Moroccan Banks Brace for Surge in Bad Loans Amid COVID-19 Crisis

A decline in the operating activity of customers as well as an increase in non-performing loans. This is what some banking institutions expect, despite the support measures in place.

A survey conducted between April 11 and May 12, 2020 by the Moroccan representation of the Roland Berger firm, reveals that some banks mainly fear an increase in non-performing loans due to the Covid-19 pandemic. This is due to the inability of customers to meet their commitments.

The commercial activity of the banks’ customers will face a drop in new production, pressure on the interest margin and a decrease in certain commissions related to services offered free of charge during the lockdown, explains Amine Tazi, partner at the Roland Berger firm, in an interview with the local media Finances News Hebdo.

The implementation of certain government measures taken in this direction will allow the banks’ customers to cope with liquidity shocks and strengthen their cash flow needs. However, Amine Tazi warns that these measures will not be enough to limit the expected operating losses at the level of companies.

However, Amine Tazi points out that the impact of Covid-19 on banks varies depending on the strengths and weaknesses of the strategies and organizations of each of these institutions, adds the same source.