The third quarter (Q3) of 2024 brought a notable surge in Morocco’s monetary aggregate, reflecting an economy in transition. According to Bank Al-Maghrib’s (BAM) latest report on monetary policy, the broad money supply (M3) grew by 6.7% in Q3, a sharp increase from 4.6% in the previous quarter.
This growth was primarily driven by a robust 10.2% rise in demand deposits, fueled by an 8.3% increase in household deposits. Term deposits, which had previously declined by 4.6%, also made a modest recovery with a 1.5% increase, largely supported by a dramatic rebound in private company deposits—up 24.7% after a sharp drop of 26.3% earlier.
Economic momentum boosted by banking credit
Banking credit showcased solid growth of 4.9% in Q3, compared to 3.2% in the previous quarter. This was buoyed by a recovery in loans to private companies, which increased by 2% after a 0.7% decline, and a notable 14.9% rise in financing for public enterprises, up from 5.5%.
In the real estate sector, loans for property development surged by 5.9%, a significant leap from the 1.1% growth seen previously. Equipment loans also posted impressive growth at 9.4%.
For households, consumer credit ticked upward slightly, growing by 1.2%. However, housing loans remained stable at 1.3%. Meanwhile, individual entrepreneurs faced mounting challenges, as their financing dropped sharply by 7.2%.
At the sectoral level, the Construction and Public Works industry saw financing grow by an impressive 22.4%, while Extractive Industries experienced a 20.7% increase. However, credits for the Trade sector and Miscellaneous Manufacturing Industries fell by 5.9% and 7.6%, respectively.
Troubling rise in non-performing loans
Despite these broadly positive trends, non-performing loans (NPLs) rose by 3.4%, bringing the overall NPL ratio to 8.6% of total banking credit. The private non-financial sector reported a concerning ratio of 12.6%, while households faced a rate of 10.7%.
Liquid investment aggregates saw a 13% rise, though this marked a slowdown compared to the 14.7% growth recorded in the previous quarter. Treasury bonds and fixed-income securities issued by collective investment schemes showed slower growth, while equity and diversified mutual fund investments skyrocketed by 25%, up from 18.9% in Q2.
Economic outlook: A balancing act
The Q3 figures illustrate Morocco’s pursuit of economic balance, with monetary growth and banking credit providing critical support to economic activity. However, challenges remain, particularly in managing NPLs and addressing sectoral disparities in financing.
With household deposits continuing to grow and private-sector credit showing signs of recovery, the outlook for the year’s final quarter appears cautiously optimistic. Yet, a focused approach will be essential to address financing gaps for households and individual entrepreneurs, while monitoring the evolution of non-performing loans.
