Moroccan Banks Outperform French Counterparts with 11% Profitability

In 2018, 14 billion were earned by the 9 major Moroccan banking groups, compared to 9 billion 10 years ago, according to Medias24.com. This staggering figure is close to 11 billion dirhams, even if the scope is reduced to banking activity carried out in Morocco. The equity of these banking groups is estimated at 128 billion dirhams, with a profitability rate of 10.8%, compared to 9.8% in 2016 (124 billion in 2016). Given these results, it appears that shareholders are well benefiting from their investments, despite the constraints and regulations of the financial market.

Taking into account this rate displayed by Moroccan banks, the result is surprising with the 2017 data of the French bank. The gap is dizzying. Even if these banks have achieved 30.5 billion euros in profit, their return on equity is limited to 6.2%, compared to 10.8% in Morocco.

As for the net interest margin, it is more interesting in Morocco than in France. Proof of this, it is at 1.86%, without the other activities, compared to 3.87% in Morocco. By integrating these activities, namely securities and interbank cash, the overall margin drops to 1.14% against 2.98%, or almost 3 times that of French banks.

Despite the high Moroccan net interest margins, they do indeed bear a higher risk. The non-performing loan rate stands at 7.3% of outstanding loans, compared to 3.4% in France. These non-performing loans are covered by provisions up to 69% in Morocco, compared to 61% in France. But ultimately, and despite a high non-performing loan rate, Moroccan banks manage to generate high profitability of 10%. In the end, 60% of these profits are pocketed each year by shareholders in the form of dividends, the same source notes.