Fitch Downgrades Moroccan Banks, Citing Government’s Limited Support Capacity

The downward revision of the ratings concerns Attijariwafa Bank, Bank of Africa (BOA) and Crédit Immobilier et Hôtelier (CIH). "The ratings of the three banks have been downgraded one notch to "BB", reflecting the Moroccan state’s weaker capacity to provide support to banks in case of need," Fitch said in a note. These revisions follow the decline in Morocco’s sovereign rating from "BBB-" to "BB+", on October 23, 2020, due to the impact of the health crisis on the Moroccan economy and public and external finances, the Fitch note explains.

However, Fitch believes that "the government plans to inject around 7.5% of GDP in guaranteed loans into the economy, which is not insignificant." Regarding Fitch’s forecast, the Moroccan economy will have to contract by 6.5% in 2020 and the Treasury’s net debt will rise to 68.5% of GDP in 2021 from 56.4% in 2019, and remain stable in 2022. But the impact of the health crisis will not facilitate the debt stabilization efforts, the agency notes.

The same note indicates that "Attijariwata Bank and Bank of Africa are classified as domestic systemically important banks (D-SIBs) in Morocco," but Crédit Immobilier et Hôtelier, with a market share of around 4%, is not a D-SIB, the same source stressed.

For the record, Attijariwafa Bank has been elected for the second consecutive time, "Safest Bank in Morocco" by the American magazine, Global Finance, based on an assessment of the ratings of the 500 largest banks in the world.