Major sector players in Morocco balance risk and reward

Attracted by higher levels of growth outside Morocco, the country’s three largest banks by assets have developed a substantial presence abroad, particularly in Africa, where all three have built multinational bank networks over the last decade. The main players, Attijariwafa Bank, Banque Centrale Populaire (BCP) and Banque Marocaine du Commerce Extérieure (BMCE), continue to expand, with the latter already well established in various anglophone and East African markets, and the other two looking to follow suit.

Widening Horizons

Attijariwafa Bank operates in 14 African countries, where it has 431 branches, having expanded its presence on the continent in 2008, when it acquired the African units of French bank Crédit Agricole. The bank also operates in another 10 countries outside Africa, including Belgium, France, Germany, Italy, the Netherlands and Spain, where it targets the expatriate Moroccan market.

For its part, in 2012 BCP made a dramatic expansion into Africa when it bought a controlling stake in Banque Atlantique (BA), which operates in seven West and Central African states. The Moroccan major has increased the size of its stake in BA several times since then, most recently acquiring another 10% share in mid-2015 to bring its ownership to 75%.

Lastly, BMCE is active in 18 sub-Saharan countries, including a variety of Central, East and West African states, as well as Tunisia, eight Western European states and a handful of other countries worldwide. The bank became the major shareholder of Mali-headquartered banking group Bank of Africa (BoA) in 2007 and raised its stake to a majority share of 55.6% in 2012; this figure has since risen to 74.98%. “Moroccan banks have a great potential in Africa. Despite a slower growth in commodity-reliant countries, West African countries in particular (Côte d’Ivoire, Senegal, Mali) are boosting our activity,” Brahim Benjelloun-Touimi, executive CEO of BMCE Bank Group and president of Bank Of Africa, told OBG.

Search For Growth

One of the drivers of diversification around the continent has been a search for continued growth, as the domestic banking sector’s rate of expansion slows. “The Moroccan banking sector is maturing,” Mehdi Chakir, financial analyst at CFG Bank’s investment arm, told OBG, noting that the bank credit to GDP ratio is now higher than in Turkey for example. “As a result there has been a slowdown in growth in the sector, which has led large banks to expand into sub-Saharan African countries, where growth prospects remain very high,” he told OBG.

According to Bank Al Maghrib (BAM), the central bank, as of June 2014 some 62% of the population held a bank account. This is similar to the World Bank’s Global Findex database figure of 59%, which is comparatively higher than 34% in sub-Saharan Africa, illustrating the high potential for growth. But such growth comes with risks, and there have been some concerns about the impact on Moroccan banks of higher non-performing loan rates in many sub-Saharan states. However, a recent IMF stress test found that Moroccan banks’ African subsidiaries did not pose systemic risks to the country’s banking system. Nevertheless, to manage cross-border risks BAM is establishing supervisory colleges for the three banks.

Continued Drive

While expansion appears to have slowed in recent years, the nation’s banks continue to build up their foreign networks. Attijariwafa Bank, for example, aims to raise the contribution of its operations abroad from 27% of its profits to 30% within five years. “Major banks are continuing to conduct due diligence on potential new acquisitions on the continent,” Chakir told OBG. The latest acquisition of an African bank by a Moroccan one occurred in 2015, when BMCE, via BoA, took a 90% stake in Rwanda’s Agaseke Bank. Attijariwafa Bank has also been linked with the sale of the Egyptian subsidiary of British bank Barclays; a sales process that began in July 2015, with the subsidiary valued at $400m.