The net profits of the Angolan banking sector rose 295 percent in 2021 to AOA 592.4 billion (US$1.3 billion), with Banco Económico (BE) recovering from losses and leading the table.
The figures are from the study “Banking under Analysis 2022” by consultancy Deloitte, which is being presented today in Luanda.
The study analyzes in detail the 25 banks operating in the Angolan financial system, considering the performance in various financial indicators.
The improvement in Angola’s rating and consequent reversal of impairment losses, as well as the positive variation in the results of Banco de Poupança e Crédito (BPC), despite being negative, and of BE, which posted the highest profit among the banks analyzed, after two years of heavy losses, was decisive for growth in net profit, the document said.
The net result was mitigated “by the significant decrease in foreign exchange results that fell by 96% in 2021” (data excluding BE due to unavailability of information).
Excluding BPC and BE from the analysis, net income in 2021 still recorded a 40% increase over the previous year, indicating the recovery trend in banking.
The top five most profitable banks in 2021 were Banco Económico, Banco de Fomento Angola (BFA), Banco Angolano de Investimento (BAI), Standard Bank, and BIC bank.
Among the banks that recorded losses, in addition to the public BPC, are also Keve, Banco de Comércio e Indústria (BCI), which was privatized at the end of 2021, currently belonging to the Carrinho Group, and Banco Prestígio, which even presented a negative banking product and saw its license revoked on September 30.
There was also an increase in loans to customers in the overall asset structure, which rose from 17% to 19%, driven by incentive measures issued by the National Bank of Angola (BNA).
Still, the weight of credit concerning total assets “remains far from that seen in other world economies,” including on the African continent.
“The fact that interest rates remain high leads companies to resort to other funding sources,” said the Deloitte study, which did not include BE and the Russian VTB in this analysis.
On the other hand, the weight of bonds and securities continues to be higher than in more mature markets due to the significant exposure of national banks to Angolan public debt, which, however, fell 3% compared to 2020.
The total value of banks’ assets (excluding VTB due to lack of information) was equivalent to AOA 17.4 trillion at the end of 2021, a decrease of 5.4% compared to the previous year, which will be associated with the appreciation and subsequent stabilization of the kwanza against the dollar and the euro in 2021.
The five largest banks (BAI, BFA, BIC, BPC, and Atlântico) represented 65% of total banking assets.
Equity amounted to AOA 2.1 trillion at the end of 2021, corresponding to a 20% increase compared to 2020, with an increase between 2014 and 2021 of close to 293%.
The study’s conclusions state that given the large number of banks competing in the Angolan financial system, they should define “business models that enable them to ensure a differentiated market positioning, both in terms of customer segmentation and the products and services they provide.
It also stresses that the theme of sustainability, in terms of compliance with specific indicators/ratios, regulatory reporting requirements, and matters related to ESG criteria (“Environmental, Social, and Governance”), is becoming increasingly urgent.
In some cases, the inability of shareholders to meet capital requirements has led the BNA to withdraw some banking licenses (Prestige was the most recent case).
The study also highlights the expectations regarding implementing the Recovery and Restructuring Plan for Banco Económico, “a systemic bank that should once again occupy a prominent position in the economy.”
It also noted that the regulator “continues to take measures aimed at the sustainability of the Angolan financial system,” including increasing the minimum share capital and approval of the regulation of the Resolution Fund that will be set up with contributions from banks and the Angolan state, to safeguard against systemic risks.
“The BNA has been assuming a more intrusive role in the supervision of the banking sector, with the opening of contravention processes for non-compliance with the regulations in force, namely the foreign exchange legislation, which poses challenges to banks in terms of strengthening their internal control systems,” the report concludes.
With information from Lusa
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