M3 Money Supply Slows to 7.8% Growth in September: Key Drivers Revealed

Bank Al‑Maghrib has released the latest monetary statistics, showing that the M3 monetary aggregate reached 1.996 billion dirhams in September. This represents a 7.8% year‑over‑year growth, a modest slowdown from the 8.3% rise seen in August.

Key Drivers of the M3 Slowdown

• Credit Growth: Credit to the non‑financial sector fell to 3% in September, down from 3.4% in August. The slowdown reflects slower loan growth to private firms (0.8% vs. 1.0%) and public firms (6.4% vs. 9.2%). Household credit remains stable at 2.9%.
• Net Credits to the Central Administration: Growth slowed to 1.4%.
• Deposits and Time Accounts: Bank deposit growth dropped to 10.1% and the rise in time‑deposit accounts fell to 1.1%.
• Currency Circulation & Market‑Fund Holdings: Both saw strong growth, 9.8% for physical cash and 24.8% for mutual‑fund investments by economic agents.

Sector‑Level Breakdown

• Private Non‑Financial Firms: M3 growth slowed to 10%, with deposits falling from 16.2% to 10.9% and mutual‑fund holdings from 30.5% to 27.9%.
• Households: Growth nearly stalled at 6.6%, deposits were 9.2% and time‑deposit accounts declined by 3.8% from 3.4%.

Official Reserves

The rate of increase in Official Asset Reserves (AOR) accelerated to 14.1% from 13.1%.

Credit Arrears

Outstanding loan arrears rose by 3.8%, with the credit‑to‑loan ratio standing at 8.6%.

Implications for the Economy

Slowdowns in deposit growth and credit expansion stem from tightening liquidity conditions and a slower real‑estate credit cycle, while the rise in consumer and equipment loans offsets some dampening effects. The overall M3 slowdown suggests a cautious monetary stance ahead of the upcoming monetary policy meeting.