FINANCIAL COMMUNICATION

Transcription

1 FINANCIAL COMMUNICATION AT 31 DECEMBER 2013

2 The Steering Committee of Credit Populaire du Maroc and the Board of Directors of Banque Centrale Populaire met on February 17, 2014, under the chairmanship of Mr Mohamed BENCHAABOUN, to assess developments in business activity and approve financial statements for the year ended 31 December STRENGTHENED GROUP DIMENSION TOTAL ASSETS 290,3 MAD BILLION + 7% CUSTOMER DEPOSITS 210 MAD BILLION + 4% ADVANCES TO CUSTOMERS 199,8 MAD BILLION + 8,5% LOCAL NETWORK: 1,250 BRANCHES IN MOROCCO, 630 DISTRIBUTION POINTS AND 1,449 AUTOMATED BANKING MACHINES. FURTHER CONFIRMED COMMERCIAL BREAKTHROUGH MARKET SHARE IN COLLECTION OF DEPOSITS 28,2% + 33 PB MARKET SHARE IN CREDIT TO THE ECONOMY 24,5% + 47 PB CONSOLIDATED FINANCIAL RESULTS NET BANKING INCOME 13,2 MAD BILLION + 14,6% GROSS OPERATING RESULT 6,7 MAD BILLION + 8,9% CONSOLIDATED NET INCOME 3,2 MAD BILLION INCLUDING NET INCOME BCP GROUP SHARE 2 MAD BILLION + 4% CONSOLIDATED SHAREHOLDERS EQUITY 34,5 MAD BILLION + 11,3% At the end of fiscal year 2013, Groupe Banque Centrale Populaire asserts its business momentum and financial performance, confirming the efficiency of its business model and the scope of its international development, particularly supported by the significant growth recorded by Groupe Banque Atlantique. STRONG COMMERCIAL DYNAMICS ON RETAIL ACTIVITY COLLECTION OF DEPOSITS : MAD 210 billion + 4% 28.2% of market share + 33 pb Customer deposits amounted to MAD 210 billion, an increase of 4%. On the domestic market, the Group has confirmed its business efficiency in terms of savings mobilization through a wide proximity network, the vector of its constant involvement in the bankarisation of households. Thus, customer deposits in Morocco amounted to MAD billion, an increase of 4.9%. This increase which exceeded that of the banking sector, has allowed improving the Group s positioning from 33 basis points to 28.2%, further consolidating its position as the leading deposit collector. On the market of local individuals, the Group shows a 7.2% robust growth in its collection activity as against 4.3% for other banks, representing a gain in market share from 48 basis points to 22.2% , CUSTOMER DEPOSITS In MAD billion + 4 % This commercial effort has always been guided with a view to optimizing collection costs, with a share of unpaid resources amounting to 62.4% against 54.6% for the other banks of the market. Such a performance reflects the recognition of the customer conquest and loyalty strategy that earned the Group to be trusted by over 422,000 new relations, bringing its portfolio to 4.5 million customers. The promoter of an ongoing proximity policy, the Group continued the expansion of its distribution network, with the opening of 105 branches in Morocco, bringing their number to 1 250, that is the leading network of the national banking sector (market share of 21.4%, an increase of 72 basis points). The Group has also 630 additional distribution points and 1,449 ATMs providing the most innovative products and services. A key player in electronic banking activities, the Group shows a number of electronic banking cards exceeding 3.4 million, with the additional marketing of over 230,000 cards distributed in nombre d agences au maroc agences The Private Banking business, in turn, continues its rate of sustained expansion with savings deposits exceeding MAD 10 billion. DEPOSITS BY MOROCCANS RESIDING ABROAD : MAD 76.7 billion On the market of Moroccans residing abroad, the Group has strengthened its strong market position, with savings deposits of MAD 76.7 billion, through its increasingly diversified transfer channel (+ 141 basis points in market share in volume of transfers), the proximity services offered and the dynamism provided by the sales force both in Morocco and abroad.

3 PERSONAL LOANS : MAD 53.4 billion +6,2% A leading player on the personal segment, the Group has reached savings deposits of MAD 53.4 billion, an increase of 6.2%, representing a market share of 25.9%, in rise by 37 basis points. These performances achieved on the Retail activity have been recognized by the trophy of the best retail bank of Africa awarded at the 7th edition of the African Banker Awards. SUSTAINED COMMITMENT FOR THE FUNDING OF ECONOMY CUSTOMER DEBTS : MAD billion + 8.5% 24.5% of market share + 47 pb Customer loans increased by 8.5% to MAD billion. In Morocco, the additional credit distribution carried out by the Group amounted to nearly MAD 9 billion, or a total of MAD billion. This progression reflects the Group s ongoing involvement in financing the productive fabric of the national economy with an outstanding credit increasing by 5.1% against 2.4% for other banks, thus allowing a gain in market share by 47 basis points to 24.5%. The Group s commitment to financing the economy will be sustained by making use of its capacity of regional savings mobilization, its employment coefficient (90.9% against an average of 102.4% for other banks) and its financial strength. 199, , CUSTOMER DEBTS In MAD billion + 8,5 % GROWTH OF THE ACTIVITIES OF THE FINANCING AND INVESTMENT BANK The Group has continued to develop its financing and investment banking services. Outstanding loans to corporate customers increased by 11.4% to MAD 40 billion, confirming the Group s breakthrough on this segment. In turn, on a social basis, market activity results reached MAD 1.2 billion, increasing by 63% despite an unfavorable environment. The leader in Investment Banking businesses, the subsidiary Upline Group has strengthened its position on its various business lines. Assets under management amounted to MAD 25.9 billion, an increase of 15.8% representing a market share of 10.6%, rising by130 basis points. CONSOLIDATED FINANCIAL PERFORMANCE NET BANKING INCOME : MAD 13.2 billion % 25, , ASSET MANAGEMENT In MAD billion + 15,8 % NBI experienced a 14.6% significant growth to reach MAD 13.2 billion, due to the sustained progression of all of its components: market activity results + 43% margin on commissions + 42% and interest margin + 9%. This performance is particularly supported by the significant contribution of Groupe Banque Atlantique as well as the commercial dynamics of the Group s various operational poles on the domestic market. BCP s social GNP stood at MAD 4.2 billion, a 10.1% significant increase. 13, , NET BANKING INCOME In MAD billion + 14,6 % GROSS OPERATING INCOME : MAD 6,7 billion + 8,9% Gross operating income increased by 9% to MAD 6.7 billion, reflecting the strength of Banque Populaire model in terms of value creation and resources optimization. 6, , GROSS OPERA- TING INCOME In MAD billion + 8,9 % NET INCOME BCP GROUP SHARE : MAD 2 billion + 4% Enjoying a positive trend in GDP, the net income of BCP group share amounted to about MAD 2 billion, an increase of 4% and the consolidated net income stood at MAD 3.2 billion, despite the extension of the provisioning effort for risk coverage. NET INCOME BCP GROUP SHARE: In order to ensure a secure development, the Group has earmarked, on a social basis, about MAD 1 billion in provisions for General risks bringing their outstanding amount to more than MAD 2 billion. This provision is a financial base enabling the group to continue its effective commitment to financing the real economy , In MAD billion + 4%

4 CONSOLIDATED SHAREHOLDERS EQUITY : MAD 34.5 billion % Taking advantage of the recurrence of BCP Group s financial results and of a distribution policy combining profitability and strengthening of financial solidity, consolidated shareholders equity jumped by 11.3% to MAD 34.5 billion, conferring to the group a sustained lever of growth. 34, , CONSOLIDATED SHAREHOLDERS EQUITY In MAD billion + 11,3 % 290, , TOTAL ASSETS In MAD billion + 7 % Similarly, the Group s dimension was further reinforced, with a total balance sheet in increase by 7% to billion. GROUPE BANQUE ATLANTIQUE: A GROWTH DRIVER IN SUB-SAHARAN AFRICA Groupe Banque Atlantique confirms its new development dynamics in the UEMOA region, while relying on intra-group synergy. This business growth was accompanied by better risk quality with a decline in outstanding receivables by 29% and significant improvement in operational efficiency, as evidenced by the appreciation of the operating ratio by more than 11%. In terms of results, the GNP increased by 18% in December The pioneer in expanding into Sub-Saharan Africa, the group will consolidate its international reach by continuing the development momentum provided by Groupe Banque Atlantique. STANDARD AND POOR s RATING: BEST RATING WITHIN THE MOROCCAN AND NORTH AFRICAN BANKING SECTOR In its report published on January 13, 2014, Standard & Poor s granted the group a BB+/Stable/B rating, which is the best rating within the Moroccan and North African banking sector. Through this rating, Standard & Poors acknowledges the role played by the Group as well as its strong and leading commercial position within the Moroccan banking system, in particular with regard to savings mobilization, transfers from Moroccans Residing Abroad and financing of the national and regional economic fabric. The rating agency also considers that BCP benefits from a high measure of financial flexibility thanks to the Support Fund supplied by BCP and Banques Populaires Régionales for the purpose of guaranteeing their solvency, and adequate liquidity and funding profile with good access to unpaid deposits. Additionally, the position of the Group in terms of risk was judged as adequate by Standard & Poor s. GOOD RESILIENCE OF BCP SHARE The BCP title confirms its resilience in a stock market in Bern, with a price of MAD at 31/12/2013, testifying to the confidence of the market (1.7% vs. 2.6% for the MASI and the MADEX). Banque Centrale Populaire will continue its distribution policy combining shareholder remuneration and strengthening of the financial base. The payment of a dividend of MAD 4.75 per share, representing a dividend payout of 49%, will be proposed to the Annual General Meeting by the Board of Directors of BCP. The Steering Committee congratulated all the staff for their continued commitment to achieving the objectives assigned to the Group and thanked members, shareholders and all partners for their ever-confirmed support.

5 1. GENERAL FRAMEWORK 1.1 BANQUE CENTRALE POPULAIRE Banque Centrale Populaire (BCP) is a credit institution established as a business corporation with Board of Directors. It has been listed on the Stock Exchange since 8 July BCP plays a central role within the Group. Its mission is twofold: Credit institution empowered to perform all banking operations; Central banking entity of Banques Populaires Régionales (Regional Banks). BCP coordinates the Group s financial policy, provides refinancing for Banques Populaires Régionales and management of their cash surpluses, as well as joint interest service on behalf of its entities BANQUES POPULAIRES REGIONALES The 10 Banques Populaires Régionales (BPR) are credit institutions empowered to perform all banking transactions in their respective territorial constituencies. They are organized as variable capital cooperative entities with Board of Directors and Supervisory Board CREDIT POPULAIRE DU MAROC Crédit Populaire du Maroc (CPM) is a banking group consisting of Banque Centrale Populaire and the Banques Populaires Régionales. It is placed under the tutelage of the Board of Directors of Crédit Populaire du Maroc. 1.4 BOARD OF DIRECTORS Board of Directors is the supreme body exercising exclusive tutelage over the various entities of CPM. Its principal assignments are as follows : Define the Group s strategic orientations Exercise administrative, technical and financial control over the organization and management of CPM entities Define and control the operating rules jointly applicable to the Group Take all the measures required for proper operating of the CPM entities and maintaining of the financial equilibrium thereof GUARANTEE MECHANISM Crédit Populaire du Maroc has a support fund for preserving the solvency of its different entities. The support fund is financed by BCP and BPRs trough the payment of a contribution determined by the Board of Directors. In respect of fiscal 2013, and upon decision of the Board of Directors, the group established a supplementary provision for general risks of MAD 972 by withdrawal from the support fund. The PRG stock at the end of 2013 amounts to MAD 2,072 including MAD 1,572 for BCP. 2. SUMMARY OF ACCOUNTING PRINCIPLES APPLIED BY GROUPE BANQUE CENTRALE POPULAIRE 2.1. CONTEXT The International Financial Reporting Standards IFRS were applied to the consolidated accounts of Groupe Banque Centrale Populaire as of 1 January 2008 with the initial balance sheet on 1 January 2007, in compliance with the regulations stipulated by IFRS 1 First Application of International Reporting Standards and by the other IFRS standards taking account of the version and interpretations of the standards as adopted by the International Accounting Standards Board (IASB). The prime objective of the regulatory authorities is to provide credit institutions with an accounting and financial information framework in compliance with the international standards in terms of financial transparency and quality of information ACCOUNTING STANDARDS APPLIED SCOPE OF CONSOLIDATION The consolidated accounts of Banque Centrale Populaire join together all the corporate entities under exclusive or joint control or under appreciable influence apart from those the consolidation of which are employed for the establishment of BCP consolidated statements. A subsidiary is consolidated as of the date at which CPM effectively procures control. The entities provisionally controlled are also integrated into the consolidated statements to the date of their transfer. It is worth noting that BPRs have been integrated since 2010 in BCP scope of consolidation. Companies under control : Subsidiaries Companies under CPM control are consolidated through global integration. CPM controls a subsidiary when it is in a position to manage the financial and operational policies of an entity so as to benefit from its activities. Control is presumed to exist when CPM owns, directly or indirectly, more than one half of the voting power of the subsidiary. It exists when CPM has the power to manage the financial and operational policies of the said entity by way of an agreement or to appoint, revoke or gather together the majority of the members of the Board of Directors or equivalent management body. Determination of the percentage of control takes into account the potential voting rights giving access to complementary voting rights as they are immediately exercisable or convertible. GROUPE BANQUE CENTRALE POPULAIRE SCOPE OF CONSOLIDATION PARTICIPATION % INTEREST SOCIAL METHOD OF % CONTROL CAPITAL IN BCP CONSOLIDATION THOUSANDS CPM 100,00% IG* CHAABI BANK (IN THOUSANDS OF EUROS) 100,00% 100,00% IG BPMC (IN THOUSANDS OF CFA FRANCS) 62,50% 62,50% IG DAR ADDAMANE 5,71% 52,63% IG MAI 77,43% 77,43% IG CCI 49,00% 51,00% IG VIVALIS 64,01% 87,17% IG MEDIA FINANCE 89,95% 100,00% IG CHAABI LLD 83,76% 83,76% IG CIB (IN THOUSANDS OF USD) 70,00% 100,00% IG BPMG (IN THOUSANDS OF GNF) 55,53% 55,53% IG BANK AL AMAL 24,01% 35,86% IG ATTAWFIQ MICRO CREDIT 100,00% 100,00% IG UPLINE GROUP 74,87% 100,00% IG UPLINE SECURITIES 74,87% 100,00% IG UPLINE CAPITAL MANAGEMENT 74,87% 100,00% IG UPLINE CORPORATE FINANCE 74,87% 100,00% IG UPLINE REAL ESTATE 74,87% 100,00% IG MAGHREB MANAGEMENT LTD 20,24% 27,04% MEE MAGHREB TITRISATION 17,97% 24,00% MEE UPLINE ALTERNATIVE INVESTMENTS 74,87% 100,00% 300 IG UPLINE VENTURES 37,44% 50,00% MEE AL ISTITMAR CHAABI 74,87% 100,00% IG ICF AL WASSIT 74,87% 100,00% IG UPLINE COURTAGE 74,87% 100,00% IG UPLINE TECHNOLOGIES 14,97% 20,00% 300 MEE UPLINE INVESTEMENT FUND 26,95% 35,99% MEE UPLINE GESTION 74,87% 100,00% IG UPLINE INVESTEMENT 74,87% 100,00% IG UPLINE MULTI INVESTEMENTS 74,87% 100,00% 300 IG UPLINE REAL ESTATE INVESTEMENTS 74,87% 100,00% 300 IG UPLINE INTEREST 67,38% 90,00% 300 IG ZAHRA GARDEN 37,44% 50,00% 100 IP CHAABI MOUSSAHAMA 74,87% 100,00% IG ALHIF MANAGEMENT 29,95% 40,00% MEE EMERGENCE GESTION 24,95% 33,33% 300 MEE MAROC LEASING 53,11% 53,11% IG BP SHORE 51,00% 100,00% IG FPCT SAKANE 49,00% 100,00% IG ATLANTIC BANQUE INTERNATIONAL (En KCFA) ATLANTIQUE FINANCE (En KCFA) ATLANTIQUE TECHNOLOGIES (En KCFA) BANQUE ATLANTIQUE DU BURKINA FASSO (En KCFA) BANQUE ATLANTIQUE DU BENIN (En KCFA) BANQUE ATLANTIQUE DE LA COTE D'IVOIRE (En KCFA) BANQUE ATLANTIQUE DU MALI (En KCFA) BANQUE ATLANTIQUE DU NIGER (En KCFA) BANQUE ATLANTIQUE DU SENEGAL (En KCFA) BANQUE ATLANTIQUE DU TOGO (En KCFA) 50,00% 100,00% IG 49,92% 100,00% IG 37,80% 100,00% IG 28,01% 100,00% IG 26,77% 100,00% IG 49,45% 100,00% IG 27,46% 100,00% IG 38,81% 100,00% IG 33,30% 100,00% IG 39,50% 100,00% IG

6 Companies under joint control: Joint ventures Joint ventures are consolidated by proportionate integration or on an equity basis. CPM exercises joint control when, by way of a contractual agreement, the financial and operational decisions require unanimous agreement among the parties sharing control Companies under appreciable influence: Associates Companies under appreciable influence are controlled using the equity method. Appreciable control exists in conjunction with the ability to partake in the financial and operational policies of an entity but without exercising control. This is assumed if CPM directly or indirectly holds 20% or more of voting rights in a given entity. Stakes below this threshold are excluded from the scope of consolidation unless they represent a strategic investment and if CPM exercises effective appreciable influence. Variations in shareholders equity in companies using the equity method are recognized in balance sheet assets under Investments in associates and in balance sheet liabilities under the appropriate own capital heading. The goodwill of a consolidated company based on the equity method is listed in the balance sheet under Investments in associates. If the quota of CPM in the losses of a company based on the equity method is equal or greater than its interests in the said enterprise, CPM no longer takes into account its quota in future losses. The stakes are then presented at nil value. Any additional losses of the associate enterprise are provisioned only when CPM is legally or implicitly obliged to do so or when it has made payments on behalf of the enterprise Minority interests Minority interests are listed separately in the consolidated income, as well as in the consolidated balance sheet under shareholders equity OPTIONS RETAINED BY GROUPE BANQUE CENTRALE POPULAIRE Definition of scope To define the companies to be integrated into the scope of consolidation, the following criteria must be respected : CPM must directly or indirectly hold at least 20% of existing or potential voting rights. One of the below limits is reached: The total assets of the subsidiary are over 0.5% of total consolidated assets: The net situation of the subsidiary is greater than 0.5% of the net consolidated situation. The turnover or banking income of the subsidiary is greater than 0.5% of the consolidated banking income. Ownership interest over which BCP has no control is not integrated in the scope even if the contribution thereof fulfills the aforementioned criteria. It is worth nothing that CPM has chosen consolidation according to the vision of the parent company Exception An entity with a non significant contribution must integrate the scope of consolidation if it holds shares in the subsidiaries meeting the aforementioned criteria Consolidation of ad hoc entities Consolidation of ad hoc entities and in particular funds under exclusive control was described by SIC 12. By way of application of this text, Banque Populaire Foundation for Microcredit has been integrated into the scope of consolidation. The chairmanship of the Foundation Board of Directors is provided by the Managing Director of Banque Centrale Populaire further to modification of its by-laws. Exclusions from the scope of consolidation: An entity under control or appreciable influence is excluded from the scope of consolidation when at acquisition the shares of the said entity are exclusively held in view of an eventual transfer in the near future. These shares are listed under the category of assets to be transferred and evaluated at fair value per statement. The stakes (apart from majority holdings) held by risk capital entities are also excluded from the scope of consolidation insofar as they are recorded as financial assets at fair value per statement upon options Consolidation methods The consolidation methods are established respectively by standards IAS 27, 28 and 31. They result from the type of control exercised by Groupe Banque Populaire over the entities to be consolidated regardless of their activity or whether they are corporate persons. Acquisition of minority interests are entered under parent equity extension method through which the difference between the price paid and the book value of the quota of the net shares acquired is entered under goodwill FIXED ASSETS The fixed assets entered in the Group balance sheet include the tangible and intangible fixed assets in or out of operation, as well as investment property. Operating fixed assets are used for production or administrative purposes. They include property other than real estate and leasing contracts. They include property other than real property leased under operating leases. Investment property is real property held for purposes of rental and appreciation of the capital invested INITIAL RECORDING Fixed assets are recorded at the acquisition price with addition of the expenses directly related thereto and the cost of borrowing when the commissioning is preceded by a long period for construction or adaptation. The software developed internally, when fulfilling fixed asset criteria, are listed at the direct cost of development including external expenditures and payroll expenses directly assigned to the project FUTURE ASSESSMENT AND RECORDING After initial entry the fixed assets are assessed at cost with deduction of depreciation and eventual losses in value. It is also possible to opt for reevaluation after the initial recording AMORTIZATION The depreciable amount of a fixed asset is determined after deduction of the residual value. Only property under lease is assumed to have a residual value as the duration of use of operating fixed assets is generally equal to the expected life span of the property. Fixed assets are amortized according to the linear method over the expected economic life useful to the enterprise. Allocations to amortization are entered under Allocation to amortization and provisions for depreciation of tangible and intangible fixed assets in the profits and losses account. When amortization consists of several items replaceable at regular intervals but having different uses or that enable economic advantages according to a different pace, each item is entered separately and each of the components is amortized according to a specific plan DEPRECIATION Depreciable fixed assets are subjected to a depreciation test when the closing date of any loss indices is identified. The non depreciable fixed assets as well and the goodwill are subjected to a depreciation at least once per year. If such a depreciation index exists the recoverable value of the asset is compared to the net book value of the fixed asset. In the event of loss of value, depreciation is recorded in the profits and losses account. The depreciation is resumed in the event of improvement of the recoverable value or disappearance of the depreciation indices. Depreciation is recorded under Allocations to depreciation and provisions for depreciation of tangible and intangible assets in the profits and losses account DISPOSAL GAINS OR LOSSES The disposal gains or losses of operating fixed assets are recorded in the profits and losses account under Net gains on other assets. The disposal gains or losses on investment property are recorded in the profits and losses account under revenues or expenses for other activities OPTIONS RETAINED BY GROUPE BANQUE CENTRALE POPULAIRE Approach per component In the corporate accounts, buildings are depreciated on a straight line basis over 25 years even though they consist of several components that, in principle, have the same useful lives. The definition of standard components of the various categories of buildings has been done further to a professional expertise and study conducted with certain BPRs. Distribution of the components applies differently depending of the nature of buildings. Four families of building have thus been defined and for each one an average distribution per component has been established. Each component has been amortized over the useful life internally documented. Evaluation The Group has opted for the cost model. The reevaluation option set by IAS 16 has not been retained. After its entry as an asset, a tangible fixed asset must be recorded at its cost less the depreciation and total losses in value. However, according to IFRS 1 an entity can decide to assess a tangible fixed asset at the date of transition to IFRS at the fair value and used that value as an assumed cost at that date. This option has been retained for land reassessed by external experts LEASE CONTRACTS The companies in the Group can be the lessee or the lessor of rental contracts THE GROUP IS THE LESSOR Rentals granted by a company of the Group are analyzed as financial lease contracts (financial leases with purchase option and other form) or leasing contracts Financing lease contracts In a financial lease contract, the lessor transfers to the lessee almost all of the risks and benefits attached to the asset. It is analyzed as financing granted to the lessee for the purchase of property. The current value of payments owed according to contract, if necessary increased by the residual value, is recorded as a debt.

7 The net income from the operation and for the lessor or lessee corresponds to the amount of interest on the loan and is recorded in the profits and losses account under Interest and similar income. The rents cashed in are spread out over the duration of the financing lease contract by attributing them to depreciation of capital and interest so that the net income represents a constant rate of return over the outstanding assets. The interest rate used is the implicit interest rate of the contract. The depreciation on the said loans and debts, whether individual or collective, are subject to the same rules as those described for loans and debts Operating leases An operating lease is a contract through which almost all the risks and benefits of the asset leased are not transferred to the lessee. The property is entered into the assets of the lessor as fixed asset and linearly depreciated over the period of rental after deduction, where applicable, of the estimate of the residual value from the price of acquisition. Rents are recorded in their entirety on a straight-line basis over the lease term. The said rents and depreciations on assets are recognized in the profits and losses account under other income and expenses for other activities The group is the lessee Lease contracts signed by a Group company are analyzed as financial leases (and other) or operating leases Financing lease contracts A financial lease contract is considered to be property acquired by the lessee and financed by a loan. The rented asset is entered at its market value under the assets of the lessee balance sheet or it is lower, at the updated value at the implicit interest rate of the contract. As counterparty, the financial debt of an amount equal to the market value of the fixed asset or the updated value of the minimal payments is recorded in the lessee liabilities. Property is depreciated according to the same method as that applicable to fixed assets held in the own account after deduction, if applicable, from the acquisition price, of the residual value estimate. The duration of use retained is the duration of useful life of the asset. The financial debt is entered into the amortized cost Operating leases The property is not entered into the assets of the lessee. The payments made for operating leases are linearly recorded in the profits and losses accounts over the period of rental. liabilities at fair value per statement including derivatives and financial assets up for sale) or in the annotations to the financial statement for other financial assets and liabilities. Fair value is amount at which an asset can be exchanged, or a liability extinguished between two consenting parties well informed and acting in the framework of a competitive market. The fair price is the price quoted on the active market when such market exists or otherwise, the price determined internally via use of a valuation method incorporating the maximum amount of market information observable in coherence with the methods used by the players on the market PRICES QUOTED ON ACTIVE MARKET When the prices quoted on an active market are available, they are retained for determining the fair market price. Also valuated are the securities listed and derivatives on organized markets such as futures and options PRICES NOT QUOTED ON ACTIVE MARKET When the price of a financial instrument is not quoted on an active market the valuation is done via use of models generally employed by market plays (updating of future cash flows, Black- Scholes model for options). The valuation model incorporates the maximum amount observable market data: quoted market price of instruments of similar underlying values, interest rate curve, currency prices, implicit volatility, goods prices. The valuation originating from the models is carried out on prudent bases. It is adjusted to take account of the liquidity and credit risk to reflect the quality credit of the relevant financial instruments MARGIN OBTAINED WHEN NEGOTIATING FINANCIAL INSTRUMENTS The margin obtained when negotiating these financial instruments (day one profit):: Is immediately entered into the income if the prices are quoted on an active market or if the valuation model incorporates only observable market data; Is deferred and written to income over the duration of the contract when all the data is not observable on the market, or when the parameters originally non observable become so; the share of the margin not yet recognized is entered into the income NOT QUOTED SHARES The fair value of non quoted shares is determined by comparison with a recent transaction dealing with the equity of the relevant company carried out by an independent third party under normal market conditions. In the absence of this type of reference, the valuation is executed either based on techniques normally employed (updating of future cash flows) or on the basis of the quota of the net asset of the Group calculated based on the latest available information. The shares whose book value is less than MAD 1 million are not subject to reassessment LOANS AND DEBTS, FINANCING AND GUARANTEE COMMITMENTS LOANS AND DEBTS The loans and debts category includes customer loans and interbank transactions by the Group, and Group stakes taken out in syndicated loans. The loans and debts are initially assessed at their fair value that generally is the net amount originally disbursed and include the origination costs directly chargeable to the operation, as well as certain commission paid (administrative charge, participation and commitment commissions) considered as an adjustment of the actual yield on the loan. The loans and debts are assessed at a later date at the depreciated cost and the interests and cost of transactions and commission are included in the initial value of the loans participate in the formation of the outcomes of these operation throughout the duration of the loan, calculated according to the effective interest rate method. The commissions paid on financing commitments prior to the granting of a loan are differed and then integrated at the value of the loan at the time of assignment. Commissions paid on the financing commitments with a low probability to result in the drawing of a loan, or with uses that are random in time and amount are linearly spread out over the duration of the commitment FINANCING COMMITMENTS Financing commitments are entered at fair value which is generally the amount of the commitment commission paid. They are recorded in compliance with aforementioned rules. If required a risk provision is entered if it is found that the said commitment will lead to a probable loss due to failure to pay by the debtor COMMITMENTS ON GUARANTEES ISSUED The guarantee commitments are entered at fair value, which is generally the amount of the guarantee commission paid. The said commissions are then entered at the prorata temporis over the period of guarantee. A provision for risks is entered, if necessary, if it occurs that the said commitment will lead to a probable loss, in particular owing to failure to pay by the debtor DETERMINATION OF FAIR VALUE 2.7. SECURITIES The securities held by the Group are classified into three categories: Financial assets at fair value per statement; Available-for-sale financial assets; Held-to-maturity investments FINANCIAL ASSETS AT FAIR VALUE PER STATEMENT The category of financial assets at fair value per statement includes: Financial assets held for transactions; Financial assets the Group has chosen via the option of entering and evaluating at fair price per statement right from the outset, as this option makes it possible to obtain more relevant information. Securities classified in this category are initially entered at their fair price and the transaction costs are directed recorded in the profits and losses account. At the balance sheet date, they are measured at their fair price and the changes in the fair value, including accrued interest for fixed income securities, are recognized in the income statement under Net gains or losses on financial instruments at fair value through profit or loss. Likewise, dividends from variable-income securities and realized capital gains or losses are recorded under this heading. Assessment of credit risk on these securities is included at their fair price AVAILABLE-FOR-SALE FINANCIAL ASSETS The category of available-for-sale financial assets includes fixed or variable income securities not falling into the two other categories. Securities in this category are initially entered at fair price, including transaction fees when of significant amount. At the date of the statement they are assessed at fair price and the fair price changes, apart from the coupon for fixed income securities, are listed in shareholders equity under unrealized or deferred gains and losses. The rules of evaluation of fixed or variable income not quoted on a regulated market are internally formalized and adhered to from one statement to another. Upon transfer of securities, the said unrealized gains or losses recorded as shareholders equity are entered into the profits and losses account under net gains or losses on available-for-sale assets" GENERAL PRINCIPLES All the financial instruments are assessed at their fair value either in the balance sheet (assets and

8 The income recorded according to the effective interest rate method on fixed income securities in this category are listed under interest and similar income in the profits and losses account. The dividends paid on variable income securities are entered under net gains or losses on available-for-sale financial assets when the Group s right to receive them is duly established HELD-TO-MATURITY INVESTMENTS The category of held-to-maturity investments includes fixed or determined income securities with fixed maturity that the Group has the intention and the capacity to hold until the said maturity. The interest rate risk coverage eventually established in this category of securities is not eligible for the coverage as spelled out by the IAS 39 standard. Held-to-maturity securities are entered at cost amortized according to the effective interest rate method integrating the amortization of premiums and losses corresponding to the difference between the acquisition value (including the transaction costs if significant) and the value of reimbursement of the said securities. The revenues gained on these securities are listed under interest and similar income in the profits and losses account REPO-TYPE AND LOAN OPERATIONS/SECURITIES BORROWING The securities provisionally transferred in the event of a repurchase agreement remain entered in the Group balance sheet in their original portfolio. The corresponding liabilities are entered under the appropriate debt title. Nevertheless, for repurchase agreement operations initiated by transaction activities, the corresponding liability is entered under financial liabilities at fair value per statement". The securities acquired provisionally in the event of a repurchase agreement are not entered into the Group balance sheet. The corresponding debt is entered under loans and debts except for repurchase agreements initiated by transaction activities for which the corresponding debt is recorded under financial assets at fair value through profit or loss. Securities lending transactions do not result in de-recognition of securities loaned and securities borrowing transactions do not result in the recognition of securities borrowed in the balance sheet excluding where securities borrowed are then sold by the Group. In this case, the obligation to deliver the securities on the maturity of the borrowing is materialized by a financial liability presented on the balance sheet under Financial liabilities at fair value through profit or loss" DATE OF ENTRY AND DERECOGNITION The securities are entered in the balance sheet at the date of settlement and delivery. During these timeframes, the consequences of the fair price changes are taken into account depending on the category under which they are classified. These operations are kept in the balance sheet until discontinuance of the Group s rights to receive the flows connected thereto or the Group has substantially transferred all the risks and benefits associated with them. Then they are derecognized and the gains and losses on disposals are listed in the statement under the appropriate heading OPTIONS RETAINED BY GROUPE BANQUE CENTRALE POPULAIRE The options retained for classification of the various securities portfolios are as follows : Financial assets at fair value per statement; Transaction securities Derivatives Available-for-sale financial assets; Treasury bills classified as investment securities Non quoted Moroccan bonds Mutual funds securities held (securitization) Mutual funds and shares Reclassified treasury bills of investment securities Held-to-maturity investments; Investment securities (apart from treasury bills reclassified AFS) Treasury bills for low-cost housing classified as investment securities CURRENCY OPERATIONS MONETARY ASSETS AND LIABILITIES IN CURRENCY Monetary assets and liabilities correspond to the assets and liabilities to be received or paid for a determined or determinable cash amount. Monetary assets and liabilities in currency are converted into the functional currency of the relevant entity of the Group at the closing price. The exchange rate differences are entered into the income with the exception of exchange rate difference concerning financial instruments designated as instruments for coverage of future revenues or coverage for net investments in currency which, in this event, are recorded as shareholders equity. Future exchange rate operations are assessed at the price of the remaining forward term. Conversion differences are recognized in income except when the operation qualifies as cash flow hedges. In this case, the conversion differences are recognized in shareholders equity for the efficient portion of the hedge and recognized in profit or loss in the same way and same periodicity as the income from the hedged transaction NON MONETARY ASSETS DENOMINATED IN FOREIGN CURRENCIES The exchange differences regarding non monetary assets denominated in foreign currencies and assessed at fair price (variable income securities) are entered as follows: They are recognized in income when the asset is classified under financial assets at fair value through profit or loss. They are recognized in shareholders equity when the asset is classified under available-for-sale financial assets unless the said asset is designated as a hedged item in a fair value hedge; in which case, the exchange rate differences are recognized in income. Non monetary assets not evaluated at the fair price remain at their historic exchange rate IMPAIRMENT OF FINANCIAL ASSETS IMPAIRMENT ON LOANS, DEBTS AND THE LIKE Scope: Held-to-maturity financial assets, loans and debts, and financing and guarantee commitments. Depreciation is accorded to credits and on held-to maturity financial assets as soon as there is an objective indication of a loss in the measurable value in connection with an event occurring after the issuance of the loan or acquisition of the asset. The analysis of any existence of impairment is first performed at the individual level and afterwards at the portfolio level Individual impairment Provisions concerning financing and guarantee commitments given by the Group follow similar principles. Individual impairment is measured as the difference between the book value before depreciation and the updated value at the effective interest rate of components deemed to be recoverable, in particular guarantees and perspective for collection of principal and interest. Depreciation is entered into the profits and losses account under cost of risk. Any subsequent re-appreciation owing to an objective cause occurring after entry of the depreciation is recognized in the profits and losses account under cost of risk. As of impairment of the asset, the heading entitled interest and similar income of the profits and losses account records the theoretical remuneration of the net book value of the asset calculated at the original interest rate used for updating the flows deemed to be recoverable Collective impairment Assets that are not individually impaired are subject to risk analysis per homogeneous portfolio. This analysis makes it possible to identify the groups of counterparties that, given events occurring since the establishment of the loans, have collectively reached a probability of default at maturity supplying an objective indication of loss of value for the portfolio as a whole, but without the said loss at this juncture being individually ascribed to the various counterparties making up the portfolio. The analysis also provides an estimate of the losses concerning the relevant portfolios taking account of the trend in the economic cycle over the period under analysis. Modifications in the value of portfolio depreciation are recorded in the operating account under cost of risk". In accordance with the provisions of IFRS standards, it is possible to use expert opinion to correct the collection flows resulting from the statistical data and adapt them to the conditions in effect at the time of the statement IMPAIRMENT OF AVAILABLE-FOR-SALE FINANCIAL ASSETS "Available-for-sale financial assets" are individually impaired through profit or loss in the accounts when there is objective evidence of lasting impairment resulting from one or more events taking place since the time of acquisition. In particular, with regard to viable income securities listed on an active market, a prolonged or significant drop in the price below its acquisition cost constitutes objective evidence of impairment. Impairment on a fixed income security is entered under cost of risk and can be recognized in the income statement when the market value of the security has appreciated due to an objective cause occurring after the last depreciation. Impairment on a variable income security is entered under net gains or losses on available-forsale financial assets and can be recognized in the income statement, if required, only at the date of transfer of the security. Any subsequent decline in fair value is recognized in profit as an impairment expense OPTIONS RETAINED BY GROUPE BANQUE CENTRALE POPULAIRE For individual provision of loans (individually significant debts): All outstanding debts qualified as major cases are reviewed on a case-by-case basis to determine the collection flows expected over a 5 year period and therefore to calculate the IFRS provision by the difference between the gross amount of the debt and the updated value of the flows at the original EIR. For individual provision of loans (individually non significant debts): Outstanding debts qualified as minor cases are subject to statistical modeling (modeling of historic collection flows) per homogeneous risk class. For collective provision: The Group has defined identification criteria for sensitive debts and has developed statistical models to calculate the collective provisions based on the historical records of transformation of sensitive debts into outstanding debts. The collective provisioning methodology takes inspiration from the Basel provisions.

9 2.10. DEBTS REPRESENTED BY A SECURITY AND OWN SHARES DEBTS REPRESENTED BY A SECURITY The financial instruments issued by the Group are qualified as debt instruments if there is a contractual obligation for the Group company issuing the said instruments to issue cash or a financial asset for the security holder. This also applies in the event where the Group can be obliged to exchange assets or financial assets or liabilities with another entity at potentially unfavorable conditions or to deliver a variable number of its own shares. The issued debts represented by a security are initially entered at issue value, including transaction costs, and are then assessed at amortized cost using the effective interest rate method. The bonds convertible or redeemable for shares are considered as hybrid instruments comprising at the same time a debt and equity component determined at the time of initial recognition of the transaction OPTIONS RETAINED BY GROUPE BANQUE CENTRALE POPULAIRE Shares: Further to the updating of the internal regulations of BPRs, these banks henceforth reserve the unconditional right to respond favorably to refund requests from holders of shares. This new provision means that a share of BPRs' capital cannot be reclassified under financial liabilities OWN SHARES Own shares held by the Group are deducted from the consolidated shareholders equity, irrespective of the purpose for which they are held, and the earnings related thereto are eliminated from the consolidated income statement DERIVATIVES AND INCORPORATED DERIVATIVES All the derivative instruments are entered into the balance sheet at their fair price GENERAL PRINCIPLE The derivatives are recorded at fair value in the balance sheet under financial assets and liabilities at fair value through profit or loss. They are recorded as financial assets when the fair value is positive and as liabilities where it is negative. Realized and unrealized gains and losses are taken to the profit and loss account under Net gains or losses on financial instruments at fair value through profit or loss DERIVATIVE INSTRUMENTS AND HEDGE ACCOUNTING The derivatives entered into under hedge accounting relationships are designated depending on the objective set. Fair value hedging is used to cover the interest-rate risk for assets and liabilities at a fixed rate. Cash flow hedging is used to cover the interest-rate risk for assets and liabilities at a variable rate and the foreign exchange exposure arising from highly probable future cash flows in currencies. When a hedging relationship is put in place, the Group establishes formal documentation: designation of the instrument and hedged risk, strategy and nature of the hedged risk, designation of the hedged instrument, procedures for assessing the effectiveness of the hedging relationship. In compliance with this documentation, at the time of initiation and at least every six months, the Group assesses the prospective and retrospective effectiveness of the hedging relationships put in place. Retrospective effectiveness testing aims at making sure that the relation between the effective variations in value or outcome of the hedging derivatives and those of the instruments covered is between 80 and 125%. Prospective testing aims at making sure that the variations in value or outcome of derivatives expected throughout the residual life of the hedge adequately compensate for those of the hedged instruments. With regard to the highly probable transactions, the character thereof is evident from the existence of historical records on similar transactions. In the event of interruption of the hedging relationship or when the latter no longer meets the effectiveness tests, the hedging derivatives are transferred to the transaction portfolio and entered according to the principles applying to the said category EMBEDDED DERIVATIVES Derivatives embedded in financial instruments are separated from the value of the host instrument when the economic characteristics and risks of the embedded derivative instrument are not closely related to those of the host contract. Derivatives are accounted for separately as derivatives and the host contract is accounted for depending upon its classification. Nevertheless, when the combined instrument is recognized in its entirety under financial assets and liabilities at fair value through profit or loss, no separation is made COMMISSIONS ON SERVICE PROVISION Commissions on service provision are accounted for as follows : Commissions that are an integral part of the effective return of a financial instrument : administrative fees, commitment fees, etc. Such commissions are dealt with as an adjustment to the effective interest rate (except when the instrument is evaluated at fair value through profit or loss). Commissions remunerating ongoing services: rental of safes, custody fees for securities held on deposit, telematic subscriptions or bank cards, etc... They are spread in profit or loss over the duration of the service, gradually as the service is provided. Commissions remunerating a specific service: securities exchanges, collection fees, foreign exchange commissions, etc. These are recognized in profit or loss when the said service has been provided EMPLOYEE BENEFITS General principle: The entity shall recognize the legal obligation arising from the formal terms of the defined benefit plan, but also any implied obligation arising from its use. The said uses generate a constructive obligation where the entity has no realistic alternative but to pay staff benefits. An example of a constructive obligation is where a change in the entity's informal practices would cause unacceptable damage to its relationship with employees. Typology of employee benefits: The benefits granted to the employees of Groupe Banque Populaire are classified into four categories: Short term benefits such as wages, annual vacation, incentive schemes, profit sharing, employer matching contribution; Long term benefits including seniority bonuses and retirement benefits; Termination benefits; Post-employment benefits including insurance benefits for retired employees SHORT-TERM BENEFITS The Group records an expense when the services provided by staff members have been used in return for the benefits granted LONG-TERM BENEFITS Long term benefits refer to benefits, other than post-employment and termination benefits, which do not fall due wholly within twelve months of the end of the financial period in which the employees render the related service. This particularly concerns seniority bonuses and retirement benefits. These benefits are covered by provisions in the account of the year to which they relate. The actuarial valuation method is similar to the one applicable to post-employment defined benefits but actuarial gains and losses are recognized immediately. In addition, the effect associated with potential plan changes considered as related to past services is recognized immediately TERMINATION BENEFITS Termination benefits are payable when employment is terminated by the Group before the normal retirement date, or whenever an employee decides to accept voluntary redundancy in exchange for these benefits Termination benefits payable more than twelve months after the balance sheet date are discounted POST-EMPLOYMENT BENEFITS The Group distinguishes between the definite contribution plans and definite benefit plans. Defined contribution plans are not representative of a commitment for the Group and are not covered by a provision. The amount of contributions called in during the year is recognized in expenses. Only the plans qualified as definite benefit plans represent a commitment for the Group, which must be valued and funded. Classification in one or other of these categories is based on the economic substance of the plan to determine whether the Group is required or not, by the terms of an agreement or by a constructive obligation, to deliver the benefits promised to staff members. The main defined benefit plan identified by the group is that of the medical coverage for retired employees and their families. Post-employment defined benefits are determined based on actuarial calculations incorporating demographic and financial assumptions. The defined benefit obligation is determined using the actuarial assumptions retained by the Group and the Projected Unit Credit Method. This valuation method takes account of a number of factors such as demographic assumptions, early retirements, wage increases and discount and inflation rates. The value of contingent plan assets is then deducted from the benefit. When the amount of the plan assets surpasses the value of the benefit, an asset is recognized if it represents a future economic benefit for the Group taking on the form of a reduction in future contributions or of an expected reimbursement of some of the amounts paid into the plan. The measurement of the obligation arising from a plan and of the value of its plan assets can change considerably from one fiscal year to the next depending on the changes in actuarial assumptions and result in actuarial gains and losses From 30/06/2013, in accordance with the revised IAS 19 standard, the group no longer applies the so-called "corridor" method to enter the actuarial gains and losses under these commitments. The annual expense recognized as personnel costs under definite benefit schemes is representative of the rights acquired over the period by each employee corresponding to the cost of services rendered, of the financial cost relating to the discounting of liabilities, of the expected returns on investments. The calculations made by the Group are reviewed periodically by an independent actuary.