Summary: The FSAP stress testing exercise took place at a time of deep structural changes for the Moroccan financial system that create opportunities but also bring about potential risks. First, Moroccan banks have expanded both domestically and regionally since the global financial crisis, taking advantage of the opportunities afforded by retreating European banks, and with proactive support from BAM. Second, Morocco’s insurance sector has expanded strongly in recent years, with close links with the banking sector. In addition, some features of the banking system increase its vulnerability to shocks. These include: rapid expansion abroad, and high concentration risks. Moreover, several shocks experienced during the recent years as a result of external and domestic macroeconomic conditions brought about liquidity pressures and a rising rate of NPLs.

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