The new lockdown measure in Europe threatens Moroccan banks, we noted that based on several macroeconomic and financial indicators. Sectors most at risk are exports and tourism. With the closure of borders, hotels, and restaurants -that concentrate a large labor force in Morocco- found themselves in difficulty during the second and a little of the third quarter of 2020.

Even with the conditional reopening of borders, a decline of up to 78% in the sector by 2020 was already expected, according to Moroccan Central Bank indicators. With Europe, Morocco's major partner, closing again, the downturn is expected to continue in this sector.

Exports have also suffered. People who are locked up at home do not think about buying vehicles and those who can prefer second-hand products to save money. Yet the automotive sector was one of Morocco's most dynamic export sectors before covid-19.

The relationship with the banks comes from the fact that several companies in these two key sectors and their employees are clients of the banks. Recent data published by Bank al-Maghrib (Central Bank) showed that the overall amount of doubtful loans in the sector increased by MAD10 billion between September 2019 and 2020 to reach MAD79 billion.

"The quality of portfolios has deteriorated significantly for private companies as well as for households. The loss ratio stood at 11.6% for deteriorating companies or 0.9 points in nine months. On the household side, 9.4% of loans returned unpaid against 8.4% at the end of 2019," explains the Central Bank in its analysis.

This situation has had an impact on the profitability of banks, particularly in terms of cost of risk. For the first half of 2020, this indicator stood at MAD 8.8 billion, a historical level since 2015, according to Attijari Global Research.

Idriss Linge