Oxygen credits: bankers fear a surge in delinquencies

Nearly 17.5 billion dirhams in cash loans were granted, as part of the Damane Oxygene operation, to small and medium-sized enterprises damaged by the poor economic situation. The Economist takes stock in the second quarter of these 3.5% credits granted to small and medium-sized enterprises to stand up to the crisis situation induced by Covid-19.

According to the newspaper, this level of production is explained by the exceptionally low costs of Oxygen credits. If it is necessary to note the slight decline in the average interest rate applied to liquidity facilities (by 0.33 percentage point) compared to the same period a year ago, it is on the side of loans intended for investment, a net decrease of almost 100 basis points is observed, compared to the second quarter of 2019.

Thanks to this breath of fresh air offered to companies and making it possible to finance up to 3 months of current charges, “the interest rate differential between micro-enterprises and large companies narrowed by 0.37 percentage point compared to the first trimester, ”notes the daily.

But, apart from the Damane loans, the production of the banks remains immobilized by the gloomy economic situation. The decisions that accompanied the health crisis, the impact of which was negative on consumption, caused a drop of 3.6% in the outstanding amount of dedicated loans over 6 months. And transactions are not about to return to their pre-crisis level.

Citing projections from BAM which predicts a probable deterioration in the average default rate in 2020 to 9.9% and to 10.8% in 2021, the newspaper states that a 1% appreciation of bad debts could induce a decrease up to 4% of the credit supply over a two-year period. This will have the corollary of “pushing the banks to be more selective and to increase the risk premium”, estimates The Economist. For their part, bankers are concerned about the behavior of bad debts. Not to mention the worsening economic outlook and their direct impact on the demand for credit.

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