Moroccan Banks Face 14% Surge in Non-Performing Loans Amid COVID-19 Crisis

Covid-19 obliges, the non-performing loans which were 69 billion dirhams at the beginning of January, found themselves at 79.6 billion dirhams ten months later. The statistics of Bank Al Maghrib, at the end of October, show two records: the evolution of non-performing loans and their level compared to the stock of loans.

Regarding the evolution, non-performing loans have risen by 14% since the beginning of the year and for the first time in the banking sector. The evolution has been more noticeable among businesses, with 11.7% of non-performing loans since the beginning of the year and among households, more affected, with an evolution of non-performing loans of more than 15% over the same period. As for the NPL ratio, it is 8.5%, or more than two points compared to the average recorded over the last decade.

Compared to the banks’ forecasts, these figures seem surprising, two bankers contacted by Médias24 said. "At 8.5% non-performing loan rate, I think we are not in the dramatic situation that was expected in April," said one of the bankers, and confirmed by the second, noting that "the figures from Bank Al Maghrib currently only take into account the actually unpaid claims, but do not include the deferred maturities," he explained. "The real figures will thus only be visible in the monetary statistics in December, or even in January 2021," and BAM is well aware of this, he hammered.

According to one banker, "we cannot continue to keep firms that are supposed to die on life support, unless a rapid economic recovery is initiated," but this will not be possible, given the forecasts of public officials and economists around the world.