Morocco – BCP, Attijariwafa, BOA: Close battle in West Africa

By Joël Té-Léssia Assoko
Posted on Wednesday, 11 May 2022 16:37

Headquarters of the Moroccan bank Attijariwafa in Casablanca ©FADEL SENNA/AFP.

The clear progression of Moroccan banks in the West African Monetary and Economic Union (UEMOA) means they are subject to heavier constraints, in an ambience of heightened competition.

In early April, Amine Bouabid, general manager in charge of the African subsidiaries of Moroccan group Bank of Africa (BOA, ex-BMCE Bank of Africa) announced that BOA would share €66.3m ($70m) of dividends generated by its local subsidiaries (Burkina Faso, Benin, Ivory Coast, Mali, Niger and Senegal) with investors of the Bourse régionale des valeurs mobilières (BRVM), the regional stock exchange of Abidjan.

Will this generosity towards local stock market players be a bulwark in case of future hard knocks, knowing that “being listed in Africa constitutes a protection for multinationals”, as Edoh Kossi Amenounve, BRVM boss, likes to say? Or will it make it easier to raise funds, if necessary, in a local financial market well disposed towards it? A mystery.

BOA is back in the game

In any case, this distribution of dividends in French-speaking West Africa (+21% compared to 2020) reflects a clear return to form for BOA, with a net profit from its 18 sub-Saharan establishments (including an office in Addis Ababa) having increased by 60% to €105.3m ($111.3m) in 2021, after having fallen by 4.6% the previous year due to the crisis related to the Covid-19 pandemic.

In addition to its strong presence in Central and East Africa, BOA thus marks its difference from its overseas peers Banque Centrale Populaire (BCP) and Attijariwafa Bank (ATW), which have barely any subsidiaries listed in Abidjan. With one exception to the rule – the Ivorian Banking Company (SIB). The company’s presence on the stock market was decided by the government of President Alassane Ouattara, who, in mid-2016, decided to sell 20% of the state’s shares, retaining 5% of public capital, against 75% for the Attijariwafa Bank group.

Following the example of BOA in activity south of the Sahara, BCP and ATW also experienced rebounds in 2021. Attijariwafa’s African revenues (excluding Morocco) increased slightly to MAD 8.27bn ($825m, +2.5%), for a net income group share of MAD 1.545bn (+24%), boosted by the decline in provisions on loans.

SUB-SAHARAN OPERATING ENVIRONMENTS PRESENT A HIGHER RISK

BCP’s sub-Saharan revenues rose by 1.7% to MAD 4.97bn. Its net income group share jumped to MAD 687m. This number had fallen by 192 million in 2020.

‘Systemic cushion’

“The pan-African strategies of Moroccan banks offer them greater diversification of revenues [these African subsidiaries contributed about half of BOA’s consolidated revenues in 2021] and greater opportunities for growth,” says Jamal El Mellali, an analyst at Fitch Ratings, who points out that the profitability of subsidiaries in sub-Saharan Africa has been less affected by the pandemic than that of establishments based in Morocco. “However, the operational environments of sub-Saharan African countries present a higher risk and weigh on the autonomous credit assessments of these banks.”

The clear progression of Moroccan banks south of the Sahara places heavier responsibilities on them. In the UEMOA zone, BCP, BOA and ATW are – with Ecobank, Oragroup and Manzi Finances (NSIA) – three of the six global systemically important banks (G-SIBs) identified by the Central Bank for West African States (BCEAO). Their individual subsidiaries have G-SIB status in six of the eight countries in the zone, with the exception of Burkina Faso and Togo.

Since a failure of these banks could “jeopardise the financial system and economic activity”, these institutions are subject to a one-point surcharge on the solvency ratio, which mobilises even more capital. Due to the pandemic, the application of this minimum solvency ratio of 12.5% has been postponed from 2021 to 2023. In 2020, the banks concerned had an average ratio of 12.7%.

Regional top five

In addition, market shares are becoming increasingly competitive. In 2010, the banks now in the fold of the three Moroccan leaders accounted for about 27% of banking assets in the UEMOA. By 2020, this share had fallen to 23.7%, according to BCEAO figures.

The total assets of all banks in the UEMOA space, however, tripled during this period, reaching €72.7bn. Meanwhile, a local player, Coris Bank, owned by Idrissa Nassa of Burkina Faso, has slipped into the regional top five, ahead of ATW (6th) and ahead of BOA (3rd) and BCP (4th). The Ugandan entrepreneur is also a candidate for the takeover of Oragroup (8th). Has the momentum shifted?

 

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