Banking Sector: Confirmed Resilience, Strong Performance, and Still Attractive Valuations

The Moroccan banking system continues to demonstrate solid fundamentals, bolstered by a more favorable macroeconomic environment and a strong regulatory framework. A recent report from MSIN highlights the structural strengthening of the banking sector from 2015 to October 2025, both in terms of resources and profitability. During this period, bank deposits steadily increased from 815 billion dirhams in 2015 to nearly 1,299 billion dirhams by the end of October 2025, reflecting an average annual growth rate of 4.8%. This growth indicates an improvement in the savings capacity of economic agents and sustained confidence in the banking system. Notable spikes in savings behavior were observed in 2020, 2022, and 2024, driven by the health crisis and subsequent inflationary pressures. The significant increase in 2024 was also influenced by a tax amnesty that facilitated a substantial influx of liquidity into the banking circuit. Simultaneously, bank loans rose from 784 billion dirhams to over 1,188 billion dirhams by the end of October 2025. Although the growth rate of loans remains slightly lower than that of deposits, this trend confirms the central role of banks in financing the real economy. The widening gap between deposits and loans suggests a comfortable structural liquidity, enabling institutions to meet demand while adhering to regulatory requirements. Risk costs have evolved heterogeneously between 2015 and 2024. After relative stability from 2015 to 2019, around 7 to 8 billion dirhams, costs surged in 2020, peaking at nearly 12.5 billion dirhams due to the health crisis. A gradual decline was noted from 2021 to 2023, followed by another increase in 2024, exceeding 13 billion dirhams, primarily linked to increased provisions for sensitive receivables on watch-lists. According to the latest data released after the meeting of the Committee for Coordination and Monitoring of Systemic Risks, the banking sector has confirmed the strengthening of its financial fundamentals, showcasing sustained profitability and a comfortable capital adequacy. By the end of June 2025, the sector's net income, based on social data, recorded a 25% increase, driven by strong performance in market activities and intermediation. This dynamic further solidified the sector's solvency, with Tier 1 and total capital ratios at 13.8% and 16.4%, significantly above the regulatory minimums of 9% and 12%. On a consolidated basis, these ratios stood at 12.3% and 14.3% in the first half of 2025. Macroeconomic stress tests conducted by Bank Al-Maghrib also confirm the sector's resilience to shocks, while the short-term liquidity ratio remains above the regulatory threshold. The 2025 semi-annual results affirm this positive trend. In the first half of the year, listed banks reported a Net Banking Product (NBP) increase of 7.4% to 49.1 billion dirhams, benefiting from monetary easing and strong financial market performance. The interest margin grew by 6.6%, supported by increased volumes and active margin management. Attijariwafa Bank recorded an increase close to 7%, while Banque Centrale Populaire and Bank of Africa reported growth between 4% and 6%. The commission margin rose by 4.4%, driven by robust service activity dynamics. However, the main driver of NBP growth remains the results from market operations, which increased by 14.8%, fully benefiting from financial market performance. With the exception of BMCI and CIH Bank, which experienced more moderate growth, all institutions reported significant increases. At the sector level, operating income rose by 18.6% to 22.5 billion dirhams, while net income attributable to shareholders improved by 18.2% to 12.5 billion dirhams, supported by revenue growth, cost control, and a decrease in risk costs (-10.8% to 6.9 billion dirhams). By the end of September 2025, the consolidated NBP of the seven listed banks reached 72.6 billion dirhams, up 6.3%. Excluding CFG Bank, gross operating income increased by 14.1%, benefiting from a 9.8% decline in risk costs, while the overall net income attributable to shareholders rose by 13.5% to 17.5 billion dirhams. In this context, the Moroccan banking sector, solid and well-capitalized, is positioned within a favorable profit-generating dynamic, with significantly improved results, while valuation levels remain controlled. The sector's price-to-earnings ratios are contained around 12x to 14x in 2025, historically lower than levels observed before 2020, suggesting continued attractiveness for investors. Nissrine EL MARINI