LVE Archives 2016. Agencies: Banks Slow Down

Clearly, banks continue to tighten their belts when it comes to opening new branches. In 2015, they only opened 210, bringing their network to over 5,135 branches, according to figures from the eight major commercial banks collected by “La Vie éco,” excluding BMCI, whose data was not provided and is unlikely to alter market trends.

This is certainly better than in 2014, when institutions showed the least ambition in recent years, with only 190 branches opened. However, they are still far from the levels seen at the peak of the expansion battle between 2006 and 2013.

During that period, banks operated at a pace of nearly 300 openings per year on average, almost doubling the network, which was only 2,422 branches ten years ago. Clearly, institutions are tempering their enthusiasm to contain costs.

As a result of their expansion efforts, major commercial banks experienced a significant increase in their operating expenses, which rose from around 11 billion dirhams in 2006 to nearly double that in 2013 (this increase is also partly due to other structural projects undertaken by the operators).

Alongside this, the banking sector’s operating ratio (general operating expenses as a percentage of gross operating profit) notably increased from 47% to nearly 50% over the period. Nevertheless, banks have managed to continually grow their profits since 2006.

However, the net banking income generated per branch (intermediation and commission margins) deteriorated at almost all institutions alongside the sustained effort to expand the commercial network. For example, Attijariwafa Bank saw its net banking income per branch drop from 11 million MAD to 9 million MAD between 2006 and 2013.

BMCE Bank of Africa lost 2 million MAD in revenue per branch over the period, with net banking income falling from 10 million MAD to 8 million MAD. Crédit du Maroc and Crédit Agricole du Maroc saw their profits decline by a third, from 9 million MAD to 6 million MAD, and CIH Bank even saw its margins per branch halved, from 12 million MAD to just over 6 million MAD.

In the end, only Banque Populaire remained on its feet in the race for network expansion, with net banking income per branch maintaining around 9 million MAD between 2006 and 2013. By slowing down the pace, banks seem to be taking the time to digest their network growth and make it more commercially efficient.

It must be said that these institutions have not paid much attention to this aspect in recent years. The French consulting firm Nouvelles Donnes, author of a recent study on banking networks in emerging countries, reports that nearly two-thirds of the staff deployed in branches in Morocco are assigned to tellers and processing and control tasks, while only 21% of resources are dedicated to commercial advice.

By way of comparison, in France, 60% of staff are assigned to commercial tasks and 20% work at the counters, given that processing and control are automated.

Banks have been especially compelled to slow their branch opening pace over the past two years because the economic situation is marked by cautious growth in deposits and loans, reducing the potential for interest and commission margins. Not to mention, the high cost of risk absorbs part of the profits (…).

If institutions are opening fewer branches, it is also because they seem to be allocating an increasing portion of their resources to developing remote banking solutions (…).

This should not, however, lead to the conclusion that banks should persist in restraint regarding network expansion in the coming years. With only one bank branch for every 5,700 inhabitants in Morocco, according to Bank Al-Maghrib statistics, there is still significant room for growth.

Institutions are well aware of this, as reflected in their opening targets for 2016. BMCE Bank of Africa aims to open 38 branches, approaching 740. Crédit Agricole Maroc even plans to double its record with 65 openings, thus consolidating a network that currently exceeds 500 branches.

REDA HARMAK