Rabat – Rabat Morocco saw a significant surge in the payment defaults of nonfinancial companies at the end of 2022, raising concerns about the financial health of the sector.
The corporate default rate refers to the percentage of companies borrowing money that fail to meet their debt obligations within a specified period of time.
Defaults soared by 6.7%, reaching a staggering total of MAD 65 billion ($6.6 billion). This alarming increase has raised questions about the stability and resilience of businesses amid economic challenges, according to a joint report from the country’s central bank, Bank Al-Maghrib, and the capital market watchdog AMMC.
The rise in defaults is particularly concerning when compared to the total bank credits extended to these non-financial companies. The default rate stood at 10.9%, which, surprisingly, represents a slight decrease of 31 basis points compared to the previous year.
In addition, the ratio of non-performing loans for non-financial companies equally increased by 6.7% in 2022, compared to a 6.5% rise in 2021 and 11.5% in 2020.
Non-performing loans refer to a bank loan that either faces delayed repayment or is unlikely to be fully repaid by the borrower. These loans present a significant challenge for the banking industry as they reduce profitability.
Non-performing loans represent 10.9% of the total bank credits provided to non-financial companies, slightly improving from the 11.3% recorded in the previous year.
Meanwhile, the growth of household financial debt accelerated, both for housing loans and consumer loans.
Measured against the GDP, household debts remained at around 30%. While non-performing loans of households experienced a limited increase of 1% compared to 9.3% in 2021, the rate remains high at 9.8% compared to 10.1% a year earlier and an average of 7.6% over the 2015-2019 period.
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