A report issued by the Central Bank revealed that banks avoided sufficient funds and allocations that exceeded 118% of non-performing non-performing loans, amounting to 111.6 billion dirhams, to ensure the highest levels of financial safety, whereby the “Central” obliges banks to comply with standards that are higher than those applied internationally in how loans are classified.

The Central Bank data showed that the coverage funds amounted to 132 billion dirhams, divided into 98.8 billion dirhams, private allocations and outstanding benefits, and 33.2 billion dirhams general allocations, noting that the allocations recorded at the end of last year, is the highest coverage of non-performing loans ever, and is considered One of the most important indicators of financial stability for banks.

Statistics indicated that non-performing or non-performing loans recorded 6.5% of the total credit portfolio at the end of last year.

On the other hand, the «Central» report showed that banks have liquid assets amounting to 453 billion dirhams, or 15.2% of the total assets amounting to 2.98 trillion dirhams.

Loan classification

The central bank system sets five levels for classifying loans: regular loans, supervised loans, sub-standard loans, doubtful loans, as well as unproductive loans, which are bad loans or loss loans.

"Normal"

According to the system, loans that are classified as "ordinary" are considered accounts that involve normal banking risk, while the information available to the bank states that their repayment is confirmed, as agreed upon, while loans that are classified as "under supervision" are accounts of some weakness With regard to the solvency of the borrower, what needs to be done more carefully, however, it does not require the formation of a dedicated to it.

"Below the normal level"

As for loans "below the normal level", they are loans that may lead to losses, due to the presence of factors that may hinder the repayment process. This category usually includes loans and advances in which the original loan is delayed for a period of more than 90 days, instead of 180 days now. In such a case, the banks must make provision for 25% of the total loan balance.

"Doubtful of their collection"

Loans that are classified as “doubtful of collection” are considered loans that seem to be fully repayable doubtful, based on available information, and this often leads to the loss of part of these loans (when the financial position of the customer is not correct, and the guarantees are insufficient), in which case Create a provision of 50% of the total loan balance.

"Unproductive"

As for loans that are classified as “unproductive” or non-performing and are considered a loss, it is in which the bank makes all means to collect them and nothing has been collected from them, or that there is a possibility of not collecting them at all, and in this case a provision is made of 100% of the entire loan balance .

New methodology

In June 2019, the Central Bank announced its adoption of a new methodology for calculating and reporting non-performing loans in the banking sector, reflecting its true position away from the exaggeration that it appears, as a result of banks combining interest on funds that have not been collected for 90 days to total non-performing loans.

The central bank system sets 5 levels of loan classification.

- A new methodology for reporting bad loans.

6.5%

Non-performing loan ratio to the total loan portfolio.