Moroccan Banks Remain Resilient Amid Economic Challenges, Central Bank Reports

Despite the difficult economic context, the banking sector has shown solidity in terms of activities, profitability, liquidity and capital adequacy, the central bank notes in its report, noting however a slowdown in banking activity. "In 2023, the total agreed assets of banks reached 1,789 billion dirhams, up 4.8% compared to 7.6% a year earlier, or 122% of GDP compared to 128% in 2022, due to the slowdown in both credit and bank deposits."

Bank Al-Maghrib (BAM) also points out that households have captured the largest share of the banks’ credit portfolio, i.e. "29%, accumulating an outstanding amount of 319 billion dirhams, followed by ’financial activities’, with an amount of 158 billion dirhams, i.e. a share of 14%, ’other services’, with an amount of 156 billion dirhams, i.e. a share of 14%, and manufacturing industries, with an amount of 109 billion dirhams representing 9%". The report also notes an improvement in the Herfindhal-Hirschman Index (HHI, which ranges from 0 to 1, ed.) in 2023 compared to 2022, from 0.138 in 2022 to 0.134 in 2023. A downward trend explained by the sectoral diversification of the credit portfolio dedicated to companies.

As for non-performing loans, they recorded "a rebound of 6.7% in 2023, reaching a total of 94.8 billion dirhams", the report notes, indicating that "the average default rate in the banking sector slightly increased from 8.4% in 2022 to 8.5% in 2023". In detail, household non-performing loans increased by 6.5%, reaching 41.8 billion dirhams, while those of non-financial companies rose by 6.9%, to nearly 70 billion dirhams. "Their sectoral distribution shows an increase of 3.1% in the primary sector, representing respectively 21.7% and 8.9% of the credits granted to the fishing and agriculture sectors," BAM specifies in its report.

The amount of specific provisions, for its part, "reached nearly 64 billion dirhams, recording an increase of 5.3%, compared to 5.8% in 2022, stabilizing the coverage rate around 68%", the document informs, adding that the banks’ general provisions have increased by 681 million dirhams to stand at 13.9 billion dirhams. In 2023, the net income of banks increased by 20.4%, a rise driven by the improvement in market operations which increased by 158%, the central bank also indicates, noting that bank revenues also increased by 16.5% to 58.4 billion dirhams in 2023. "The profitability of banks has improved with a return on equity (ROE) ratio of 8%, compared to 6.9% the previous year," BAM concludes.