Fitch downgrades three Moroccan banks

Fitch Ratings has revised its outlook on Moroccan banks Attijariwafa Bank, Bank of Africa, and Credit Immobilier et Hotelier (CIH) to Negative from Stable, while affirming the three banks’ Long-Term Foreign-and Local-Currency Issuer Default Ratings (IDRs) at ‘BB+’.

This comes after Fitch’s revision of the outlook on Morocco’s sovereign rating to Negative from Stable on the anticipated adverse impact of the COVID-19 pandemic. The three Moroccan banks’ national ratings remain unaffected.

Fitch expects the Moroccan economy to contract 4.5 pc in 2020 and general government (GG) debt to rise to 58 pc of GDP in 2020 from 52.5 pc in 2019 under its baseline scenario.

According to the analysts of the rating agency, this is Morocco’s sharpest GDP contraction in 25 years, with the country’s external and fiscal deficits also set to worsen.

The magnitude of the shock will raise downside risks to the sovereign’s credit profile, despite a proactive policy response in line with the authorities’ long-standing commitment to prudent economic policies, says Fitch.

The experts of the rating agency believe the sovereign’s propensity to support to the banking sector remains high due to the role it plays in financing the economy and the authorities’ drive to preserve financial stability as the country implements its economic development plans.