What Islamic finance will mean for Morocco

Growth prospects for banking industry

Islamic Financing, finger on keyboard, financial decision concept.

Islamic Financing, finger on keyboard, financial decision concept.


After the Moroccan central bank finally approved Islamic finance in early 2017, the first Islamic bank has opened, with promising growth prospects for the banking industry as a whole

After years of rejection from the central bank, Islamic finance in Morocco is now a reality.

In addition to the five new Islamic banks approved in January by Bank Al-Maghrib, the country’s central bank, an announcement earlier this year further granted three banks permission to sell Islamic products.

A statement from the central bank noted that a Shari’ah Committee for Participative Finance will be established to govern all Islamic finance activities.

The five banks are: CIH Bank in partnership with Qatar International Islamic Bank; BMCE Bank of Africa jointly with the Saudi/Bahraini group Dalla Al Baraka; Banque Centrale Populaire with the Guidance Financial Group; and Crédit Agricole du Maroc in partnership with the Islamic Corporation for the Development of the Private Sector (ICD), a subsidiary of the Saudi-based IDB.

Banque Marocaine du Commerce et de l’Industrie, Crédit du Maroc and Société Générale have also been approved to sell Islamic banking products, whilst Attijariwafa Bank is in talks about a potential future partnership.

“The launching of participative (Islamic) finance products in Morocco complements and expands the range of products offered by the domestic banking sector and opens it to new financing capacities,” a statement from the Central Bank said. “It will strengthen the attractiveness of Casablanca as a leading financial hub in Africa, in accordance with the will and guidance of His Majesty the King, may God assist Him.” 

“We are delighted by the news that we will be able to positively impact the Moroccan consumer finance market,” said Khaled Elsayed, President and CEO of Guidance Financial Group, USA.  He added, “It is also nice to know that this achievement is yet another positive result of the remarkable success our distinctive US Islamic home finance programme has had since it was introduced over 15 years ago to the US Muslim consumer market.”

Guidance stated in a press release that the collaboration with Banque Centrale Populaire is aimed at fulfilling the growing demand in Morocco for Islamic financial products.

Though it was expected that Morocco would issue its first ever Sukuk for the domestic market in the first half of 2017, to date no such announcement has been made.

In addition, there has not yet been any approval for a bill on the regulation of Takaful.


The first Islamic bank was launched in Morocco in June. QIIB announced the launch of the operations of Umnia Bank in Morocco, which is the result of a partnership between QIIB and Crédit immobilier et hotelier (CIH) and Moroccan Deposit and Management Fund. The bank is the first Islamic bank in Morocco. This comes six months after the Central Bank first approved the operations of Islamic financial institutions.

The Bank’s operational works began through its branches in Casablanca and Rabat, where Umnia is considered as the first bank of its kind to obtain the necessary approval of the Central Bank of Morocco to promote its products in the Kingdom of Morocco.

Umnia Bank has formulated an operational strategy that focuses on expanding in various cities in the Kingdom of Morocco and offers innovative and different banking bank products including everyday banking solutions, finance and investments as well as deposits and savings.


Islamic banks, referred to as ‘participation banks’ in Morocco, are likely to provide a modest stimulus to deposit growth in the country, Fitch Ratings wrote in a statement. Morocco’s central bank granted its first licences to Islamic banks in June.

Fitch's discussions with rated banks indicate that the ability to offer Islamic banking products could expand their deposit bases by five per cent to 10 per cent. The ability to grow the deposit base is positive for Morocco’s economic development because deposits represent about 70 per cent of banking sector funding.

“We expect growth of participation banks will be high initially, as was the case following the introduction of Islamic banking in Turkey and Indonesia. The ability to access Islamic products will ensure that customers have access to a more comprehensive range of services. Customers who have avoided transacting with conventional banks for Shari’ah-related reasons can now move into the formal banking sector,” said Bashar Al Natoor, Head of Islamic Finance for Fitch Ratings.

However, banking penetration is already high in Morocco, with 70 per cent of adults holding a bank account, suggesting that most Moroccans have not shied away from the banking sector on faith grounds. Participation banking is therefore unlikely to take a significant market share from the well-established conventional banks, according to Fitch.

 The growth of participation banks will be affected by several factors, including the spread of awareness of Islamic finance, the extent to which the government stimulates expansion, population growth rates and regulatory developments. Positively, the central bank has established a central Shari’ah board of Islamic scholars to oversee the sector, which should help to provide a cohesive framework under which the banks can operate. Greater clarity on essential aspects, such as how participation banks will manage their liquidity in a Shari’ah-compliant manner and how financing contracts will be drawn up, would help to stimulate the sector. However, delays in establishing a clear framework could hinder the development of participation banks, forcing up funding costs and resulting in insufficient depth in product offerings, according to Fitch.

Growth rates in the Moroccan banking sector have been volatile in recent years, reflecting unsteady economic trends. Deposit growth (nearly seven per cent in 2016) has outstripped loan growth (3.9 per cent) in recent years, but credit demand is set to accelerate in line with an improved economic outlook in 2017. This could force banks to compete more aggressively for deposits, putting pressure on margins at the conventional banks, said Fitch. The ability to offer participation banking services could broaden the pool of potential depositors in the country, mitigating the competitive pressure.

Only existing conventional banks have applied for participation banking licences and Fitch is not aware of any independent Islamic banks making requests to operate in Morocco. Banks owned by domestic shareholders, such as the aformentioned Attijariwafa Bank, BMCE Bank, Groupe Banque Centrale Populaire and Credit Immobilier et Hotelier, have opted to establish separate participation banking subsidiaries, while subsidiaries controlled by French parents, such as Societe Generale Marocaine de Banques (controlled by Societe Generale), Banque Marocaine pour le Commerce et l’Industrie (BNP Paribas) and Credit du Maroc (Credit Agricole), have chosen to provide services through special Islamic banking ‘windows’, according to Fitch.

© Islamic Business & Finance 2017