Casablanca profit surge backed by credible fiscal reform

Morocco’s equity outlook for 2025 is grounded in quantifiable improvement across policy, funding, and external balances. Broker guidance now puts aggregate net profit for Casablanca-listed companies near MAD 41.2 billion in 2025, roughly a 10% rise from 2024. Bank Al-Maghrib (BAM) has eased the stance in three steps—2.75% in June 2024 to 2.50% in December 2024 and 2.25% in March 2025—then held in September.

With headline inflation projected around 1.0% in 2025, the ex-ante real policy rate is modestly positive, supporting price credibility while lowering nominal borrowing costs. Ten-year local yields trade near 2.9% in mid-October 2025, down from roughly 3.4% a year earlier, compressing discount rates used in equity valuation and pushing duration back into domestic portfolios.

Growth and price dynamics are consistent with the earnings upgrade. Real GDP is forecast to accelerate from about 3.8% in 2024 to 4.6% in 2025 and 4.4% in 2026, with agriculture normalizing and non-agriculture activity—autos, aerospace, construction materials, tourism—maintaining near-trend momentum. Disinflation restores real income growth and eases working-capital strain, while the slope of the sovereign curve anchors equity risk premia.

The 10-year–policy-rate gap has tightened to roughly 65–75 basis points, indicating less term-premium variability and improved forward guidance credibility. Fiscal accounts add support: the general-government deficit is guided around 3.6% of GDP in 2025, narrowing toward about 3.4% in 2026 as revenue performance improves and capex sequencing avoids pro-cyclical cuts. Lower net issuance reduces crowding-out, allowing banks to reweight from sovereign paper toward private credit.

External buffers are rebuilding and reduce tail-risk to the currency regime. The current-account deficit is projected in a 2.0–2.3% of GDP band in 2025, improving to roughly 2.0% in 2026 as energy imports ease and higher-value exports expand. Foreign-exchange reserves are expected to approach 5½ months of import cover by 2026, an increase from roughly five months, providing room to maintain the managed basket and widen the fluctuation band when conditions permit. Tourism receipts exceeded MAD 100 billion in 2024 and continue to firm in 2025, while OCP revenues reached about MAD 97.0 billion in 2024, stabilizing the external cash-flow base alongside growing automotive exports. These buffers reduce the need for defensive monetary tightening if harvest volatility reappears.

Earnings sensitivity varies by sector but leans constructive. Banks, roughly 40% of market capitalization, face mild net-interest-margin compression as rates fall, but loan growth and normalized cost of risk offset pressure; fee income rises with transaction volumes. Industrials and construction materials benefit from lower financing costs and stabilized energy inputs, with EBITDA margin repair of 200–250 basis points plausible on 2025 guidance.

Telecoms and regulated utilities gain valuation support as lower discount rates are applied to long-dated cash flows, enabling sustained dividend capacity. The MASI free-float index (MOSENEW:IND) hovered around the high-18,000s in mid-October, still at a 15–20% valuation discount to Egypt’s post-reform market (EGX30:IND). Closing that gap requires proof that higher profits convert into free cash flow and reinvestment rather than balance-sheet cleanup.

The market signal extends beyond a cyclical bounce. Morocco is aligning monetary easing with inflation near 1%, fiscal consolidation with deficits below 4% of GDP, and external stabilization with reserves targeting 5–5½ months of cover. That triad compresses the local risk-free anchor and lowers the corporate cost of capital, enabling a shift from deleveraging to capex. Execution risks remain measurable: rainfall shortfalls would trim agricultural value added and widen the food import bill; a global slowdown would test autos and phosphates volumes; and slippage on tax-base expansion could re-widen the deficit.

The verification set is clear for the next 3–4 quarters: BAM’s policy rate anchored around 2.25%, headline CPI within 1–2%, 10-year yields contained in a 2.7–3.2% corridor, a 2025 fiscal deficit near 3.6%, reserves trending toward 5½ months, and listed-company free-cash-flow yields stable or rising. If these thresholds hold through mid-2026, Morocco’s profits of MAD 41.2 billion will mark the start of a structural re-rating rather than the peak of a policy-assisted bounce.