Moroccan Banks Achieve Maturity, Stabilize Credit Demand

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Morocco’s banking sector has been steadily progressing towards maturity, with banks expanding their presence across Africa and introducing participatory banking institutions to cater to a previously underserved market.

African Expansion

Since 2006-07, Moroccan banks have been expanding their presence in Africa. As of December 2017, these banks were present in 26 African countries, with a network of over 1400 branches handling approximately 7.2 million accounts.

“The African expansion of Moroccan banks has continued, and they have had to transform the institutions they acquired to incorporate them into their operations,” said an industry expert.

Participatory Banking Takes Off

Back home, participatory banking institutions have been making waves since 2015, when the country’s banking law was amended to allow for their establishment. The new legal framework allows for both fully-fledged participatory banks and sharia-compliant windows of traditional banks.

Licensed Banks

In January 2017, five participatory banks were licensed by the Bank Al-Maghrib (BAM), including:

• Umnia Bank, a joint venture between Morocco’s Crédit Immobilier et Hôtelier and Qatar International Islamic Bank.
• Bank Assafa, which rose from an Attijariwafa Bank subsidiary.
• Bank Al-Maghrib, a joint venture between Morocco’s Attijariwafa Bank and Qatar International Islamic Bank.
• Al Baraka Bank, which began operations in June 2017.

Growing Domestically

While it is too early to assess the impact of participatory banking on the sector, future domestic growth strategies will likely require creativity. One potential route to growth lies in the monetization of payment mechanisms.

“The number of bank cards in circulation expanded from 11.8 million to 14.1 million between 2015 and 2017,” said a BAM official. “However, Morocco remains a largely cash-based society, and the proliferation of electronic payment methods will allow for the development of new service channels.”

Outlook

As one of the region’s most developed banking industries, Morocco is showing signs of maturity. While this presents some opportunities for growth in certain niches, it also likely ensures that the largest banks’ main sources of expansion will come from abroad.

Regulatory changes have continued to align the sector’s solvability requirements and debt-classification criteria with international norms, allowing authorities to successfully mitigate both domestic and external risk.

In conclusion, Morocco’s banking sector has achieved a significant level of maturity, with the introduction of participatory banking institutions and ongoing efforts to monetize payment mechanisms. While growth opportunities will likely arise in certain niches, the sector’s future development will be closely tied to broader economic performance.