Morocco Prepares to Sell 100.5 Billion MAD in Non-Performing Loans
Draft Law Published
The Moroccan government has made public a draft legislative text enabling credit institutions to sell a substantial portion of their non-performing loans, valued at approximately 100.5 billion MAD. The General Secretariat of the Government published the preliminary version online to collect public feedback over a one-month consultation period. Afterward, the executive will review a revised version before submitting it to Parliament for debate and vote.
Growth of Non-Performing Loans
Data from Bank Al-Maghrib indicate that non-performing loans now represent 9% of total bank credit, rising 80% over the past decade. By the end of last year, their volume reached 100.5 billion MAD, roughly USD 11 billion.
Secondary Market Proposal
The draft law proposes the creation of a regulated secondary market allowing banks to transfer these loans to buyers under strict central bank oversight. A non-performing loan is defined as a disputed debt or one whose full or partial recovery is uncertain.
Transfers may involve any individual or legal entity. The transfer agreement must detail the debtor’s identity, address, initial amount, interest, maturity, applied rate, guarantees, and related insurance contracts.
Expected Impact and International Lessons
The Ministry of Economy emphasizes that “international experience shows that an organized secondary market for non-performing loans helps manage accumulation and allows banks to focus on sustainable financing of the economy.”
Liquidity Pressure on Banks
Non-performing loans have grown on average 6% annually, with a sharp 15% increase in 2020 due to Covid-19 economic disruptions. Abderrahim Bouazza, CEO of Bank Al-Maghrib, notes this rise is linked to economic challenges, sectoral weaknesses, over-leveraging, unforeseen events, and management failures.
Prolonged presence of these loans in bank balance sheets creates significant administrative and legal costs. Fiscal rules allow removal from balance sheets after a minimum of five years once all recovery avenues are exhausted.
Bank Financial Performance
Despite rising bad debts, major banks continue to report solid results. Attijariwafa Bank reported a net profit of 10.6 billion MAD (+16.2% YoY), while Banque Centrale Populaire posted around 4.5 billion MAD (+8.6%).
