Significant Growth in Islamic Financing: Real Estate Dominates at 80.4% in BAM’s Annual Report

2024-07-28 17:01:12

These funds were dedicated to real estate (80.4%), equipment (13.5%), as well as consumption and treasury (6.1%), indicates BAM in its 20th annual report on banking supervision. The report also states that participatory financing consists of “Mourabaha” types (99%) and “Salam” (1%).

Thus, the total outstanding amount of Mourabaha financing was established at 28 billion dirhams (MMDH), an increase of 20.1% year-on-year. Excluding pre-determined margins, this outstanding amount amounted to 21.2 billion dirhams. In terms of distribution by economic object, the Mourabaha portfolio is composed of 81% real estate financing, 13.6% equipment financing, and 5.5% consumption financing.

Furthermore, BAM specifies that the stock of goods acquired under Mourabaha operations amounts to 301.4 million dirhams (MDH) in 2023, compared to 171.1 MDH in 2022.

As for the outstanding Salam financing, it increased to 187.7 MDH in 2023. Receivables from customers represent 86.8% of total assets.

Emerging Trends in Islamic Financing: The Rise of Mourabaha and Salam

Recent data from Bank Al-Maghrib (BAM) highlights significant shifts in Morocco’s financing landscape, with a
considerable focus on real estate investments. Of the total financing indicated, a staggering 80.4% was
allocated to real estate, underscoring its prevailing importance in the market. This trend signals a potential
continued buoyancy in the real estate sector, driven by sustained demand and favorable economic conditions.

Moreover, the report showcases a remarkable 20.1% year-on-year increase in Mourabaha financing, which now
stands at 28 billion dirhams. The predominance of this financing type, which constitutes 99% of the total
participative funding, emphasizes its pivotal role. Factors such as increasing housing demand and rising
property prices could contribute to this upward trajectory, as more Moroccans seek accessible financing options
in the housing market.

The growth in equipment financing, accounting for 13.5% of the total, indicates businesses investing in
capital assets, potentially highlighting an economic resurgence as companies prepare for expansion. This trend
further supports the notion of a robust economic recovery and a responsive financial ecosystem nurturing
business growth.

Additionally, the Salam financing product, while constituting a mere 1% of the total participative finance
market, registered growth, with an outstanding amount of 187.7 million dirhams in 2023. This indicates a
gradual acceptance and interest in diverse Islamic financing products, which could encourage the proliferation
of these options in the financial marketplace.

With the acquisition of goods through Mourabaha operations reaching 301.4 million dirhams, a noticeable
increase from the previous year, it reflects a growing consumer confidence and a willingness to engage in
Sharia-compliant financing strategies. This trend suggests an expanding awareness and acceptance of Islamic
financing methods among the Moroccan population.

As these financing patterns evolve, the emphasis on real estate and equipment reflects broader economic and
social trends. Stakeholders in the financial sector may need to adapt to the increasing demand for
participative financing options, particularly those aligned with Islamic principles, which may lead to
innovative products that cater to the diverse needs of consumers and businesses alike.