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Rabat – Moroccan banks continued to recover in the first quarter of 2022 with profitability reaching pre-pandemic levels.
The aggregate net income of Morocco’s seven largest banks has already reached pre-pandemic levels, according to a recent rating report from Fitch, an American rating agency.
The report projects that Moroccan banks would continue the current positive growth trend, but at a slower rate, hampered by adverse global economic conditions and their effect on Morocco’s national economy.
Morocco’s seven largest banks’ aggregate net income increased by 21% in the course of the first quarter of 2022, the report specifies.
Despite limited loan growth and a 5% increase in operating expenses, Morocco’s banks managed to deliver positive quarterly results thanks to central low-interest rates.
Fitch further predicts lending rates to rise in 2022-2023, driven by inflation, while Morocco’s central bank, Bank Al-Maghrib (BAM) is likely to hike interest rates in 2022 to attempt to limit inflation.
The North African banks are expected to benefit from rising interest rates. Funding costs are expected to grow at a slower rate as they are largely dependent on low-cost saving accounts and current accounts that made up 84% of the sector’s deposit at the end of 2021, the report indicates.
Slow loan growth from higher interest rates, coupled with market competition could however limit the benefits of higher interest rates, Fitch argues.
Lending growth is likely to average 3% to 4% in 2022, up from 2.8% in 2021.
Assessing the banks’ returns on investment, the Fitch report notes that the average return on equity reached 8.6% in the first quarter of 2022, up from 8.1% in 2021. The rating agency expects the positive trend to continue.
Moroccan banks’ return on investment would, however, remain below pre-pandemic levels.
Read Also: Fitch Ratings: Attijariwafa Bank’s Outlook Remains Stable
