Big oil-producing countries have faced a double-hit in recent months: the sudden drop in prices of oil and the economic impact of the global pandemic. In the case of Angola, which entered both crises with an already weakened economy, how are its prospects looking? The Africa Report speaks to Sergio Pugliese, the Executive President for the African Energy Chamber (AEC), to find out.
Growth slows in Africa for Moroccan banks
The activity of Morocco's banks outside the kingdom's borders is generally decelerating, according to a recent report by the Moroccan central bank. This is due to a slowdown in some countries and international regulations that modify the evaluation of financial results.
Last year was a slower year for Moroccan banks in Africa. The three groups with a strong presence on the continent, Attijariwafa Bank followed by BMCE Bank Of Africa and the Banque Centrale Populaire (BCP), had more than Dh284bn ($29.6bn) in assets at the end of 2018, representing an increase of just 1.8% compared to the previous year.
After an expansion period – from 2012 to 2015 – the appetite of Moroccan groups has decreased. In 2018, BCP was the only one to establish itself in new territories. It acquired Banque des Mascareignes, located in Mauritius, which itself has a banking subsidiary in Madagascar.
Moroccan banks have built up a vast network on the African continent in recent years. At the end of 2018, they were present in 27 countries: ten countries in West Africa (including eight in the Union Economique et Monétaire Ouest Africaine area), six countries in Central and East Africa, three countries in the Maghreb and two countries in Southern Africa.
All these locations outside Morocco represent, on average, 24% of the groups’ profits. However, the growth in the international distribution of loans has slowed significantly. The three Moroccan banks distributed Dh155.3bn, a timid increase of 1.1% compared to 13.3% a year earlier.
Changes and challenges
The modest performance in this financial year was due to the entry into force of IFRS 9, which requires banks’ equity to be taken into account, and to the difficulties encountered by Moroccan banks in certain countries. “This trend is also due to a difficult economic situation, particularly in Central African countries,” explain the central bank’s analysts.
The year 2019 is set to be a poor one in terms of new acquisitions, except for BCP, which is in the process of completing the acquisition of the African subsidiaries of France’s Banque Populaire – Caisse d’Epargne group.
The three Moroccan groups focused on strengthening equity capital to better manage risks, particularly in a handful of African countries. Several analysts argue that the next few years will be years of consolidation of gains before the banks seek new growth drivers.
Slowdown in foreign deposits
From a global point of view, the growth in deposits collected by subsidiaries located abroad also slowed down. At the end of 2018, Moroccan banks collected Dh191bn, up 5.6% on 2017, when those deposits grew 13.1%. This figure nevertheless represents 24% of the total deposits of the three banking groups.
Non-performing loans carried by foreign subsidiaries amounted to Dh15.7bn. The rate of provisioning for these loans was also maintained at 70%, as requested by the central bank.
On the whole, Moroccan banks do not have their best hours, even if they still continue to generate large profits on the continent. For the 2018 financial year, Moroccan banking institutions as a whole posted a net profit of Dh11.1bn, up just 2.9%. A year earlier, profit growth exceeded 17%.
This article first appeared in Jeune Afrique.