Casablanca – The total earnings capacity of companies listed on the Casablanca Stock Exchange is projected to reach $1.74 billion in 2024, reflecting a slight decline of 2.6% compared to the same period in 2023. This drop is largely attributed to rising credit risk costs, although various sectors have maintained positive contributions, according to a recent report by BMCE Capital Global Research (BKGR).

Banks lead the charge amid rising risk costs

The financial sector, particularly banks, has been instrumental in offsetting some of the challenges posed by the increase in risk costs. Banks accounted for 63% of the positive contribution to overall profitability, demonstrating robust commercial and operational performance. These results indicate that financial institutions have successfully managed to navigate the challenging economic landscape, compensating for credit risk through improved operational efficiencies.

Growth in oil distribution, transport, and agri-food sectors

Outside of the banking sector, industries such as oil distribution, transport, construction, and agri-food have made significant contributions to the positive performance. These sectors benefited from falling input costs, further supported by price relaxation and gains in operational efficiency.

Telecoms sector weighs on earnings

Despite these gains, the telecommunications sector, led by Maroc Telecom (IAM), has negatively impacted the overall earnings capacity. The company set aside a significant provision of $618 million to cover damages related to its legal dispute with telecom rival Inwi. This provision represents the largest negative contribution to the earnings figures, offsetting much of the positive gains from other sectors.

Overall revenue growth driven by financial companies

The report highlights a 4.3% growth in the aggregate revenue of listed companies, reaching $15.6 billion. The increase was largely driven by financial firms, which saw their net banking income rise by an impressive 12.8% to $4.79 billion. In contrast, industrial companies have shown limited growth, with revenues nearly flat at $9.74 billion, inching up by just 0.6%. However, about 30 out of the 51 industrial companies reported increased revenues, driven by higher volumes and shifts in their operational scope.

Stable operating results despite telecom setback

In terms of operating income, listed companies posted a nearly stable performance, with a slight decrease of 0.2%, bringing the total to $4.04 billion. However, a stark 28.3% drop in the operating income of industrial companies—primarily due to IAM’s substantial provision—dampened the overall results. Without this provision, the operating performance of industrial companies improves significantly, with adjusted profits up by 11.6%, amounting to $1.73 billion. Adjusted operating margins also increased by 1.7 percentage points, reaching 17.8%.

Resilience despite sectoral discrepancies

Despite the negative impact from the telecom sector and industrial stagnation, the Casablanca Stock Exchange has shown resilience, buoyed by strong performances in the financial and other key sectors. The improved operational results of industrial companies, excluding one-off impacts, suggest that the market is on a stable footing with promising growth prospects in key sectors moving forward.