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Fitch Ratings: Islamic finance will struggle to maintain its current rate of growth

The annual report of Bank al Maghrib, the central bank of Morocco, has highlighted a solid progress in the Islamic finance sector, whose outstanding loans to the economy, reached 4.6 billion dirhams at the end of December 2018. This performance comes with the start of activities for 5 banks and three participatory windows.

In an analysis note released on July 30, 2019, Fitch Ratings reports that from June 2018 to April 2019, the industry grew by 110%. But this solid performance according to the rating agency, will have difficulties to continue. By the end of 2018, the Islamic bank accounted for only 1% of total outstanding bank loans to the Moroccan economy.

Also, it arrives in a sufficiently mature banking market, where more than 70% of the population has a bank account. In addition, most Islamic banks operate in the mortgage market, which reduces their ability to reach more customers. Resource mobilization is a major challenge for participating banks, and competition for deposit collection remains strong.

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