Banking sector in Morocco: the reassuring diagnosis of Fitch Ratings

The New York rating agency has changed its outlook on the operating environment of Moroccan banks from “negative” to “stable”, believing that the risks induced by the pandemic on this sector “have sufficiently attenuated”, as it specifies it in its note distributed this Friday, February 18, 2022.

Fitch ratings delivered a rather reassuring diagnosis of the state of health of the Moroccan banking sector, which has shown itself to be resilient in the face of the effects of the Covid-19 pandemic on economic activity.

In analysis note released this Friday, February 18, 2022, the New York rating agency indicates that it has revised upwards its outlook on the operating environment of Moroccan banks, which has gone from “negative” to “stable”, after the review 5 establishments representing approximately 77% of the assets of the Moroccan banking system (Attijariwafa Bank, Bank of Africa, Crédit Immobilier et Hôtelier, Société Générale Marocaine de Banques and Banque Marocaine pour le Commerce et l’Industrie).

According to Fitch Ratings experts, this upgrade to the outlook for the Moroccan banking system “reflects our view that pandemic-induced risks to the operating environment have sufficiently mitigated with the opening of the economy and markets in Morocco. export from Morocco, and that, despite the current risks, the five banks will continue to provide resilient financial indicators in 2022″.

The agency believes that despite the impact of the crisis, the quality of the assets of the five banks examined remained “in line with expectations”, supported by the overall support measures taken by the Moroccan authorities in 2020 to combat the effects of the pandemic on the economy.

In addition, adds Fitch “while debt relief measures ended in 2021 for most borrowers, banks’ asset quality was supported by a strong rebound in GDP growth estimated at 6.2 % in 2021, after a contraction of 6.3% in 2020”. The agency even expects an improvement in the rate of unpaid receivables (unpaid loans/distributed loans), to settle at 11%, “thanks to better recovery of loans and the continued recovery of commercial activity. “.

The strong recovery in the profitability of the banking sector is also a source of satisfaction for the rating agency, thanks in particular to the fall in the cost of risk observed in 2021. ROE (Return on equity, an indicator that measures the profitability of capital that a company’s shareholders make available to it) of the five banks examined has thus increased from 5.5% in 2020 to more than 10% in 2021.

For 2022, the New York agency expects further strengthening of profitability, although a return to pre-pandemic return on equity (around 12%) does not yet seem on the agenda. .

Another “key positive element” noted by Fitch Ratings is that funding and liquidity conditions have proven stable in 2020-2021 in Morocco. Thus, continues the agency, “there was no outflow of deposits and the national capital markets continued to function well”. Customer deposits, which represent the bulk of Moroccan bank financing, even increased by 4% in 2021.

Fitch nevertheless noted certain elements that could weigh negatively on the Moroccan banking sector in 2022. The agency cites in particular a lower economic growth than expected (Fitch forecasts GDP growth of 3.2%), a delayed recovery in tourism, a “vital” sector of the national economy, as well as “high” inflation and unemployment rates of respectively 1 .8% and 11.2% in 2022.

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