Bank Al-Maghrib: Money Supply Slows to +7.7% in July

The recent report from Bank Al-Maghrib (BAM) indicates that the money supply growth has slowed to 7.7% in July. This change is largely attributed to a decrease in bank credit to the non-financial sector, which fell from 4.4% to 3.4%. Additionally, official reserve assets have shown nearly stagnant growth around 11%, while net claims on the central administration saw a slight increase of 0.1% after a decline of 0.9%. The annual growth of the M3 aggregate primarily reflects the deceleration in demand deposits at banks, which decreased from 11.8% to 11.2%. There was also a 0.3% decline in term deposits following a 3.2% increase the previous month. Conversely, the growth of currency in circulation accelerated to 8.7% from 7%, alongside an increase in holdings of money market mutual fund shares, which rose to 7.6% from 6.3%. The slowdown in bank credit to the non-financial sector particularly highlights the reduced growth of loans to private non-financial companies, which fell to 1.2% from 3.5%. In contrast, the growth of loans to households accelerated to 2.9% from 2.5%, while the growth of credit to public non-financial companies remained stable at around 7.5%. By economic purpose, the year-on-year change in bank credit to the non-financial sector reflects a decline in treasury facilities, which dropped by 5% after a slight increase of 0.4% the previous month. There was, however, an acceleration in the growth of equipment loans (15.2% after 12.6%), real estate loans (3.4% after 3%), and consumer loans (3.9% after 2.8%). Regarding non-performing loans (NPLs), their growth slowed from 5.7% in June to 5.4% in July, while their ratio to total credit increased to 8.7% from 8.6% the previous month. By institutional sector, the evolution of monetary assets (excluding currency in circulation) shows a deceleration in the growth of monetary assets held by households, which fell from 6.5% to 6.3%. This was driven by a slowdown in their demand deposits (9% after 9.4%), nearly stagnant savings accounts (1.9%), and a reduction in term accounts (-3.8% after -4.3%). The report also reflects a slowdown in the growth of monetary assets of private non-financial companies, which decreased from 14.3% to 11%. This was marked by the growth of their demand deposits (14.4% after 14.6%) and a decline in term accounts (-23.1% after +19.7% in June).