Morocco: bank profitability as seen by Moody’s

Credit rating agency Moody’s said Moroccan banks’ profitability was put under pressure in 2020 due to several factors. These are provisioning costs in anticipation of higher credit losses, lower transaction volumes, containment measures, and one-off charges related to donations to the Covid-19 special fund, among others.

According to a report published earlier this week by the agency, Attijariwafa bank (rated AWB, Ba1 negative, ba31), Groupe Banque centrale populaire (Ba1 negative, b1), Bank of Africa of the BMCE group (Ba1 negative, b1) and Credit of Morocco (Ba1 stable, ba3) represented 65% of Moroccan loans at the end of 2020. These banking establishments, the document points out, declared an overall net profit of 6.5 billion dirhams (0.7 billion dollars) in 2020 , down 53% from 13.9 billion dirhams ($ 1.4 billion) in 2019. Net interest income increased despite falling interest rates and slower credit growth .

The four rated banks saw a combined 5.6% year-over-year increase in net interest income. The finance agency also stressed that bottom line profitability will remain under pressure in the medium term. And predicts an increase of 3% to 5% of net income in 2021 compared to the level noticed in 2020.

In addition, Moody’s recommended that banks continue to rationalize their costs of risk in a still difficult environment.

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