Fitch Warns of Rising Non-Performing Loans in Moroccan Banking Sector

According to a report by the agency published on July 26, the quality of banks’ assets deteriorated in the first quarter of 2023, with an increase in the ratio of non-consolidated non-performing loans to 8.7%, compared to 8.4% at the end of 2022.

However, Fitch Ratings assures that this situation of loan deterioration should be manageable for Moroccan banks. They have not only strengthened selectivity in granting loans to minimize risk, but have also maintained stable capitalization. The report points out that the Tier 1 capital ratio stands at around 10% for the seven largest banks and should increase slightly by the end of 2023.

Furthermore, the central bank (Bank al-Maghrib) had previously noted an evolution of non-performing loans in its 2022 annual report, noting a 4.2% decrease to 88.8 billion Moroccan dirhams (9.08 billion $). Despite this trend, Moroccan banks have maintained a prudent approach by increasing provisions for non-performing loans by 5.7% and allocating 13.3 billion dirhams to general provisions to cover sensitive loans, not classified as non-performing loans.