Moroccan banks’ non-performing loans (NPLs) climbed to MAD 105.97 billion between January and May 2026, marking a 4.9% increase compared with the same period in 2025, according to the latest figures released by Bank Al-Maghrib.
The increase follows the trend seen in 2025, when outstanding NPLs rose 5.2% to MAD 103 billion, after growing 2.8% in 2024. However, the pace remained below the annual average increase of 6.8% recorded between 2015 and 2023, according to the Financial Stability Report for 2025. The banking sector’s overall NPL ratio stood at 8.3%, down slightly from 8.4% in 2024, marking a second consecutive year of improving asset quality.
The default rate continued to vary significantly across sectors. Trade recorded the highest ratio at 15.6%, compared with 15.7% in 2024, followed by manufacturing at 15.3%, down from 16.1% a year earlier. The hospitality sector posted a ratio of 14.3%, slightly lower than 14.4% in 2024 and well below its decade-long average of 22%. Construction and public works (BTP) recorded 14.1%, compared with 14.8% the previous year, while agriculture and fisheries saw their default rate rise to 13.2%, up from 10.4% in 2024, reflecting the sector’s structural vulnerability to climate-related shocks.
Within banks’ loan portfolios, non-performing loans held by households reached MAD 36 billion, up 4.3%, pushing the household default rate to 10.9%, compared with 10.7% in 2024.
By risk category, compromised loans remained the largest component, accounting for 81% of total NPLs, despite declining by 360 basis points. Their outstanding value increased only 0.7% to reach MAD 82.9 billion.
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Doubtful loans, meanwhile, surged by 68.3% to MAD 14.8 billion, increasing their share of total NPLs to 14.4%, up from 9% a year earlier. In contrast, substandard loans fell 23.4% to MAD 5 billion, reducing their share from 6.7% in 2024 to 4.9%.
To cover these non-performing loans, banks had built up provisions totaling MAD 70 billion by the end of 2025, up 3.8% following a 4.6% increase the previous year. The overall provisioning coverage ratio stood at 68%, compared with 27.3% for participatory banks alone.
Coverage levels varied significantly by risk category, reaching 75% for compromised loans, 47% for doubtful loans, and just 12% for substandard loans. Among Morocco’s three systemically important banks, the coverage ratio stood at 68.9%, compared with 69.2% at the end of 2024.
In addition to these specific provisions, banks held general provisions amounting to MAD 18 billion, up 5%, as part of a forward-looking credit risk management approach aligned with international regulatory standards.
According to Bank Al-Maghrib, these buffers, together with banks’ regulatory capital, strengthen the overall resilience of the banking system against potential credit shocks.
The central bank also conducted a new macroeconomic solvency stress test covering the country’s eight largest banks under three scenarios of increasing severity: a baseline scenario aligned with the central bank’s June 2026 macroeconomic forecasts; a severe scenario based on an escalation of the conflict in the Middle East and its impact on global supply chains; and an extreme scenario combining a sharp recession with a severe drought in 2027.
Under the baseline scenario, the average NPL ratio of the eight largest banks would stabilize at around 9.8% over the 2025-2027 period, while banks would maintain comfortable levels of regulatory capital, with an average capital adequacy ratio of about 15.2% by the end of 2027.
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Under the severe scenario, the average NPL ratio would increase from 9.1% in 2025 to 11.1% in 2027, requiring banks to strengthen their provisions, while the average capital adequacy ratio would decline by about 141 basis points over the period.
In the extreme scenario, the average NPL ratio would rise to 11.5% in 2026 before reaching 12.8% in 2027. Average regulatory capital and core capital ratios would stand at 13.6% and 10.3%, respectively, by that horizon. Even so, banks would, on average, continue to meet the minimum regulatory capital requirements in force.
