2007 has been the year of the
emerging market. Pakistan, Vietnam, Kazakhstan, to name a few, are
now very much on the retail banking radar as both domestic and
foreign banking groups look to capitalise on positive economic –
and investment – sentiment. Although many African states continue
to remain just off the map, the banking market in Angola has been
picking up speed as the country tries to make up for lost time
following decades of civil war. The potential of the market has
been underlined in the last two years, with bank deposits
increasing 60 percent a year.
A slight slowdown is anticipated in 2007 – up to June, the rate
of bank deposit growth was 19.2 percent – and total deposits
amounted to only $7.2 billion at the end of 2006. But some
commentators feel the lack of banking penetration in Angola, which
now has the third-highest GDP in sub-Saharan Africa, presents an
opportunity for growth.
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“A great majority of the 14 million Angolans still don’t have
access to bank services. Its bancarisation level is still very
small, not more than 6 percent,” said Pedro Barreto, managing
partner of Deloitte Angola and co-ordinator of a study just
released by the professional services firm on the development of
the Angolan market.
Fall in interest rates
The economy has developed quickly since civil war ended in 2002.
Interest rates fell from 100 percent four years ago to 7 percent in
2007. Boosted by huge oil reserves – the second largest in
sub-Saharan Africa – and developing construction and manufacturing
industries, the economy grew 18.6 percent last year. The service
sector, including banking, matched the country’s overall rate of
growth.
Barreto said: “Some time ago [Angola] still had a very reduced
number of banks, and they offered only a few services. Now they are
playing catch-up. Our expectation is that the banking system will
keep growing strongly for at least five more years… likely to
develop faster than the economy itself.”
In 2006, three new banks started operations in the country, taking
the total to 15. There is a long list waiting for a licence from
Angola’s central bank. Last year’s new entrants – Banco de
Desenvolvimento de Angola, Banco Privado Atlântico and Banco de
Negócios Internacional – are all fully owned by Angolan
groups.
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By GlobalDataForeign players also have their sights on the market. Former
colonial power Portugal is well represented: Millennium BCP, Banco
Espírito Santo and Banco Totta (now part of Spain’s Santander)
maintain meaningful operations there.
The UK’s Barclays is also present with its majority-owned South
African subsidiary, Absa, and South Africa’s Standard Bank has a
representative office in the country. Russia’s expansive VTB was
granted a licence this year.
Last year, 63 new branches were opened in the country, taking the
total to 290.
Big players moving in
There are signs the major banks are taking Angola seriously. In its
third-quarter results presentation, Millennium BCP said it wanted
to open 37 new branches in the country and launch a fully fledged
commercial network. It described Angola as one of its key markets.
The Portuguese bank, which has suffered recently after a failed
attempt to buy local rival BPI (see RBI 580), wants to
increase business volumes in the corporate and affluent sectors of
the market.
Barreto said: “There is no barrier to new entrants in the market.
The government is interested in diversifying the profile of the
banks operating in the country, as there is a concentration of
Portuguese players at the moment.”
According to the Deloitte study, loans and advances to customers
represented 34 percent of total bank assets by the end of 2006,
against 27 percent one year before. Barreto added: “We are starting
to see a higher level segmentation of the business, with some banks
offering corporate banking, others creating private banking
divisions.”
Three domestically owned banks dominate the sector in terms of
deposits. Foment Bank of Angola, with 23.4 percent, is the largest.
It recently opened its 77th branch, in the capital, Luanda, though
it has said it plans to have 100 branches by the end of 2007.
African Investment Bank is the next largest, with 21.47 percent.
National Bank of Angola with 20.16 percent, and Banco BIC with 10.9
percent, follow.
For its part, BESA, a subsidiary of Banco Espírito Santo, is the
best-placed foreign-owned bank, sitting at fifth, with 8.54 percent
of deposits.
Rodrigo Amaral
