Expected increase in bank rates for new loans from February

Lending rates will increase by 75 to 85 basis points (Bps) from the beginning of February for new loans granted by banks. Information obtained from several sources in the banking sector.

“This rise comes on the heels of successive Central Bank rate hikes and their impact on 52-week Treasury bill rates,” a banking source told us. This increase should be observed at almost all banks, particularly with regard to corporate rates.

For fixed-rate loans to large companies, for example, these should be at least around 4.95% for short-term cash loans, 5.25% for medium-term equipment loans term and 6.25% for long-term loans.

Variable rates should also increase in proportion to this new deal, i.e. between 75 and 85 bps. These figures are of course indicative.. They largely depend on company ratings. “Some companies will undoubtedly exceed these rates, because the spread of risk is more important”, specifies one of our sources.

Below is the table summarizing the lending rates practiced between 2019 and 2022 following the quarterly survey of Bank Al Maghrib.

Source: Bkam

Fixed rate loans formerly contracted, as well as specific products such as Intelaka, will not experience any change in principle. “Products like Intelaka are approved; they are almost off the market”, continues our interlocutor.

Another of our banking sources explains to us that the increase is normal and is part of the Basel rules. These are the rules for remunerating equity which are generally deposited in Treasury bonds.

Each increase in the yield curve of the public debt automatically increases the financing costs of banks. Added to this is the cost of risk which has increased, which automatically generates latent losses for the banks which must be covered by an adequate level of profitability.

Strongly impacted both by the increase in the cost of banking resources and by the rise in the cost of risk, the banks we contacted explain that they are obliged to take into account the new situation, or even to integrate new increases in the event of new changes, induced in particular by the increase in key interest rates.

They also warn that they are following very closely the next evolutions of the Treasury yield curve and the announcements of the Central Bank, which could augur further increases in lending rates over the next few months.

At the level of creditor rates (term deposits and accounts on book), they are also indexed on the prices of short-term Treasury bills (52 weeks). They must also experience an increase in their remuneration, which, according to our bankers, increases the cost of banking resources by the same amount, justifying this substantial increase in borrowing rates.

Ghassan Wail El Karmouni

January 17, 2023 at 7:55 p.m.

Modified January 17, 2023 at 8:13 p.m.

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