Moroccan banks demonstrated exceptional resilience in the first quarter of 2024, recording a 32% increase in net profit compared to the previous year, according to a Fitch Ratings report published on July 22. This robust performance was achieved despite a 49% rise in loan loss provisions, primarily due to higher provisions from the three pan-African banks: Attijariwafa Bank (AWB), Groupe Banque Centrale Populaire (GBCP), and Bank of Africa (BOA).
The growth in net profit was supported by a substantial increase in trading revenues, benefiting from lower interest rates. In contrast, net interest income and fees experienced more moderate growth due to limited credit demand and increased competition.
Fitch Ratings forecasts mid-single-digit loan growth for 2024 and 2025, driven by lower interest rates, improved macroeconomic conditions, and the acceleration of major infrastructure projects related to the 2030 World Cup.
Moroccan banks’ profitability remains strong, with an average operating profit before depreciation of 4% of gross loans in the first quarter of 2024. This safety margin enables them to manage risks related to asset quality, which remains challenging with an average non-performing loan ratio of 10.3% at the end of 2023.
Despite the reduction of Bank Al-Maghrib’s policy rate to 2.75%, the impact on loan interest rates will be limited due to the long duration of loan portfolios. Nevertheless, Fitch Ratings anticipates a net profit growth of 15% to 20% for the sector over the 2024-2025 period, reflecting the solid standing of the Moroccan banking sector.
