SOCIÉTÉ GÉNÉRALE
Fitch Ratings has affirmed
Key Rating Drivers
SGMB's ratings are based on potential support from the bank's 57.65% shareholder,
Strategically Important Subsidiary: SGMB has a moderate franchise in
Strong Ability to Support: SGMB is small relative to SG, representing less than 1% of consolidated assets at end-1H23, and support would be manageable for SG.
Strong Integration with SG: SGMB is highly integrated with SG through significant board representation, the appointment of senior executives, and oversight by SG of SGMB's credit, country, market, operational and liquidity risks. In addition, the subsidiary benefits from funding lines from SG as well as the parent's procedures, systems, tools and branding.
No Record of Extraordinary Support: SGMB has never required extraordinary support from SG. However, instances of ordinary support from SG include the provision of counter-guarantees and foreign-currency funding, when required.
High Impaired Loans: SGMB's impaired loans/gross loans ratio of 16.5% at end-1H23 was significantly above most domestic rated peers. This is partially due to SGMB's more stringent classification policies and the bank's conservative recognition of impaired loans. We expect the impaired loans ratio to reduce on the back of recoveries and write offs but remain above sector average.
Good Profitability: Operating returns on risk-weighted assets averaged 1.8% over 2020 to 1H23. Earnings are supported by good margins and good cost management. We expect profitability to further improve in 2024 on the back of lower loan impairment charges and greater cost discipline.
Reasonable Capitalisation: SGMB's common equity Tier 1 (CET1) ratio at end-1H23 compared well with peers and displays reasonable capital buffers. Unreserved impaired loans were a high 39% of CET1 capital; this reflects a high portion of collateralised lending that requires less provisioning.
Adequate Funding and Liquidity: Like its peers, SGMB is mainly funded by customer deposits. These are fully sourced in
Rating Sensitivities
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
A downgrade of SGMB's National Ratings could result from a multi-notch downgrade of SG's IDR or from a reduced propensity of SG to support SGMB, both of which we view as unlikely at present.
Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
SGMB's National Ratings are at the highest level on the national scale and cannot be upgraded.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
Public Ratings with Credit Linkage to other ratings
SGMB's ratings are linked to IDR of its parent, SG.
RATING ACTIONS
Entity / Debt
Rating
Prior
Societe Generale Marocaine de Banques
Natl LT
Affirmed
Natl ST
F1+(mar)
Affirmed
F1+(mar)
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VIEW ADDITIONAL RATING DETAILS
Additional information is available on www.fitchratings.com
PARTICIPATION STATUS
The rated entity (and/or its agents) or, in the case of structured finance, one or more of the transaction parties participated in the rating process except that the following issuer(s), if any, did not participate in the rating process, or provide additional information, beyond the issuer's available public disclosure.
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