Fitch Rating: Liquidity and Profitability Lift Growth Prospects for Moroccan Banks
Rabat – Morocco's largest banks are set to benefit from a window of opportunity in 2025 and 2026 as their financial footing grows firmer, according to Fitch Ratings.
In a new report released recently, the agency says improved profitability, more solid capital levels, and sound liquidity are giving the country's top lenders a real shot at meaningful expansion, at home and across parts of Africa.
Despite a tougher environment in 2024, with higher loan losses to absorb, the combined net income of the seven biggest banks in Morocco jumped by 22%. That rise came largely from gains in fixed-income trading, higher income from lending, and tighter control over expenses.
Fitch sees further room for growth ahead. With a more stable economic outlook in Morocco and several African markets, banks could recover more unpaid loans and reverse some past provisions. Increased lending activity is also expected to support revenues.
Even if interest rates dip, the agency believes Moroccan banks will remain relatively unaffected, thanks to the historical steadiness of their net interest margins.
For years, limited capital buffers have held some banks back. Many operated just above the regulatory minimum, which narrowed their growth options.
But Fitch points out that stronger earnings in recent years, along with the use of subordinated debt, have helped shore up capital. Banks now enjoy more breathing room to pursue expansion.
One area where that growth could take shape is infrastructure. Some projections suggest Morocco may need more than USD 100 billion in financing for infrastructure projects between 2025 and 2030, a figure equal to 61% of the country's 2024 GDP.
This demand is likely to lift credit growth to the mid-single digits, with even higher rates for banks that focus heavily on corporate lending.
There is also potential for structural change. If Morocco successfully launches a secondary market for non-performing loans, banks could sell off bad debt and free up more capital for lending. While still in the works, such a development would give the sector a stronger hand in managing risk and funding new business.
Fitch's report underlines the strength of Moroccan banks' funding base. Most rely on customer deposits, which remain a low-cost and stable source of financing. A tax amnesty in 2024 encouraged many to bring previously undeclared funds into the banking system, further boosting liquidity.
With a more comfortable capital cushion, reliable funding, and a pipeline of investment opportunities, Moroccan banks appear to be entering a new era. Tags: economyfitch ratingMoroccan BanksMoroccoMorocco economy
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