BCP: Alpha Mena changes its recommendation on the stock from 'accumulating' to 'lightening'

BCP: Alpha Mena changes its recommendation on the stock from ‘accumulating’ to ‘lightening’

The group posted a good recovery in its profits in the first quarter of 2021 thanks to good margins and a drop in the cost of risk. This trend should continue for the rest of the year. The group operates in a complicated global context, marked by the slowdown in loan production and faces the difficulty of generating profitable external and organic growth. The litigation rate is higher than the market average.

In a note published this week, the research company Alpha Mena returned to the performance of the BCP group during the first quarter of 2022. The group posted encouraging indicators during the first three months of the year, in particular with a good recovery in profitability and net income up 66% to 831 million dirhams. GNP meanwhile only increased by 2% to 4.9 billion dirhams.

However, it should be remembered that the group is operating in a generally unfavorable environment this year, marked by uncertainty and galloping inflation. The research company has revised its forecasts for the stock and anticipates a downside of 5% to 242 dirhams. The research firm now recommends lightening the stock in portfolios after previously recommending it for accumulation.

A tense economic context

A notable performance in a banking environment still affected by the repercussions of the Covid pandemic and the impacts of the war in Ukraine. In YTD, the price of BCP fell by 9.2% to 255 dirhams at the end of the June 16 session. The fall in the price, like the market, began with the outbreak of the war at the end of February.

Source: medias24.com

This tense economic situation weighs on the national banks and in particular on the BCP and continues to affect the banking sector on the deterioration of the quality of assets. ” The Russian offensive in Ukraine has reduced growth prospects both in Morocco and internationally and challenged the banking sector notes Alpha Mena. The observed inflationary situation was moreover strongly catalyzed by this war. Growth forecasts in the country have been revised sharply downwards in 2022 with growth of 0.7% now expected against 2.9% initially.

Profitability that is consolidating this year but revenues that are complicated to generate

The improvement in the group’s NIGS in the first quarter of 2022 surpasses that of other banks in the market. Bank of Africa and Attijariwafa Bank had posted over the same period NPGS up by 9% and 20.2% respectively.

The bank notably improved its net income thanks to the good performance of commission margins and interest margins, up respectively by 3.4% to 875 MDH and 9.5% to 3.3 billion MAD. ” However, in terms of revenue growth, BCP ranks third penalized by lower market revenue ” emphasizes the research company. Indeed, they posted a drop of 34.8% to 480 MDH compared to the same period the previous year. It should be noted that the group’s profitability this year should however benefit from the fall in the cost of risk over the period after two years of strong caution. Moreover, over the first three months of 2022, the latter fell by 23% to 896 MDH.

The BCP group, like the rest of the sector, is facing the difficulty this year of generating growth on its revenues. Alpha Mena notes that ” in absolute terms, the figures for the sector point to a slowdown in credit production which should drag down the prospects for revenue growth while operating in a low interest rate environment “. With the deterioration of the economic climate, the group will be faced with an even more unfavorable context. ” Our unfavorable opinion also takes into account a modest asset quality in view of a higher litigation rate compared to other universal Moroccan banks. explains the research company.

The group will be able, with regard to its income, to capitalize on the activities of Vivalis. ” However, BCP’s real challenge is to ensure profitable (organic and external) growth that consumes little capital concludes Alpha Mena.

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