At the end of September, the group posted indicators that exceeded expectations. The prolonged decline in the cost of risk should improve the generation of equity. The RNPG is expected at 6 billion dirhams this year. An attractive yield of over 4.2% is expected this year.
In a research note published on November 22, the research company Alpha Mena reconsidered its recommendation concerning the title Attijariwafa bank. The action has dropped, like the banking sector as a whole, 17% since the start of the year.
After recommending relief, the research firm now suggests accumulating the title in portfolios, anticipating a rise of 6.51% to 427 dirhams.
An RNPG expected at 6 billion dirhams this year
Alpha Mena notes that as of the end of September, “the group’s achievements were slightly above our expectations”. Attijariwafa bank posted a NBI up 7.2% at the end of September at 19.7 billion dirhams. Margins on commissions and on interest increased respectively by 8.4% to 4.2 billion dirhams, and by 6.2% to 12.8 billion dirhams. At the same time, the cost of risk fell by 8.2% to 2.6 billion dirhams, and the group’s profitability increased by 18.2% with an NI of 4.5 billion dirhams.
For the research firm, “the contraction in the cost of risk should support the improvement in the generation of equity over the short and medium term, taking into account the expected reversals on forward-looking provisions following the expected improvement in the quality of the sector’s credit portfolio”. The stock should also perform well this year for investors, according to Alpha Mena projections, with a yield of 4.24%.
Pressure on solvency ratios
Nevertheless, Alpha Mena highlights the fact that Core Tier 1 is losing ground at the end of September. This may come from the entry into force of the circular relating to giving in payment. “Indeed, according to Bank Al-Maghrib, the real estate assets in question should be overweighted (up to 250%) depending on the duration of their holding”, underlines the research company.
She recalls that this measure is smoothed over five years. “According to experts, the giving in payment represents between 1.5% and 2% of the assets of Moroccan banks.” Alpha Mena concedes that it is difficult to simulate the impact of this circular by ignoring the holding period of its assets. However, she stresses that “the risk is very real”.
Beyond the giving in payment, the international activities whose contribution reaches approximately 35% of the GNP and NIGS also present risks. “On the top-line side, the rise in market rates should harm the results of market operations. The Egyptian asset incurs a greater risk in view of an aggressive credit growth in line with the government’s strategy to support SMEs “, explains the research company.
