Moroccan Banks Rebounded Despite Macro Challenges, Fitch Ratings

Fitch Ratings, a leading American credit rating agency, released on Wednesday its newest report on Morocco’s seven largest banks, showing that Moroccan banks were able to bounce back and show resilience amid challenging global and national macroeconomic conditions.
The agency gave a positive outlook for 2023, on the back of reasonable post-pandemic credit fundamentals.
It, though, projected somehow modest business-related prospects for these banks in 2023.
Higher interest rates prompted a 1% drop in unconsolidated credit: “Banks unconsolidated credit fell 1% in May as higher interest rates dampened demand from corporates and households, while banks became more selective in their lending to reduce credit risk,” wrote the report.
Moroccan banks’ asset quality deteriorated in the first quarter of 2023, with impaired loans ratio rising to 8.7% (end-2022: 8.4%). Figures are forecast to plunge further in 2023, but nothing the banks’ conservative lending strategy cannot handle.
In 2022, Banks’ profitability barely increased, with the average operating profit/risk-weighted assets proportion rising to 1.8%. Lower impairment charges (LICs) and flat net interest margins were credited for this increase. Profitability is expected to improve in 2023 due to the decline in LICs and higher interest rates impacting loan rates.
Capitalization at the seven major banks is constant at roughly 10%, with a little increase predicted by the end of 2023.