“Moroccan banks should record sustained and growing profitability over the period 2025-2026, favored by a significantly improving operational environment, conducive to the development of activities”according to an analysis by the American financial rating agency Fitch Ratings, published Wednesday January 15 and consulted by Barlamane.com.
The Moroccan economy, driven by robust growth, remains a major asset for this momentum. Fitch forecasts average annual GDP growth of 3.8% over the next two years, above the median for the Middle East and North Africa region. This dynamism is supported by ambitious investment projects as well as structural reforms, in particular the establishment, planned this year, of a secondary market dedicated to non-performing loans (NPL), which could considerably strengthen the capacities of banks.
Growth momentum and increased profitability
Average annual credit growth stood at 4.5% between 2019 and the third quarter of 2024, reaching 5% in the first nine months of that year. Fitch anticipates an acceleration to 6% in 2025. At the same time, the aggregate net profit of the seven main Moroccan banks increased by 19% year-on-year at the end of September 2024. This trend is expected to continue, supported by an increase in business volumes and a reduction in provisions linked to doubtful debts in a more favorable economic context.
Large infrastructure and industrial projects, requiring financing estimated at more than $100 billion between 2025 and 2030, including $34 billion for 2025 alone, are expected to drive credit growth estimated between 6% and 7%. annually over the medium term.
Regional comparison and structural challenges
The operational environment of Moroccan banks stands out favorably on the African continent, with a “BB” rating assigned by Fitch. This score, the second highest in Africa, surpasses that of South African banks and is just behind that of Mauritian banks. However, structural obstacles limit the potential for improvement in this rating. Among these challenges are a relatively modest GDP per capita (4,021 USD in 2024), a notable dependence on agriculture (12% of GDP and 30% of employment), making the economy vulnerable to climatic hazards, a rate high unemployment (12.5% forecast in 2025) as well as lower human development and governance indicators than higher-rated countries.
-The role of reforms and major sporting events
Despite these constraints, demand for credit should be stimulated by sustained growth in non-agricultural sectors in 2025 and 2026, particularly in tourism and construction, encouraged by the international sporting events that Morocco is preparing to host. Investment loans, having grown by 14% year-on-year in the first ten months of 2024, are expected to be the main driver of credit growth in the medium term, as part of the large investment projects planned by the Morocco.
Fitch also highlights the potential weight of creating a secondary market for NPLs. Such a measure “would allow banks to sell off a significant portion of their bad loans, freeing up liquidity and equity to finance more projects.” NPLs, which reached 98 billion MAD at the end of September 2024 (8.6% of sector credits and 7% of GDP), further burden banks’ balance sheets due to tax rules requiring their maintenance for at least five years after the exhaustion of remedies. A 20% reduction in these receivables among the six main Moroccan banks could, according to Fitch, improve their Tier 1 capital ratio (CET1) by 185 basis points on average, thus strengthening their financing capacity.
Capitalization prospects and challenges to face
Despite these advances, capitalization remains a point of weakness for certain Moroccan banks. A sustainable improvement in this parameter, combined with a reduction in uncovered bad debts and a better capacity for internal capital generation, could lead to an upward revision of capitalization valuations. In conclusion, “Moroccan banks, supported by ambitious reforms and favorable economic dynamics, are ideally positioned to consolidate their resilience and play a driving role in the country’s economic development.”
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