If Moody’s was positive for Morocco and its banking system a few days ago while maintaining its rating and its outlook, the financial assessment agency has just shrunk slightly. In a report released on April 27, Moody’s has reviewed the outlook for banking systems in Morocco, South Africa and Nigeria from stable to negative in light of the coronavirus pandemic and the drop in oil prices.
Indeed, the impact of the spread of the Covid-19 as well as the drought will undeniably, for the American agency, lead to a sharp slowdown in the Moroccan economy, particularly in terms of tourism. The export sector to Europe where the auto industry has been particularly hard hit. These effects should be partially offset by the fall in prices of energy imports.
Moody’s is confident that “the government’s rapid and comprehensive response will support economic recovery in the aftermath of the crisis.” However, depending on the duration of the crisis, “the risks to our current GDP growth forecasts of 2% for 2020 (compared to 2.4% in 2019) are increasing, reflecting both the shock of the coronavirus and the persistence of the drought,” the agency said. This implies that she would probably have to revise her growth forecast for the country. The same goes for the rate of increase in loans which would be reduced to 5% in 2020.
“We expect loan performance to weaken in light of the coronavirus pandemic,” said Mik Kabeya, analyst at Moody’s. He expects an increase in problem loans in a context of generalized credit term rescheduling.
“We predict that problematic system-wide loans will increase between 9% and 11% of total loans in 2020,” said the analyst, who agreed that the provisioning rate for bad debts is high (93%). Against this backdrop, Moody’s believes that funding will remain solid and stable, and liquidity will remain high.
Bank Al-Maghrib’s support for the banking system is an asset. It will help provide banks with easier and wider access to finance. “We expect that these measures, if fully implemented, will triple the banks’ refinancing capacity with BAM,” said Kabeya.