RECOMMENDATIONS
In a resilient macroeconomic context, listed banks in Morocco confirm their solid growth profile, going from an AAGR of their Net Banking Income of 3.7% during the pre-Covid period(1) to 7.5% over 2023-2026E. A scenario supported by four main drivers, which are:
- The new investment dynamic in Morocco which is reflected positively on the evolution of investment loans. The latter recorded a growth of 14.2% at the end of October 2024 after 13.0% in 2023. At the same time, the solid recovery of construction starts, i.e. 32.1% during the H1-24, supported by the Direct Housing Assistance Program ;
- The positive orientation of trading activities thanks to, on the one hand, the start of a new accommodating monetary cycle in Morocco and on the other hand, the democratization of Foreign Exchange hedging instruments within SMEs ;
- The continued optimization of the average cost of deposits through a sustained increase of non-interest-bearing deposits in Morocco. Thanks to a CAGR of demand deposits(2) of 7.3% over the last three years, their weight is now close to 70% in the deposit structure ;
- The downward trend of the Cost-to-Income ratio which attests to the strong ability of Top Management to optimize expenses. Thanks to the growing adoption of digital platforms by customers, the sector's C/I ratio could improve by an additional 5.7 points over 2023-2026E, going from 47.3% to 41.7%.
In this context, the listed banking sector in Morocco is expected to record new all-time highs in terms of performance during the 2024E-2026E period. Therefore, we have reviewed our earnings growth forecasts upward, from an initial AAGR of 8.3% to 13.5% in order to exceed MAD 22.0 Bn total earnings by of 2026E.
Following our valuation exercise, we come out with a target market capitalization of the listed banking sector of MAD 312 Bn, which offers an appreciation potential of +13.0% over the next 12 months and an induced P/E 26E which remains "attractive ", i.e. around 14.0x.
