Here are the key figures from the 2021 Banking Supervision Report

In 2021, bank lending experienced a dynamic driven mainly by Damane Relance and Damane Oxygène loans. 80% of the recipients of housing and consumer loans are civil servants and employees.

A conference was organized on Monday 25 July at the Bank Al-Maghrib (BAM) headquarters in Casablanca, as part of the 18th edition of banking supervision. BAM’s Director of Banking Supervision, Hiba Zahoui, presented the 2021 annual report and then took part in the question and answer exercise with reporters.

First, it presented key figures for the sector at the end of 2021. The banking sector, in its structure, has remained broadly stable. In total, 89 credit institutions were under the jurisdiction of BAM in 2021 compared to 91 in 2021. The three largest banks in the market held 62.4% of the assets at the end of 2021.

Ms. Zahoui also noted the streamlining of bank branches due to the increasing digitization of the industry and the increased use of digital modes for day-to-day operations. In 2021, the number of bank branches stood at 6,056 units, down by 117 units compared to 2020.

2021 was characterized by an increase of 1.4 million bank current accounts, for a total of 31.2 million. At the end of 2021, 53% of Moroccan adults had a bank account.

Hiba Zahoui also compiled the evolution of the activity of the country’s banks and the key indicators of the sector.

The evolution of loans mainly driven by mechanisms guaranteed by the state

In 2021 the evolution of loans disbursed slightly increased by 2.8% to 948 billion dirhams. “This progress was mainly supported by the granting of state-guaranteed loans to companies, namely Damane Oxygène and Damane Relance, decided by the authorities to cope with the impacts of the crisis”, underlines Hiba Zahoui. In the total amount outstanding, 48 billion dirhams are Damane loans.

The progression of loans granted by banks to private companies grew by 4.2% and by 3.2% for loans granted to households. By economic purpose at the end of 2021, cash loans show the most notable increase with an improvement of 9.3% to 177 billion dirhams. “We see that most of the loans were supported by financing the operational needs of the companies. On the other hand, equipment loans, which finance companies’ investment needs, fell by 4.4% over the period. This shows that companies are not yet in an investment position in the current environment, “explains Hiba Zahoui.

Loans for housing increased 2.8% to 216 billion dirhams. However, they are decelerating compared to 2020. “2020 was marked by an increase of over 5% due to the measures taken by the government, particularly in terms of registration fees,” the manager recalls.

In 2022 there was also a return to the risks inherent in lending. The bank’s liquidity remains resilient, as evidenced by the stress tests carried out by Bank Al-Maghrib in December 2021. “The stress tests have shown resilience from the banking sector on a global and individual level. Potential vulnerabilities could derive from macroeconomic elements “, he notes. However, the repercussions of the world situation with logistical difficulties, increased inflation and the evolution of the Ukraine-Russia war pose a risk, particularly on credit activity.” All of these they are economic vulnerabilities that can reach bank customers through the credit channel. We are closely monitoring this. For now, things remain manageable; there are no vulnerabilities of undue concern. “

The institution also returned to the evolution of the characteristics of the beneficiaries of bank loans for housing and consumption.

Employees and civil servants receive 80% of housing and consumer loans in 2021

During 2021, most of the home loans were granted to public employees and employees. 43% of the beneficiaries of the housing loan were employees and 37% civil servants. Free professions follow with 12% and artisans and traders with 7%.

“This picture remains broadly similar for consumer credit in 2021, with 48% of beneficiaries being employees and 33% civil servants,” says Hiba Zahoui. For home equity loans, one third of the beneficiaries receive an income of over 10,000 dirhams. “For consumer loans it is more than salary bands below 4,000 dirhams with a share of 36%,” specifies the director of banking supervision.

Hiba Zahoui also got back on the momentum of growing customer deposits and the performance of banks in general over the course of 2021.

An improvement in deposits observed in 2021

In 2021, customer deposits grew more steadily than the previous year, with an improvement of 5.3% to 1.056 billion dirhams. “When we look at which economic agents explain the good performance of deposits, we see that individuals show an increase of 3.9% to 749 billion dirhams, as well as other non-financial economic agents, whose deposits increased by 7.9% to 260 billion dirhams “, explains Hiba Zahoui.

On purpose, these deposits increased by 7.5% to 710 billion dirhams related to sight deposits. For their part, term deposits continued to decline with a decline of -1.5%, due to the low interest rates on savings. Savings accounts rose slightly by 2.7% to 174 billion dirhams.

With the current environment and inflation at 7.2% at the end of June, is deposits expected to drop this year? This scenario is not currently considered by the authority. “We can see that on remunerated deposits, this can be a factor. Term deposits are falling, but this is not specific to the year 2021. Savings accounts will continue to attract because they are small savings accounts, despite the rates not being very profitable. I think we will see more sight deposits and more investments in alternative financial instruments ”, explains the director of banking supervision.

The sector (11 largest groups, ed.) As a whole showed a marked improvement in its profitability in 2021. Consolidated NBI increased 3.8% to 80 billion dirhams and consolidated NIGS increased 78.1 % to 12.1 billion dirhams. It was particularly helped by a marked improvement in risk over the period with a 21% decline to AED 16.2 billion. “On the one hand, there is the improvement in NBI and the decrease in the cost of risk, which made it possible to significantly recover the net result”, explains the director.

Nonetheless, he underlines the fact that the total brokerage margin fell over the period to reach 2.87%. “The rate of return on bank jobs has dropped. This was in particular due to the Damane Relance and Damane Oxygène loans, which were framed loans with low interest rates. The rates of return on loans and jobs were therefore falling ”, explains Hiba Zahoui.

Bad loans: the secondary market is in preparation

Unpaid bills increased by 6.6% in 2021 to 85.1 billion dirhams compared to 79.8 billion dirhams in 2020. They represented 8.5% of total loans granted in 2021 against 8, 2% in 2020.

An opportunity for BAM’s Director of Banking Supervision to return to the secondary market project for outstanding debts, wanted by the institution to counter the increase in outstanding debts. “This project concerns the identification and implementation of the preliminary conditions for the creation of this market with a view to reducing the portfolio of outstanding debts, brought by the banks through a sale to interested investors. In doing so, these divestments would increase the banks’ ability to finance the economy, “notes BAM.

“I think the project is progressing well, after a phase in which it was necessary to bring the stakeholders around the table. We have the various stakeholders that are there, namely BAM, the Ministry of Economy and Finance, Justice, Trade and Industry… ”, explained Hiba Zahoui.

There are several aspects that the authorities need to work on to bring the project to fruition. Indeed, some business constraints need to be removed to improve the recovery and clarify the situation to potential investors. “Any investor who comes to invest in this market must have guarantees of recovery in terms of legal proceedings. On this point, things are moving forward. We have a legal service provider who accompanies us in preparing amendments to the law, ”explains Hiba Zahoui.

The tax component follows to encourage investors or transferees. “We have discussed this aspect with the tax authorities and have achieved good results”, explains the director, without going into detail.

The third issue is operational: how banks must prepare to have information systems that provide all the data an investor needs. “Above all, it is necessary to professionalise and retrain the labor market. recovery in Morocco. The first two projects are progressing well; these are the priorities. Of course we collaborate with the banks on our side for everything related to the information system ”, concludes Hiba Zahoui.

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