BMCE says London-based wholesale banking unit to break even

CASABLANCA, March 31 (Reuters) - Moroccan bank BMCE's (BMCE.CS) London-based wholesale banking subsidiary Medi Capital Bank will at least break even this year as start-up costs fall and it picks up more business from Africa, the company said.

Medi Capital Bank was established in 2007 to offer finance and advisory services focused on Africa. Much of its business comes via Bank of Africa, a continent-wide lender in which BMCE holds a 42 percent stake.

Medi Capital Bank made a loss last year due to start-up costs, the global financial crisis and one-off provisions.

Jelloul Ayad, head of BMCE's investment banking operations, said the drop in the value of the pound affected Medi Capital's capacity for development, but he was optimistic for 2009.

"We expect in 2009 that we will return at least to break-even," he told analysts and reporters in Casablanca late on Monday.

He said the core business of Medi Capital was financing trade and the bank had no exposure to sub-prime mortgages or derivatives.

"The trade flows that are starting to come to Medi Capital Bank are extraordinary and it's just the beginning," he said.

Casablanca-based BMCE has pushed harder than most Moroccan rivals into African markets in recent years, using cash from a fast-growing retail bank to expand across the continent via Bank of Africa.

BMCE's revenues climbed 41 percent last year to 6 billion dirhams ($712.4 million) while net profit was up 46 percent to 1.4 billion dirhams.

Provisions for falling financial markets in Morocco and Europe and the drop in the pound pulled BMCE's net income down by 301 million dirhams, the bank said.

BMCE has opened 270 branches in Morocco in the past four years to take advantage of surging demand for banking services as falling interest rates allow more Moroccans to buy homes, cars and consumer goods on credit.

Economic growth in the north African kingdom slowed to 4.8 percent in the fourth quarter of 2008 from 5.4 percent in the third. The central bank expects the economy to grow by around 5 percent this year, thanks partly to strength in agriculture.

BMCE said it would keep opening new branches in Morocco and forecast that its African subsidiaries would making a growing contribution to its results.

French bank Groupe Credit Mutuel CIC doubled its stake in BMCE to 20 percent last year. ($1 = 8.422 Moroccan dirham) (Reporting by Tom Pfeiffer; Editing by Hans Peters)