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Rabat — Morocco’s central bank, Bank Al Maghrib (BAM), has reported that non-performing loans at the country’s banks fell 2.7% to MAD 97.4 billion ($ 10.86 billion) in 2024.
According to the central bank’s latest annual banking supervision report, this level represents a loss rate of 8.4%, indicating an improvement of 0.1 percentage points compared to the previous year.
The analysis by risk level reveals varying trends across different loan categories. Banks classified 6.5 billion dirhams in loans as “under surveillance,” marking a 4.1% increase from 2023.
Meanwhile, doubtful debts decreased by 1.7% to MAD 8.7 billion ($970.136 million).
However, the central bank confirmed that bad debts rose 3.1% to reach MAD 82.2 billion ($ 9.16 billion), representing the largest portion of troubled loans.
The distribution shows bad debts dominate at 84% of all non-performing loans, followed by doubtful debts at 9% and loans under surveillance at 7%.
Provisions to cover non-performing loans increased 4.6%, which improved the coverage rate by two percentage points to 69% year-over-year. The coverage rate varies significantly by loan type: 76% for bad debts, 45% for doubtful debts, and 11% for loans under surveillance.
Banks also set aside MAD 17.1 billion ($ 1.9 billion) in general provisions to cover sensitive loans, representing 1.6% of healthy loans.
On a consolidated basis, non-performing loans held by customers of 11 banking groups totaled MAD 134.6 billion ($ 15 billion), up 2% compared to the end of 2023. When accounting for loan growth, the risk rate improved by 0.2 percentage points to 9%.
These 11 banking groups increased their provisions by approximately 5% to around 93 billion dirhams, following a 2.6% increase the year before. This resulted in a coverage rate increase of two percentage points to 69%, up from 67% in 2023.
Foreign operations show better performance
Non-performing loans carried by foreign bank branches, particularly in other parts of Africa, totaled MAD 16.1 billion ($ 1.79 billion). The risk rate for these operations decreased 0.1 percentage point to 7.2%.
The coverage rate for these debts improved 1.3 percentage points to 82.4%, up from 81.1% in 2023.
Banking groups also allocated provisions to cover sensitive loans that meet IFRS 9 accounting standards at an average rate of 16.9%. They covered healthy loans showing no signs of weakness with preventive provisions representing 0.8% of their total outstanding amounts.
Household debt shows concerning trends
For households, non-performing loans held by banks and financing companies rose 6.7% after increasing 6.4% the previous year, reaching 44.6 billion ($ 4.97 billion). This led to an increase in the risk rate of 0.3 percentage points to 10.5%.
This development reflects a 0.3 percentage point increase to 10.6% for resident households and an improvement of 0.6 percentage points to 7.1% for non-resident households. The coverage rate for these debts reached 64%.
Corporate sector performance varies by industry
Non-performing loans held by non-financial companies increased 0.7% to 70.1 billion ($ 7.81 billion), but the risk rate declined to 11.1% during 2024. Provisions cover 73% of these debts.
The construction and public works sector saw a slight decrease in bad loans (down 0.8%) with a risk rate of 13.7%.
The trade sector experienced growth in bad debts (up 4.3%) with an increase in the loss rate to 15.7%, making it one of the higher-risk sectors in Morocco’s banking system.
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