Overall net income and net income attributable to shareholders sustained significant losses during the first half of 2020.
Rabat – Morocco’s Bank of Africa Group has overall shown resilience in the face of the global COVID-19 crisis, but the pandemic did trigger a loss of 68% in net income attributable to shareholders in the first half of 2020.
The bank’s half-year report shows that profits attributable to shareholders reached only MAD 373 million ($40.14 million) as of June 30. The bank attributed the loss to several factors related to COVID-19, including its donation of MAD 1 billion ($107.62 million) to Morocco’s pandemic response fund.
Bank of Africa also noted in its report a 68% increase in the consolidated cost of risk from MAD 872 million ($93.84 million) in June 2019 to MAD 1.5 billion ($161.43 million) in June 2020. The figure factors in the anticipated impact from the health crisis, based on “a dynamic and forward-looking loan-loss provisioning model.”
The bank’s net income more than halved during the same period, falling by 55% from MAD 1.059 million ($113.97 million) to MAD 476 million ($51.23 million).
Despite the loss in profit, Bank of Africa’s consolidated net banking income increased by 1% to reach MAD 7 billion ($753.3 million) in June. The modest growth is due to a 4.3% increase in net interest income and income from market operations, according to the report.
Net banking income rose by 3.4% to reach MAD 3.6 billion ($387.4 million). Bank of Africa Group says this is thanks to strong momentum by market operations and a backdrop of lower interest rates, resulting in a 42% increase in income from market operations. The report also credits the rise to a 2.7% growth in net interest income amid a reduction in the cost of funding.
In terms of loans, consolidated outstanding loans rose by 5% to MAD 195.5 billion ($21 billion) at the end of June. Customer loans rose by 3%, hitting MAD 178 billion ($19.16 billion). Bank of Africa’s share of the loan market grew from 12.28% in December 2019 to 12.53% in June 2020.
Bank of Africa’s COVID-19 support
Apart from Bank of Africa’s handsome donation to Morocco’s COVID-19 response fund, the bank has also sought to help customers and other citizens manage the impacts of the crisis.
The bank extended loan maturities with fee and late payment penalty waivers, extended maturities on home loans and consumer loans for retail customers suffering the economic consequences of the pandemic, and automatically deferred repayments for customers with FOGARIM-backed housing loans.
The bank also launched two new products guaranteed by the Damane Oxygene program — allowing small businesses to finance expenses — and Damane Relance, which helps business customers with their financial recovery from COVID-19.
The bank launched Credit Entrepreneurs Covid-19, an amortised loan system that allows consumers to meet current expenses.
The bank also partnered with European Bank for Reconstruction and Development (EBRD) in a €145 million finance facility and signed two agreements to support Moroccan SMEs. The bank also established specific credit lines for people benefiting from RAMED aid.
Bank of Africa further worked to assist Moroccans stranded abroad by closed borders, offering a simple means of accessing the exceptional tourism allowance.
Despite the challenges of COVID-19, Bank of Africa was able to accelerate its digitalization strategy in the first half of 2020. Among its digital reforms include the launch of Credit Business Online, a platform that enables business customers to initiate loan applications and renew or consult credit lines.