Moroccan banks reduce bad loans, boost coverage despite rising provisions

Monday 28 July 2025 - 09:50

By: Dakir Madiha

Moroccan banks reduce bad loans, boost coverage despite rising provisions

Morocco’s central bank, Bank Al Maghrib (BAM), revealed a 2.7% decrease in non-performing loans (NPLs) at Moroccan banks, bringing the total to MAD 97.4 billion ($10.86 billion) in 2024. This marked a slight improvement in the loss rate to 8.4%, down 0.1 percentage points from the previous year, according to BAM's annual banking supervision report.

Breakdown of non-performing loans

The distribution of troubled loans showed that bad debts accounted for 84% of all NPLs, followed by doubtful debts at 9% and loans under surveillance at 7%. While bad debts rose by 3.1% to MAD 82.2 billion ($9.16 billion), doubtful debts decreased by 1.7% to MAD 8.7 billion ($970 million). Loans classified as “under surveillance” increased by 4.1%, totaling MAD 6.5 billion.

Banks allocated MAD 17.1 billion ($1.9 billion) in general provisions for sensitive loans, covering 1.6% of healthy loans. Overall, provisions to cover NPLs increased by 4.6%, boosting the coverage rate from 67% in 2023 to 69% in 2024. This included a 76% coverage rate for bad debts, 45% for doubtful debts, and 11% for loans under surveillance.

On a consolidated basis, NPLs held by 11 banking groups reached MAD 134.6 billion ($15 billion), up 2% compared to 2023. These groups also increased provisions by 5%, further improving the consolidated coverage rate to 69%.

Foreign operations show resilience

Foreign branches of Moroccan banks, particularly in Africa, performed better, with NPLs totaling MAD 16.1 billion ($1.79 billion). The risk rate for foreign operations declined slightly to 7.2%, while the coverage rate rose to 82.4%, up from 81.1% in 2023. Preventive provisions for foreign-held healthy loans averaged 0.8% of the total outstanding amounts.

Household debt continues to rise

Household non-performing loans increased by 6.7% to MAD 44.6 billion ($4.97 billion), up from 6.4% in 2023. This caused the risk rate to climb to 10.5%, with resident household debt at 10.6% and non-resident household debt improving to 7.1%. The coverage rate for these loans reached 64%.

Corporate sector trends show mixed results

Non-performing loans in the corporate sector rose 0.7% to MAD 70.1 billion ($7.81 billion), but the sector’s risk rate declined to 11.1%. Provisions covered 73% of these debts, highlighting the banking system’s improved resilience.

The construction and public works sector saw a slight 0.8% decline in bad loans, with a risk rate of 13.7%. Meanwhile, the trade sector witnessed a 4.3% increase in bad debts, pushing its loss rate to 15.7%, making it one of the highest-risk industries.

Morocco’s banking system shows cautious progress

Despite the rising provisions and certain sectoral challenges, the overall risk rate of the Moroccan banking system improved by 0.2 percentage points to 9%. These figures underscore the sector's ability to navigate financial uncertainties while maintaining strong coverage levels.