Fitch affirms Eqdom’s rating at ‘AA (mar) ‘

Feb 23 – Fitch Ratings has affirmed Eqdom’s National Long-term rating at ‘AA(mar)’ with Stable Outlook and National Short-term rating at ‘F1+(mar)’. Fitch has also affirmed Eqdom’s Support Rating at ‘3’. Eqdom’s ratings are underpinned by the support it could expect, if needed, from its ultimate main shareholder Societe Generale (SG, ‘A+’/Negative). However, Fitch believes that the probability of support is moderate as SG is not a direct majority shareholder. Eqdom’s main shareholders include SG Consumer Finance (100%-owned by SG) and Societe Generale Marocaine de Banques (SGMB, ‘AAA (mar)’/Stable, 56.9%-owned by SG) which hold ownership stakes of 35% and 19%, respectively, in the company. SG controls Eqdom’s board and has representatives at Eqdom’s top management. Despite its small size compared to SG’s and lower importance of the consumer finance business within SG’s revised strategy (in line with funding constrains), Fitch views that Eqdom still fits into SG’s strategy to develop retail banking business in North Africa. Eqdom is Morocco’s second-largest consumer finance company with 27% market share at end-H111. Eqdom’s operating profitability in H111 remained adequate (with operating ROAA and ROAE at 4.3% and 28.2% respectively), although it was affected by higher loan impairment charges, reflecting rising unemployment in the private sector. Eqdom’s impaired loans/gross loans ratio remain high (11.71% at end-H111), albeit reducing, but better relative to the ratio reported in the Moroccan consumer finance sector (14.12% at end-H111). Net impaired loans accounted for a moderate 12.4% of equity at end-H111. Eqdom’s asset quality has been gradually improving in recent years reflecting the company’s improved risk management and controls. As a consumer finance company, Eqdom is entirely wholesale funded and its liquidity is tight. At the same time, Eqdom has a considerable amount of unutilised financing facilities with Moroccan banks. Fitch believes that in case of liquidity stress, Eqdom would be supported by SG (potentially through SGMB). Eqdom’s Fitch core capital (14.08% at end-H111) is merely acceptable in light of the company’s risk profile and high dividends policy. Additional information is available on www.fitchratings.com. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings. Applicable criteria, ‘Global Financial Institutions Rating Criteria’, dated 16 August 2011 and ‘National Ratings Criteria’, dated 19 January 2011 and ‘Finance and Leasing Companies Criteria’, dated 12 December 2011 are available at www.fitchratings.com. Applicable Criteria and Related Research: Global Financial Institutions Rating Criteria National Ratings Criteria Finance and Leasing Companies Criteria