(The following statement was released by the rating agency)
Nov 09-
OVERVIEW
— We have reviewed our Banking Industry Country Risk Assessment on Morocco after having published our updated methodology.
— We are revising our BICRA on Morocco to group ‘7’ from group ‘8’.
— We are maintaining our economic risk score at ‘8’ and assigning an industry risk score at ‘5’.
BICRA ACTION
Standard & Poor’s Ratings Services said that it has revised its Banking Industry Country Risk Assessment (BICRA) on Morocco to group ‘7’ from group ‘8’. It also has maintained the economic risk score at ‘8’ and assigned an industry risk score of ‘5’.
RATIONALE
We have reviewed the banking sector of the Kingdom of Morocco (foreign currency BBB-/Stable/A-3, local currency BBB/Stable/A-2) under our updated BICRA methodology. Our criteria define the BICRA framework as one “designed to evaluate and compare global banking systems.” A BICRA analysis for a country covers rated and unrated financial institutions that take deposits, extend credit, or engage in both activities. A BICRA is scored on a scale from 1 to 10, ranging from the lowest-risk banking systems (group ‘1’) to the highest-risk (group ’10’). Other countries in BICRA group ‘7’ include Jordan, Indonesia, Bulgaria, and Russia.
Our economic risk score of ‘8’ reflects our opinion that Morocco has “very high risk” in “economic resilience,” “high risk” in “economic imbalances,” and “very high risk” in “credit risk in the economy,” as our criteria define those terms.
Although Morocco has made significant progress toward diversification, we consider that its economy is skewed toward some cyclical sectors, especially agriculture and tourism, which leaves the country’s economic performance vulnerable to external factors. In addition, Morocco’s political situation has been tense since the “Arab spring.” This has dampened credit demand and investment, although we forecast real GDP growth of 4.8% in 2011.
