Regulation
Minimum provisions of 20, 50 and 100 percent
Prudential floors, after reserved interest and eligible guarantees.
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- Serenor Capital
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The three percentages travel through market notes as if they were loss rates. They are provisioning floors, computed on a base that has already been reduced. Using them as a transfer discount reverses the sense of the text.
The text
Circular No. 19/G/2002, as amended in 2004, sets in Article 13 minima of 20% for pre-doubtful claims, 50% for doubtful claims and 100% for compromised claims. The calculation comes after reserved interest is deducted and after eligible guarantees are taken into account.
That sentence is the core of the rule. An eligible, real guarantee reduces the base. A guarantee that does not meet the text's conditions does not, even if the tape mentions it. The detail, without simplifying the conditions, is in the methodology.
Why this is not a price
The provision measures what the institution must recognise. The price measures what a third party pays for uncertain cash flows. A compromised claim provisioned at 100% of the residual base can be worth the net proceeds of its guarantee. A pre-doubtful claim provisioned at 20% can be worth far less than 80% of face value if the debtor does not pay.
The note that separates the two languages is NPL valuation in Morocco.
Link to the published ratio
The 68% coverage ratio at end-2025 is not an average of 20, 50 and 100. It is the figure printed for the whole stock of banks on a social basis. It depends on the mix of the stock and on the base after guarantees.
The 68% is not 'checked' by weighting the three floors by the severity shares. That check would be a different indicator, which BAM does not publish in that form. How to read the ratio is set out in Morocco's NPL coverage ratio.
2027
Circular No. 1/W/2025 takes effect on 1 January 2027. It does not restate, backwards, the provisions already recognised on published years, and it does not turn the historical minima into prices.
A portfolio model struck at 31 December 2025 uses the grid under which those files were classified. Moving the floors onto the future text is a scenario, dated and kept separate.
In this series
This note is a method of reading a file or a published series. It is not legal, tax or investment advice, and it is not an opinion on a particular exposure. Serenor Capital does not buy claims for its own account, manage a fund, or carry on collection.
Sources and references
- Bank Al-Maghrib, Annual Report on Banking Supervision, financial year 2025 — PDF
- Bank Al-Maghrib, Circular No. 19/G/2002 of 23 December 2002 on the classification of claims and their provisioning, as amended — PDF
- Circular No. 1/W/2025, adopted on 5 December 2025, effective 1 January 2027. It does not restate the 2012–2025 figures discussed here.
- Serenor public series, banks, social basis — Morocco NPL Monitor and methodology
Frequently asked questions
- Does the minimum apply to the whole face value?
- No. Article 13 uses a base after reserved interest and after eligible guarantees, on the text's conditions. The percentage is not multiplied by the balance on the tape.
- Does the 68% coverage ratio contradict these floors?
- No. 68% at end-2025 is an aggregate bank ratio on a social basis. The floors are category rules. The two figures are not in competition.
Evaluating an NPL Portfolio
Serenor Capital supports financial institutions and investors in the analysis and valuation of non-performing loan portfolios in Morocco.
Serenor Capital publishes research on non-performing loans, distressed-credit valuation and the development of Morocco’s secondary credit market.
This note is general commentary on method and market structure. It is not investment advice, legal advice, or a recommendation in relation to any portfolio, transaction or financial asset.