by: Jessica Ferreira

The combined net profit of Angola’s 21 banks more than doubled to AKZ 818.165 million (USD 987 million) in 2023, with the sector’s total solvency ratio improving from 28.4% in 2022 to 30.3% last year, according to a report by financial consultancy Eaglestone.

This development is explained above all by the strong increase in income, particularly from other banking income related to foreign exchange gains, trading in treasury instruments and the sale of real estate assets.

According to Eaglestone, these banks’ total net income represented a return on equity (ROE) of 25.2% and a return on assets (ROA) of 3.72%, compared to 13.4% and 2.11% respectively in 2022.

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At the same time, the total assets of the 21 banks in 2023 amounted to AKZ 21.984 billion (USD 26.5 billion), up 29.9% on the previous year, reflecting the increase in the amount of securities and net credit on the balance sheet and representing around 30% and 20% of the banking sector’s total assets, respectively.

The figures also showed that net credit increased at a much faster pace, by 40.5% year-on-year (YoY), following another strong increase in loans denominated in local and foreign currency, with local currency loans accounting for 79.8% of total loans (vs. 83.5% in 2022).

Deposits also recorded a strong increase of 30.9% YoY, mainly due to the strong recovery in foreign currency deposits and another robust increase in local currency deposits, accounting for 60.2% of the total deposit base, the report added.

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However, real GDP growth in Angola slowed to 0.9% in 2023, compared to 3.0% the previous year, due to the decline in activity in the country’s oil sector (-2.4%), as oil production continued to be affected by maintenance stoppages on some oil platforms.

At the same time, annual inflation increased in the second half of the year, reaching 20.0% in December 2023, and was once again under some pressure due to the impact that the depreciation of the kwanza in May-June 2023, which led the central bank to tighten monetary policy at the end of 2023, increasing the Banco de Angola (BNA) rate by 100 bp (to 18.0%) and the minimum reserve ratio in national currency by the same amount.