Financial Crime World

Angola’s Banking Sector Sees Steady Growth in Net Profits Despite Regulatory Challenges

============================================================

The Angolan banking sector has demonstrated resilience in the face of regulatory challenges, with net profits rising steadily over the past few years.

Growth in Net Profits

According to data from the Bank of Namibia (BNA), the country’s central bank, the banking sector’s net profits reached 100 billion kwanzas in 2019, up from 80 billion kwanzas in 2018. This represents a growth rate of 25% over the period.

Regulatory Challenges

Despite this growth, the BNA has taken steps to ensure that banks comply with regulatory requirements and maintain sound financial conditions. In early 2019, the regulator revoked the licenses of two Angolan banking institutions due to non-compliance with new share capital and regulatory own fund requirements.

  • January 2021: The BNA took similar action against an investment bank, citing non-compliance with regulations.
  • Regulatory orders have been issued to ensure banks maintain a sufficient solvency ratio and comply with international standards on risk management.

Adoption of International Financial Reporting Standards (IFRS)

The adoption of IFRS by all Angolan banking institutions operating in the country is expected to improve transparency and consistency in financial reporting, making it easier for regulators to monitor the sector’s performance.

Recovery Plan

The BNA has also implemented a recovery plan aimed at helping banks recover from financial difficulties. The plan includes measures such as:

  • Recapitalization
  • Disposal of shares and assets
  • Suspension or replacement of management and supervisory bodies

Asset Quality Assessment Exercise

A recent asset quality assessment exercise identified recapitalization needs in two Angolan banking institutions. However, the BNA’s efforts have helped to maintain the stability of the financial system, with the regulator concluding that the Angolan banking system is “globally robust”.

Future Outlook

The steady growth in net profits and the regulatory efforts by the BNA are expected to continue supporting the development of Angola’s banking sector, which plays a crucial role in the country’s economic growth and development.