EXECUTIVE SUMMARY
In this Research Paper, we focused on the evolution of the valuation multiples of the Banks index and the MASI index over the period 2010-2024E. At the end of this exercise, we note an “unusual ” spread level which deviates significantly from the normative trend observed over the last 15 years.
Ultimately, our quantitative analysis reveals a potential recovery of the Banks index of +20% over the MT. Therefore, we recommend investors to overweight the Moroccan banking sector in their portfolios.
In more detail, we emerge with the following conclusions:
- For the 1st time, the spread between the P/E of the “banking sector” and that of the “Equity market” widened significantly to more than 25%, i.e. 15.0x versus 19.1x respectively ;
- In relative terms, the “Banks P/E” compared to the “MASI P/E” stands at 0.79 in 2024 against a 15-year average of 0.97. An “unusual ” situation which seems hardly sustainable over the MT;
- We forecast an upward adjustment of the banking sector’s average P/E to approach 18.0x in the first instance. A level equivalent to the lower band of our confidence interval, i.e. 0.91 (Cf. Graph 2, page 2) ;
- The achievement of our scenario would result in a target performance of the banking sector of at least +20% on the MT. Especially since Moroccan banks will show during the 2023-2025E period, both steady and resilient growth profile.
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