A favorable environment for the momentum of listed banks

Moroccan banks operated in a favorable environment in 2025, marked by the combination of positive factors: (1) An acceleration of the economic growth to 5.0% after 3.8% in 2024, i.e. the highest level since 2017, (2) A strong public investment effort of MAD 340 Bn, representing 21% of GDP versus a historical average of 17% and, (3) An accommodative monetary policy supporting economic growth. As a reminder, by -25 BPS in March 2025, for the 3rd time since June 2024.

The key takeaways from this reports are as follows:

  • Driven by Morocco¡¦s investment supercycle, domestic credits recorded in 2025 the strongest growth during the past 15 years, i.e. +8.0%. As expected, equipment loans accelerated by +25% to MAD 304 Bn, representing a share of total loans of 24% in 2025. This dynamic is supported by the sale-and-leaseback transactions regarding assets held by the Moroccan state;
  • The listed banks' results at the end of September 2025 are broadly in line with our forecasts. The listed banking sector posted an increase of +6.0% of its Net Banking Income (NBI) to MAD 72 Bn and +13.6% of its Net Income Group Share (NIGS) to MAD 17 Bn. Beyond the volume effect, banks benefited from: (1) The optimization of funding costs as the share of demand deposits accounted for 73% of total deposits, (2) The ramp-up of market activities within the NBI structure in a favorable interest rate environment, (3) The growing adoption of digital banking services by clients, enabling an optimization of the distribution network and translating into a decrease of -0.6 pt of the Cost-to-Income (C/I) ratio to 41%, and finally (4) A decrease of -9.8% of the Cost of Risk (CoR) after 2 years of increases, thanks to the asset quality improvement in Morocco and some African countries ;
  • We remain convinced that banking stocks are undervalued. As the ROE 26E-27E exceeds the 13.0% threshold for the 1st time, the sector's P/E stands at a historical low level of 12.6x over the same period. The P/E has never been this low relative to the sector's financial profitability. This unprecedented situation offers an upside potential for the listed banking sector of +26% in 2026.
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