Moroccan Banks Restrict Household Loans Amid Economic Uncertainty

At the bank level, the mobility observed in July with the deconfinement and the gradual resumption of activities in early June 2020 quickly plummeted in August with the increase in contamination cases. Thus, household demand has declined in recent months, as households were forced to conform their budget and limit themselves to necessary expenses, thus creating a need to save to cope with the possible problems of an uncertain future, reports La Vie éco.

For their part, banks, fearing an increase in defaults, no longer grant loans to clients with a so-called weak profile, given the clearly visible deterioration of the borrowers’ financial situation, with an increase of around 15.5% in August in loans presenting default risks. According to some professionals, this rate will rise by the end of 2020, with no improvement in 2021.

Thus, to limit the drawbacks, the banking institutions, indicates the same source, must settle the situation amicably by dealing with each case individually, restructure the loans of clients in difficulty, and grant a grace period to those who have lost their jobs, in order to avoid legal proceedings and the associated expenses.

Nevertheless, if high-risk debtors are eliminated, other profiles continue to be pampered by banks. In addition, the latter have taken the responsibility of financing up to 107% of the property being financed, including notary fees, registration, renovation or development, or even furnishing, concludes the economic magazine.