Nineteenth meeting of the Systemic Risk Coordination and Monitoring Committee (CCSRS)


The Committee for Coordination and Monitoring of Systemic Risks (CCSRS) held its nineteenth meeting this Tuesday, July 2, at the headquarters of Bank Al-Maghrib in Rabat.

It examined and approved the financial stability report for the year 2023 and took stock of the progress of the financial stability roadmap covering the period 2022-2024.

He also reviewed the conclusions of the work of his monthly subcommittee as well as the results of the assessment of systemic risks and noted in this regard that the monitoring indicators continue to show the solidity and resilience of the Moroccan financial sector.

The analysis of the situation of the financial system in light of observed and expected economic and financial developments enabled the Committee to note the following main findings:

– The global economy, despite monetary tightening, geopolitical tensions and conflicts in Ukraine and the Middle East, showed notable resilience in 2023, accompanied by a tangible reduction in inflationary pressures. However, its outlook is slowing down, particularly due to the high uncertainties surrounding it. In this context, the national economy recorded a significant improvement in its growth,

with a rate increasing from 1.5% in 2022 to 3.4% in 2023. Suffering from low agricultural production, this rate should return, according to Bank Al-Maghrib’s projections, to 2.8% this year before accelerating to 4.5% in 2025, driven by the continued strengthening of non-agricultural activities. In terms of external accounts, the current account deficit narrowed in 2023 to 0.6% of GDP and should remain contained, at 1.7% of GDP in 2024 and 2.7% in 2025. Under these conditions, Bank Al-Maghrib’s official reserve assets would continue to strengthen to ensure coverage of nearly 5 and a half months of imports of goods and services. As for public finances, the budget deficit would continue to ease post-covid, stabilizing at 4.4% of GDP in 2024 before decreasing to 4.1% in 2025, while Treasury debt would see a slight increase to 70.1% of GDP in 2024 before decreasing to 68.5% in 2025.

– In this context and after an increase of 2.7% in 2023, bank credit to the non-financial sector should record an acceleration of its pace to 4.4% at the end of this year and to 5.2% in 2025. Taking into account the increase in non-performing loans, the banking sector’s loss ratio stood at 8.5% at the end of 2023 and 8.8% at the end of May 2024. The coverage rate of these loans by provisions remained around 68%.

– The banking sector continues to display solid fundamentals. In terms of profitability, the aggregate result of banks at the end of 2023 recorded a rebound of 20.4% after a contraction of 13% in 2022, mainly thanks to the sharp recovery in the result of market operations. In terms of solvency, the banks achieved, on a corporate basis, an average solvency ratio of 15.5% and an average Tier 1 capital ratio of 12.9%, above the regulatory minima of 12% and 9% respectively. On a consolidated basis, these ratios stand at 13.5% and 11.6% respectively. In addition, the solvency macro-stress test exercise continues to demonstrate the resilience of the banking sector in the face of scenarios simulating the deterioration of macroeconomic conditions. The short-term liquidity ratio remains at a comfortable level, above the regulatory threshold of 100%.

– As for Financial Market Infrastructures, they continue to demonstrate strong resilience, both financially and operationally, and still present a low level of risk to financial stability.

– Concerning the insurance sector, despite the rise in interest rates, it was able to maintain its growth although at a slower pace. Its turnover reached 55.9 billion dirhams at the end of 2023, a slight increase of 3.9% driven mainly by the 5.8% growth of the non-life branch. The growth of the life branch, slowed down in particular by the savings segment, has, for its part, shown a significant deceleration to 1.8% against an average of 11.9% over the last ten years.

In terms of profitability, the sector generated a net accounting result of 4.2 billion dirhams, an increase of 6.2%, thus bringing the rate of return on equity (ROE) to 9.6%.

The ratio of unrealized capital gains on investments improved to 9.3%, in a context of recovery of the stock market, which had a positive impact on the solvency margin of the sector which reached 330.4% against 312.7% a year earlier. This margin, calculated under the current prudential regime, remains above the regulatory threshold but at this stage only covers the underwriting risk.

Furthermore, the stress test exercises carried out highlight the overall resilience of insurance companies to unfavourable macroeconomic and technical conditions.

– As regards the pension sector, the main basic schemes continue to experience a difficult financial situation. The application of the latest resolutions relating to salaries taken within the framework of the social dialogue (April 29, 2024) would make it possible to slightly postpone the horizons for the depletion of the reserves of the CMR-RPC and RCAR schemes, without however guaranteeing their long-term viability. For the general CNSS scheme, the reduction in the minimum contribution period giving entitlement to a pension from 3,240 to 1,320 days will bring forward, by a few years, the appearance of the overall deficit of the scheme and the depletion of its reserves. Thus, the implementation of the systemic reform of this sector, through the establishment of the two-pole system, one public and the other private, whose strategic orientations were also determined by the aforementioned social dialogue agreement, becomes essential. This reform should make it possible to set up a pricing system for these schemes capable of absorbing a large part of their uncovered past commitments.

– On the stock market, the MASI index has been on an upward trend, recording a gain of 10% since the beginning of the year, with a drop in volatility to 6.87% on average in the first half of 2024 compared to 9.4% in the second half of 2023. The overall valuation of the market is at a relatively high level with an estimated PER of 20.7x, close to the average of the last five years. For its part, the market liquidity ratio has improved to 11.53% at the end of May compared to 8.7% a year earlier.

– On the bond market, BDT rates remained broadly stable in the first half of 2024, but significantly lower compared to the first half of 2023. The outstanding amount of private debt at the end of April 2024 increased by 3.54% year-on-year, to stand at 262.9 billion dirhams, 80% of which was issued by financial institutions and public companies. The net debt of non-financial issuers through public offerings remains at a generally controlled level despite a slight increase in 2023. It stands at 53% of equity for listed issuers and 80% for unlisted issuers.

– The overall net assets of UCITS stood at 609.7 billion dirhams as of May 31, 2024, up 8.9% compared to the end of 2023. Net subscriptions since the beginning of the year amount to 34.6 billion dirhams, 54% of which were directed towards the “medium and long-term bonds” category. Regarding the other categories of UCITS, the overall net assets of OPCIs amounted to 87.4 billion dirhams at the end of March 2024, up 42.6% year-on-year. The outstanding amount of securitization funds increased, from one year to the next, by 24.7% at the end of March 2024 with total securitized assets of 17.4 billion dirhams. The overall net assets of OPCCs reached 2.55 billion dirhams at the end of March 2024, an increase of 3.3% year-on-year.

Furthermore, the Committee welcomed the efforts made to complete the compliance of the national system for combating money laundering and terrorist financing with the FATF recommendations. This compliance was endorsed by the MENAFATF at its plenary meeting held in Manama in May 2024.

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