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Morocco World
3 days ago
- Business
- Morocco World
Morocco's Banks See Drop in Bad Loans Despite Rising Provisions
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. Tags: Bad loansMorocco's banking sectornon-performing loans
Economic Times
26-06-2025
- Business
- Economic Times
Now, give credit where credit's due
Washington: As leaders gather in Seville for the UN Financing for Development meet that starts from June 30, putting developing countries' needs first - and fixing the broken credit-rating system - must top the agenda, along with operationalising Africa Credit Rating Agency (AfCRA). Today, Fitch, Moody's and S&P dominate the credit-rating landscape, with their assessments influencing the cost of capital for countries. In 2023, many developing nations paid over 5 percentage points more than developed economies when borrowing from instruments deployed by MDBs and DFIs include direct debt and equity, lines of credit to commercial banks, intermediated investments via funds (including impact funds), guarantees and technical assistance. They also provide concessional finance, which mobilises private investors. Today, most lending from MDBs and DFIs focuses on infra: 34% of concessional and market-rate finance provided in the 'global south' in 2021 ($2.5 bn) focused on this sector. This compares with only 7% focused on the farm sector in the same year, and far less in climate adaptation. However, regulations such as Basel 3 and 4, set up in 2008-09, to respond to financial crises, and reporting requirements of the financial system, such as International Financial Reporting Standards 9 (IFRS 9) and 10 (IFRS 10) are biased against incorporating realities of the developing world. These regulations and standards also affect lending from national and public development banks, which are similarly deterred from investing in agriculture and climate a result, (multilateral and national) banks end up allocating their capital to less-risky sectors - those that, for instance, have more regular payments than the seasonal nature of agriculture allows, offer more predictable returns, and require lower capital capital adequacy requirements also limit banks' overall lending capacity, increasing the opportunity cost of lending to businesses perceived as higher risk and less profitable (e.g., smaller or less formal businesses in rural areas).As a result, in East African countries, central banks require domestic commercial banks to hold 10-15% of their capital, well above Basel 3 requirements (8.5%). This exacerbates low levels of commercial bank lending to the agriculture sector, which in 2019 averaged just 6% despite the sector contributing about 60% to Basel 4 regulations require banks to take a standardised approach to determining risk-weighted assets. These disincentivise global banks from financing rural infra projects in the 'global south', which are perceived as Basel 4 implementation began in 2023, banks could use proprietary models, which considered investment history, to allocate risk weightings to different assets. Now, they must use standardised capital weightings, which assign higher risk weightings to investments in countries with low national credit ratings, and to loans with longer standardised approaches to calculating risk-weighted assets (RWAs) do not account for the reduced risk associated with banks - or other investors - investing in senior tranches of blended finance structures where a first-loss guarantee has been provided by an impact investor or DFI. This has also meant that participating in blended finance confers no additional advantage to investors, irrespective of a first-loss risk being taken by another skewed nature of risk appraisal also affects MDB lending. They target AAA credit ratings from major credit-rating agencies to ensure they can borrow at low cost. While this allows MDBs to pass on the benefit of low-cost borrowing to borrowers (including rural businesses), in practice, MDBs manage their capital to protect these credit ratings. This limits their capacity to take on ventures perceived as risky, including those in rural or agricultural countries are significantly more agricultural and rural. Lending in these contexts should not be automatically deemed 'below investment grade', forcing banks to write down assets. Seville must call for reform of international rating architecture, which unfairly treats high-liquidity, essential sectors in developing regions as high-risk. (Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of Elevate your knowledge and leadership skills at a cost cheaper than your daily tea. Punit Goenka reloads Zee with Bullet and OTT focus. Can he beat mighty rivals? 3 critical hurdles in India's quest for rare earth independence HDB Financial may be cheaper than Bajaj Fin, but what about returns? INR1,300 crore loans for INR100? Stamp duty notice to ArcelorMittal, banks. Stock Radar: Titan Company breaks out from 3-month consolidation; check target & stop loss for long positions For risk-takers: More than bullish, be selective; 5 mid-cap stocks from different sectors with an upside potential of up to 38% Multibagger or IBC - Part 12: If transition is successful then there is no limit. But there is a big 'IF' These mid-cap stocks with 'Strong Buy' & 'Buy' recos can rally over 25%, according to analysts
Business Recorder
04-06-2025
- Business
- Business Recorder
Fitch downgrades Afreximbank to one notch above ‘junk'
LONDON: Fitch downgraded Afreximbank's credit rating to one notch above junk on Wednesday, with a negative outlook, citing high credit risks and weak risk-management policies. The one-notch downgrade to BBB- comes as the African lender battles to protect its loans from restructuring in Ghana, Zambia and Malawi, claiming that as a multilateral lender it has preferred creditor status. Fitch pegged Afreximbank's non-performing loans at above 6%, while the bank itself reported an NPL ratio of 2.44% in the first half. 'The revision of risk management to 'weak' reflects low transparency in the recent reporting of loan performance relative to multilateral development bank peers and that Fitch's definition of NPLs differs from the bank's approach, which makes use of flexibilities offered by IFRS 9,' Fitch said. A lower credit rating can increase the borrowing cost for an issuer, which can in turn impact how much they can lend and at what rates. Fitch upgrades Pakistan's rating: macroeconomic stabilisation acknowledged Fitch attributed the negative outlook, which effectively puts the bank on downgrade watch, to the risk that some of its debt to sovereign borrowers might be included in restructuring. 'This would put pressure on our assessment of the bank's policy importance and heighten the risk associated with its strategy,' Fitch said. Afreximbank did not immediately comment on the downgrade.
Kuwait Times
14-05-2025
- Business
- Kuwait Times
Al-Ahli Bank of Kuwait Group holds Q1 2025 analyst conference call
ABK's diversified footprint continues to drive its growth momentum KUWAIT: Al-Ahli Bank of Kuwait (ABK) recently hosted its Q1 2025 analyst conference attended by Abdulla Al-Sumait, Acting Group Chief Executive Officer; Shiamak Soonawalla, Group Chief Finance Officer; Abdulaziz Jawad, Chief Strategy Officer; and Osama Ezzeldin, Assistant General Manager of Strategy and Follow Up. Al-Sumait began with discussing the financial highlights for Q1 2025. 'ABK achieved a healthy net profit growth of 8 percent to KD 15.7 million. Earnings per share remained stable at 5 fils, and our capital adequacy ratio stood robustly at 16.78 percent.' 'On the lending side, ABK's loan portfolio expanded by 10 percent year-on-year, supported by our disciplined credit underwriting standards. Asset quality remains strong, with our NPL ratio well controlled at 1.38 percent, reflecting our continued focus on maintaining strong asset quality,' Al-Sumait said. He added, 'Our diversified footprint continues to drive our growth momentum. Our international operations, including our UAE branches and ABK-Egypt, contributed a solid 40 percent of operating income and accounted for 37 percent of total assets, highlighting the strength of our regional diversification strategy.' Al-Sumait shared that ABK launched key strategic initiatives during the quarter to reinforce its competitive advantage and enhance customer experience. Major achievements in Q1 2025 included the launch of its new mobile banking app in Kuwait, featuring enhanced features and a new design, the introduction of a free international call service for customer support, and an enhanced customer service model with virtual service available in branches. He concluded, 'As we look ahead, ABK remains focused on delivering sustainable, long-term value. We will continue to pursue strategic expansion opportunities, strengthen our regional presence, and introduce innovative financial solutions tailored to meet the evolving needs of our customers.' ABK's Chief Strategy Officer Abdulaziz Jawad ABK Group CFO Shiamak Soonawalla Financial indicators On his part, Soonawalla discussed ABK's financial highlights for Q1 2025. He said, 'We achieved a healthy net profit growth of 8 percent year-on-year, with KD 15.7 million net profit attributable to shareholders. Earnings per share remained stable at 5 fils, and our operating income for the period reached KD 50.4 million, while operating profit stood at KD 29.3 million. This was supported by proactive cost management and continued revenue momentum across business lines.' ABK's asset quality remains robust, with the Group's non-performing loan (NPL) ratio maintained at a healthy 1.38 percent. The Group's loan loss coverage ratio held firm at 433 percent, confirming strong credit quality. Furthermore, provisions exceeded the IFRS 9 requirements, in accordance with Central Bank of Kuwait guidelines, as ABK continues to apply a prudent provisioning policy. Soonawalla added, 'We managed to maintain our net interest margin at 2.1 percent levels, although operating income marginally declined due to funding cost pressures and lower fees and commission income. Return on Average Equity (ROAE) delivered a healthy 8.1 percent, underlining ABK's strength in sustaining returns and driving long-term shareholder value. Liquidity continues to be a key strength for us, as evidenced by a liquidity coverage ratio of 255 percent and a net stable funding ratio of 109 percent, both comfortably above regulatory thresholds. Customer deposits remained resilient, totaling KD 4.4 billion, which represents 66 percent of our total liabilities. This further reinforces the strength and stability of our funding base.' He highlighted that the Group's strong start to 2025 reflects ABK's effective execution of strategic priorities and the leveraging of our core banking franchise alongside diversified income streams to drive sustainable growth. Notably, operating profit grew by 5 percent, highlighting the Group's enhanced operational efficiency. Commercial Banking remained the largest contributor to our operating income during the quarter, accounting for 49 percent, followed by Retail Banking at 39 percent, and Treasury and Investments at 12 percent. Our asset allocation remains strategically balanced, with 55 percent allocated to Commercial Banking, 12 percent to Retail Banking, and 33 percent to Treasury and Investments. He added, 'Our focus on operational excellence, digital transformation, and strategic investments continues to yield meaningful improvements. During Q1 2025, ABK's cost-to-income ratio significantly improved to 41.9 percent, down from 46.4 percent year-on-year, reflecting greater efficiency and disciplined cost management across the Group. As of Q1 2025, total assets expanded to KD 7.4 billion, delivering strong year-on-year growth of 13 percent. Net loans and advances increased by 10 percent to KD 4.7 billion, demonstrating healthy lending activity and prudent balance sheet expansion.' Soonawalla closed, 'Our Q1 2025 results highlight our solid profitability, disciplined risk management, and strengthened balance sheet. ABK remains firmly positioned to deliver sustainable growth and create enduring value for shareholders. With a strong foundation and a clear strategic focus, we are confident in our ability to sustain momentum throughout 2025.' The local and global economy Jawad mentioned that the sharp escalation in trade tensions and high policy uncertainty are expected to weigh heavily on global economic activity. According to the latest IMF projections, global GDP growth is now projected at 2.8 percent in 2025 and 3.0 percent in 2026. This marks a downward revision from the earlier forecast of 3.3 percent for both years. Global headline inflation is expected to decline at a slightly slower pace than what was expected in January, reaching 4.3 percent in 2025 and 3.6 percent in 2026. When it comes to Kuwait, the IMF has revised its 2025 GDP growth forecast for Kuwait to 1.9 percent. The adjustment reflects a more measured recovery pace, although domestic demand remains strong and oil output continues to recover. Inflation is expected to stabilize at 2.5 percent, supported by effective monetary policy by the Central Bank of Kuwait. Jawad highlighted, 'In March, Kuwait introduced a new public debt law, setting a borrowing ceiling of KD 30 billion and permitting the issuance of financial instruments with maturities up to 50 years. The move aims to strengthen financial stability, support Kuwait Vision 2035, diversify funding sources, and enhance Kuwait's position as a regional financial hub.' Exceptional results Jawad continued, 'Our strategic focus continues to be on salaried Kuwaitis and high-income expatriates, while placing growing emphasis on youth, who represent the future. We are continuously enhancing our youth offering to further strengthen our overall value proposition. As a result, our retail loan portfolio grew 1.75 times faster than the market in Q1 2025. We also enhanced our cards portfolio with a new prepaid card featuring a dual rewards program.' Furthermore, he affirmed, 'ABK maintains strong credit ratings of 'A' from Fitch and 'A2' from Moody's, reflecting its robust financial position, prudent risk management, and commitment to long-term stability.' Egypt and the UAE Regarding Egypt's macroeconomic landscape, the country is making progress on its macro-economic reform agenda despite regional challenges. The IMF completed the fourth review of Egypt's Extended Fund Facility (EFF), disbursing $1.2 billion and approved an additional $1.3 billion under the Resilience and Sustainability Facility (RSF). Although Egypt's inflation rose slightly to 13.9 percent in April 2025, up from 13.6 percent in March, the rise remains in line with market expectations, reflecting stability despite seasonal demand pressure. GDP growth accelerated to 4.3 percent in Q2 FY 2024/25. Moving on, Jawad shed light on the UAE stating, 'ABK, through its DIFC branch, has successfully closed a landmark $1 billion global syndicated term loan facility for a period of over three years, marking its largest debt facility to date. This significant achievement affirms ABK's robust standing in the financial markets.' The syndication was initially launched at $750 million; however, due to excessive oversubscription by 60 percent, the facility was upsized to $1 billion. This positive response highlights the strong liquidity position and confidence that both regional and international lenders, including those from the Middle East, US, Europe, and Asia, have in ABK. Jawad affirmed, 'This achievement reflects the trust and confidence that our lenders have in our financial stability and strategic vision. We are committed to utilizing these funds to enhance our service offerings and continue to foster sustainable growth.' 'Alongside our funding activities, ABK-UAE continued to advance its strategic agenda in the real estate sector. As a continuation of our Q4 2024 update, ABK-UAE successfully onboarded its first real estate escrow customer, marking a key milestone as the first Kuwaiti bank to offer this service in the UAE. With additional clients in the pipeline, we are now assessing the extension of these services to Abu Dhabi. This aligns with our strategy to strengthen our footprint and competitiveness in the UAE financial sector,' Jawad continued. Complementing the real estate escrow rollout, a dedicated UAE mortgage service for Private Banking clients in Kuwait was also launched. To enhance this service, real estate brokers are being brought on board as key partners, ensuring a more streamlined client experience. ESG ABK continued to build momentum around its ESG agenda, laying the groundwork for future initiatives and enhancements. The Bank remains committed to further integrating ESG principles into key business areas. Looking ahead, ABK plans to publish its updated sustainability report, assess its ESG maturity, strengthen internal capabilities, and explore opportunities that support sustainable value creation. Building on a strong start to 2025, ABK remains committed to accelerating momentum, executing its strategic agenda with discipline, and creating long-term shareholder value.
Zawya
01-05-2025
- Business
- Zawya
Gulf Bank records KD 9.4mln in net profit for the first quarter of 2025
Ahmad Mohammad Al-Bahar: We have begun the groundwork to the potential conversion of the Bank into a Sharia-compliant institution in alignment with our long-term vision for sustainable growth. Gulf Bank's financial performance in the first quarter of 2025 reflects the ongoing challenges facing the financial sector including a declining interest rate environment. Recent government reforms present a promising outlook for national development. The proposed Real Estate Financing Law is designed to ease existing difficulties in the public housing segment and open a new revenue and growth stream for local banks. Waleed Khaled Mandani: While our financial performance was impacted by sector-wide factors, we made meaningful progress on several strategic fronts. Gulf Bank successfully closed its debut international syndicated loan transaction, raising US$650 million through a senior unsecured term facility. We continued to invest in the long-term strength of our leadership team by advancing experienced professionals into key executive roles. We remain committed to supporting our clients, driving operational excellence, and executing on our strategic initiatives. Kuwait: Gulf Bank K.S.C.P. announced its financial results for the first three months ending 31 March 2025. The Bank reported a net profit of KD 9.4 million, a decline of KD 3.5 million or 27% compared to 2024 first three months net profit of KD 12.9 million. In addition, Gulf Bank recorded an operating income of KD 44.0 million for the first three months of 2025, representing a decline of 9% compared to the same period of last year. Moreover, operating profit before provisions and impairments was KD 20.9 million, representing a decline of 22% compared to the first quarter of 2024. Financial Performance The decline in net profit for the first quarter of 2025 is attributed to the decline in net interest income of KD 3.3 million or 9%, coupled with a decline in non-interest income of KD 1.0 million or 10%, compared to the same period of prior year, respectively. In addition, operating expense has increased by KD 1.5 or 7%, when compared to first quarter of 2024. However, this was offset by a decline in the total provisions which reached KD 11.0 million in the first quarter of 2025, down by KD 2.1 million or 16% when compared to the same period of last year. As for asset quality, the non-performing loans (NPL) ratio was 1.5% as of 31 March 2025, compared to the prior year level of 1.2%. Additionally, the Bank continues to have significant non-performing loans coverage ratio of 305% including total provisions and collaterals. Total credit provisions as of 31 March 2025 reached KD 277 million whereas IFRS 9 accounting requirements (i.e., ECL or expected credit losses) were KD 183 million. As a result, the Bank has a healthy excess provision level of KD 94 million, above and beyond what is required by the IFRS 9 accounting requirements. Compared to 31 December 2024, total assets increased by 1% to KD 7.5 billion, net loans and advances increased by 3% to KD 5.6 billion, while total deposits stood at KD 5.5 billion and total Shareholders' equity reached KD 808 million. The Bank's regulatory Tier 1 ratio of 14.9% was 2.9% above the regulatory minimum of 12% and the Capital Adequacy Ratio (CAR) of 17.0% was 3.0% above the regulatory minimum of 14%. On the 22nd of March 2025, Gulf Bank held its Annual General Assembly Meeting, where shareholders approved the distribution of a cash dividend of 10 fils per share for the year 2024, representing a 63% cash payout ratio per share, in addition to a distribution of 5% bonus shares. Growth Foundations Commenting on the financial results for the first quarter of 2025, Gulf Bank Chairman Mr. Ahmad Mohammad Al-Bahar stated: 'Gulf Bank's financial performance in the first quarter of 2025 reflects the ongoing challenges facing the financial sector. Despite ongoing headwinds, Gulf Bank's underlying fundamentals remain strong, supported by a resilient balance sheet, sound risk management, and a clear strategic direction. While net profit of KD 9.4 million and operating income of KD 44.0 million in the first quarter of 2025 were lower than the same period last year, this was driven by systemic factors, including a declining interest rate environment, which continued to exert pressure on net interest margins and overall profitability." He continued: "The global economic landscape remains volatile. Geopolitical tensions, newly imposed tariffs, and ongoing trade restrictions are weighing on market confidence. These recent developments may affect government capital spending, particularly on development projects, which could slow credit demand and investment momentum." "Locally, recent government reforms present a promising outlook for national development. The approval of the long-anticipated Public Liquidity and Finance Law, with a borrowing ceiling of KD 30 billion, will enable the government to finance strategic infrastructure initiatives and support efforts to diversify revenue sources beyond the oil sector. This measure is expected to stimulate overall activity and create new opportunities for growth within the banking industry. Furthermore, the proposed Real Estate Financing Law is designed to ease existing difficulties in the public housing segment by permitting commercial banks to provide housing finance solutions, thereby opening a new revenue and growth stream for local banks. These legislative, among other advancements, align with Kuwait's Vision 2035 and are expected to boost investor confidence and support long-term prosperity." Strategic progress Commenting on the operational performance of Gulf Bank, Acting Chief Executive Officer Mr. Waleed Khaled Mandani said: 'As we reflect on our performance in the first quarter of 2025, we remain focused on delivering long-term value, amidst the pressures of the macroeconomic landscape. While our financial performance was impacted by sector-wide factors, we made meaningful progress on several strategic fronts that reinforce the Bank's underlying strength and long-term direction. During the quarter, Gulf Bank successfully closed its debut international syndicated loan transaction, raising US$650 million through a senior unsecured term facility. The transaction, which was significantly oversubscribed, attracted strong participation from both regional and global institutions, underscoring investor confidence in the Bank's credit profile and strategic vision. This diversifies our funding base, enhances financial flexibility, and positions us to support future growth opportunities more effectively. In parallel, we continued to invest in our most valuable asset, our people. During the quarter we continued to invest in the long-term strength of our leadership team by advancing experienced professionals into key executive roles. This reflects our commitment to developing national talent and building leadership from within. By nurturing internal capabilities, we promote continuity, reinforce our culture, and enhance our ability to navigate a dynamic and evolving market landscape. Looking ahead, we remain committed to supporting our clients, driving operational excellence, and executing on our strategic initiatives, as we navigate the evolving economic landscape with resilience and purpose.' Credit Ratings Gulf Bank's financial strength and operational resilience were affirmed by leading credit rating agencies. Fitch Ratings assigned a Long-Term Issuer Default Rating (IDR) of 'A' with a Stable Outlook, while Moody's rated long-term deposits at 'A3' with a Positive Outlook. Capital Intelligence affirmed a Long-Term Foreign Currency rating of 'A+' with a Stable Outlook, further highlighting the Bank's stability and sound risk management practices. Appreciation Mr. Al-Bahar concluded his remarks by saying: 'As we progress through 2025, Gulf Bank remains focused on executing its strategic priorities with discipline and resilience. In line with our long-term vision for sustainable growth, we have initiated the groundwork for the potential conversion to a Sharia-compliant institution (subject to regulatory approvals), an important step aligned with our long-term vision for sustainable growth. On behalf of the Board of Directors, I extend our sincere appreciation to our shareholders for their continued trust, our employees for their dedication, and the Regulatory Authorities for their valued support. Most importantly, we thank our customers for their loyalty and reaffirm our commitment to delivering a best-in-class banking experience.' Key Financial indicators for the first quarter 2025: First Quarter 2025 net profit of KD 9.4 million. First Quarter 2025 operating income of KD 44.0 million. Net loans and advances grew by 3% year-to-date to reach KD 5.6 billion. Non-performing loan ratio for the First Quarter 2025 was 1.5%, with a solid non-performance loan coverage ratio of 305% including total provisions and collaterals. Capital ratios as of 31 March 2025, Tier 1 ratio was 14.9% and Capital Adequacy Ratio (CAR) was 17.0%.
