTIONS First Resolution Fourth Resolution The Ordinary General Meeting, after having listened to the reading of the Management Report submitted by the Board and the Reports drawn up by the auditors, approves all of these documents fully and unreservedly. It likewise approves the accounts of the fiscal year closed on December 31, 2011, noting that the individual accounts, as well as the balance sheet bearing on the activity in Morocco, including those of affiliates and income statements pertaining to them thus closed on December 2011, reflect the overall operations of the Bank. The Ordinary General Meeting shall take note of the accomplishment of Bank Auditors ERNST & YOUNG and FIDAROC GRANT THORNTON’s mission for the 2011 fiscal year, in line with articles of incorporation’s provisions, law 17-95 as abrogated and completed by Law 20 – 05 on limited companies (sociétés anonymes) and to provisions of article 72 of Dahir on Law n° 1-05-178 of February 14th 2006, on the grounds of their General Report on operations of tax year 2011. The AGM approves the documents submitted to it. Fifth Resolution Second Resolution The Ordinary General Meeting acknowledging that aggregated benefits of tax year 2011 are distributed as follows: - For the Moroccan activity : MAD 522 756 796,03 - For the Paris Branch : foreign currency equivalent in dirhamsMAD -35 839 247,00 - For the Offshore BMCE Bank Branch foreign currency equivalent in dirhamsMAD 57 844 102,95 - That is a net benefit of MAD 544 761 651,98 Consequently, the Ordinary General Meeting decides to allocate profits made during tax year 2011 as follows: Net Profits MAD 544 761 651,98 - First of 6% dividend MAD - 103 178 034,00 Remaining MAD 441 583 617,98 - of 24% Super dividend MAD -412 712 136,00 Remaining MAD 28 871 481,98 - Past year retained earnings MAD 10 891,81 Remaining MAD 28 882 373,79 - Extraordinary Reserve MAD -28 880 000,00 Balance to be carried forward MAD 2 373,79 The subsidiaries and equity portfolio has generated, along tax year 2011, dividends up to 237,4 million dirhams. Net allocations to provisions on equity portfolio stood 137,4 million dirhams. Understandably, all these elements have been integrated in profits and losses of the aggregated activity. Third Resolution The General Meeting sets the dividend at 3 dirhams per share, which payment, after deduction of all taxes and fees provided for by law, shall be made from July 10th 2012 at the Head Office: 140, Avenue Hassan II in Casablanca, BMCE Capital Securities. Dividends shall be cashed by bank transfers of coupons to the benefit of the BMCE Bank account open in the MAROCLEAR books. The Ordinary General Meeting, after the reading of the Auditors’ Special Report on conventions stemming from articles 56 and following of Law 17-95 as abrogated and completed on Limited Companies (sociétés anonymes) and article 26 of articles of incorporation, approves the conclusions of the said report with all conventions mentioned thereof. Sixth Resolution The Ordinary General Meeting sets the amount of fees to be distributed among directors for fiscal year 2011, at 1 545 775,73 DH (one million five hundred and forty five dirhams and thirteen cents). Seventh Resolution The term of the company BANCO ESPIRITO SANTO as director represented by Mr. Mario Mosqueira DO AMARAL voiding at the end of this Meeting, the Ordinary General Meeting decides to renew the said fiscal term for another six years coming to an end on the Assembly bound to rule over accounts of tax year closing on December 31st 2017. Eighth Resolution The Ordinary General Meeting gives total, full and unreserved quietus (discharge) to the Directors for their management regarding the fiscal year closed on December 31, 2011. Nineth Resolution The Ordinary General Meeting decides, in view of activities carried out by the BMCE Bank Foundation on the necessary financial need to achieve their programs, sets the yearly financial attribution of such Foundation between 3% and 4% of the Gross Operanting Income of the Bank. Tenth Resolution The Ordinary General Meeting gives all powers to the bearer of an original document or copy of these minutes in order to execute all legal formalities. Auditors’ Report on the Consolidated Financial 47, rue Allal Ben Abdellah 20 000 Casablanca Maroc 37, Bd Abdellatif Ben Kaddour 20 060 Casablanca Maroc To the Shareholders of BMCE BANK 140, Avenue Hassan II Casablanca Auditors’ Report on the Consolidated Financial Statements as at December 31st, 2011 (This is a free translation of the original French text for information purposes only) We have audited the attached consolidated financial statements of the Banque Marocaine du Commerce Extérieur and its subsidiaries (BMCE Bank Group) for the financial year ended 31 December 2011, which comprise the consolidated balance sheet, the consolidated income statement, the global income statement, the statement of changes in shareholders’ equity, the cash flow statement and, notes containing a summary of main accounting methods and other explicative notes. Management’s Responsibility RESOLUTIONS The Management is responsible for the preparation of the consolidated financial statements in accordance with the International Financial Reporting Standards. This responsibility includes designing, implementing and maintaining internal control system relevant to the preparation and presentation of consolidated financial statements that are free from material misstatement, and making accounting estimates that are reasonable with regards to the circumstances. Auditors’ Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with the Moroccan Auditing Standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control system. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall consolidated financial statements presentation. We believe that the audit evidence that we have obtained is sufficient and appropriate to provide a reasonable basis for our audit opinion. Opinion on the consolidated financial statements BMCE Bank received in March 2011 a second notice of the tax administration following the control over the period 2006 to 2009 of corporate tax (IS), Income Tax (IR) and Value Added Tax (VAT). Disagreeing with the tax adjustments notified, the bank introduced an appeal to the local commission of taxation. In the current state of the proceedings, we are not able to estimate the potential impacts of this control over the results and equity of the Group on December 31st, 2011. In our opinion, except the impact of the situation described in the paragraph above, the consolidated financial statements referred to in the first paragraph of this report give, in all their significant aspects, a fair view of the financial position of Group Banque Marocaine du Commerce Extérieur (BMCE Bank) as at December 31st, 2011 as well as the result of its operations and its cash flows for the year then ended, in accordance with the International Financial Reporting Standards (IFRS). Casablanca, April 23, 2012 Faïçal MEKOUAR Partner ERNST & YOUNG Bachir TAZI Partner annual report 2011 The Statutory Auditors FIDAROC GRANT THORNTON 135 BMCE BANK GROUP accounting standards and principles applied by the group 1. Context The application of IAS/IFRS is obligatory starting from the fiscal year beginning on January 1st, 2008. intention of reselling them in the short term. These securities are recorded in this case under ‘‘available for sale assets’’ at the fair value through profit or loss. The paramount objective of the regulatory authorities is to provide credit institutions with an accounting framework in accordance with international standards in terms of disclosure and financial transparency. Also are excluded from the consolidation list participations held by venture capitalists, (except for major participations) which are optionally recorded as financial assets at fair value through profit or loss. BMCE Bank Group has adopted IFRS, approved by IASB to the consolidated accounts for the 2008 fiscal year compared to the 2007 fiscal year as well. 2.2. Tangible Fixed Assets 2. Applicable Accounting Standards 2.1. Consolidation A tangible fixed asset is a long term asset held by the firm to be used for operations or lease. • Initial Recognition Tangible fixed assets are initially recognised at purchase price plus directly attributable costs. The scope of consolidation includes all domestic and foreign entities in which the Group has direct or indirect control. The consolidation method, i.e. full consolidation, proportional consolidation, and equity method, is respectively determined by whether the Group exercises exclusive control, joint control, or significant influence. However, joint ventures are consolidated using the proportional method or the equity method. • Subsequent Measurement The new aspect brought by the International Financial Reporting Standards concerns Special Purpose Entities, distinct legal structures, formed specifically by the Group to realize a limited and well defined objective. These entities must be consolidated regardless of their legal form and country of implementation. • Reevaluation method (optional) : assets are measured at fair value at the date of reevaluation less subsequent cumulated depreciation and any impairment losses. Fair value is the amount for which an asset could be exchanged, or liability settled, between knowledgeable, willing parties in an arm’s length transaction. Are excluded from consolidation : • Entities under temporary control, i.e. acquired to be disposed in the short term (within a 12 month period) ; • Entities whose assets are held for transaction purposes and accounted for at fair value through profit or loss. There is no control presumption in IAS 27, IAS 28, and IAS 31 and therefore subsidiaries in which the Group has 40% to 50% control are fully consolidated. ✦ Options Adopted by BMCE Bank • Definition of the Consolidation Scope BMCE Bank Group consolidates entities, regardless of their activity, in which it holds at least 20% of the voting power. On the other hand, the Group consolidates entities meeting the following conditions : • The subsidiary’s total assets is greater than 0,5% of the parent company’s ; • The subsidiary’s net assets is greater than 0,5% of the parent company’s ; • The subsidiary’s banking revenues are greater than 0,5% of the parent company’s ; • Cumulated thresholds where the total of unconsolidated entities does not exceed 5% of the consolidated aggregate. • Exception Any entity having a non significant contribution has to be consolidated if it holds stakes in subsidiaries which meet one of the conditions mentioned above. Subsequent to initial recognition, tangible fixed assets can be measured according to two methods : • Cost method (recommended) : assets are measured at cost less cumulated depreciation and any impairment losses ; Reevaluation should be conducted on a sufficient regular basis so that the book value will not be significantly different from the fair value at the closing date. • Component-based Approach Where an asset consists of a number of components that have different users or different patterns of consumption of economic benefits, each component is recognised separately and depreciated using an appropriate method to that component. • Depreciation rules The depreciation of a tangible fixed asset is the cost of this asset less any residual value, which corresponds to the current value of the asset, taking into account its estimated age and condition over its useful life. A tangible fixed asset is depreciated over its useful life, which corresponds to the period over which the entity expects to use this asset. The depreciation should reflect the consumption patterns of future economic benefits. The depreciation periods and methods have to be reviewed periodically by the firm, and hence the depreciation expenses for the current and future fiscal years must be readjusted. Even if the fair value of the asset is greater than its book value, depreciation is recognised, as long as the residual value does not exceed the book value. • Impairment • Exclusion from the Consolidation Scope The amount of impairment is the excess of the carrying value over the recoverable value, which corresponds to the highest value between the net disposal price and the value in use. BMCE Bank excludes from its consolidation list entities in which it has control or exercises a significant influence, when at their acquisition, the securities of these entities are held with the Impairment losses are recognised when there is an indication of impairment (internal or external), which has to be valued at the end of each fiscal year. ✦ Options Adopted by BMCE Bank • Measurement The Group has chosen the cost method instead of the reevaluation method, as specified by IAS16. However, the Group might use the reevaluation method for a part of its lands. BMCE Bank Group has adopted the amortised cost method for the measurement of its investment properties. The treatment in terms of measurement is identical to that used in the measurement of operating properties. • Initial Recognition The borrowing costs are not included in the acquisition cost of a tangible fixed asset. • Residual Value Given the nature of BMCE Bank’s fixed assets, the Group did not retain any residual value, except for equipment transport of the subsidiary LOCASOM. Actually, there is no sufficiently active market or replacement policy over a period that is shorter than the asset’s useful life so that a residual value can be recognised. • Depreciation period The Group has adopted an identical depreciation scheme in the IAS/IFRS consolidated accounts. • Component-based Approach 2.4. Intangible Fixed Assets An intangible fixed asset is a non monetary and non physical asset. It is : • Identifiable in order to distinguish it from goodwill ; • Controlled if the firm has the power to get the future economic benefits generated from the underlying asset and if the firm can also restrain the access of a third party to its benefits. IAS 38 states two phases for in-house intangible fixed assets. Phase Fixed asset/expense Research Expense Development Fixed asset Given the nature of the Group’s activity, depreciation by component is essentially applied to buildings. For the opening balance sheet, the recognition of the historical depreciation cost by component is applied, using a different depreciation periods as a function of the construction characteristics. Expenses resulting from the development phase are recorded under fixed assets if it is possible to demonstrate : Headquarters’ Buildings Branch Offices • The intention to carry out the project ; Buildings: Head Offices Structure, structural works Façade General technical Equipment Fittings • Impairment • The technical feasibility of the product ; Other buildings than Head Offices • The capacity of the firm to sell or use the product ; • That the firm will profit from the future economic benefits. Duration QP Duration QP 80 55% 80 65% 30 15% 20 20% 20 15% 10 10% 10 20% The Group considers that impairment is only applied to constructions and therefore the market value (appraisal value) is used for depreciation. 2.3. Investment Property According to IAS 40, an investment property comprises property assets held to generate rental income and capital gains. Unlike a fixed asset used in operations or in the provision of services, an investment property generates cash flows, independent from the other assets of the firm. IAS 40 gives the choice for the measurement of an investment property : • The fair value through profit or loss ; • The amortised cost method. ✦ Options Adopted by BMCE Bank • Definition The Group considers any non operating property as an investment property. • Initial Recognition An intangible fixed asset is initially recognised at cost that is equal to the amount of cash or cash equivalent paid or at the fair value of any counterpart given to purchase the asset at the acquisition or construction date. IAS 38 refers to two options for the subsequent measurement of an intangible fixed asset : • Amortised cost : assets are measured at cost less cumulated depreciation and any impairment losses ; • Reevaluation method : assets are measured at fair value at the date of reevaluation less subsequent cumulated depreciation and any impairment losses. Fair value has to be measured based on an active market. Reevaluation should be conducted in a sufficient regular basis so that the book value will not significantly different from the fair value at the closing date.. • Amortisation Intangible fixed assets are amortised over a maximum period of 20 years. An intangible fixed asset enjoying an unlimited useful life period is not amortised. In this case, a depreciation test should be carried out at the end of each fiscal year. The amortisation method must reflect the consumption pattern of the future economic benefits. annual report 2011 Any used method must be applied to all investment properties. • The financial capacity to carry out the project ; 137 BMCE BANK GROUP • Impairment Loss Impairment losses are recognised when there is an indication of impairment (internal or external), which has to be valued at the end of each fiscal year. ✦ Options Adopted by BMCE Bank For the first time adoption, BMCE Bank has chosen the amortised cost method. It has been decided to not include internally developed software on the opening balance sheet and to put in place a tracking system for development costs in the future. For subsequent measurement of intangible fixed assets, the Group has adopted the amortised cost method. • Amortisation The Group has decided to maintain the currently used amortisation periods. • Residual value Given the nature of BMCE Bank’s intangible fixed assets, the Group considers that the concept of residual value is not relevant and thus did not retain any. 2.5. Securities the intention and ability to hold until maturity. These securities do not include financial instruments initially designated as assets or liabilities at fair value through profit or loss or loans and receivables. An entity cannot classify securities under held to maturity investments if it has, during the current fiscal year or during the two previous fiscal years, sold or reclassified before maturity a significant portion of these securities. This restriction is not applicable to disposals : • Near maturity (less than three months) where a change in interest rates has no significant impact on the fair value of the securities; • Occur after the accumulation of a substantial portion of the initial principal (about 90% of the asset’s carried amount); • Attributable to an isolated and incontrollable event, which could not be predicted ; • Between the group entities (intra-group transactions). An entity does not have the intention to hold a financial asset until maturity if one of the following criteria is met : • The entity intends to hold the financial asset for an undetermined period ; Financial Assets at Fair Value Through Profit or Loss • The entity is willing to sell the asset as a response to changes in interest rates or risks, to liquidity needs, to changes in the availability and yield of alternative investments, to changes in the funding base, and foreign exchange risks ; It is classified under this category any financial asset meeting the following criteria . • The issuer has the right to pay for the financial asset an amount that is well below its amortised cost. It is considered a trading financial instrument because : Any entity does not have the ability to hold a financial asset until maturity if one of the following two criteria is not met : IAS 39 classifies financial assets into 4 categories, defined as a function of the management purpose. • It is acquired or contracted to be sold or purchased in the short term ; • It is part of a portfolio made of distinct financial instruments, for which exists a recent effective pattern of retained earnings in the short term ; • It does not have adequate financial resources to continue the financing of its held-to maturity investments ; • It is a derivative (except for hedging instruments) ; • It is subject to an existing legal constraint or other, which could distrust its intention to hold the financial asset until maturity. • It is designated as so during its acquisition. ✦ Accounting Principles Financial instruments can be classified under financial assets or liabilities at fair value through profit or loss, except for equity investments for which an active market does not exist and thus the fair value cannot be precisely measured. Derivatives are also classified as financial assets or liabilities at fair value through profit or loss, except for hedging instruments. ✦ Accounting principles • Initial Recognition Financial assets at fair value through profit or loss must be initially recognised at acquisition price, excluding transaction costs directly attributable to the acquisition, and accrued interest on fixed income securities. • Subsequent Measurement Securities in this category are measured at fair value. Changes in fair value are presented in the profit and loss account. These securities are not subject to amortisation.. Held-to-maturity investments Held-to-maturity investments are financial assets with fixed or determinable payments and fixed maturity that an entity has • Initial Recognition Held to maturity investments must be initially accounted for at acquisition price, plus transactions costs directly attributable to the acquisition, and accrued interest on fixed income securities (in a related receivables account). • Subsequent Measurement Subsequent to initial recognition, held to maturity investments are accounted for at amortised cost using the effective interest method, which builds in amortisation of premium or discount. • Impairment loss in the carrying amount and the estimated recoverable value. The estimated recoverable value is measured through discounted future cash flows at the original effective interest rate. Any subsequent decrease in the impairment loss is credited to the profit and loss account. • Loans and Receivables Loans and receivables are assets rather than derivatives with fixed or determinable payments and which are not quoted in an active market. The following assets are not classified under this category : •A ssets that the entity has the intention to sell immediately or in the short term; these assets are classified under ‘‘assets held for trading purposes’’and financial assets at fair value through profit or loss ; •A ssets that the entity designates as available for sell ; •A ssets of which a significant portion of the investment could not be recovered for other reasons than the deterioration of the loan; these assets are classified under ‘‘available-for-sale financial assets’’. ✦ Accounting Principles Loans and receivables are recognised at amortised cost, net of provisions for impairment loss. • Impairment Loss When there is objective evidence of measurable decrease in value, an impairment loss is recognised for the difference in the carrying amount and the estimated recoverable value. Any subsequent decrease in the impairment loss is credited to the profit and loss account. ✦ Available for Sale Financial Assets These are financial assets other than derivatives, loans and receivables, held to maturity investments, or financial assets at fair value through profit or loss. ✦ Accounting principles According to IAS 39, the accounting principles for ‘‘available for sale financial assets’’ are as follows : • Initial Recognition Available for sale financial assets are initially recognised at the acquisition price plus transaction costs directly attributable to the acquisition, and accrued interest on fixed income securities (in a related receivables account). • Subsequent Measurement The changes in the fair value of these securities are recognised in shareholders’ equity. On disposal or on recognition of an impairment loss, unrealised gains and losses on fixed income securities are taken to the profit or loss account, using effective interest method. • Impairment Loss When there is objective evidence of measurable decrease in value for equity securities, or the occurring of credit risk for debt securities, unrealised capital losses are transferred from shareholders’ equity to the profit or loss account. Any subsequent decrease in the impairment loss is credited to the profit and loss account for debt securities, but not for equity securities. Any positive change in the fair value of the latter will be recognised in the shareholders’ equity, whereas any negative change in the fair value will be accounted for in the profit or loss account. ✦ Options Adopted by BMCE Bank The portfolio is made of the following securities : • Equity investments ; • Trading securities ; • Regulated securities • Classification These securities are classified as available-for-sale financial assets, recognised at fair value. • Valuation Listed securities : the reference value is the last stock price. Unlisted securities : the fair value is measured according to internal models. • Impairment Loss Listed securities : decrease by 20% in the stock price over the last 6 months ; Unlisted securities : according to impairment indications for the monitoring of provisioning. ✦ Trading Room • Classification The purpose of management is defined in accordance with the future management of the Trading Room. At the opening balance sheet, the securities managed under the trading room were essentially for trading purposes. • Valuation Listed Securities : the fair value corresponds to the market share. Unlisted Securities : the fair value is measured according to an internal model. ✦ Regulated Securities These securities are classified as held-to-maturity financial assets. 2.6. Impairment ✦ Portfolio Impairment If there is no objective evidence of impairment, whether it is significant or not, the financial asset is included in a portfolio of securities having the same credit risk characteristics to be collectively assessed. ✦ Indication of Impairment In a portfolio assessment, an objective evidence of impairment can be reduced to observable events indicating a measurable decrease in the estimated future cash flows of a group of loans, since the initial recognition, although this decrease can be associated with the different loans making this portfolio : • Adverse changes in the capacity of borrowers ; • A national or local economic situation correlated to the default payment on the assets of the portfolio. ✦ Individual Impairment An impairment loss is recognised when there is objective evidence or several objective indications of a decrease in the value of loans, including: • Significant financial difficulties of the issuer or the debtor ; • A breach in the contract resulting from a default payment (interest or principal) ; • The granting by the lender to the borrower, for economic or legal reasons related to financial difficulties, of a facility that the lender did not expect in other circumstances ; annual report 2011 BMCE Bank Group has chosen a classification as a function of the intention of management and the nature of securities. ✦ Securities 139 BMCE BANK GROUP • The increasing likelihood of bankruptcy or other restructuring of the borrower ; • The disappearance of an active market for that financial asset following financial difficulties, or ; • Observable events indicating a measurable decrease in the estimated future cash flows of a group of financial assets, since the initial recognition, although this decrease can be associated with every single asset in the portfolio : - Adverse changes in the solvency of borrowers ; - A national or local economic situation correlated to the default payment on the assets of the portfolio. ✦ Impairment Method IAS 39 does not distinguish different methodologies for the assessment of individually and collectively impaired assets. Instead, the only principle is to provision the excess of the book value (carrying amount) on the recovered value. The recoverable value is the present value, discounted at the effective interest rate, of the estimated future cash flows of the asset (or a group of assets). An impairment loss is recognised when there is an evidence of a measurable decrease in the value (impact on the cash flows of the asset). Given the valuation technique of recoverable values under IFRS, companies must be able to correlate the observed objective evidence of impairment and its impact on the expected cash flows of the portfolio. • Impairment Loss Under IFRS, the amount of impairment is the difference between the carrying amount and the recoverable value, which corresponds to the present value of the estimated recoverable cash flows, discounted at the effective interest rate. - The impairment under IFRS corresponds to the difference between the debit balance and the sum of the expected recovered amount ; - The loans not included in the large loans category are subject to an extrapolation on the basis of the impairment rate used for large loans. 2.7. Goodwill The cost of a business combination The cost of a business combination is measured as the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed and equity instruments issued by the acquirer in exchange for control of the acquired entity plus any costs directly attributable to the combination. General administrative costs, on the other hand, are recognised as expenses. Recognition of the cost of a business combination in the assets acquired and the liabilities and contingent liabilities assumed The acquirer must recognise the acquired entity’s identifiable assets, liabilities and contingent liabilities, that satisfy the recognition criteria, at fair value at the acquisition date. Any difference between the cost of a business combination and the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities is recognised under Goodwill. Goodwill Goodwill acquired must be recognised as an asset from the acquisition date. It is initially recognised at its historical cost i.e. the excess cost of the business combination over the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities. ✦ Options Adopted by BMCE Bank After initially being recognised at historical cost, Goodwill must subsequently be recognised at cost less cumulative impairment. impairment. Goodwill may not be amortised but, instead, is tested for impairment. • Portfolio Impairment As for portfolio impairment, BMCE Bank has identified a certain number of criteria for the analysis of the behavior of loans and receivables, and their categorisation in types of anomalies that will be used for the constitution of homogenous groups of assets. ✦ Options Adopted by BMCE Bank In accordance with IFRS 1, BMCE Bank has decided not to amortise existing Goodwill. The used method consists of assessing a portfolio of loans, classified under surveillance during the last fiscal years, in order to determine the level at which loans will be considered as ‘‘non performing’’ based on statistical studies. This is applied, along with the impairment loss defined under IFRS, to these loans to measure the portfolio impairment. • Goodwill will not be amortised. Individual Impairment IAS 21 “The effects of changes in foreign exchange rates” contains the following general provisions concerning translation differences: The Group considers that it is possible and necessary to apply the contagion principle to identify outstanding loans with objective evidence of a decrease in value according to IFRS standards. • Impairment tests will be conducted regularly. Impairment tests are conducted at least once every year to identify potential impairment. 2.8. Translation differences • Non-monetary items that are measured in terms of historical cost in a foreign currency remain at historical cost ; To measure the impact at the opening balance sheet, BMCE Bank’s portfolio of nonperforming loans was broken down as follows : • Non-monetary items that are measured at fair value are translated using the exchange rates when the fair value was determined ; - ‘‘Large loans’’ ; • Monetary items are translated using the closing rate ; - Review of every individual loan application by BMCE Bank in order to calculate the estimated recovered cash flows over a time horizon ; • Items of income and expenditure are translated at exchange rates at the transaction dates except for amortisation charges and provisions for non-monetary items which are translated at historical cost. Exchange differences for monetary items are recognised in profit or loss in the period in which they arise. Translation of financial statements of foreign subsidiaries Assets and liabilities are translated at closing exchange rates : ✦ Options Adopted by BMCE Bank • First-time adoption: • The Bank has discounted those provisions meeting the three criteria outlined above if the impact is material ; • Incompatible provisions are written back to shareholders’ equity. • Items of income and expenditure are translated the exchange rates prevailing at the date of each transaction but, for convenience, may be translated at average exchange rates over the period except in the case of material changes ; 2.10. Out-of-market loans •T ranslation differences are posted to shareholders’ equity, although the share of minority interests must be clearly differentiated. Fair value is equal to : ✦ Options Adopted by BMCE Bank • The sum of future expected cash flows discounted at the market rate; any difference between the loan’s market rate and contractual rate results in immediate recognition of a writedown through income which may be subsequently written back over the loan’s life. In the case of equity securities of non-consolidated companies qualified as assets available for sale (AFS), translation differences will be a constituent of fair value recognised in shareholders’ equity. BMCE Bank Group has considered its overall translation differences at the adoption date to be zero for all its foreign activities. The consequences are, therefore, as follows : • Translation differences or reserves are reclassified under opening shareholders’ equity ; • Translation differences accumulated prior to the IFRS adoption date are not to be taken into consideration when determining income on the future disposal of the activities in question. On subsequent disposal, the entity will not recognise these differences in income. On the other hand, any translation difference arising after IFRS adoption by the subsidiaries in question will be recognised in income. 2.9. Provisions A provision is a liability of uncertain timing or amount. Under IFRS, a loan’s entry value is equal to its fair value plus the internal and external transaction costs directly attributable to the issue of the loan. • The nominal value if the loan is “in the market” and if there are no transaction costs ; The decision to classify an issued loan “out-of-market” is made if the issuer has offered very advantageous financing terms by comparison with those generally offered by competitors in order to win a customer. If this is the case, a write-down relating to the difference between the market rate and contractual rate is recognised in income and is amortised over the loan’s life at the effective interest rate. ✦ Options Adopted by BMCE Bank BMCE Bank must therefore decide which loans have been issued by the Group at rates considered to be “out-of-market”. In the absence of clear guidelines on the concept of “out-ofmarket”, the Bank has decided to apply Bank Al-Maghrib’s minimum lending rates. 2.11. Leases According to IAS 17, a lease is a contract by which the owner (or lessor) transfers the right of use of an asset to the lessee in return for payments with an option to purchase the asset at maturity. Classification of leases IAS 17 makes a distinction between two types of lease : A liability is a present liability arising from past events whose settlement is expected to result in an outflow of resources (economic benefits). • A lease is classified as a finance lease if it transfers a substantial portion of the risks and rewards incident to ownership of an asset. Title may or may not be transferred in fine ; • Measurement • A lease contract is classified as an operating lease if it does not transfer a substantial portion of the risks and rewards incident to ownership. The amount recognised as a provision must be the best estimate of the expenditure required to settle the present liability at the closing balance sheet date. • A present liability towards a third party ; • High probability of resources outflow to settle the liability ; • The amount can be estimated reliably. • The lease transfers ownership of the asset to the lessee by the end of the lease term ; • The lessee has the option to purchase the asset at a price which is substantially lower than fair value at the date the option becomes exercisable on the basis that, at the inception of the lease, it is reasonably certain that the option will be exercised ; • The lease term is for the major part of the economic life of the asset, even if title is not transferred ; annual report 2011 According to IAS 37, the amount of the provision must be discounted if the impact is material. The standard states that a company must recognise a provision if the following three criteria are met : IAS 17 provides five examples which would normally lead to a lease being classified as a finance lease : 141 BMCE BANK GROUP • At the inception of the lease, the present value of the minimum lease payments amounts to at least a substantial portion of the fair value of the leased asset ; and • The leased assets are of a specialised nature such that only the lessee can use them without major modifications being made. ✦ Accounting for finance leases • The lessor should record an asset held under a finance lease in the balance sheet as a receivable at an amount equal to the net investment in the lease ; • Finance lease payments should be apportioned between the finance charge and the reduction of the outstanding liability ; • An operating lease does not transfer to the lessee all risks and rewards incident to ownership. Accounting for operating leases • Assets held under operating leases should be recorded on the lessor’s balance sheet according to the nature of the asset ; • Income statement – the lease payments should be recognised as an expense in income over the lease term on a straight-line basis, unless another systematic basis is more representative of the time pattern in which use benefit is derived from the diminished leased asset; • The depreciation policy for leased assets should be consistent with the policy normally adopted by the lessor for similar assets and must be calculated on the basis outlined in IAS 16 (plant, property and equipment) and IAS 38 (intangible fixed assets). • Long-term benefits These relate to benefits which are not due within the 12 months following the close of the period in which staff members have provided the corresponding services. Provisions are required if the benefit depends on an employee’s length of service. ✦ Termination payments Termination payments are made in the event of dismissal or voluntary redundancy. The company may book provisions if it is clearly committed to making employees redundant. Funding and accounting principles for post-employment defined benefit schemes and other long-term benefits Assessment and accounting principles of the Post-employment benefits and other long-term benefits. ✦ Valuation principles The valuation method adopted is the projected unit credit method which apportions benefits by service on a pro-rata basis. This method comprises two phases . • An assessment of long-term benefits, relating to future cash flows, based on actuarial assumptions; ; • Apportioning the long-term benefits over the period of activity during which BMCE Bank benefits from the service of its employees. ✦ Accounting Principles • Definitions ✦ Options Adopted by BMCE Bank Net present value of the gross liability i.e. the actuarial value of employee benefits or actuarial liability. The entities concerned by application of the standard relating to leases are Maghrebail, Salafin, Locasom as well as some subsidiaries of BOA Group. Non-recognised items – unrealised gains and losses to be amortised in the future or non-recognised items. The contracts entered into Maghrébail, Salafin and BOA subsidiaries meet the definition of leases. However, contracts of Locasom meet the definition of a finance lease. As all BMCE Group’s lease contracts are classified as finance leases, the accounting treatment currently employed at a consoldiated level is in accordance with IFRS. The impact is therefore zero. 2.12. Employees benefits ✦ Classification of employees’ benefits • Short-term benefits These relate to benefits due within the 12 months following the close of the period in which staff members have provided the corresponding services. They are recognised as expenses in the period in which they are consumed. • Post-employment defined contribution schemes The employer makes a fixed payment contribution to an external fund and has no other liability. Benefits received are determined as a function of contributions made plus any interest and are recognised as expenses in the period in which they are consumed. • Post-employment defined benefit schemes These are defined as all post-employment benefits other than those relating to defined contribution schemes. The employer undertakes to make available a certain level of benefit after an employee’s departure, whatever the liability’s cover. Provisions are required. ✦ Accounting for post-employment benefits The provision required is equal to the net liability less non-recognised items. There are two categories of non-recognised items: • In the event that the company opts for the corridor method, actuarial gains and losses, comprising the difference between the actual liability’s estimated net present value at the closing balance sheet date on the basis of the opening net present value and events arising during the period, result from one of the following two factors : - Changes to actuarial assumptions made between the opening and closing balance sheet dates in the light of specific events arising during the period or changes to the general economic environment i.e. assumption-based actuarial gains and losses ; - Differences between initial expectations of employees’ socioeconomic behaviour or the general economic environment during the period – reflected in actuarial assumptions – and what actually occured i.e. experience-based actuarial gains and losses. • Past service cost, arising from changes to scheme arrangements, which is the term used to describe the change in the liability for employee service in prior periods. Non-amortised items are amortised differently, depending on the situation : • Past service cost is amortised on a straight-line basis over the average period until the amended benefits become vested. The corridor rule consists of amortising at least over one period and generally over the remaining active service life of employees, at the closing balance sheet date, the portion of net accumulative non-recognised actuarial gains and losses equal to or exceeding 10% of the actuarial liability at the opening balance sheet date or the fair value of assets, whichever is the greater. must be deduced from consolidated shareholders’ equity, regardless of why they were acquired. ✦ Accounting for other long-term benefits The entity deducts directly from shareholders’ equity, net of any related tax credit in income, distributions to equity shareholders. The provision required at each closing balance sheet date is equal to the liability’s current value. ✦ Options Adopted by BMCE Bank All BMCE Bank securities held by Group entities must be cancelled by deducting shareholders’ equity. assessed defined benefits using the projected unit credit method. Transaction costs relating to shareholders’ equity, with the exception of equity issuance costs, directly attributable to the acquisition of an entity, must be recognised by deducting shareholders’ equity, net of any related tax credit in income. Employee benefits recognised relate to end-of-career bonuses and termination benefits. Only BMCE Bank Maroc is concerned by the application of this standard. No provision has been booked relating to post-employment health cover (CMIM) due to the lack of required information. 2.15. Effective Interest Rate ✦ Options adopted by BMCE Bank 2.13. Restructured loans Restructured loans are loans whose terms, including interest received by BMCE Bank, have been modified due to difficulties encountered by the counterparty. • Accounting Principles When a loan is restructured due to the borrower’s financial situation, future cash flows are discounted at the original effective interest rate and the difference between this amount and the loan’s carrying amount is immediately recognised in the cost of risk. This write-down is incorporated over the life of the loan in interest income. ✦ Options Adopted by BMCE Bank Restructured loans have been identified by cross-checking consolidated loans in the accounting statements held for accounting purposes against management records held for monitoring loan commitments for loans of above one million dirhams. In each case, the write-down at the date of renegotiation has been calculated based on original maturities and renegotiation terms. The write-down is calculated as the difference between : • The sum, at the date of renegotiation, of contractual initial cash flows, discounted at the effective interest rate ; • And the sum, at the date of renegotiation of renegotiated initial cash flows, discounted at the effective interest rate. For the opening balance, the write-down net of amortisation is recognised by a decrease in the value of loans outstanding against shareholders’ equity with amortisation charged to net banking income. On a recurring basis, write-downs are charged to income at the time of restructuring. 2.14. Treasury shares Treasury securities held for an employee stock-option scheme Costs and royalties to be included when calculating the effective interest rate. • Costs IAS 39 provides for transaction costs to be amortised over the period at the effective interest rate. These are marginal costs directly attributable to the acquisition, issue or exit of a financial asset or financial liability. • Fees IAS 18 differentiates between 3 fee categories depending on the nomenclature : - Fees forming an integral part of a financial instrument’s effective interest rate ; • Origination fees on loan sanctioning ; • Commitment fees received ; - Fees received in line with services provided ; - Fees for completion of an important act. • Accounting Principles Issued loans are recognised at amortised cost at the effective interest rate. ✦ Options Adopted by BMCE Bank Analysis has shown that costs and fees are not material. It was decided, therefore, not to amortise them for the purpose of first-time adoption. Transaction costs and fees must be regularly monitored to ensure that they are not material. Depending on the outcome, the Group will decide whether transaction costs and fees for loans maturing after one year will be amortised or not. Loans maturing in less than one year will be held at historical cost. 2.16. Customer deposits ✦ Accounting Principles • Initial measurement When a financial liability is recognised initially, an entity shall measure it at fair value plus, in the case of a financial liability not at fair value through income, transaction costs that are annual report 2011 When an entity buys back its own shares, they must be deducted from shareholders’ equity. Any profit or loss must not be recognised in income on purchase, sale, issue or cancellation of a company’s Treasury stock. Treasury shares may be acquired or held by the entity or members of the consolidated entity. The counterpart payment made or received must be recognised directly in shareholders’ equity. IAS 39 defines the effective interest rate as the rate which equates the net present value of future cash flows and the loan’s initial carrying amount, which incorporates transaction costs and fees. 143 BMCE BANK GROUP directly attributable to the acquisition or issue of the financial liability. • Subsequent measurement After initial recognition, a financial liability must be measured at amortised cost using the effective interest rate, except for : • Financial liabilities at fair value, through profit and loss ; • Financial liabilities that arise when a transfer of a financial asset does not qualify for recognition or when the continuing involvement approach applies. ✦ Options Adopted by BMCE Bank Currently, the Group categorises all deposits under “Other financial liabilities”. No deposit is categorised under “Financial liabilities held for trading purposes”. BMCE Bank deposits systematically have a maturity of no more than one year. It was concluded, therefore, that the impact from calculating a write-down and its amortisation over the life of the deposit was not material. No other item needs to be incorporated in the calculation regarding either existing or new deposits. No restatement has been made for sight deposits and savings accounts ; Interest-bearing deposits must be categorised under loans and advances and treated accordingly. 2.17. Deferred taxes Deferred tax is a correction made to the tax charge and/or the net position with the aim of smoothing the impact from taxable temporary differences. A deferred tax asset is a tax which is recoverable in the future. A tax liability is a tax which is payable in the future. In the event of changes to tax rates or tax rules, the impact on deferred taxes is recognised according to the matching principle - if the deferred tax was initially recognised in shareholders’ equity, the adjustment is also recognised in shareholders’ equity, otherwise through income. ✦ Options Adopted by BMCE Bank The Group has chosen to assess the probability of recovering deferred tax assets. Deferred tax assets are not recognised unless recovery of future taxable profit is probable. The probability of recovery may be ascertained by evaluating the business plans of the companies in question. Under IFRS, the phrase “probable recovery” must be interpreted as meaning that “recovery is more probable than improbable”. This could result, in certain cases, of recognising a high level of deferred tax assets than under generally accepted accounting principles, where this phrase is often interpreted as implying “a high level of probability”. 2.18. Derivatives A derivative is a financial instrument (firm or optional) whose value varies as a function of the value of an underlying variable such as an interest rate, commodity or security price. These are generally highly-geared instruments which require none or limited initial investment. Derivative instruments include swaps, options, futures and forward contracts. Derivatives (swaps, options etc.) are recognised on the balance sheet at fair value. At each balance sheet, they are marked to market on the balance sheet. Changes in fair value are recognised in income. ✦ Options Adopted by BMCE Bank Analysis conducted internally has concluded that BMCE Bank Group does not undertake hedging activities. 2.19. Share-based payment This standard deals with the payment of share based transactions in which and that are settled in equity instruments in return for goods or services are received as consideration for equity instruments. The payment can also be concluded by the equivalent of equity instruments issued. In fiscal year 2010, BMCE Bank carried out a capital increase in cash reserved for employees of BMCE BANK Group. Consolidated Balance Sheet as of december 31st, 2011 ASSETS Cash and amounts due from central banks and post office banks Financial assets at fair value through profit or loss Derivatives used for hedging purposes Available-for-sale financial assets Loans and receivables due from credit institutions Loans and receivables due from customers Remeasurement adjustment on interest rate risk hedged assets Held-to-maturity financial assets Current tax assets Deferred tax assets Accrued income and other assets Non current assets held for sale Investment in subsidiaries consolidated under the equity method Investment property Property, plant and equipment Intangible assets Goodwill Total Assets 2011 2010 6 391 958 31 732 316 2 330 377 23 822 680 121 342 658 9 590 911 408 979 321 084 4 559 041 399 358 547 099 5 064 126 645 081 832 470 207 988 138 8 033 096 27 750 733 1 847 394 22 971 432 107 367 885 8 321 093 383 596 371 417 3 260 722 382 171 520 667 4 795 142 651 205 531 006 187 187 559 Consolidated annual accounts Ifrs Balance Sheet (In thousand MAD) Liabilities & SHAREHOLDERS EQUITY Due to central banks and post office banks Financial liabilities at fair value through profit or loss Derivatives used for hedging purposes Due to credit institutions Due to customers Debt securities Remeasurement adjustment on interest rate risk hedged portfolios Current tax liabilities Deferred tax liabilities Accrued expenses and other liabilities Liabilities related to non-current assets held for sale Provisions for contingencies and charges Provisions for contingencies and charges Subsidies, assigned public funds and special guarantee funds Subordinated debts Capital and related reserves Consolidated reserves - Group share - Minority interests Unrealised or deferred gains or losses – group share Net earnings - Group share - Minority interests Total Liabilities & Shareholders Equity 2011 2010 1 752 24 848 609 139 152 010 12 008 860 324 592 934 127 8 971 070 457 440 4 904 381 1 275 13 602 716 132 019 155 11 444 054 316 356 906 568 8 093 984 349 989 4 634 497 12 428 604 10 451 134 1 045 085 82 186 850 199 3 956 693 12 390 435 10 439 225 1 153 220 -20 979 818 969 3 428 530 207 988 138 187 187 559 (In thousand MAD) NET INCOME AND GAINS AND LOSSES DIRECTLY RECOGNISED IN SHAREHOLDERS EQUITY 2010 1 507 754 -2 911 65 433 1 424 581 -5 968 -10 557 62 522 1 570 276 932 386 637 890 -16 525 1 408 056 797 991 610 065 (In thousand MAD) annual report 2011 Net earnings Currency tranlation adjustment Reevaluation of available for sale financial assets Reevaluation of hedging instruments Reevaluation of fixed assets Actuarial gains and losses on defined plans Proportion of gains and losses directly recognised in shareholders equity on companies consolidated under equity method Total gains and losses directly recognised in shareholders equity Net income and gains and losses directly recognised in shareholders equity Group Share Minority interests 2011 145 BMCE BANK GROUP IFRS INCOME STATEMENT Interests and assimilated revenues Interests and assimilated charges Net interest income Fees received Fees paid Net fee income Net gains or losses on financial instruments at fair value through profit or loss Net gains or losses on available for sale financial assets Income from market transactions Other banking revenues Other banking expenses Net banking income General operating expenses Allowances for depreciation and amortisation of tangible and intangible assets Gross operating income Cost of risk Operating income Share in net income of companies accounted for by equity method Net gains or losses on other assets Change in goodwill Pre-tax earnings Corporate income tax Net earnings Net earnings –minority interests Net earnings – group share 2011 9 350 022 -4 095 844 5 254 178 1 703 136 -280 201 1 422 935 1 020 376 27 075 1 047 451 792 174 -376 675 8 140 063 -4 588 896 -535 299 3 015 868 -872 214 2 143 654 44 590 -6 717 2 181 527 -673 773 1 507 754 657 555 850 199 2010 10 808 823 -5 952 292 4 856 531 1 648 926 -295 369 1 353 557 973 334 143 552 1 116 886 638 171 -413 112 7 552 033 -4 169 863 -484 499 2 897 671 -819 496 2 078 175 34 337 -75 381 2 037 131 -612 550 1 424 581 605 612 818 969 (In thousand MAD) ShareReserves Unrealised Reserves holder’s STATEMENT OF CHANGES IN Share Treasury & con- or deferred Minority related to Equity Total interests Capital stock solidated gains or SHAREHOLDERS EQUITY stock Group earnings losses Share Ending balance of Shareholder’s equityn12/31/2009 1 587 514 5 733 467 -3 110 742 1 923 947 4 935 6 139 121 3 086 733 9 225 854 Impact of changes in Accounting methods Ending balance of adjusted Shareholder’s equity 1 587 514 5 733 467 -3 110 742 1 923 947 4 935 6 139 121 3 086 733 9 225 854 12/31/2009 Operations on capital 132 000 2 986 244 -220 593 2 897 651 54 114 2 951 765 Share-based payment plans Operations on treasury stock 3 110 742 3 110 742 5 230 3 115 972 Dividends -481 962 -481 962 -218 651 -700 613 Net earnings 818 969 818 969 605 612 1 424 581 Tangible and intangible assets:Revaluations and disposals (A) Financial instruments: change in fair Value and trans-3 914 -25 914 -29 828 4 453 -25 375 fer to earnings (B) Currency translation adjustments: Changes and trans-77 575 -77 575 -23 555 -101 130 fer to earnings (C) Unrealised or deferred gains or losses (A)+ (B) + (C) -81 489 -25 914 -107 403 -19 102 -126 505 Change in the scope of consolidation 13 317 13 317 -85 406 -72 089 Ending balance of Shareholder’s Equity 2009 1 719 514 8 719 711 - 1 972 189 -20 979 12 390 435 3 428 530 15 818 965 Impact of changes in accounting methods Ending balance of adjusted Shareholder’s equity 1 719 514 8 719 711 - 1 972 189 -20 979 12 390 435 3 428 530 15 818 965 2009 Operations on capital 11 909 -36 548 -24 639 276 523 251 884 Share-based payment plans Operations on treasury stock Dividends -510 486 -510 486 -242 559 -753 045 Net earnings 850 199 850 199 657 555 1 507 754 Tangible and intangible assets:Revaluations and disposals (E) Financial instruments: change in fair value and transfer -8 029 103 165 95 136 -19 665 75 471 to earnings (F) Currency translation adjustments : Changes 23 758 23 758 -23 169 589 and transfer to earnings (G) Unrealised or deferred gains or losses (E)+ (F) + (G) 15 729 103 165 118 894 -42 834 76 060 Change in the scope of consolidation -177 271 -177 271 -120 522 -297 793 Divers -218 528 -218 528 -218 528 Ending balance of adjusted Shareholder’s equity 2011 1 719 514 8 731 620 - 1 895 284 82 186 12 428 604 3 956 693 16 385 297 (In thousand MAD) Extract of Appendices Related to Financial Consolidated Statements as of decembre 31st, 2011 Pre-tax net income +/- Net depreciation/amortisation expense on property, plant, and equipment and intangible assets +/- Impairment of goodwill and other non current assets +/- Net addition to provisions +/- Share of earnings in subsidiaries accounted for by equity method +/- Net loss (income) from investing activities +/- Net loss (income) from financing activities +/- Other movements +/- Non monetary items included in pre-tax net income and other adjustments Cash flows related to transactions with credit institutions +/- Cash flows related to transactions with customers +/- Cash flows related to transactions involving other financial assets and liabilities +/- Cash flows related to transactions involving non financial assets and liabilities +/- Taxes paid - Net increase (decrease) in cash related to assets and liabilities generated by operating activities Net cash flows from operating activities Cash flows related to financial assets and equity investments +/- Cash flows related to investment property +/- Cash flows related to pp&e and intangible assets +/- Net cash flows from investing activities Cash flows related to transactions with shareholders +/- Cash flows generated by other financing activities +/- Net cash flows from financing activities Net increase in cash and equivalents Effect of movements in exchange rates on cash and equivalents Net balance of cash accounts and equivalent accounts Beginning balance of cash and equivalents Net balance of cash accounts and accounts with central banks and post office banks Net balance of demand loans and deposits- credit institutions Ending balance of cash and equivalents Net balance of cash accounts and accounts with central banks and post office banks Net balance of demand loans and deposits- credit institutions Net increase in cash and equivalents 2011 2010 2 181 527 2 037 157 2 963 886 2 890 908 0 165 026 659 723 -44 591 -1 465 434 0 95 910 2 374 520 10 723 883 -10 060 593 -3 805 482 -28 000 76 212 275 497 -34 336 -544 262 -87 392 2 576 627 -1 372 903 -6 965 745 -3 095 416 27 488 -626 156 -274 352 -3 796 348 759 699 -1 090 685 -177 -1 298 024 -2 388 886 -339 866 703 344 363 478 -30 074 -1 295 783 11 933 784 8 033 096 3 900 688 10 638 001 6 391 958 4 246 043 -1 295 783 -11 680 928 -7 067 144 -920 960 -295 -1 000 565 1 921 820 2 709 665 2 787 095 5 496 760 -67 107 -3 559 311 15 493 095 11 961 191 3 531 904 11 933 784 8 033 096 3 900 688 -3 559 311 Consolidated annual accounts IFRS CASH FLOW STATEMENT (In thousand MAD) 2011 NET INTEREST INCOME Expense 2010 Net Income 7 614 768 2 772 953 4 841 815 9 349 581 6 987 941 2 601 939 4 386 002 6 428 988 171 014 -171 014 626 827 626 827 2 920 593 729 381 633 259 96 122 526 020 524 514 576 358 -51 844 406 441 204 867 56 901 147 966 119 579 740 126 689 632 50 494 795 873 740 126 456 680 283 446 795 873 232 952 -232 952 265 747 265 747 137 349 9 350 022 4 095 844 5 254 178 10 808 823 Expense Net 4 802 262 2 238 931 247 874 2 315 457 471 105 421 608 49 497 678 925 433 302 4 547 319 4 190 057 -247 874 605 136 54 915 -15 167 70 082 116 948 362 571 -245 623 137 349 4 856 531 245 623 5 952 292 (In thousand MAD) annual report 2011 Customer items Deposits, loans and borrowings Repurchase agreements Finance leases Interbank items Deposits, loans and borrowings Repurchase agreements Debt securities issued Cash flow hedge instruments Interest rate portfolio hedge instruments Trading book Fixed income securities Repurchase agreements Loans/borrowings Debt securities Available for sale financial assets Held to maturity financial assets Total interest income Income 147 BMCE BANK GROUP NET FEE INCOME Income Expense Net Net fee on transactions - With credit institutions - With customers - On custody - On foreign exchange On financial instruments and off balance sheet Income from mutual funds management Income from electronic payment services Insurance Other NET FEE INCOME 634 753 160 602 238 497 158 633 237 623 1 068 383 99 168 61 434 119 599 233 288 39 639 835 095 1 703 136 79 960 280 201 474 151 238 497 59 465 176 189 948 784 193 649 755 135 1 422 935 (In thousand MAD) Cost of Risk for the Period Impairment provisions Impairment provisions on loans and advances Impairment provisions on held to maturity financial assets (excluding interest rate risks) Provisions on off balance sheet commitments Other provisions for contingencies and charges Write back of provisions Write back of impairment provisions on loans and advances Write back of impairment provisions on held to maturity financial assets (excluding interest rate risks) Write back of provisions on off balance sheet commitments Write back of other provisions for contingencies and charges Changes in provisions Losses on counterparty risk on available for sale financial assets (fixed income securities) Losses on counterparty risk held to maturity financial assets Loss on irrecoverable loans and advances not covered by impairment provisions Loss on irrecoverable loans and advances covered by impairment provisions Discount on restructured products Recoveries on amortised loans and advances Losses on off balance sheet commitments Other losses Cost of risk 2011 2010 -1 220 654 -1 125 287 -1 162 486 -1 092 610 -1 385 -93 982 443 494 375 716 -3 907 -65 969 783 730 744 184 2 916 64 862 -95 054 2 880 36 666 -440 740 -109 023 -446 751 13 969 6 011 -872 214 -819 496 (In thousand MAD) SEGMENT INFORMATION The Group is composed of 4 core businesses : - Asset Management : BMCE Capital, BMCE Capital Bourse, BMCE Capital Gestion, Casablanca Finance Market - Specialised Financial Services : Salafin, Maghrébail, Maroc Factoring, Euler Hermes Acmar - International Activities : BMCE Bank Off Shore, BMCE Paris, BMCE International (Madrid), Banque de Développement du Mali, La Congolaise de Banque, BMCE Bank International Plc (Londres), Bank Of Africa, - Other activities : Locasom, EAI, CID, Hanouty INFORMATION BY OPERATIONAL SECTOR Net interest income Net fee income Net banking income General operating expenses & allowances for depreciation and amortisation Operating income Corporate income tax Net earnings group share Activity in Morocco 2 459 516 633 071 3 560 669 6 257 116 311 184 886 2011 Specialised financial services Other activites 648 868 -9 121 655 610 -6 378 0 131 202 internationales activites Total 2 145 915 682 674 3 607 696 5 254 178 1 422 935 8 140 063 -2 441 749 -195 785 -145 168 -75 470 -2 266 023 (5 124 195) 1 118 918 -298 334 342 440 -10 899 -15 916 37 843 510 442 -142 916 152 807 55 732 -8 318 18 149 1 341 675 -208 289 298 960 3 015 868 ( 673 773) 850 199 396 558 12 932 271 153 339 49 823 440 207 988 138 116 662 1 122 0 13 534 12 290 687 27 18 126 0 0 890 127 2 330 377 25 391 409 121 342 658 7 774 392 9 590 911 0 97 450 1 342 613 1 188 619 0 -59 131 37 139 940 139 152 010 3 435 629 16 385 297 Assets & liabilities by operational segment Total assets 144 682 530 Assets items Available for sale assets 1 291 928 Customer loans 83 659 440 Held to maturity assets 1 816 492 Liabilities & shareholders equity items Customer deposits 100 669 457 Shareholders equity 11 722 730 v Consolidated annual accounts Income by operational segment Asset management (In thousand MAD) BREAKDOWN OF FINANCIAL INSTRUMENTS BY TYPE OF FAIR PRICE MEASUREMENT Financial Assets Financial assets held for trading purposes at fair value through profit or loss Financial assets at fair value through profit or loss under the fair value option Financial Liabilities Financial liabilities held for trading purposes at fair value through profit or loss Financial liabilities at fair value through profit or loss under the fair value option 2011 Model Model with with non Market Price observable observable parameters parameters 31 732 316 1 752 2010 Total Market Price 31 732 316 27 750 733 1 752 1 275 Model Model with with non observable observable parameters parameters Total 27 750 733 1 275 (In thousand MAD) annual report 2011 149 BMCE BANK GROUP Financial assets, financial liabilities, and derivatives at fair value through profit or loss 2011 2010 Assets Assets designated designated Trading Trading at fair value Total at fair value Total book book through through profit or loss profit or loss Financial assets at fair value through profit or loss Negociable certificates of deposits Treasury bills and other eligible for central bank refinancing Other negotiable certificates of deposits Bonds Government bonds Other bonds Equities and other variable income securities Repurchase agreements Loans - To credit institutions - To corporate customers - To private individual customers Trading Book Derivatives Currency derivatives Interest rate derivatives Equity derivatives Credit derivatives Other derivatives Total financial assets at fair value through profit or loss Of which loaned securities Excluding equities and other variable-income securities Financial liabilities at fair value through profit or loss Borrowed securities and short selling Repurchase agreements Borrowings Credit institutions Corporate customers Debt securities Trading Book Derivatives Currency derivatives Interest rate derivatives Equity derivatives Credit derivatives Other derivatives Total financial liabilities at fair value through profit or loss 7 493 340 - 7 493 340 7 452 379 6 979 579 6 979 579 6 974 496 513 761 433 914 - 477 883 567 369 - 433 914 23 763 897 - - 513 761 433 914 433 914 23 763 897 - 567 369 19 730 408 - - 577 - 577 577 41 165 40 588 577 - 31 732 316 - 7 452 379 6 974 496 477 883 567 369 567 369 19 730 408 - 41 165 40 588 577 577 - 31 732 316 27 750 733 - 27 750 733 - - - - - - 1 752 1 752 - 1 752 1 752 - 1 275 1 275 - 1 275 1 275 - 1 752 - 1 752 1 275 - 1 275 (In thousand MAD) AVAILABLE FOR SALE FINANCIAL ASSETS Negociable certificates of deposit Treasury bills and other bills eligible for central bank refinancing Other negociable certificates of deposit Bonds Government bonds Other bonds Equities and other variable-income securities Of which listed securities Of which unlisted securities Total available-for-sale financial assets, before impairment provisions Provisions for impairment of available-for-sale financial assets Fixed-income securities Variable-income securities Total available-for-sale financial assets, net of impairment provisions Of which fixed-income securities, net of impairment provisions 2011 2010 - - - - 2 628 596 435 416 2 193 180 2 628 596 -298 219 1 994 752 398 228 1 596 524 1 994 752 -147 358 -298 219 2 330 377 -147 358 1 847 394 (In thousand MAD) INTERBANK AND MONEY-MARKET ITEMS Loans and receivables due from credit institutions Demand accounts Loans Repurchase agreements Total loans and receivables due from credit institutions, before impairment provisions Provisions for impairment of loans and receivables due from credit institutions Total des prets consentis et creances sur les etablissements de credits nets de depreciation Total loans and receivables due from credit institutions, net of impairment provisions Demand accounts Borrowings Repurchase agreements Total Due to Credit Institutions 2011 5 911 143 17 945 572 5 310 23 862 025 -39 345 23 822 680 2011 2 348 107 13 583 608 8 916 894 24 848 609 2010 4 904 258 18 084 570 12 420 23 001 248 -29 816 22 971 432 2010 1 222 864 9 830 254 2 549 598 13 602 716 (In thousand MAD) Loans and receivables due from customers 2011 2010 Demand accounts Loans to customers Repurchase agreements Finance leases Total loans and receivables due from customers, before impairment provisions Impairment of loans and receivables due from customers Total loans and receivables due from customers, net of impairment provisions 17 335 789 89 763 953 9 910 252 9 650 410 126 660 404 -5 317 746 121 342 658 14 806 099 80 789 158 7 606 889 8 616 093 111 818 239 -4 450 354 107 367 885 Breakdown of Customer Loans by Business Segment Activity in Morocco Specialised Financial Services International Activities Asset Management Other activities Total Allocated debts Value at balance sheet 2011 83 659 441 12 290 691 25 391 404 1 122 121 342 658 2010 73 928 891 11 390 194 22 048 536 264 107 367 885 121 342 658 107 367 885 Breakdown of Customer Loans by Geographic area Morocco Africa Europe Total en principal Allocated debts Value at balance sheet 2011 95 951 254 22 792 100 2 599 304 121 342 658 2010 85 319 349 19 342 686 2 705 850 107 367 885 121 342 658 107 367 885 Due to Customers Credit accounts Term accounts Regulated savings accounts Deposit Receipts Repurchase agreements Total due to customers 2011 57 769 414 52 986 886 19 881 953 4 911 391 3 602 366 139 152 010 2010 53 179 017 49 389 636 17 901 496 5 210 305 6 338 701 132 019 155 Breakdown of Customer Deposits by Business Segment Activity in Morocco Specialised Financial Services International Activities Asset Management Other activities Total en principal Allocated debts Value at balance sheet 2011 100 669 553 1 342 518 37 139 939 139 152 010 2010 98 044 626 959 192 33 015 337 132 019 155 139 152 010 132 019 155 102 012 071 36 114 558 1 025 381 139 152 010 99 003 818 31 989 542 1 025 795 132 019 155 Breakdown of Customer Desposits by Geographic area Morocco Africa Europe Total en principal Allocated debts Value at balance sheet 139 152 010 Consolidated annual accounts LOANS AND RECEIVABLES DUE FROM CUSTOMERS 132 019 155 (In thousand MAD) annual report 2011 151 BMCE BANK GROUP PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS USED IN OPERATIONS, INVESTMENT PROPERTY PP&E Land and buildings Equipment, furniture and fixtures Plant and equipment leased as lessor under operating leases Other PP&E Intangible Assets Purchased software Internally-developed software Other intangible assets Investment Property 2011 Accumulated depreciation Gross amortisation Value and impairment 8 152 649 3 088 523 2 617 698 534 135 2 859 747 1 290 230 5 064 126 2 083 563 1 569 517 7 920 516 2 370 751 3 117 391 2010 Accumulated depreciation amortisation and impairment 3 125 374 472 701 1 184 094 Carrying Amount Gross Value 0 0 0 0 0 2 675 204 1 339 715 821 009 0 518 706 594 302 1 264 158 694 634 410 414 0 284 220 47 203 1 411 046 645 081 410 595 0 234 486 547 099 2 432 374 1 214 476 676 689 0 537 787 560 214 1 468 579 563 271 326 698 0 236 573 39 547 Carrying Amount 4 795 142 1 898 050 1 933 297 963 795 651 205 349 991 301 214 520 667 (In thousand MAD) PROVISIONS FOR CONTINGENCIES AND CHARGES Total provisions at start of period Additions to provisions Reversals of provisions Provisions utilized Effect of movements in exchange rates and other movements Total provisions at end of period 2011 2010 349 988 93 783 14 713 300 492 76 733 -26 615 -1 044 457 440 -621 349 989 (In thousand MAD) CHANGES IN SHARE CAPITAL AND EARNINGS PER SHARE Share Capital (MAD) Number of shares Net earnings group share (MAD) EPS (MAD) (1) 2011 2010 1 719 633 900 171 963 390 850 199 000 4.9 1 719 633 900 171 963 390 818 969 000 4.8 (In thousand MAD) SCOPE OF CONSOLIDATION Company Activity BMCE BANK BMCE CAPITAL BMCE CAPITAL GESTION BMCE CAPITAL BOURSE MAROC FACTORING MAGHREBAIL SALAFIN BMCE INTERNATIONAL MADRID LA CONGOLAISE DE BANQUE BMCE BANK INTERNATIONAL UK BANK OF AFRICA LOCASOM RM EXPERTS BANQUE DE DEVELOPPEMENT DU MALI CASABLANCA FINANCE MARKETS EULER HERMES ACMAR HANOUTY EURAFRIC INFORMATION CONSEIL INGENIERIE ET DEVELOPPEMENT I.G. : Intégration Globale M.E.E : Mise en Equivalence Banking Investment banking Asset managment Stock brokerage Factoring Leasing Consumer credit Banking Banking Banking Banking Car Rental Banking Investment banking Insurance Distribution Information technology Study Office Bureau d'études % of voting interests 100.00% 100.00% 100.00% 100.00% 51.00% 74.50% 100.00% 25.00% 100.00% 59.40% 100.00% 100.00% 27.38% 24.56% 20.00% 45.55% 41.00% 38.90% % of ownership interests 100.00% 100.00% 100.00% 100.00% 51.00% 74.50% 100.00% 25.00% 100.00% 59.40% 97.30% 100.00% 27.38% 24.56% 20.00% 45.55% 41.00% 38.90% Method Mère I.G. I.G. I.G. I.G. I.G. I.G. I.G. I.G. I.G. I.G. I.G. I.G. MEE MEE MEE MEE MEE MEE General Report of the Statutory Auditors 47, rue Allal Ben Abdellah 20 000 Casablanca Maroc 37, Bd Abdellatif Ben Kaddour 20 060 Casablanca Maroc To the shareholders of BMCE BANK 140, Avenue Hassan II Casablanca General Report of the Statutory Auditors As of December 31st, 2011 (This is a free translation of the original French text for information purposes only) In accordance with our engagement as statutory auditors by your General Meeting dated May 25, 2011, we have audited the financial statements attached of the Banque Marocaine du Commerce Extérieur « BMCE Bank », which comprise the balance sheet, the off balance sheet, the income statement, the management balances’ statement, the cash flow statement and the notes to the financial statements for the year ended December 31st, 2011. These financial statements show a net equity and equivalent of KMAD 15.411.554 including a net profit of KMAD 544.762. Management’s Responsibility The Management is responsible for the preparation of the financial statements in accordance with the Moroccan Accounting Standards. This responsibility includes designing, implementing and maintaining internal control relevant to the preparation and presentation of financial statements that are free from material misstatement, and making accounting estimates that are reasonable with regards to the circumstances. Auditors’ Responsibility Our responsibility is to express an opinion on the financial statements based on our audit. We conducted our audit in accordance with the Moroccan Auditing Standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of the financial statements in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control system. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall financial statements presentation. We believe that the audit evidence that we have obtained is sufficient and appropriate to provide a reasonable basis for our audit opinion. Opinion on the financial statements The bank received in March 2011 a second notice of the tax administration following the control over the period 2006 to 2009 of corporate tax (IS), Income Tax (IR) and Value Added Tax (VAT). Disagreeing with the tax adjustments notified, the bank introduced an appeal to the local commission of taxation. In the current state of the proceedings, we are not able to estimate the potential impacts of this control over the results and equity of BMCE Bank on December 31st, 2011. Except the impact of the situation described in the paragraph above, we certify that the financial statements mentioned in the first paragraph above, are regular and sincere and give, in all their significant aspects, a fair view of the financial situation of the Banque Marocaine du Commerce Extérieur as at December 31st, 2011, as well as the result of its operations and the changes in its financial position for the previous year then ended, in accordance with Moroccan accounting standards. Specific Procedures and Disclosures We have also performed other procedures required by Moroccan law and we have verified the correspondence of the information provided in the management report addressed to the shareholders with the Company’s financial statements. Moreover, in accordance with article 172 of the law 17-95 such as modified and completed by the law 20-05, we inform you that your bank, during the year 2011, made the following acquisitions: - 100% of the capital of LITTORAL INVEST for MMAD 450 - 33.33% of the capital of INMAA for MMAD 3 - 10% of the capital of Maroc Télécommerce for MMAD 1.6 FIDAROC GRANT THORNTON Faïçal MEKOUAR Partner Les Statutary Auditors ERNST & YOUNG Bachir TAZI Partner annual report 2011 Casablanca, April 19th 2012 153 BMCE BANK GROUP SPECIAL STATUTORY AUDITORS’ REPORT 47, rue Allal Ben Abdellah 20 000 Casablanca Maroc 37, Bd Abdellatif Ben Kaddour 20 060 Casablanca Maroc To the shareholders of BMCE BANK 140, Avenue Hassan II Casablanca SPECIAL STATUTORY AUDITORS’ REPORT FROM JANYARY 1ST TO DECEMBER 31ST 2011 In our quality of statutory auditors of your company, we are presenting you our report on regulated conventions in line with articles 56 to 59 of Law 17-95 as modified and completed by Law 20-05 and his decree of application. It is our duty to present you the characteristics and essential modalities of conventions the chairman of the Board informed us of, or which we would have discovered in the exercise of our mission, without having to pronounce ourselves on their utility, advisability, or look for the existence of other conventions. It belongs to you, according to the above Law, to express yourselves on their approval. We abided by all necessary standards of care, in our view, for this profession in Morocco. These diligences consisted in verifying the correspondence of information communicated with basic documents from which it is issued. 1. Conventions Concluded During Tax Year 2011 1.1 Acquisition of LOCASOM shares by BMCE BANK This year, BMCE Bank purchased 203.467 Locasom shares, as follows: - 29,337 shares from FinanceCom at the price of KMAD 17,310, - 49,566 shares from RMA Watanya at the price of KMAD 29,247, - 124,564 shares from Amine Echcherki at the price of KMAD 73,500. 1.2 Conventions between BMCE Bank and SALAFIN • Service Contract between BMCE Bank and SALAFIN Concluded in 2011 for a period of three years, renewed by tacit agreement, this contract aims to define the modalities by which a number of services and material needs as well as their conditions of use, will be made available by BMCE Bank to the benefit of SALAFIN. The fee was set by the parties at a fixed price of 1000dhs ATI per desk. This fee is payable in advance on a quarterly basis. Under this convention, BMCE Bank registered during tax year 2011, global proceeds of KMAD 84. • Convention of implementation of a compliance control platform of immediate BMCE BANK credit requests and ASP hosting of a SALAFIN management system. Agreed on in 2011 by BMCE Bank and SALAFIN, this convention aims to create a back-office platform to ensure files compliance, the network’s re-launch to correct non-compliant files and operational risk reporting. Besides, this platform takes care of the centralization and subscription to death and disability coverage as well as the handing of files to the entity designated by the bank for credit files digitalization and archiving. Besides, it deals with the files instructions management system’s hosting, based on the immediate platform interfaced with the Bank’s IT systems, maintenance and daily use, besides the maintenance made available by BMCE Bank. The remuneration due by BMCE Bank is calculated on the grounds of files effectively treated by the platform on the grounds of a tariff grid. • Rider to the agreement for the implementation of a compliance control platform of immediate BMCE Bank credit files by SALAFIN Agreed on July 1st 2011 between BMCE Bank and SALAFIN, this rider modifies remuneration conditions ensuring co-management between the Parties concerning new consumer credits distributed to private clients: interest income shall be distributed according to the 80 % rule to the entity that bears the risk and 20 % to the other entity. Finally, this rider describes services provided by SALAFIN for all stocks of loans generated by either Party. Under this convention and its rider, in 2011 BMCE Bank registered global expenses of KMAD 4,077. • BMCE Bank / SALAFIN Regulated Instant Credit Management Portal Agreed on March 17, 2011, this IT development service contract provides technical assistance for the implementation of Instant Credit management software, which enables SALAFIN to fulfill missions given by BMCE Bank, namely: The drafting of functional specificities files, implementation of Instant software and advanced set-up, development of interfaces with SI BMCE and other functional needs in line with specifications described by DSF. A commercial proposal compiling all tariffs related to the above services. Under this convention, BMCE Bank recorded tangible assets up to KMAD 1,331 over the past tax year. 1.3 Conventions between BMCE Bank and Eurafric Information (EAI) • Memorandum of Understanding on software licenses and related services, between BMCE Bank and Eurafric Information (EAI) Agreed on December 2, 2011, this convention aims to ensure EAI shall make available to BMCE Bank a number of licenses such as contained in the said contract (GRC Bricks, E- Banking Cyber Mut, Agency Post Batch 1) in view of their utilization by staff of the latter. In exchange, BMCE Bank shall pay to EAI the equivalent of the amount in dirhams of 4,800,370.4 for its services GRC, 3,303,063.2 euro for GRC licenses, 201,976.6 euro for the post-agency license batch 1, 729,504 euro for Post-Agency batch 1 services 1, 500,000 euro for E – Banking licenses, 768,672.0 euro for E-Banking services. These prices are to be understood without taxes and must be increased by the incidence of a 10% withholding tax. The same is true regarding maintenance costs with licenses amounting to 545,004.8 euro for GRC maintenance, 105.694 euro for the Post Agency Batch 1 contract, 162,801 concerning a E- banking Cyber Mut. Maintenance. • Rider n° 2 APPENDIX III to the service contract agreed between BMCE Bank and Eurafric Information Agreed on March 10, 2011 and coming into force by January 1st this rider modifies services invoiced by EAI to BMCE Bank, the tariffs grid as well as payment modalities by virtue of the possible yearly update of the price/day/man applicable to services aimed at under the original contract. Under these 2 conventions agreed with EAI in 2011, BMCE Bank registered during tax year 2011: • E-BANKING : Nil • Post agency : Nil • Recurring Services : KMAD 36,814 ET • SIBEA GRC–Project (capital assets) : KMAD 70,048 ET • Non SIBEA Project (capital assets) : KMAD 27,974 ET • SIBEA Advances SIBEA (capital assets) : KMAD 8,674 ET 1.4 MPOST Card Convention – PASSPORT between BMCE Bank and the Company Global Network Systems « GNS » SA Agreed on February 1st 2011, this convention aims to ensure BMCE Bank shall make available to GNS pre-paid cards as well as the determination of recharge modalities, customizing and operation of the said cards. The card once delivered leads to a levy in favor of Bank of an amount previously agreed between Parties. Charges corresponding to recharges stemming from the subscriber are debited from the account of the latter open on the books of BMCE Bank progressively. All the other charges are debited from the card balance. This convention had no impact on BMCE Bank closed on 31/12/2011. 1.5 Riders n° 1 and 2 to the software development contract of May 26, 2010 agreed between BMCE Bank and the company STERIA MEDSHORE Agreed respectively on February 14 and July 25, 2011 these riders modify remuneration conditions as well as the nature and scope of works foreseen by the initial convention. They come into force retroactively in July 2010. Under this convention, BMCE Bank registered during tax year 2011 global expenses (Capital assets) of KMAD 3,887. 1.6 Service contracts between BMCE Bank and EURAFRIC GED Services Agreed in 2011 for an initial duration of 3 months tacitly renewable until the conclusion of the final contract as soon as the Bank Al Maghrib authorization shall be obtained, this contract aims to define conditions and modalities under which BMCE Bank shall give to Eurafric GED Services the responsibility of handling document digitalization services. Invoicing is monthly and depends on volumes: the billing price is 0.86 dhs ET per digitalized page, 0.68 dhs ET per video-coded document, 5 dhs ET per document for the return of any document provided to the service provider and not yet being returned in full, 3 dhs ET per document for the Index communication whenever the document has already been subject to a return from BMCE Bank. Under this convention, BMCE Bank registered global expenses of KMAD 60 during tax year 2011. 1.7 Partnership Convention– Treatment of sub-compensation between BMCE Bank and BMCE BANK INTERNATIONAL Plc Under this convention agreed on October 4, 2011 BMCE BANK International ensures certain banking service operations for BMCE Bank, namely: - Checks drawn on Banks domiciled in France or abroad. - Interbank wires in favor of BMCE Bank or its clients. - SWIFT transfers issued from abroad or towards foreign countries. Commercial papers domiciled at BMCE Bank cashiers, payable in France - Documentary credit Confirmations This convention had no significant impact on BMCE Bank accounts closed on 31/12/2011. 1.8 Promotion Convention and OPCVM trading in the BMCE Bank network agreed between co BMCE Bank and BMCE CAPITAL GESTION This convention had no significant impact on BMCE Bank accounts closed on 31/12/2011. annual report 2011 Agreed on March 1st 2011 for a tacitly renewable duration of twelve months, this convention aims to determine collaboration modalities between the collaboration between Parties in view of the promotion and sale by BMCE Bank of a defined number of products stemming from BMCE Capital Management through different entities of the BMCE Bank Network. To this respect, Parties mutually agree to provide all human, material, technical, and logistical means necessary to the development and promotion of OPCVM subject to this convention. The BMCE Bank remuneration is determined by subscription operations/takeovers inside the network, BMCE CAPITAL MANAGEMENT paying a proportionate share of entrance/exit rights perceived on the said operations in the Network following rates descried under the appendix to this Convention. 155 BMCE BANK GROUP 1.9 Premises leasing Conventions These conventions foresee the lease of premises and/or offices to the following companies: SOCIÉTÉ DATE NATURE LOCALISATION MONTANT 2011 EAI 01/05/2011 Plateau de bureaux Angle avenue Lalla Yacout et rue Mohamed Belloul Pégoud N°18, 3ème et 5ème étage Casablanca 731 EAI 01/05/2011 Plateau de bureaux 49 & 51 rue Ali Ibnou Abi Taleb RDC, du 1er au 7ème étage, parking et soussol Casablanca 6 506 RM Experts 05/07/2011 Plateau de bureaux L’immeuble Zénith N°2 et 2 Bis sis à lotissement Taoufik rond point route de Marrakech et Bouskoura Casablanca 991 1.10 Tripartite Convention between BMCE Bank, BMCE CAPITAL and MAGHREBAIL, related to the transferal of credit-bails for the acquisition and the layout of offices domiciled in Rabat, Avenue Imam Malik Agreed on March 16, 2011 between BMCE CAPITAL, the initial lessee, BMCE Bank, the lessee and MAGHREBAIL, the Lessor, this convention foresees the transfer of bail-credits above to BMCE BANK, according to an ET monthly rent of 68,453.70 DHS and a global forfeit cost related to the funding subject of this contract of 7,200,000.00 DHs, 720,000 DHs of which correspond to the estimated value of the land. This agreement is concluded for 97 months duration from April 25th 2011 to May 24th 2019. Under this convention, BMCE Bank registered global expenses of KMAD 616 during tax year 2011. 2. Conventions Concluded Under The Past Tax Years And Which Execution Continued During The Ongoing Tax Year 2.1 Subordinated loan agreement between BMCE Bank and BMCE BANK INTERNATIONAL (BBI) (ex MédiCapital Bank plc) Agreed on May 30th 2010, this convention foresees that BMCE Bank should make a subordinated loan available to BBI, of a corresponding amount in euros of 15,000,000 pounds remunerated at the fixed yearly rate of 4 % on behalf of second level complementary equity. The loan’s refund date intervenes at the end of a period of seven years from the date of coming in to force of the convention. Under this convention, BMCE BANK registered a global income of KMAD 7,974 during tax year 2011. 2.2 Premise lease conventions Société Date Nature ILEM Infogérance 01/01/2012 Plateau de bureau et local 18 rue Mohammed Belmitoyen loul, 2ème étage - Casablanca 304 BMCE Capital 08/01/2010 Plateaux de bureaux à usage commercial Casablanca 142, avenue Hassan II aux 4ème, 7ème et 8ème étage 2 444 Terasse d’immeuble Essaouira - n°8, rue El Hajjali 84 MEDITELECOM Localisation Montant BMCE Capital 01/07/2002 Espaces de bureaux Agence BMCE Bank Rabat - Ibnou Sina - BMCE Capital 01/07/2002 Espaces de bureaux Agence BMCE Bank Agadir Ville 23 Eurafric information 08/10/2009 Appartement de 279m2. Casablanca 243 Bd MoTF n°36929/C, propriété hamed V dire «GAMECOUR» 281 F2S 01/11/2009 Plateau de bureaux situé Casablanca 243 Bd Moau 2ème de l’immeuble hamed V GAMECOUR 237 2.3 Rider to the BMCE EDIFIN Convention agreed between BMCE Bank and the Company Global Network Systems (GNS) Agreed on April 2nd 2010 and coming into force in January 2010, this rider, in the framework of BMCE EDIFIN services generalization to all its commercial relationships for profitability reasons aims modify the monthly fee of Network Added Value Services of GNS BMCE Bank becoming in this respect wholesale provider and in charge of the commercialization of the volume of services acquired through GNS. BMCE Bank pays the Provider 5,500,000 dirhams ET yearly, corresponding to the minimum volume, which it commits to acquire of 2.000.000 operations lines. Under this convention, BMCE Bank registered global expenses of KMAD 5,500 during tax year 2011. 2.4 Service Contract for receivables collection between BMCE Bank and RM EXPERTS Agreed on December 24th, 2010 between the company RECOVERY INTERNATIONAL MANAGEMENT AND EXPERTISE – RM EXPERTS and BMCE Bank, this convention gives exclusive mandate to RM EXPERTS in order to handle outstanding receivables collection ordered by BMCE Bank. This contract is agreed for a period of five years tacitly renewable per period of two years. In this respect, BMCE Bank shall make available to the Provider, in the form of a staff secondment, all human resources which, at the date of the signature of the convention are pegged to the Remedial Management Pole. These resources shall perceive their remuneration from BMCE Bank directly. BMCE Bank shall invoice salaries and other staff remuneration element to the Provider, increased by 20%. The re-billing of the staff seconded during tax year 2011 reached KMAD 15,929. RM EXPERTS shall further invoice to BMCE Bank a « Human Resources Management » service, the amount of expenses registered by BMCE Bank during tax year 2011 stand for KMAD 1.698. Under this convention, each file which amount to collect is less than 200,000 dirhams is invoiced to BMCE Bank for an amount of 500 dirhams ET for the payment of management charges. RM EXPERTS perceives, other than BMCE Bank fees, quarterly payments of fees on cashed or recovered amounts. In case of non-collection, BMCE Bank commits to refund RM EXPERTS upon justification for any fees generated by the latter. During tax year 2011, BMCE BANK paid result fees to RM EXPERT up to KMAD 13,728 and file management fees of KMAD 7,129. 2.5 Cash Management Activities Convention between BMCE BANK and BMCE Capital This convention, made on October 19th 1999, aims to hand to BMCE CAPITAL, the management of cash activities and monetary, securities and exchange market in dirhams, convertible dirhams and foreign currency of the bank and its Tangiers Branch, Tangiers Off Shore « TOS ». This Convention is agreed for a period of 3 renewable years for successive periods. Remuneration conditions for services provided BMCE CAPITAL, set by a rider of November 22nd 2001, are the following: • BMCE CAPITAL perceives a yearly remuneration representing 15% of the surplus, with respect to the 100 million dirhams of the Gross Operating Profits generated by the Bank’s market activities; • BMCE CAPITAL’s remuneration cannot be less 10 million dirhams, or superior to 20 million dirhams for each 12 years management period. • During tax year 2011, the BMCE CAPITAL remuneration amount to KMAD 20,000. The re-billing amount of expenses generated during tax year 2011 amounts to KMAD 55,000. 2.6 The Advance on Current Account Convention between BMCE BANK and BMCE CAPITAL Three advance on current account conventions have been signed with BMCE CAPITAL: - The first one signed on July 04, 2005, aiming to ensure BMCE BANK would make an advance of 10,000 KMAD available at the rate of 2.78% ET. This convention aims to enable the financing of the stake in BMCE CAPITAL in the share capital of the AXIS group, with head offices in Tunis and which activity was related to financial engineering business lines. Under this convention, BMCE BANK registered during tax year 2011, global profits of KMAD 278. - The second convention, signed on December 13, 2005 aims to ensure BMCE BANK will make an advance of 5,800 KMAD available. This convention aims to enable the financing of capital enlargement operations of Med Capital Communication subsidiaries and Capital Conseil. This advance is remunerated at the rate of 2,78% ET. By December 31st, 2011, profits made in the accounts of BMCE BANK amounted to KMAD 161. - Third was concluded on November 1st 2010, this convention aims to ensure a BMCE Bank advance in current accounts of BMCE Capital of a global 17,500,000 dirhams in order to settle structural deficits in the cash flow of two of BMCE Capital’s subsidiaries. The amount of the associated loan is granted at the legal rate in force in 2010 at 3.49 % ET payable as soon as the amount has been made available. This convention comes into force from the date of signature by the Parties. - Under this convention, BMCE Bank registered incomes of MAD 602 in 2011. 2.7 Service Contract between BMCE BANK and EMAT Under a Framework Service Contract signed on August 29th, 2007 and which duration is of one renewable year, BMCE BANK appointed EMAT as provider of banking and financial services in charge of the implementation, development and operation of a BMCE Net telematics platform for its clients. This Service has been transferred to Ilem Infogérance. Under this convention, BMCE BANK recorded overall expenses of KMAD 4,153 during Tax Year 2011. 2.8 It Services Management Contract between EURAFRIC INFORMATION and BMCE Bank This contract, agreed on October 6th, 2008, deals with the providing of IT services between the company C EURAFRIC INFORMATION and BMCE BANK. This convention was subject to riders in 2011, detailed under paragraph 1.3. Agreed on September 15th, 2008, then modified on June 5, 2009, this convention aims to have SALAFIN implement and manage a collection platform in order to take care of first layer abnormality outstanding debts from SALAFIN clients and BMCE BANK’s mass clients. annual report 2011 2.9 Convention for the Implementation of a Receivables Collection Management Platform between SALAFIN and BMCE Bank (Rider) 157 BMCE BANK GROUP Rider aims to set derogation provisions to the main contract, by foreseeing exceptional management by BMCE BANK of SALAFIN’s remuneration on the grounds of the ASP contract concluded with the latter. Payment Modalities: remuneration modalities: percentages on amounts collected invoiced by SALAFIN to BMCE BANK range from 5 % to 6 % of recovered amounts with a minimum threshold set regarding these recoveries between 60 and 540 dirhams. Under this convention, BMCE BANK registered global expenses of KMAD 3,794. 2.10 Service, technical assistant and applications hosting Contract between BMCE Bank and SALAFIN Concluded on January 15th, 2009, this convention essentially aims to implement a debt collection service, through which SALAFIN shall undertake missions granted by BMCE BANK (assistance for the debt collection tool and advanced setting, provision of a license of use for the portfolio management module to managers and the telecommunications management module; development of interfaces with SI BMCE, hosting of the debt collection software and daily operation, provision of a maintenance center…). Under this convention, BMCE BANK during tax year 2011 registered global expenses of KMAD 972. 2.11 Convention between BMCE Bank and MAGHREBAIL Agreed on May 8th, 2009, this convention aims to determine modalities and conditions of the cooperation between the parties for the investment by BMCE BANK for the account of MAGHREBAIL of formatted credit-bail products, of BMCE BAIL incomes, as well as BMCE IMMOBAIL Corporate incomes, classical credit-bail products sorted or not with BMCE BANK’s collateral security. Conditions for this convention are the following: MAGHREBAIL pays to BMCE BANK business commissions defined by a tariffs grid. • MAGHREBAIL further commits to pay quarterly business commissions corresponding to BMCE BANK’s remuneration. • MAGHREBAIL commits to pay yearly business commissions calculated on the grounds of yearly commercial objectives which achievement is confirmed by a steering committee. • Finally, MAGHREBAIL involves into formatted products and BMCE Bail, to remunerate BMCE BANK’s guarantee at the yearly rate. Rates of guarantee commissions are determined on a case per case basis concerning classic files sorted or not with collateral securities; they are calculated yearly on the MAGHREBAIL credit outstanding guaranteed by BMCE BANK (Credits outstanding X portion of bank guarantee). Under this convention, BMCE BANK registered a global income of KMAD 4,007 during tax year 2011. 2.12 Partnership Convention between BMCE Bank and BUDGET LOCASOM Concluded on May 29th, 2009, this convention aims to settle cooperation between the parties in view of the investment by BMCE BANK of BMCE LLD profits (that is: pack LLD consisting in the acquisition and management of the vehicles fleet) for the account of LOCASOM. BMCE BANK orientates its clientele towards the said product. LOCASOM takes care of BMCE clients providing them with the necessary assistance. This product shall be commercialized through the BMCE BANK network. Terms of this convention are defined as follows: • BMCE BANK commits to only privilege payment of rents related to BMCE LLD when by its clients. (Levies on the client’s account, etc.) • BMCE BANK perceives a commission calculated on the grounds of the budget of the vehicle and lease period going from 0.15 % to 0.40 % of the tariff. This convention produced no effects on the accounts of the bank closed by December 31st 2011. 2.13 Distribution Convention between BMCE BANK and SALAFIN Concluded in 2006, this convention aims to settle main rights and objectives of each party, in the framework of consumer credits exclusively commercialized by BMCE BANK and managed by SALAFIN. Remuneration is distributed as follows: - Remuneration under the format of a quarterly margin retrocession calculated on the grounds of average outstanding healthy credits made through BMCE BANK network; - Remuneration based on the volume of new production. Under this convention, BMCE BANK registered profits of KMAD 16,334 during tax year 2011. Casablanca, April 19th, 2012 The Statutory Auditors FIDAROC GRANT THORNTON Faïçal MEKOUAR Partner ERNST & YOUNG Bachir TAZI Partner Notes Outlining the Rules, Accounting Principles and Valuation Methods used 1 - Fundamental accounting principles 1.1 - Credit institutions must establish financial statements at the end of each financial year able to give a true and fair view of their financial position, risks position and their results. 1.2 - A true and fair view is necessarily based on respect for the seven fundamental accounting principles as recommended by the General Accounting Standards. 1.3 - When transactions, events and situations are expressed in accounting terms in accordance with fundamental accounting principles and the requirements of «Accounting Standards for Credit Institutions», the financial statements are presumed to give a true and fair view of the credit institution’s financial position, risks assumed and results. 1.4 - ln the event that the application of these principles and requirements is not sufficient to obtain a true and fair view from the financial statements, the credit institution will be obliged to provide an additional information statement containing all necessary items of information so as to reach the objective of giving a true and fair view. 1.5 - ln the exceptional event that strict application of a principle or requirement proves contrary to the aim of providing a true and fair view, the credit institution should dispense with it. • This dispensation should be mentioned in the additional information statement and be duly justified, with an indication of its influence on the credit institution’s financial position and results. 1.6 - Seven basic accounting principles are used : - Going concern principle. 2.2 - Credit institution and customer receivables and contingent liabilities General presentation of receivables Repos transactions, involving shares or other securities, are recorded under the various receivables headings (credit institutions or customers). - Sight and term receivables, for credit institutions. - Cash advances, equipment loans, consumer credit, mortgage loans and other loans for customers. Contingent liabilities accounted for in off-balance sheet items correspond to irrevocable commitments. Repurchase agreements with delivery of securities or stocks are recognised under the appropriate receivables entry (credit establishments, customers). Values given at receipt, which are only credited to the remitter after their actual receipt or after a contractual period, are not recorded in the balance sheet, but are accounted for materially. Accrued interest on receivables is recognised in the accrued income account as a contra to the income statement entry. Non-performing loans - Non-performing loans are recorded and valued in accordance with prevailing banking regulations The main features applied are as follows : - Non-performing loans are classified as substandard, doubtful or loss loans according to the degree of risk, - After deducting the share of any guarantees as required by current regulations, provisions are raised in respect to non-performing loans as follows : - Consistency principle. • 20 % for substandard loans, - Historical cost principle. • 50 % for doubtful loans, - Periodic reporting principle. • 100 % for loss loans. - Prudence principle. The provisions raised in respect of credit risk are deducted from the asset categories concerned. - Clarity principle. - Materiality principle. 2 - Presentation of financial statements The financial statements include : - The Head Office accounts - The accounts of domestic branches - The accounts of foreign branches (Paris and Tanger Off Shore). Significant internal transactions and balances between the various entities have been eliminated. 2.1 - General principles Once loans have been classified as doubtful, interest is no longer accrued, but is recognised as income when received. Losses on irrecoverable loans are recognised when there is deemed to be no possibility of recovering the doubtful loans. Provisions for doubtful loans are written-back following positive developments in respect to the doubtful loans concerned : actual repayment or restructuring of the debt with partial or total repayment. 2.3 - Liabilities to credit institutions and customers Amounts due to credit institutions and customers are presented in the summary financial statements according to their initial maturity or the nature of these liabilities : • Sight and term liabilities for credits institutions, The presentation of BMCE Bank’s financial statements complies with «Accounting Standards for Credit Institutions». Depending on the type of counter-party, these various heading include repo transactions involving shares or other securities. • Demand deposits, savings accounts, terms deposits and other customer deposit accounts. annual report 2011 The summary financial statements have been prepared in accordance with generally accepted accounting principles applicable to credit institutions. 159 BMCE BANK GROUP Accrued interest on these liabilities is recorded in the accrued expense account as a contra to the income statement entry. 2.4 - Securities portfolio 2.4.1 - General presentation Securities transactions are accounted for and valued in accordance with «Accounting Standards for Credit Institutions». Securities are classified according to their legal characteristic : (debt securities or title instruments), and also according to purpose for which they are held (trading securities, investment securities, investment holdings). 2.4.2 - Securities held for trading Securities held for trading are securities which are : - Acquired or sold with the intention of being resold or repurchased in the short term with the aim of generating a profit ; - Held by credit establishments in the context of their market maintenance activities, their classification as securities held for trading being dependent on the condition that the stock of securities held is the subject of a significant volume of activity given market opportunities ; - Acquired or sold in the context of specialised portfolio management activity comprising derivative instruments, securities or other instruments managed together with recent evidence that a short-term profit-taking approach has been adopted ; - The subject of a sales undertaking in the context of arbitrage activity. Securities held for trading are recognised at historical cost, excluding transaction costs but inclusive of accrued interest, if applicable. Transaction costs are recognised directly through profit or loss. The same rules apply to disposed securities. 2.4.3 - Securities held for sale Securities held for sale comprise fixed or variable income securities securities acquired with the intention of holding them for a defined period and which can be sold at any time. This category of securities includes in particular securities which do not meet the necessary criteria for classification in another category of securities. Debt securities are recorded excluding accrued interest. Title instruments are recorded at cost excluding acquisition expenses. On each balance sheet date, a provision for impairment in value is made for any negative difference between the market value lit and book value of the securities. 2.4.4 - Investment securities Investment securities are debt securities which are acquired or which come from another category of securities, with the intention of holding them until maturity for the purpose of generating regular income over the long-term. 2.4.5 - Equity securities This category comprises securities whose long-term ownership is deemed to be useful to the Bank. These securities are categorised according to the provisions established by Accounting Standards for Credit Institutions as follows : - Equity securities ; - Investments in related companies ; - Portfolio securities - Other similar assets. On each balance sheet date, they are valued on the basis of generally-accepted criteria such as utility value, share of net assets, future earnings prospects and share price performance. Impairment provisions are booked for unrealised losses on a case by case basis. 2.4.6 - Repos Securities delivered under repos are maintained in the balance sheet and the amount received, which represents the liability to the transferee, is recorded in the balance sheet under liabilities. Securities received under reverse repos are not recorded in the balance sheet, but the amount received, which represents the receivable due from the transferor; is recorded in the balance sheet under assets. 2.5 - Foreign currency-denominated transactions Receivables, liabilities and contingent liabilities denominated in foreign currencies are translated into dirhams at the average exchange rate prevailing on the balance sheet date. Any foreign currency gains and losses on contributions from overseas branches and on foreign currency borrowings hedged against exchange rate risk are recorded in the balance sheet under other assets or other liabilities as appropriate. Any translation gains and losses arising from the translation of fixed asset securities acquired in a foreign currency are recorded as translation differences in the securities items concerned. Foreign currency gains and losses on other accounts held in foreign currencies are recorded in the income statement. Income and charges in foreign currency are translated at the exchange rate prevailing on the day they are booked. 2.6 - Translation of financial statements prepared in foreign currencies The «closing rate» method is used to translate financial statements prepared in foreign currencies. Translation of balance sheet and off-balance sheet items All assets, liabilities and off-balance sheet items of the foreign entity (Paris Branch) are translated based on the exchange rates prevailing on the closing date. These securities are recognised ex-coupon at their acquisition date. Shareholders’ equity (excluding the net income or loss for the year) is valued at various historical rates (charges) and constitutes reserves. The difference arising from the correction (closing rate less historical rate) is recorded under «translation differences» within shareholders’ equity. On each balance sheet date, the securities are valued at historical cost, regardless of their market value. Accordingly, unrealised profit or loss is not recognised. Translation of income statement items Except for charges to depreciation and amortisation, which are translated at the closing rate, ail income statement items are translated at the average exchange rate for the year : However; income statement items have been translated at the closing rate since this method does not show a significant difference from the average exchange rate method. 2.7 - General provisions These provisions are raised, at the discretion of the management, to address future risks relating to the banking activity which cannot be currently identified or accurately measured. The provisions raised are added back for taxation purposes. 2.8 - Tangible and intangible fixed assets Tangible and intangible fixed assets are recorded in the balance sheet at cost less accumulated amortisation and depreciation, which are calculated based on the straight line method over the estimated life of the assets concerned. Intangible fixed assets are broken down into operating and non-operating fixed assets and are amortised over the following periods : Asset category Amortised period Asset category Amortised period Lease rightsNot amortised Patents and brandsPeriod of protection of patents Research and development IT software 1 year 5 years Other goodwill itemsNot amortised Tangible fixed assets are broken down into operating and nonoperating fixed assets and are depreciated over the following periods : Asset category Depreciation period the purpose of benefiting from a definite tax break, the regulated provisions, with the exception of excess tax depreciation, are treated as tax-free reserves. 2.11. Recognition of interest and fees in the income statement Interest income Income and expenditure earned on capital actually lent or borrowed are considered as interest. Income and expenditure earned on an accruals basis, which remunerates risk, are considered as interest equivalent. This category includes fees on guarantee and financing commitments (guarantees, sureties etc.). Interest accrued on capital actually lent or borrowed is recognised in the related receivables and payables accounts with the contra entry through profit or loss. Interest equivalent is immediately recognised through profit or loss on invoice. Fees Income and expenditure, which are calculated on a flat-rate basis and which remunerate a service provided, are recorded as fees as soon as they are invoiced. 2.12. Non-recurring income and expenditure They consist exclusively of income and expenditure arising on an exceptional basis. ln principle, such items are rare as they are unusual in nature and occur infrequently. 2.13. Pension fund commitments Pension fund commitments (Wissam AI Choghl, compensation payments for early retirement) which are not covered by pension plans managed by external independent bodies (non- mandatory) are not subject to a provision for risks and expenses. Land Not depreciated Operating premises : Built before 1986 20 years Built after 1986 40 years Office furniture 10 years IT hardware 5 years Vehicles 5 years Fixtures, fittings and equipment 10 years Shares in non profit companiesNot depreciated 2.9 - Deferred charges Deferred charges comprise expenses which, given their size and nature, are likely to relate to more than one financial year. 2.10. Regulated provisions When the conditions for the raising and utilisation of such provisions have been met and assuming they have been raised for annual report 2011 Regulated provisions are raised in accordance to legal or regulatory requirements, in particular relating to taxation. The decision as to whether or not to raise such provisions is effectively a management decision motivated in particular by the desire to reduce the tax charge. 161 BMCE BANK GROUP AGRREGATED BALANCE SHEET AS OF DECEMBER 31ST, 2011 Assets Cash, central banks, treasury, giro accounts Loans to credit institutions and equivalent . Demand . Time Loans and advances to customers . Cash and consumer loans . Equipment loans . Mortgage loans . Other loans Advances acquired by factoring Transaction and marketable securities . Treasury bonds and equivalent securities . Other debt securities . Title deeds Other assets Investment securities . Treasury bonds and equivalent securities . Other debt securities Equity investments and equivalent uses Subordinated loans Fixed assets leased and rented Intangible fixed assets Tangible fixed assets Total Assets 2011 2010 1 712 258 16 881 374 1 962 058 14 919 316 86 547 728 27 737 290 15 548 989 28 140 076 15 121 373 31 442 600 7 474 124 1 306 173 22 662 303 2 782 953 1 508 720 674 432 834 288 4 927 751 201 314 478 875 2 089 870 148 573 443 3 852 738 15 796 608 1 731 075 14 065 533 76 839 091 24 655 802 15 722 961 25 556 512 10 903 816 28 152 829 7 598 139 1 515 430 19 039 260 1 791 998 1 404 908 730 824 674 084 4 165 111 203 045 298 798 2 031 014 134 536 140 (In thousand MAD) Liabilities 2011 Central banks, treasury, giro accounts Liabilities to credit institutions and equivalent . Demand . Time Customer deposits . Demand deposits . Savings deposits . Time deposits . Other deposits Debt securities issued . Negociable debt securities . Bond loans . Other debt securities issued Other liabilities Contingent liabilities Regulated provisions Subsidies, assigned public funds and special guarantee funds Subordinated debts Revaluation reserve Reserves and premiums related to capital Capital Shareholders Unpaid-up Capital (-) Retained earnings (+/-) Net earnings being appropriated (+/-) Net earnings for the year (+/-) Total Liabilities 18 618 066 883 596 17 734 470 100 780 504 51 055 827 16 290 784 29 299 288 4 134 605 7 367 071 7 367 071 6 180 084 216 164 4 415 648 8 731 499 1 719 634 11 544 762 148 573 443 2010 8 314 431 976 911 7 337 520 98 046 357 47 587 384 15 258 208 30 342 392 4 858 373 7 135 904 7 135 904 5 629 917 25 256 4 423 298 8 719 591 1 719 634 11 521 741 134 536 140 (In thousand MAD) Off-Balance Sheet 2011 Given commitments Financing commitments on behalf of credit institutions and equivalent Financing commitments on behalf of customers Guarantee commitments given to credit institutions and equivalent Guarantee commitments given to customers Securities repos purchased Other securities to be delivered Received commitments Financing commitments received from credit institutions and equivalent Guarantee commitments received from credit institutions and equivalent Guarantee commitments received from the State and various guarantee bodies Securities repos sold Other securities to be received 21 091 063 1 232 366 10 790 353 3 019 973 5 460 369 588 002 6 629 869 6 545 564 30 849 53 456 2010 20 619 217 1 309 841 10 640 969 3 054 091 5 292 482 321 834 6 736 876 6 632 538 30 996 73 342 (In thousand MAD) Aggregated annual accounts Income Statement AgreGated activity as of december 31st, 2011 2011 7 746 501 504 831 4 387 594 262 417 293 250 650 571 1 647 838 3 682 994 638 910 1 800 163 252 899 991 022 4 063 507 64 454 54 175 2 636 039 1 280 600 58 572 1 042 815 172 253 880 882 557 433 134 45 399 404 024 283 116 156 915 13 968 112 233 838 306 838 306 293 544 544 762 2010 7 236 779 386 655 4 157 979 267 038 198 877 678 178 1 548 052 3 285 763 499 039 1 707 036 251 030 828 658 3 951 016 63 749 34 012 2 442 346 1 138 339 41 836 1 044 578 5 264 212 329 1 313 835 480 533 416 073 417 229 573 017 478 089 6 011 88 917 797 589 797 589 275 848 521 741 (In thousand MAD) annual report 2011 Bank operating revenues Interests and assimilated revenues on transactions with credit institutions Interests and assimilated revenues on transactions with customers Interests and assimilated revenues on debt securities Revenues on title deeds Revenues from leased and rented fixed assets Fees on provided services Other banking revenues Bank operating expenses Interests and assimilated expenses on transactions with credit institutions Interests and assimilated expenses on transactions with customers Interests and assimilated expenses on debt securities issued Expenses on leased and rented fixed assets Other banking expenses Net Banking Income Non-banking operating revenues Non-banking operating expenses General operating expenses Staff expenses Tax expenses External expenses Other general operating expenses Allowances for depreciation and provisions for intangible and tangible fixed assets Allowances for provisions and loan losses Allowances for non performing loans and commitments Loan losses Other allowances for provisions Provision write-backs and recovery on amortised debts Provision write-backs on non performing loans and commitments Recovery of amortised debts Other provision write-backs Current income Non-current revenues Non-current expenses Pre-tax earnings Corporate tax Net Earnings For The Year 163 BMCE BANK GROUP Aggregated Management Balances Statement As of december 31st, 2011 Earnings formation table + Interests and assimilated revenues - Interests and assimilated expenses Net interest income + Revenues from leased and rented fixed assets - Expenses on leased and rented fixed assets Profit from leasing and renting operations + Fees received - Fees paid Net fee income ± Income from operations on transaction securities ± Income from transactions on marketable securities ± Income from exchange transactions + Income from derivatives transactions Income from market transactions + Other miscellaneous banking revenues - Other miscellaneous banking expenses Net banking income ± Net income from equity investments + Other non-banking operating revenues - Other non-banking operating expenses - General operating expenses Gross operating income ± Allowances for non performing loans and commitments (net of write-backs) + Other allowances net of provision write-backs Current income Non-current income - Corporate tax Net earnings for the year 2011 2010 5 154 842 2 691 972 2 462 870 781 742 166 631 615 111 686 824 28 634 144 101 589 860 148 293 250 167 872 4 063 507 -135 473 61 333 52 739 2 636 040 1 300 588 -307 650 -154 632 838 306 293 544 544 762 4 811 672 2 457 105 2 354 567 853 304 228 984 624 320 705 502 53 320 232 374 -4 643 986 553 198 877 213 300 3 951 017 -375 511 54 039 33 855 2 442 345 1 153 345 -412 506 56 751 797 589 275 848 521 741 (In thousand MAD) Cash flow + Net earnings for the year + Allowances for depreciation and provisions for intangible and tangible fixed assets + Allowances for provisions for equity investments depreciation + Allowances for provisions for general risks + Allowances for regulated provisions + Non-current allowances - Provisions write-backs - Capital gains on disposals of intangible and tangible fixed assets + Capital losses on disposals of intangible and tangible fixed assets - Capital gains on disposals of equity investments + Capital losses on disposals of equity investments - Write-backs of investment subsidies received + Financing capacity - Dividends distributed + Cash-flow 2011 2010 544 762 253 881 191 889 54 731 4 240 1 973 3 120 1 436 931 849 508 390 423 459 521 741 212 329 390 337 85 849 12 957 9 710 157 1 016 048 476 263 539 785 (In thousand MAD) Statement of Cash Flow 2010 7 272 978 13 968 64 454 3 526 996 54 175 2 382 159 293 544 1 094 526 6 769 510 6 011 63 749 3 212 378 34 012 2 230 017 275 848 1 087 014 -1 084 766 -9 708 637 -3 393 583 -990 955 10 303 635 2 734 147 231 167 550 167 -1 358 825 -264 299 14 349 829 151 486 203 261 469 212 054 -827 482 342 823 -11 398 880 -239 794 460 551 1 950 371 1 740 926 2 317 613 -569 241 -5 395 631 -4 308 617 965 653 017 489 243 273 125 194 145 -674 026 -703 045 2 517 320 491 902 476 264 846 109 -4 136 533 7 989 271 3 852 738 67 225 473 083 508 390 -1 048 699 -2 140 480 3 852 738 1 712 258 Aggregated annual accounts 2011 1. (+) Operating income received from banking operations 2. (+) Recovery of amortised debts 3. (+) Non-banking revenues received 4. (+) Banking operating expenses paid 5. (+) Non-banking operating expenses paid 6. (+) General operating expenses paid 7. (+) Corporate tax paid I - Net Cash Flows from the Income Statement Change in : 8. (+) Loans to credit institutions and equivalent 9. (+) Loans to customers 10. (+) Debt and marketable securities 11. (+) Other assets 12. (+) Fixed assets leased and rented out 13. (+) Liabilities to credit institutions and equivalent 14. (+) Customer deposits 15. (+) Debt securities issued 16. (+) Other liabilities II - Balance of Changes in Operating Assets and Liabilities III - Net Cash Flows from Operating Activities ( I + II ) 17. (+) Revenues from equity investments 18. (+) Revenues from disposals of intangible and tangible fixed assets 19. (+) Acquisitions of equity investments 20. (+) Acquisitions of intangible and tangible fixed assets 21. (+) Interests received 22. (+) Dividends received IV - Net Cash Flows from Investment Activities 23. (+) Subsidies, public funds and guarantee funds received 24. (+) Issues of subordinated debts 25. (+) Stock issues 26. (+) Repayment of shareholders equity and equivalent 27. (+) Interests paid 28. (+) Dividends paid V - Net Cash Flows from Financing Activities VI - Net Change In Cash ( III + IV + V ) VII - Cash & Cash Equivalent at Beginning of Year VIII - Cash & Cash Equivalent at Year-end VIII. Cash at Year - end (In thousand MAD) annual report 2011 165 BMCE BANK GROUP Statement of Additional Information As of december 31st, 2011 Main valuation Methods Applied VALUATION METHODS APPLIED BY BMCE BANK Cf : Accounting Principles. Loans to Credit Institutions and Equivalent Claims Bank AlMaghrib Treasury and giro accounts Banks in Morocco Other credit institutions and equivalent in Morocco Foreign credit institutions Ordinary accounts in debit 955 038 20 687 62 377 Securities received as pledges - Overnight - Time Short-term loans 643 742 2 407 663 - Overnight 250 784 - Time 392 958 2 407 663 Financial loans 500 000 8 710 403 Other loans 2 895 759 Receivables accrued interest 420 1 125 10 015 Non performing loans 2 705 Total 3 851 217 1 165 554 11 193 163 Comment : La pl 480 de MMAD : 2 895 759 included in « Other loans » Total 2011 673 172 1 670 615 1 670 615 38 599 2 096 2 384 482 1 711 274 4 721 236 250 784 4 471 236 9 210 403 2 934 358 13 656 2 705 18 593 632 Total 2010 4 133 196 3 716 825 1 456 223 2 260 602 8 801 835 2 917 505 45 130 34 855 19 649 346 (In thousand MAD) Loans and Advances to Customers Claims Short-term loans - Deposit accounts in debit - Commercial loans in Morocco - Export loans - Other cash loans Consumer loans Equipment loans Mortgage loans Other loans Advances acquired by factoring Receivables accrued interest Non performing loans - Substandard loans - Doubtful loans - Loss loans Total Public sector 1 631 038 1 449 469 89 481 92 088 447 3 398 102 89 452 1 230 769 756 69 187 500 6 350 564 Private Sector Financial companies 2 328 008 728 008 1 600 000 10 456 921 3 656 21 3 635 12 788 585 Non financial companies 18 315 972 9 911 767 2 259 271 203 008 5 941 926 6 503 327 12 067 554 27 911 488 408 411 561 317 1 387 526 365 489 398 013 624 024 67 155 595 Total 2011 Other customers 61 746 50 318 2 044 9 384 64 285 104 499 22 454 122 82 22 250 252 984 22 336 764 12 139 562 2 350 796 203 008 7 643 398 6 568 059 15 465 656 28 105 439 12 096 101 561 317 1 414 392 365 701 398 282 650 409 86 547 728 Total 2010 18 014 167 11 210 597 1 789 543 135 249 4 878 778 6 273 424 15 568 674 25 530 326 10 188 566 286 522 977 412 153 796 276 776 546 840 76 839 091 (In thousand MAD) Breakdown of Transaction & Marketable Securities and Investment Securities by Category of Issuer Credit Public institutions and issuers equivalent Quoted securities - 8 110 124 - Treasury bonds and equivalent securities - 8 110 124 - Bonds - Other debt securities - Title deeds Unquoted securities 1 157 107 82 740 - Treasury bonds and equivalent 798 639 securities - Bonds - Other debt securities 357 453 - Title deeds Accrued interest 1 015 82 740 Total 1 157 107 8 192 864 Private Issuers Non Financial 21 757 438 1 026 999 567 315 459 684 21 757 438 807 312 9 600 Financial Total 2011 Total 2010 30 894 561 8 110 124 567 315 459 684 21 757 438 2 056 759 27 747 874 7 663 363 567 368 477 883 19 039 260 1 696 797 - - 798 639 665 600 790 740 16 572 22 564 750 9 600 1 036 599 1 148 193 109 927 32 951 320 1 031 197 113 066 29 557 737 (In thousand MAD) Values of Transaction & Marketable Securities and Investment Securities Transaction securities Treasury bonds and equivalent securities Bonds Other debt securities Title deeds Marketable securities Treasury bonds and equivalent securities Bonds Other debt securities Title deeds Investment securities Treasury bonds and equivalent securities Bonds Other debt securities Total Gross book value Current value 30 375 290 7 229 886 430 921 481 327 22 233 156 1 085 672 244 238 841 434 1 517 849 674 432 843 417 32 978 811 30 375 290 7 229 886 430 921 481 327 22 233 156 1 067 310 244 238 823 072 1 508 720 674 432 834 288 32 951 320 Redemption price 30 375 290 7 229 886 430 921 481 327 22 233 156 1 067 310 244 238 823 072 1 411 090 593 921 817 169 32 853 690 Unrealised capital gains - Unrealised capital Provisions losses 18 362 18 362 97 630 9 129 80 511 17 119 9 129 Aggregated annual accounts (In thousand MAD) Detail of Other Assets 2011 Optional instruments Miscellaneous transactions on securities (debit) Sums settled to be recovered from securities issuers Other settlement accounts concerning transactions on securities Other debtors - Sums due by the state - Sums due by provident companies - Receivable from staff - Receivable for non-banking services - Other debtors Other securities and assets - Other securities and assets Off-balance sheet adjustment accounts (debit) Currencies and securities discrepancy accounts (debit) Potential losses on hedging transactions non settled Deferred losses on hedging transactions non settled Deferred expenses Liaison accounts between the head office, subsidiaries and branches in morocco (debit) Accrued income and prepayment - Accrued income - Prepayment Transitory accounts Non performing loans on miscellaneous transactions Provisions for non performing loans on miscellaneous transactions Total 11 573 15 251 463 328 408 252 21 290 33 786 9 339 2 283 462 30 093 236 658 83 446 802 307 152 556 20 329 132 227 978 402 2 782 953 2010 13 052 8 488 423 101 375 269 11 426 36 406 8 508 1 338 849 18 255 167 183 40 227 123 110 114 214 6 325 107 889 875 860 1 791 998 (In thousand MAD) annual report 2011 167 Securities / Activities Of The Portfolio E.S.F.G. Total Foreign credit institution Long Term Car Rental Distribution Foreign credit institution Investment Bank Study Office Factoring Data processing Financial institution Real estate Company Recouvrement créances Foreign credit institution Service company Stock brokerage Financial institution Mutual fund management Service company Service company Insurance Service company Foreign credit institution Consummer credit Ets de crédit/étranger Leasing Foreign credit institution Holding Company Gestion, de la place financière de Casablanca Offshoring Development company Electronic payment management Investment fund Real estate management Education Real Estate Expertise Financial institution Gest, fonds MNF Debt Collection Prom, Immobilier industriel et de services Commerce & paiement electronique EQUITY HOLDINGS EMAT MOROCCAN FINANCIAL BOARD MAGSHORE TANGER ZONE FRANCHE CENTRE MONETIQUE INTERBANCAIRE Fonds de garantie de la commande publique MORROCAN INFORMATION TECHNO PARC CIE ISCID CAP EVAL MARTKO (MAGHREB ARAB TRADING C°) MITC CAPITAL STE RECOURS FONCIERE EMERGENCE MAROC TELECOMMERCE EQUITY AFFILIATES BOA Group SALAFIN BMCE Bank International MAGHREBAIL B.M.C.E. MADRID LITTORAL INVEST LOCASOM HANOUTY BANQUE DE DEVELOPPEMENT DU MALI BMCE CAPITAL CONSEIL INGENIERIE ET DEVELOPPEMENT MAROC FACTORING GLOBAL NETWORK SYSTEMS SOCIETE CASA FINANCE MARKET MABANICOM RM EXPERTS LA CONGOLAISE DE BANQUE EULER HERMES ACMAR BMCE CAPITAL BOURSE (maroc inter titres) STE FINANCIERE Italie BMCE CAPITAL GESTION (marfin) Eurafric Informatique DOCUPRINT (STA) BMCE ASSURBANK EURAFRIC GED SERVICES Sector of activity Name of the issuing company As of December 31st, 2011 Equity investments and equivalent 923 105 231 892 1 783 526 94 173 000 522 913 300 000 26 000 784 767 1 074 999 102 926 100 000 155 437 450 000 116 000 281 074 200 000 199 996 100 000 100 010 67 500 600 000 50 000 41 937 4 000 15 000 937 44 828 200 000 192 500 135 000 109 984 100 000 56 500 40 000 12 750 12 000 4 000 3 750 96 696 561 Number of shares 778 549 160 EUR 60 521 920 EUR 239 449 700 94 173 000 GBP 102 532 000 18 030 000 EUR 2 600 000 83 042 900 236 029 100 10 000 429 600 CFA 100 000 000 40 000 000 45 000 000 11 600 000 114 862 500 20 000 000 20 000 000 4 000 000 000 CFA 50 000 000 10 000 000 600 000 EURO 5 000 000 10 000 000 4 000 000 1 500 000 1 500 000 8 047 300 120 000 000 38 500 000 105 000 000 98 200 000 100 000 000 46 000 000 10 000 000 2 500 000 600 000 USD 2 000 000 2 500 000 120 017 000 5 610 000 Share capital 1,19 59,39% 74,48% 100,00 51,00 100,00 100,00 94,50% 45,60 27,38 100,00 38,85 100,00 100,00 24,56% 100,00 100,00 25,00 20,00 67,50 100,00 100,00 41,94 100,00 100,00 6,25 55,71% 16,67% 50,00 12,86 11,20 10,00 12,28 40,00 51,00 20,00 20,00 15,00 8,06% 10,00% Equity holding as % 177 134 1 363 915 624 831 1 252 407 232 521 225 373 450 000 336 882 107 500 101 916 100 000 90 192 51 817 46 591 28 205 29 700 20 000 16 942 10 001 6 750 6 666 6 443 4 100 4 000 3 025 94 30 355 20 000 19 250 13 500 11 000 10 000 5 650 2 000 1 275 971 400 375 2 492 1 563 Overall acquisition price 0 124 319 5 119 872 118 831 0 0 719 868 0 0 0 0 101 204 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 26 731 0 13 394 0 0 0 286 0 1 275 971 0 0 0 0 Provisions 4 862 20 000 6 197 13 500 11 000 10 000 4 740 2 000 1 275 400 375 100 20 000 Net book value 0 52 814 821 072 0 - 4 298 800 42 657 76 174 1 363 915 624 831 1 068 874 532 539 622 195 232 521 176 629 225 373 418 410 450 000 232 521 336 882 226 672 6 296 216 825 101 916 16 274 100 000 102 503 90 192 54 086 51 817 90 192 46 591 51 817 28 205 43 549 29 700 28 205 20 000 24 001 16 942 17 040 10 001 10 001 6 750 6 750 6 666 6 704 6 443 6 443 4 100 4 100 4 000 4 000 3 025 1 425 94 94 3 623 20 000 5 856 13 500 11 000 10 000 5 364 2 000 0 0 400 375 2 492 1 563 PRG BMCE BANK GROUP Total Total other Total associates current account BMCE CAPITAL RISMA MARTCO Siège G.P.B.M. MAGHSHORE CAP EVAL ALLICOM MAROC EMAT Other Total CAP EVAL ALLICOM MAROC EMAT Total Other Equity Investment RISMA Mutandis SOGEPOS LA CELLULOSE DU MAROC SMAEX FRUMAT STE IMMOBILIERE SIEGE GPBM STE D'AMENAGEMENT DU PARC INDUSTRIE MASTERCAD MAROCLEAR Experian Maroc GECOTEX SOCIETE ALLICOM MAROC DAR ADDAMANE STE IPE SINCOMAR PORNET SWIFT DYAR AL MADINA RMA WATANYA E.S.I PROPARCO UBAE ARAB ITALIAN BANK FONDS D'INVESTISSEMENT DE L'ORIENTAL MAROC NUMERIC FUND INMAA SA AFREXIM BANK (African Import Export) FONDS MONETAIRE ARABE(ARAB TRADE FINANCING PROGRAM) FIROGEST annual report 2011 169 Financial Services Central Custodian Service Company Industry Industry Guarantee bodies Print Agri-industry Service informatique Service Company Cie immobilière Insurance Paper pulp Insurance and service Agri-industry Real estate Tourism Investment fund Investment fund Financial institution 279 628 841 472 46 216 52 864 16 900 4 000 12 670 10 000 1 817 8 030 27 000 5 000 5 000 9 610 4 000 494 1 800 23 640 5 2 500 50 467 250 656 325 59 600 107 500 200 000 30 000 30 782 368 500 1 483 431 000 35 000 000 700 484 000 37 500 000 13 000 000 19 005 000 60 429 000 ND 20 000 000 90 000 000 10 000 000 20 000 000 75 000 000 5 440 000 37 440 000 6 000 000 434 020 000 EUR 20 000 000 1 796 170 800 2 000 000 500 000 000 USD 260 400 000 EUR 420 000 000 EUR 151 060 800 EUR 300 000 000 100 000 000 9 000 000 166 601 000 USD Aggregated annual accounts Foreign credit institution International credit institution Foreign credit institution Investment fund Investment fund Société de service Foreign credit institution 3,57% 5,67% 13,20 0,75 4,51 3,08 6,67 1,65 0,01 4,02 3,00 5,00 2,50 0,64 7,35 0,13 0,03 0,01 0,32 0,00 12,50 0,05 1,79 2,50 4,34 7,17 20,00 33,33 0,20 33 300 11 651 1 500 723 1 250 1 020 552 10 50 007 6 052 190 1 020 552 10 99 983 88 439 4 622 3 393 1 690 1 450 1 267 1 000 958 803 2 700 500 500 481 400 49 45 24 9 2 250 2 570 152 483 122 745 73 593 10 750 10 000 3 000 2 642 6 052 190 50 007 0 0 1 500 0 0 0 552 0 2 052 1 124 439 552 - 208 315 43 063 0 895 0 0 1 450 0 0 0 0 600 360 500 0 0 0 0 0 0 0 555 166 0 0 79 810 0 0 6 884 775 0 0 47 955 33 300 2 500 1 446 1 250 1 020 10 161 446 59 258 75 000 4 622 1 906 1 690 1 267 1 000 933 803 600 500 481 400 49 24 9 2 343 377 250 2 504 139 243 91 364 123 452 74 017 9 879 10 000 2 574 1 124 439 4 927 751 2 052 33 300 11 651 0 723 1 250 1 020 0 10 47 955 4 927 751 46 869 56 920 88 439 3 726 3 393 1 690 0 1 267 1 000 958 803 2 100 140 0 481 400 49 45 24 9 2 211 789 250 2 570 72 673 122 745 73 593 3 866 9 225 3 000 2 642 BMCE BANK GROUP TANGIBLE AND INTANGIBLE FIXED ASSETS Fixed Assets Gross amount Acquisiat the tions beginof the ning year of the year Intangible fixed assets - Leasehold rights - Investment in research and development - Other operating intangible fixed assets - Non-operating intangible fixed assets Tangible fixed assets - Operating buildings . Operating land . Operating buildings offices . Operating buildings. Staff housing - - - Operating furniture and equipment 1 482 366 . Operating office furniture 334 647 . Operating office equipment 202 411 . Computer equipment 881 643 65 363 64 931 . Operating vehicles 494 941 76 757 235 377 3 470 - - 418 184 231 907 - - 4 284 200 849 600 130 401 719 199 307 000 158 552 61 957 96 595 0 Disposals or withdrawls of the year Depreciation and/or provisions DepreciaGross Net tion Depreamount amount and/or Allowciation at the at provisions ances on fixed Total end the end at the be- for the assets of the of the ginning year withyear year of the drawn year 730 318 196 142 55 301 251 443 478 875 80 227 80 227 - 0 - - - - - 650 091 196 142 55 301 - 251 443 398 648 - - - - - - 18 689 4 535 027 - 1 008 152 192 358 815 794 2 253 185 236 119 236 119 198 579 20 563 20 563 - - - - 13 327 1 534 854 399 578 202 411 4 528 877 115 - 1 106 525 240 347 164 052 646 907 72 405 18 342 5 678 46 816 6 607 2 445 157 2 089 870 256 682 751 470 192 358 256 682 559 112 - - 5 854 1 173 076 258 689 2 350 167 380 693 723 - 361 326 140 889 35 031 183 392 18 943 432 8 127 11 248 10 717 1 569 3 504 8 782 2 466 . Other operating equipment 44 722 - Other operating tangible fixed 1 505 021 assets - Non operating tangible fixed 447 213 assets . Non-operating land 141 394 . Non-operating buildings 173 929 . Non-operating furniture and equip40 711 ment . Other non-operating tangible fixed 91 179 assets Total 4 779 141 - 672 44 502 44 502 - - 44 502 - - 1 467 537 806 370 89 270 895 640 571 897 83 085 5 362 524 484 104 171 16 341 753 119 759 404 725 7 600 71 994 782 452 148 212 245 471 62 457 9 218 753 0 70 922 148 212 174 549 3 491 4 44 198 23 488 2 882 - 26 370 17 828 0 4 576 86 603 18 226 4 241 - 22 467 64 136 18 689 5 265 345 2 449 327 253 880 542 377 6 607 2 696 600 2 568 745 (In thousand MAD) DISPOSAL OF TANGIBLE AND INTANGIBLE FIXED ASSETS Assets sold A - Disposal operations with the group Operating buildings Operating office furniture Operating vehicules Non - Operating buildings B - Disposal operations outside the group Operating buildings Operating office furniture Non - Operating buildings Total Gross book value Accumulated depreciation and/or provisions Revenues from disposals - 0,00 - 13 327 5 362 18 689 Net book value 5 854 753 6 607 7 473 11 713 4 609 2 636 12 082 14 349 Capital gain on disposals Capital loss on disposal 0 4 240 4 240 1 973 1 973 LIABILITIES TO CREDIT INSTITUTIONS AND EQUIVALENT Credit institutions and equivalent in Morocco Bank AlOther credit Maghrib, Banks institutions and Treasury and giro in Morocco equivalent in current account Morocco Debts Ordinary credit accounts Securities pledged - Overnight - Time Cash Borrowings - Overnight - Time Financial borrowings Other debts Payable accrued interests Total 7 471 894 7 471 894 102 175 13 098 7 587 167 150 124 1 433 123 1 433 123 3 026 000 226 000 2 800 000 31 862 1 182 4 642 291 243 998 2 727 424 33 329 2 694 095 15 765 16 553 15 652 3 019 392 Credit institutions abroad 230 145 3 119 387 3 119 387 19 684 3 369 216 Total 2011 624 267 8 905 017 8 905 017 8 872 811 259 329 8 613 482 169 486 30 833 15 652 18 618 066 Total 2010 282 710 2 535 646 2 535 646 5 193 282 693 526 4 499 756 217 794 64 366 20 633 8 314 431 (In thousand MAD) Public sector Deposits Financial companies Demand acredit accounts 2 360 650 1 443 357 Saving accounts 36 Time Deposits 5 735 473 2 553 600 Other credit accounts (*) 2 951 161 3 958 805 Payable accrued interests 60 154 63 218 Total 11 107 474 8 018 980 Comment : ( * ) Including PL 480 for MAD 2 895 759 Private Sector Non financial companies 9 256 220 4 022 4 018 475 714 799 194 876 14 188 392 Other companies 36 299 089 16 679 877 14 137 564 112 206 236 922 67 465 658 Total 2011 49 359 316 16 683 935 26 445 112 7 736 971 555 170 100 780 504 Aggregated annual accounts CUSTOMER DEPOSITS Total 2010 45 961 220 15 258 208 24 928 820 11 497 394 400 715 98 046 357 (In thousand MAD) DEBT SECURITIES ISSUED AS OF DECEMBER 31ST 2011 Type of securities (1) Characteristics Date bears interest Maturity date Unit face value Nominal rate Method of repayment(2) 230 000 500 000 24 000 30 000 605 000 100 000 10 000 100 000 130 000 14 000 400 000 741 500 258 500 1 021 000 250 000 485 000 279 000 100 000 27 000 250 000 100 000 507 000 141 000 320 000 50 000 630 000 7 303 000 annual report 2011 CD BMCE 08/042010 28/12/2012 100 4.35% Infini CD BMCE 12/04/2010 28/12/2012 100 4.35% Infini CD BMCE 26/10/2010 26/10/2012 100 3.80% Infini CD BMCE 26/10/2010 26/10/2013 100 4.19% Infini CD BMCE 26/10/2010 26/10/2012 100 4.07% Infini CD BMCE 05/11/2010 05/11/2013 100 4.15% Infini CD BMCE 16/11/2010 16/11/2012 100 3.76% Infini CD BMCE 16/11/2010 16/11/2013 100 4.13% Infini CD BMCE 16/11/2010 16/11/2012 100 4.01% Infini CD BMCE 16/12/2010 17/12/2012 100 3.55% Infini CD BMCE 10/01/2011 10/01/2013 100 4.10% Infini CD BMCE 15/04/2011 15/04/2012 100 3.85% Infini CD BMCE 18/04/2011 18/04/2012 100 3.85% Infini CD BMCE 14/11/2011 12/11/2012 100 3.96% Infini CD BMCE 16/11/2011 14/11/2012 100 3.96% Infini CD BMCE 16/11/2011 16/05/2012 100 3.80% Infini CD BMCE 16/11/2011 07/02/2012 100 3.70% Infini CD BMCE 17/11/2011 18/02/2012 100 3.70% Infini CD BMCE 30/11/2011 02/03/2012 100 3.72% Infini CD BMCE 02/12/2011 04/06/2012 100 3.80% Infini CD BMCE 08/12/2011 06/12/2012 100 3.96% Infini CD BMCE 08/12/2011 08/03/2012 100 3.72% Infini CD BMCE 22/12/2011 23/03/2012 100 3.72% Infini CD BMCE 30/30/2011 28/12/2012 100 4.00% Infini CD BMCE 30/12/2011 02/04/2012 100 3.72% Infini CD BMCE 30/12/2011 30/12/2013 100 4.25% Infini TOTAL (1) These are: Certificates of deposit - Bonds - Debt finance companies - Other debt securities (2) Amortization: Annual - In fine Amount 171 BMCE BANK GROUP DETAIL OF OTHER LIABILITIES Liabilities Optional Instruments Sold Miscellaneous Transactions on Securities Other Creditors State debt Social security and provident societies debts Staff debt Shareholders and partners debt Supply of goods and services Other creditors Accrual Accounts Adjustment accounts of off-balance sheet transactions Currencies and securities differential accounts Profit on hedging instruments Liaison accounts between the head office, branches and Moroccan branches Expenses payable and prepaid income Other accruals Total 2011 2010 18 457 4 336 507 741 477 574 103 44 676 63 346 4 643 54 709 1 083 643 2 324 72 700 8 541 220 686 779 392 6 180 084 19 088 3 880 288 693 277 488 090 38 553 113 104 3 548 49 982 1 037 264 1 632 60 394 6 022 173 032 796 184 5 629 917 (In thousand MAD) Provisions Provisions, deducted from assets, on : Loans to credit institutions and equivalent Loans and advances to customers Doubtful interest Marketable securities Equity investments and equivalent assets Leased and rented fixed assets Other assets Provisions Recorded under liabilities Provisions for risks of fulfilment of commitments Contingent liabilities Provisions for general risks Provisions for retirement pensions and similar obligations Other contingent liabilities (E.C) Regulated provisions Total Amount 2011 3 706 693 25 703 2 675 485 13 587 989 627 2 291 25 256 Allowances Write backs 653 363 31 429 401 705 23 721 191 889 4 620 212 136 210 156 -36 168 156 915 261 52 980 57 502 -29 191 -5 098 -4 097 2 218 36 274 Amount 2010 4 113 732 57 132 2 891 084 13 587 18 362 1 124 439 9 129 216 164 2 620 - - -1 083 1 537 183 160 541 - - 160 724 Other changes - - - - - 22 453 3 731 949 51 595 865 498 57 502 267 658 37 357 106 53 903 4 329 896 (In thousand MAD) SUBORDINATED DEBTS AS OF DECEMBER 31ST 2011 Currency Debt amount closing exchange rate (1) MAD 1 000 000 MAD 150 000 MAD 850 000 MAD 950 000 MAD 50 000 EURO 70 000 EURO 50 000 (1) Bank Al Maghrib rate as of 31/12/2011 (2) Indefined 1 1 1 1 1 11,1095 11,1095 Interest rate 4,43% 5,95% 4,50% 4,57% 5,30% 5,86% 5,90% Term (2) 10 ans Perpétuel Perpétuel Perpétuel Perpétuel Perpétuel 10 ans Debt amount KMAD 1 000 000 150 000 850 000 950 000 50 000 777 665 555 475 SHAREHOLDER’S EQUITY Revaluation reserve Legal reseve Other reserves Issuance, merger and contribution premiums Capital Called-up capital Uncalled capital Investment certificates Allowance fund Shareholders. Unpaid-up capital Retained earnings (+/-) Net earnings being appropriated (+/-) Net earnings for fiscal year(+/-) Total Total Amount 2011 8 719 590 460 306 4 777 866 3 481 418 1 719 634 1 719 634 11 521 741 10 960 976 Allocation of earning Other changes - 11 909 11 909 11 909 Amount 2010 8 731 499 460 306 4 789 775 3 481 418 1 719 634 1 719 634 11 544 762 10 995 906 (In thousand MAD) Financing and guarantee commitments given Financing commitments on behalf of credit institutions and equivalent - Import letters of credit - Payment acceptances or commitments - Opening of confirmed credit - Substitution commitments on issuing of securities - Irrevocable leasing commitments - Other financing commitments given Financing commitments on behalf of customers - Import letters of credit - Payment acceptances or commitments - Opening of confirmed credit - Substitution commitments on issuing of securities - Irrevocable leasing commitments - Other financing commitments given Guarantee commitments for credit institutions and equivalent - Confirmed export letters of credit - Payment acceptances or commitments - Credit guarantees given - Other securities, endorsments and guarantees given - Non performing commitments Guarantee commitments for customers - Credit guarantees given - Securities and guarantees given on behalf of the public administration - Other securities and guarantees given - Non performing commitments Financing and guarantee commitments received Financing commitments received from credit institutions and equivalent - Opening of confirmed credit - Substitution commitments on issuing of securities - Other financing commitments received Guarantee commitments received from credit institutions and equivalent - Credit guarantees - Other guarantees received Guarantee commitments received from the state and other guarantee institutions - Credit guarantees - Other guarantees received 2011 2010 20 503 061 1 232 366 1 232 366 10 790 353 2 073 670 362 359 7 825 337 528 987 3 019 973 98 919 63 135 49 201 2 808 718 5 460 369 3 949 061 1 511 308 6 576 413 6 545 564 1 706 275 4 839 289 30 849 30 849 - 20 297 383 1 309 841 1 309 841 10 640 969 2 032 422 682 125 6 728 255 1 198 167 3 054 091 111 316 21 935 45 776 2 875 064 5 292 482 3 694 026 1 598 456 6 663 534 6 632 538 1 581 482 5 051 056 30 996 30 996 - Aggregated annual accounts FINANCING AND GUARANTEE COMMITMENTS (In thousand MAD) Given commitments Securities repos purchased Other securities to be delivered Reveived commitments Securities repos sold Other securities to be received 588 002 588 002 53 456 53 456 (In thousand MAD) annual report 2011 COMMITMENTS ON SECURITIES 173 BMCE BANK GROUP FORWARD EXCHANGE TRANSACTIONS AND COMMITMENTS ON DERIVATIVES Holding transaction 2011 36 064 344 16 172 181 866 953 17 144 748 1 880 462 10 853 617 2 443 338 8 408 790 1 489 Forward exchange transactions Currency to be received Currency to be delivered Dirhams to be received Dirhams to be delivered Of which financial currency swaps Commitments on derivatives Commitments on regulated interest rate markets Commitments on OTC interest rate markets Commitments on regulated exchange rate markets Commitments on OTC exchange rate markets Commitments on regulated markets for other instruments Commitments on OTC markets for other instruments 31 déc 2010 34 240 199 13 080 636 742 046 16 832 440 3 585 077 13 043 183 1 929 553 11 091 887 21 743 Other transaction of BMCE Paris and Offshore bank 2011 2010 4 851 348 3 215 381 2 180 467 2 056 958 2 424 173 1 158 423 246 708 2 208 804 760 841 1 666 220 760 841 542 584 (In thousand MAD) SECURITIES RECEIVED AND GIVEN AS COLLATERAL Securities received as collateral Net book value Treasury bills and equivalent Other securities Mortgages Other securities received as collateral Total Securities given as collateral 90 525 446 127 41 132 834 90 477 578 132 147 064 Loans or given committments posted to assets or to off balance sheet Net book value Treasury bills and equivalent Other securities Mortgages Other securities given as collateral Total 7 171 894 5 335 490 - Amount of loans and given commitments Bons de caisses Debts or received committments posted to liabilities or to off balance sheet Amount of debts or received committments T-bills given as repo securities given as repos (In thousand MAD) BREAKDOWN OF USES AND RESOURCES ACCORDING TO RESIDUAL MATURITIES D< 1 month 1months<D< 3 months<D< 3months 1 year Assets Loans to credit institutions and equivalent 3 571 060 5 011 029 Loans and advances to customers 4 624 881 9 990 341 Debt securities 30 389 392 202 657 Subordinated loans Leasing and equivalent TOTAL 38 585 333 15 204 027 Liabilities Liabilities to credit institutions and equivalent Debts to customers Debt securities issued Subordinated borrowings TOTAL 1 year <D< 5 years 1 585 783 4 496 125 451 409 6 533 317 4 450 799 31 826 251 567 102 36 844 152 D> 5 years Total 300 645 14 919 316 19 647 595 70 585 193 1 340 760 32 951 320 21 289 000 118 455 829 3 229 135 2 343 417 3 246 384 3 550 960 5 364 574 17 734 470 4 035 172 7 264 307 5 305 105 1 054 000 8 702 522 11 136 361 3 939 000 18 321 745 8 323 753 2 310 000 14 184 713 498 897 5 863 471 29 299 288 7 303 000 54 336 758 (In thousand MAD) CONCENTRATION RISK ON THE SAME BENEFICIARY AS OF DECEMBER 31, 2011 Number 24 Total amount of risks 24 753 Operating loans 31 747 Amount of riskc bypassing 10% of capital Contracting Amount of securities held in th capital of the loans beneficiary 3 939 1 004 (In thousand MAD) BREAKDOWN OF TOTAL ASSETS, LIABILITIES AND OFF-BALANCE SHEET IN FOREIGN CURRENCY 2011 13 595 111 31 524 5 714 888 3 924 200 792 617 2 164 2 933 080 196 638 10 264 721 8 504 164 410 150 17 267 1 333 140 5 334 465 4 223 515 1 110 950 Aggregated annual accounts Assets Cash, central banks, treasury, giro accounts Loans to credit institutions and equivalent Loans and advances to customers Transaction, marketable and investment securities Other assets Equity investments and equivalent uses Subordinated loans Fixed assets leased and rented Intangible and tangible fixed assets Liabilities Central banks, treasury, giro accounts Liabilities to credit institutions and equivalent Customer deposits Debt securities issued Other liabilities Subordinated debts Subsidies, assigned public funds and special guarantee funds Off-Balance Sheet Given commitment Received commitment (In thousand MAD) INTEREST MARGIN 2011 2010 5 154 842 504 831 4 387 594 262 417 2 691 972 638 910 1 800 163 252 899 4 811 672 386 655 4 157 979 267 038 2 457 105 499 039 1 707 036 251 030 Type of securities 2011 2010 Equity Securities Equity in affiliates Equity in portfolio Other securities TOTAL 5 356 237 382 50 512 293 250 4 733 170 738 23 407 198 877 Intérêts perçus Intérêts et produits assimilés sur opérations avec les établissements de crédit Intérêts et produits assimilés sur opérations avec la clientèle Intérêts et produits assimilés sur titres de créance Intérêts servis Intérêts et charges assimilés sur opérations avec les établissements de crédit Intérêts et charges assimilés sur opérations avec la clientèle Intérêts et charges assimilés sur titres de créance émis REVENUES FROM INVESTMENT SECURITIES (In thousand MAD) COMMISSIONS 2011 2010 781 742 536 760 230 972 14 010 166 631 1 400 38 780 81 419 45 032 - 853 304 579 305 261 645 12 352 228 984 520 35 372 114 405 78 687 (In thousand MAD) annual report 2011 Fees received On transactions with credit institutions On transactions with customers Concerning operations on the primary securities markets On derivatives On transactions on securities under management and custody On means of payment On consulting and assistance On sales of insurance products On other services Fees paid On transactions with credit institutions On transactions with customers Concerning operations on the primary securities markets On derivatives On transactions on securities under management and custody On means of payment On consulting and assistance On sales of insurance products On other services On sales of insurance products On other services 175 BMCE BANK GROUP INCOME FROM MARKET TRANSACTIONS Revenues Gains on transactions securities Capital gains on disposals of marketable securities Provision write-backs on depreciation of marketable securities Gains on derivatives Gains on exchange transactions Expenses Losses on transaction securities Capital losses on disposals of marketable securities Provisions for depreciation of marketale securities Losses on derivatives Losses on exchange transactions Earning 2011 1 563 780 761 540 52 094 261 321 584 428 301 703 632 74 716 23 721 320 995 284 200 860 148 2010 1 351 726 752 710 10 557 18 806 242 132 327 521 365 173 21 898 261 246 775 96 239 986 553 (In thousand MAD) GENERAL OPERATING EXPENSES Staff expenses Taxes External expenses Allowances for depreciation and provision for intangible and tangible fixed assets 2011 1 280 600 58 572 1 042 987 253 880 2010 1 138 339 41 836 1 049 842 212 329 (In thousand MAD) OTHER REVENUES AND EXPENSES Other banking revenues and expenses Other banking revenues Other banking expenses Non-banking operating revenues and expenses Non-banking operating revenues Non-banking operating expenses Other expenses Allowances for provisions and loan losses Other revenues Provision write-backs and recoveries on amortised debts 2011 656 816 1 647 838 991 022 10 279 64 454 54 175 2010 719 394 1 548 052 828 658 29 737 63 749 34 012 882 557 1 313 835 283 116 573 017 (In thousand MAD) BREAKDOWN OF EARNINGS BY BUSINESS LINE OR GEOGRAPHIC AREA AS OF DECEMBER 31ST 2011 Net banking income Gross operating income Pre-tax earnings MOROCCO 3 969 702 1 247 511 816 087 (In thousand MAD) FROM NET BOOK EARNINGS TO NET FISCAL EARNINGS 2011 Net book earning Tax reintegration Corporate tax Donations and subsidies Gifts Non deductible Expenses Toys grants Car depreciation Derogatory depreciation 2- Non current Tax deduction : III- Tax deductions 1- Current Dividends Write back of 1/3 of provisions for investment Taxable income Net fiscal earnings Corporate tax - 37% Net earnings (*) Within the limit of the amount of gross profit tax (A) 2010 838 306 214 080 1 763 7 306 8 816 1 294 9 177 185 724 237 382 237 382 237 382 815 003 293 544 544 762 (In thousand MAD) Aggregated annual accounts DETERMINATION OF CURRENT EARNINGS AFTER-TAX Amount I. Earnings determination . Current earnings according to the income statement . Tax reintegrations on current transactions . Tax deductions on current transactions . Current earnings theoretically taxable . Theoretical tax on current earnings . Current earnings after tax II. Indications of the tax system and the incentives Granted by the investment codes or by specific provisions DETAIL ON VALUE ADDED TAX Category A. VAT Collected B. VAT to be Recovered * On expenses * On fixed assets T.V.A = (A - B ) Balance at the beAccounting opginning of the fiscal erations of the fiscal year 1 year 2 82 492 506 104 93 560 322 276 78 738 251 989 14 822 76 419 -11 068 177 695 (+ ou -) (+) (-) (=) (-) (=) VAT claims for the fiscal year 3 838 306 214 080 237 382 815 003 301 551 536 755 (In thousand MAD) End of year balance (1+2-3=4) 503 743 337 664 256 148 81 516 166 079 84 853 84 304 74 579 9 725 549 (In thousand MAD) SHAREHOLDING Capital : 1 719 634 Nominal value : 10.00 Number of shares Name of the main shareholders 67 Avenue des FAR- Casablanca 239, Bd Mohamed V - Casablanca 69 Avenue des FAR- Casblanca 100, Bb.Abdelmoumen-Casablanca Espace Les Palmiers, Angle Avenues Mehdi Benbarka et Annakhil, Hay Riad - Rabat 16 Rue Abou Inane- Rabat 140, Avenue Hassan II - Casablanca 140, Avenue Hassan II - Casablanca Avenida da libertad 195 1250-142 Lisbone Avenida da libertad 195 1250-142 Lisbone 4, rue Gaillon 78002 Rue San Fernando, 40, 03001 Alicante 31 dec 2010 31 dec 2011 (%) of capital held (%) of voting rights 48 014 586 907 190 7 938 790 7 414 490 48 243 598 907 204 15 876 302 7 414 504 28.05% 0.53% 9.23% 4.31% 28.05% 0.53% 9.23% 4.31% 14 423 718 14 923 852 8.68% 8.68% 9 969 252 2 812 418 25 778 404 8 757 194 2 789 567 26 284 057 5.09% 1.62% 15.28% 5.09% 1.62% 15.28% 4 004 020 4 004 020 2.33% 2.33% 397 220 397 220 0.23% 0.23% 42 365 802 42 365 802 24.64% 24.64% 0 70 100% 100% 7 937 500 0 171 963 390 171 963 390 (In thousand MAD) annual report 2011 RMA WATANYA S.F.C.M. FINANCE.COM C.I.M.R. Le Groupe Caisse de Dépôt et de Gestion MAMDA/MCMA PERSONNEL BMCE SBVC ET DIVERS BANCO ESPIRITO SANTO / FUNDO PENSOES BESCL BANCO ESPIRITO SANTO BANQUE FEDERATIVE DU CREDIT MUTUEL CAJA DE AHORROS DEL MEDITERRANEO, ALICANTE INCOMED - GROUPE CAM TOTAL Address 177 BMCE BANK GROUP ALLOCATION OF EARNINGS THAT OCCURED DURING THE FISCAL YEAR A- Origin of the earnings allocated Decision of May 26th 2010 Retained earnings Net earnings being allocated Net earnings for the fiscal year Withdrawals from earnings Other withdrawals TOTAL Amount B- Results allocation Amount 11 Réserves légales Dividendes 521 741 Autres affectations 67 225 588 966 TOTAL B 508 390 80 576 588 966 (In thousand MAD) EARNINGS AND OTHER ELEMENTS OF THE LAST THREE FISCAL YEARS Equity capital and equivalent Operations and earnings for the fiscal year 1- Net banking income 2- Pre-tax earnings 3- Corporate tax 4- Dividends distributed 5- Earnings not distributed Earnings per share (in MAD) Net earnings per share Earnings distributed per share Staff Gross remunerations for the year Average number of staff employed during the fiscal year Exercice 2011 10 995 906 4 063 507 838 306 293 544 508 390 3 3 1 280 600 4 941 Exercice 2010 14 887 353 3 951 016 797 589 275 848 476 264 3 3 1 138 339 5 027 Exercice 2009 12 898 809 3 713 830 655 427 152 498 438 440 64 489 3 3 1 074 469 4 900 (In thousand MAD) DATING AND SUBSEQUENT EVENTS I. Dating . Date of the end of the fiscal year (1) 31 december 2011 . Date of financial statements performance (2) 23 march 2012 (1) Justification in case of a change in the date of the end of the fiscal year (2) Justification in the case of an overrun on the statutory period of three months allowed for drawing up the financial statements II. Events occurring subsequent to the end of the fiscal year not charged to this year and known before the 1st external Disclosure of the financial statements Dates . Favorable . Unfavourable Indicators of events none BMCE BANK has been monitored during fiscal 2009, completed in December 2010, for the years 2006-2009 concerning the corporate tax (IS), the general income tax (IGR) and the Value Added Tax (VAT), the Bank has received the first notification from recovery leaders on December 16th, 2010 related to the four exercises controlled. It also received the second letter of notification on 1st March 2011. STAFF NUMBERS Staff renumerated Staff employed Equivalent full time staff Administrative and technical staff (full-time equivalent) Staff assigned to banking tasks (full-time equivalent) Executives (full-time equivalent) Clerks (full-time equivalent) 2011 4 941 4 941 4 941 2 662 2 279 2010 5 027 5 027 5 027 2 476 2 551 (In thousand MAD) SECURITIES AND OTHER ASSETS UNDER MANAGEMENT OR UNDER CUSTODY Securities of which the institution is custodian Securities managed under mandate Mutual funds of which the institution is custodian Mutual funds managed under mandate Other assets of which the institution is custodian Other assets managed under mandate Number of accounts 2011 2010 11 725 15 221 77 63 62 - Amounts 2011 2010 174 000 000 191 000 000 13 500 000 67 000 000 64 000 000 (In thousand MAD) NETWORK 2011 620 657 1 28 2010 615 648 1 25 Aggregated annual accounts Permanent branches Temporary branches ATMs Main branches and branches abroad Representative offices abroad CUSTOMER ACCOUNTS Custmer accounts Current accounts Check accounts excluding Moroccan expatriates Moroccan expatriates accounts Factoring accounts Savings accounts Time deposits Interest-bearing notes 2011 75 065 255 729 1 012 124 823 571 12 366 - 2010 70 756 244 150 959 497 769 817 11 841 3 053 - (En nombre) The following statements post ‘‘non applicable’’ mention for the 2011 fiscal year : ✦ Derogatory statements ✦ Summary of changes in methods ✦ A ssets leased under finance or operating leases with option to purchase and standard lease agreement ✦ Subsidies, assigned public funds and special guarantee funds annual report 2011 179 BMCE BANK GROUP DOMESTIC ACTIVITY BALANCE SHEET AS OF DECEMBER 31ST, 2011 ASSETS Cash, central banks, treasury, giro accounts Loans to credit institutions and equivalent . Demand . Time Loans and advances to customers . Cash and consumer loans . Equipment loans . Mortgage loans . Other loans Advances acquired by factoring Transaction and marketable securities . Treasury bonds and equivalent securities . Other debt securities . Title deeds Other assets Investment securities . Treasury bonds and equivalent securities . Other debt securities Equity investments and equivalent uses Subordinated loans Fixed assets leased and rented Intangible fixed assets Tangible fixed assets TOTAL ASSETS 2011 1 710 799 19 191 251 1 901 140 17 290 111 85 722 061 27 681 490 14 785 848 28 140 075 15 114 648 30 961 004 7 421 794 1 306 173 22 233 037 2 208 576 1 336 251 674 432 661 819 4 850 215 201 314 477 561 2 087 157 148 746 189 2010 3 850 056 19 585 405 5 559 430 14 025 975 75 985 841 24 531 153 15 001 927 25 556 512 10 896 249 26 874 344 7 420 179 1 515 430 17 938 735 1 465 238 1 404 908 730 824 674 084 4 035 505 203 045 297 423 2 029 731 135 731 496 (In thousand MAD) LIABILITIES Central banks, treasury, giro accounts Liabilities to credit institutions and equivalent . Demand . Time Customer deposits . Demand deposits . Savings deposits . Time deposits . Other deposits Debt securities issued . Negotiable debt securities . Bond loans . Other debt securities issued Other liabilities Contingent liabilities Regulated provisions Subsidies, assigned public funds and special guarantee funds Subordinated debts Revaluation reserve Reserves and premiums related to capital Capital Shareholders unpaid-up capital (-) Retained earnings (+/-) Net earnings being appropriated (+/-) Net earnings for the year (+/-) TOTAL ASSETS 2011 2010 20 286 936 625 024 19 661 912 100 259 257 50 801 303 16 290 784 29 037 996 4 129 174 7 367 071 7 367 071 5 873 945 195 006 4 415 648 8 105 924 1 719 634 11 522 757 148 746 189 11 555 167 976 911 10 578 256 97 062 287 47 351 069 15 258 208 29 628 895 4 824 115 7 135 904 7 135 904 5 060 706 22 292 4 423 298 8 092 573 1 719 634 11 659 624 135 731 496 (In thousand MAD) OFF-BALANCE SHEET Given commitments Financing commitments on behalf of credit institutions and equivalent Financing commitments on behalf of customers Guarantee commitments given to credit institutions and equivalent Guarantee commitments given to customers Securities repos purchased Other securities to be delivered Received commitments Financing commitments received from credit institutions and equivalent Guarantee commitments received from credit institutions and equivalent Guarantee commitments received from the State and various guarantee bodies Securities repos sold Other securities to be received 2011 20 978 044 1 232 366 10 790 353 2 970 772 5 396 822 587 731 6 542 355 6 458 235 30 849 53 271 2010 20 483 627 1 309 841 10 640 969 2 980 762 5 230 221 321 834 6 654 307 6 549 968 30 996 73 343 (In thousand MAD) Aggregated annual accounts DOMESTIC ACTIVITY INCOME STATEMENT AS OF DECEMBER 31ST, 2011 2011 7 396 970 394 856 4 357 218 253 504 292 017 648 783 1 450 592 3 427 267 588 047 1 792 028 252 899 794 293 3 969 703 64 454 54 175 2 630 886 1 277 946 58 572 1 041 880 172 252 316 815 859 428 215 45 446 342 198 282 850 156 915 13 967 111 968 816 087 816 087 293 330 522 757 2010 7 069 545 304 013 4 123 036 266 084 198 877 676 175 1 501 360 3 194 544 432 665 1 704 006 251 030 806 843 3 875 001 63 693 34 012 2 437 542 1 135 977 41 836 1 043 615 5 264 210 850 1 104 396 472 012 416 066 216 318 572 519 478 089 5 512 88 918 935 263 935 263 275 639 659 624 (In thousand MAD) annual report 2011 Bank operating revenues Interests and assimilated revenues on transactions with credit institutions Interests and assimilated revenues on transactions with customers Interests and assimilated revenues on debt securities Revenues on title deeds Revenues from leased and rented fixed assets Fees on provided services Other banking revenues Bank operating expenses Interests and assimilated expenses on transactions with credit institutions Interests and assimilated expenses on transactions with customers Interests and assimilated expenses on debt securities issued Expenses on leased and rented fixed assets Other banking expenses Net banking income Non-banking operating revenues Non-banking operating expenses General operating expenses Staff expenses Tax expenses External expenses Other general operating expenses Allowances for depreciation and provisions for intangible and tangible fixed assets Allowances for provisions and loan losses Allowances for non performing loans and commitments Loan losses Other allowances for provisions Provision write-backs and recovery on amortised debts Provision write-backs on non performing loans and commitments Recovery of amortised debts Other provision write-backs Current income Non-current revenues Non-current expenses Pre-tax earnings Corporate tax Net earnings for the year 181 BMCE BANK GROUP DOMESTIC ACTIVITY MANAGEMENT BALANCES STATEMENT AS OF DECEMBER 31ST, 2011 EARNINGS FORMATION TABLE + Interests and assimilated revenues - Interests and assimilated expenses Net interest income + Revenues from leased and rented fixed assets - Expenses on leased and rented fixed assets Profit from leasing and renting operations + Fees received - Fees paid Net fee income ± Income from operations on transaction securities ± Income from transactions on marketable securities ± Income from exchange transactions + Income from derivatives transactions Income from market transactions + Other miscellaneous banking revenues - Other miscellaneous banking expenses Net banking income ± Net income from equity investments + Other non-banking operating revenues - Other non-banking operating expenses - General operating expenses Gross operating income ± Allowances for non performing loans and commitments (net of write-backs) + Other allowances net of provision write-backs Current income Non-current income - Corporate tax Net earnings for the year 2011 2010 5 005 578 2 632 974 2 372 604 779 755 165 753 614 002 687 742 28 634 128 613 13 897 858 886 292 017 167 807 3 969 702 -99 898 61 333 52 739 2 630 887 1 247 511 -302 779 -128 645 816 087 293 330 522 757 4 693 134 2 387 701 2 305 433 851 119 228 464 622 655 705 502 29 102 231 282 -4 643 961 243 198 876 213 206 3 875 001 -177 393 53 984 33 855 2 437 542 1 280 195 -404 477 59 545 935 263 275 639 659 624 (In thousand MAD) CASH-FLOW + Net earnings for the year + Allowances for depreciation and provisions for intangible and tangible fixed assets + Allowances for provisions for equity investments depreciation + Allowances for provisions for general risks + Allowances for regulated provisions + Non-current allowances - Provisions write-backs - Capital gains on disposals of intangible and tangible fixed assets + Capital losses on disposals of intangible and tangible fixed assets - Capital gains on disposals of equity investments + Capital losses on disposals of equity investments - Write-backs of investment subsidies received ± Financing capacity - Dividends distributed + Cash-flow 2011 2010 522 757 252 316 156 049 54 467 4 240 1 973 3 120 1 436 872 703 508 390 304 313 659 624 210 849 192 219 85 850 12 957 9 710 157 954 332 476 263 478 069 (In thousand MAD) BMCE Bank International Network BMCE Bank Group Subsidiaries BMCE BANK GROUP BMCE BANK BRANCH NETWORK, REPRESENTATIVE OFFICES AND DESKS ABROAD France SPAIN UNITED KINGDOM Marseille 20, Bd. Dugommier - 13 001 - Marseille Tél. : 00 334 91 64 04 31 Fax : 00 334 91 64 88 47 Madrid Plaza Cataluña, n°.1 - 28002 - Madrid Tél. : 00 3491 564 58 34 / 564 57 63 Fax : 00 3491 564 59 11 Londres 26 Upper Brook Street - London WKQE Tél. : 00 4420 75 18 82 52 Fax : 00 4420 76 29 05 96 Montpellier 59, Cours Gambetta 34 000 - Montpellier Tél. : 00 334 67 58 06 18 Fax : 00 334 67 58 58 06 Barcelone Calle Tarragona , 129 08014 - Barcelona Tél. : 00 3493 325 17 50 Fax : 00 3493 423 26 05 Emirats arabes unis Lille 48, Bd. De la liberté - 59 800 - Lille Tél. : 00 333 20 40 12 00 Fax : 00 333 20 12 98 08 Valence Calle Alfonso Magnanima nº3 (esquina Calle la paz) 46003 - Valencia Tél. : 00 3496 353 44 41 Fax : 00 3496 394 24 39 Lyon 1, Rue Carry - 69 003 - Lyon Tél. : 00 334 72 34 38 07 Fax : 00 334 78 54 24 04 Strasbourg 13, Av. Du Général de Gaulle 67 000 - Strasbourg Tél. : 00 333 88 61 00 18 Fax : 00 333 88 61 45 73 Bordeaux 35, Av. Charles de Gaulle 33 200 - Bordeaux Tél. : 00 335 56 02 62 60 Fax : 00 335 56 17 09 52 Toulouse 64, Bis avenue Jean Rieux - 31500 Toulouse Tél. : 00 335 61 20 08 79 Fax : 00 335 61 20 06 92 Orléans 6-8 Place de l’indien 45 100 - Orléans la source Tél. : 00 332 38 25 31 90 Fax : 00 332 38 25 31 99 Asnières 43, Rue pierre brossolette 92 600 - Asnières Tél. : 00 331 46 13 43 40 Fax : 00 331 46 13 43 44 Mantes-la-jolie 34, Bd du Maréchal Juin 78 200 - Mantes-la-jolie. Tél. : 00 331 39 29 25 30 Fax : 00 331 39 29 25 40 Dijon 64 Bis, Avenue du Drapeau 21 000 - Dijon Tél. : 00 333 80 60 59 00 Fax : 00 333 80 60 59 01 Paris 175 Bis, Avenue de Clichy 75 017 - Dijon Alméria Calle José Artes de Arcos - 24 I2Q 04004 - Alméria Tél. : 00 3495 028 23 28 Murcia Calle Bolos, b bajo 2 30 005 - Murcia Tél. : 00 3496 829 06 73 ITALY Milan Viale Nazario Sauro,5 - cap 20124 Milano Tél. : 00 39 02 89 28 17 00 Fax : 00 39 02 89 69 16 28 Bologne Tél. : 00 39 05 12 49 824 Fax : 00 39 02 89 69 16 283 Turin Tél. : 00 39 01 14 36 77 89 Fax : 00 39 02 89 69 16 28 Padova Tél. : 00 39 04 97 80 03 01 Fax : 00 39 02 89 69 16 28 Rome Tél. : 00 39 05 12 49 824 Fax : 00 39 02 89 69 16 28 Délégation BMCE Bank aux Emirats Arabes Unis Moroccan Embassy - P.O. Box 4066 Abu Dhabi Tél. : 00 971 24 434 328 Fax : 00 971 24 43 64 42 GERMANY Agence de Services Financiers Frankfurt Münchener Str 8 - 60 329 Tél. : 00 49 69 27 40 34 40 Fax : 00 49 69 27 40 34 44 Agence de services financiers düsseldorf Eller str 104 - 40227 Düsseldorf Tél. : 00 49211 8 63 98 64 Fax : 00 49211 8 63 98 70 CHINA Bureau de représentation de Pekin Henderson Center, Tower One, Units 1202/1203/1204 18, Jian Guo Men Nei Avenue 100 005 Beijing, PR China Tél. : 00 8610 65 18 23 63 Fax : 00 8610 65 18 23 53 BMCE BANK GROUP SUBSIDIARIES BMCE CAPITAL BMCE CAPITAL GESTION BMCE Bank INTERNATIONAL UK PRESIDENT DU DIRECTOIRE M. Khalid NASR OBJET Banque d’Affaires Siege social Tour BMCE, rond point Hassan II, 20 039 Casablanca Tel : 0522 49 89 78 Fax : 0522 22 47 41/48 Site Internet www.bmcecapital.com DIRECTEUR GeNeRAL M. Amine Amor Objet Société de Gestion d’Actifs Siège social Tour BMCE, rond point Hassan II, 20 039 Casablanca Tél : 0520 36 43 00 Fax : 0522 47 10 97 Site Internet www.bmcecapital.com Directeur general M. Mohamed Bircharef OBJET Banque SIeGE SOCIAL 100, ST Paul’s Churchyard Juxon House 2nd Floor London EC4M 8BU Tel : 00 44 207 429 55 50 Fax : 00 44 207 248 85 95 VICE PRESIDENT DU DIRECTOIRE M. Youssef BENKIRANE Tel : 0522 49 81 01 Fax : 0522 48 10 15 bmce capital Conseil SECRETAIRE GENERAL M. Mohamed IDRISSI TeL : 0522 46 20 01 FAX : 0522 22 47 48 PReSIDENT DU DIRECTOIRE M. Mehdi DRAFATE Objet Conseil Financier Tel : 0522 42 91 00 FaX : 0522 43 00 21 bmce capital cameroun bmce capital bourse PReSIDENT DU DIRECTOIRE M. Youssef BENKIRANE Objet Société de Bourse Siege social Tour BMCE, rond point Hassan II, 20 039 Casablanca Tel : 0522 49 89 01 Fax : 0522 48 10 07 Site Internet www.bmcecapital.com BMCE Bank INTERNATIONAL ESPAGNE DIRECTEUR GENERAL M. Radi Hamudeh OBJET Banque SIeGE SOCIAL Calle Serrano, N°59 - 28006 - Madrid Tel. : 00 3491 575 68 00 Fax : 00 3491 431 63 10 Directeur General M. Serge Yanic NANA Siege social 316, Rue Victoria, 5ème Etage Immeuble Victoria Bonanjo, Douala Cameroun Tel : 00 237 75 60 40 40 MAGHREBAIL SALAFIN MAROC FACTORING RM EXPERTS president directeur general M. Azeddine GUESSOUS Objet Société de leasing Siège social 45, Bd Moulay Youssef, 20 000 Casablanca Tél : 0522 48 65 00 Fax : 0522 27 44 18 Site Internet www.maghrebail.co.ma President du Directoire M. Amine BOUABID Objet Société de Crédit à la Consommation Siege social Zenith Millenium Immeuble 8, Sidi Maârouf Casablanca Tel : 0522 97 44 55 Fax : 0522 97 44 77 Site Internet www.salafin.com Presidente du directoire Mme. Salma TAZI Objet Société de Factoring Siege social 243, Boulevard Mohamed V, 20 000 Casablanca Tel : 0522 30 20 08 0522 30 13 42 Fax : 0522 30 62 77 Site Internet www.maroc-factoring.co.ma president DIRECTEUR GENERAL M. Mamoun BELGHITI Objet Société de Recouvrement Siege social Lotissement Zénith Millenium - Immeuble 2 bis 3ème étage - Sidi Maârouf Casablanca Tel : 05 22 20 42 91 78 / 79 Fax : 05 22 58 09 87 annual report 2011 185 BMCE BANK GROUP HistorY 2011 • Increase of the bank’s equity stake in BOA to 59,39% • Reinforcement of the bank’s holding in Maghrebail and Locasom to 51% and 89,5%, respectively • BMCE Bank named for the second time “Best Bank in Morocco” by the British Magazine EMEA Finance • First bank in Morocco and the MENA Region to be ISO 14001 certified for the environment 2010 • Aquisition by CDG Group of a 8% equity stake in BMCE Bank • Capital increase of 2.5 billion MAD, issue premium included, reserved to Credit Mutuel - CIC, through its Holding BFCM • Launch of the first tranche of capital increase of 500 mMAD, issue premiuim included, reserved to BMCE Bank employees • Takeover of Bank of Africa , following the increase of BMCE Bank’s stake to 55.8% • Increase of BMCE Bank’s stake in Maghrébail from 35.9% to 51% 2009 • Reinforcement of CIC Group’s equity stake in the capital of BMCE Bank, through its holding company, BFCM, from 15.05% to 19.94% • Issue of a MAD 1 billion perpetual subordinated debt on the local market 2008 • Acquisition of an additional equity stake of 5% by CIC in BMCE Bank, bringing it to 15,04%. • Issue of a 70 million Euros perpetual subordinated debt to International Financial Corporation (IFC) • Issue of a 50 million Euros Subordinated debt to Proparco • Issue of a MAD 1 billion Perpetual Subordinated debt • BMCE Bank’s stock split, bringing the nominal value of shares from MAD 100 to MAD 10 • Increase of the Group’s equity stake in Bank of Africa from 35 % to 42.5% • Transfer of CIC’s equity stake in BMCE Bank through its holding, La Banque Fédérative du Crédit Mutuel 2007 • Acquisition of a 5% stake in the Bank’s capital by Caja Mediterraneo following a strategic partnership agreement • Alliance between BMCE Bank and AFH/Bank of Africa ; BMCE Bank being the reference shareholder in the capital of Bank of Africa with an equity stake of 35% • Start of the business activities of MediCapital Bank, the London based affiliate of BMCE Bank Group • Award of the first prize in Human Resources for BMCE Bank by «HR Management and Training Association» (AGEF). • Winning for the second time in a row of the first prize in financial communication, awarded by the Moroccan Financial Analysts Association to BMCE Bank as the first ranked bank and listed company, all categories combined. 2006 • Obtaining of the « Investment Grade » rating on Banking deposits denominated in dirhams, awarded by the international rating agency Moody’s • ISO 9001 Certification for project Finance & Recovery activities • «Bank of the year-Morocco» granted for th 5th time since 2000 and the 3rd consecutive time, by the Banker Magazine • Inauguration of Axis Capital, the Tunisian Investment Bank • Obtaining by BMCE Bank Foundation of the « Excellence » prize for the sustained Development, granted by the Morocco-Switzerland Founation 2005 • BMCE Bank creating a new visual identity on the occasion of its 10th anniversary celebrations since privatisation • Launch of a branch opening programme with 50 branch to be opened each year • Signing of an agreement with the BEI for the establishment of a 30 million euros credit line without sovereign guarantee • Launch of BMCE Bank Group of its 2nd stock employee programme • Issue of the second tranche of a MAD 500 million subordinated bond • BMCE Bank awarded the title of «Bank of the Year - Morocco» by «The Banker» magazine 2004 • Acqusiition of CIC of a 10% stake in BMCE Bank • 1st non-European bank to receive a social responsibility rating in Morocco • BMCE Bank awarded «Bank of the Year - Morocco» by the magazine «The Banker» 2003 • Launch of the CAP CLIENT interprise project • Issue od a stock employee programme of 4.72% of the Bank’s share capital • Isssue of MAD 500 million subordinated debt • Inauguration of BMCE Capital Dakar 2002 • Implementation of a new customer-oriented organisation • ISO 9001 certification for all activities related to custody • Change of status of the Tangier Free Zone Branch, becoming an offshore bank • Stock repurchase Programme of 1.5 million BMCE shares, representing 9.45% of the Bank’s share capital 2001 • Opening of the Barcelona Representative Office • ISO 9001 certification for the quality management system introduced for foreign activity and electronic banking. • BMCE Bank awarded the title of «Bank of the Year - Morocco» by «The Banker» magazine 2000 • Opening of Representative Offices in London and Beijing • Creation of the holding company FinanceCom • BMCE Bank awarded the title of «Bank of the Year - Morocco» by «The Banker» magazine 1999 • Equity investment in AL WATANIYA, giving birth to a leading insurance company • Equity investment of 20% in the first private telecoms operator MEDI TELECOM 1998 • Creation of BMCE CAPITAL, the Group’s investment bank 1997 • Creation of SALAFIN, a consumer credit company 1996 • Launching of a 60 million dollar issue of GDR shares, the first of its kind, in international financial markets 1995 • Privatisation of the Bank 1994 • Creation of BMCE Bank’s first capital market companies : MIT and MARFIN 1989 • Opening of BMCE Internacional in Madrid 1988 • Creation of a factoring company, MAROC FACTORING 1975 • Listing on the Stock Exchange 1972 • BMCE becomes the first Moroccan bank to establish an overseas presence by opening a branch in Paris 1965 • Opening of the Tangier Free Zone Branch 1959 • Creation of BMCE Bank by the Public Authorities BMCE BANK BP 20 039 Casa Principale Tel : 05 22 20 04 92 / 96 Fax : 05 22 20 05 12 Capital : 1 719 633 900 dirhams Swift : bmce ma mc Telex : 21.931 - 24.004 Trade register : casa 27.129 PO checking account : Rabat 1030 Social security : 10.2808.5 Fiscal ID N° : 01085112 Tranding license : 35502790 Group General Secretariat Tel : 05 22 49 80 03 / 05 22 49 80 04 Fax : 05 22 26 49 65 E-mail : communicationfinanciere@bmcebank.co.ma bmce bank web site www.bmcebank.ma international trade web site www.bmcetrade.com investment bank web site www.bmcecapital.com GRAPHIC DESIGN : amina bennani - PRINT : direct print
