Participatory bank NPLs in Morocco

Participatory banks sit inside the landscape Bank Al-Maghrib supervises, in a population that is not the conventional banks. Their distressed exposures are not read by importing the 8.3% ratio or a consumer-credit curve.

Why the loan analogy fails

A mourabaha is a sale at a deferred price, not an interest-bearing facility. An ijara is a lease, close in economic logic to a finance lease, with a possible transfer at the end. The remedy on non-payment — taking the asset back, suing for the price, terminating — is the contract's remedy, not that of a conventional amortisation schedule.

That does not lift the prudential grid that applies to the institution. It does forbid treating the nominal as outstanding principal in the sense of a loan, and the margin as default interest in the sense of conventional credit law.

What the data room has to contain

The named contract, the price or rent schedule, the state of title, the condition of the asset and the arrears history. Without the contract, the prudential category alone does not say which right can be transferred or which security, in the broad sense, goes with it.

Portfolio due diligence still applies, with one further question: can a transferee continue exactly the same contract, or is the structure tied to the seller's participatory licence? That question is legal. It comes before the model, not after. See investing in Moroccan NPLs.

Price

Price starts from the cash the contract can still produce, or from the net proceeds of selling the asset if repossession is the main path, minus cost and time. It does not start from a percentage of face value anchored on conventional banks.

Scenarios split: a customer still paying part of the price, an asset that can be located and taken back, an asset already transferred to the customer so that what remains is a price claim. Averaging them creates a false sense of granularity.

No improvised series

This note does not publish an NPL ratio for participatory banks. The useful figure is the one in that year's report, on the exactly labelled line, read in its table. If it has not been extracted and checked, it is not quoted here.

The classification circular remains the prudential reference for years already published, until the 2025 circular takes effect in 2027. It does not turn a mourabaha into a loan.

In this series

• Morocco NPL market
• NPL valuation in Morocco
• Leasing NPLs in Morocco
• Write-offs of fully provisioned loans in Morocco

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