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In a report, the financial rating agency Fitch Ratings underlines that the credit fundamentals of Moroccan banks are slowly recovering from the effects of the Covid-19 pandemic. While experts predicted profitability well above that of 2020, indicators for 2021 show that the industry will need another year to recover and reach pre-pandemic levels.
Asset quality should therefore deteriorate slightly with downside risks including high unemployment and pressure on corporate and household cash flows, which will continue to weigh on banks’ financial profiles. In addition, the cautious increase in provisions by banks has caused a significant drop in the profitability of the sector.
If bad loans had experienced a slight decrease in the first half of 2021, after increasing to 9.7% in 2020 against 8.7% in 2019, the agency’s forecasts point to a moderate increase in the second half of 2021 following the expiry of measures to support borrowers. The tourism, industry and commerce sectors are seen as the most vulnerable in this regard.
