If there remains one sector with attractive valuations on the stock market, it is the banking sector. In a new note, AGR analysts forecast average annual growth in profits of listed banks of 13.5%, to exceed 22 billion dirhams within two years. This forecast has been significantly revised upwards, whereas a few months ago it was estimated at only 8.3%.
Several factors explain this revision in a generally resilient macroeconomic context. Listed banks confirm the improvement in their growth profile, going from a CAGR of their NBI of 3.7% observed before the health crisis to 7.5% over the forecast period 2023-2026E. This scenario is supported by several elements, the most important of which are:
- The new investment dynamic in Morocco which has a positive impact on the evolution of equipment credits. The latter showed growth of 14.2% at the end of October 2024 after 13.0% in 2023. At the same time, the solid recovery in construction starts (+32.1% in H1-2024), supported by the Direct Housing Assistance announces the great return of housing credit from 2025E.
- The positive direction of market activitiesthanks on the one hand to the start of a new accommodating monetary cycle in Morocco and, on the other hand, to the accelerated democratization of hedging products among SMEs.
- Continuous optimization of the average cost of the resource through the sustained growth of non-interest-bearing deposits. Thanks to a CAGR of 7.3% of “social base” resources over the last three years, these deposits now represent nearly 70% of total resources.
- The downward trend in the operating ratiowhich demonstrates the proven ability of top management to rationalize costs. Driven by the growing adoption of digital platforms by customers, the sector’s COEX could improve by 5.7 points between 2023 and 2026E, going from 47.3% to 41.7%.
At the same time, the valuation exercise carried out by the subsidiary of the Attijariwafa Bank group shows a target market capitalization of the listed banking sector at 312 billion dirhams, i.e. a potential appreciation of +13% over the next 12 months. The induced P/E 2026E, around 14.0x, is considered “conservative” by analysts.
(4) No recommendation due to the capital links between AGR and Attijariwafa bank.
