Driven by vast oil reserves and conservative fiscal management, gross domestic product has grown by almost 20% a year for the past three years. This has put pressure on the older, state-owned banks which are being forced to adapt to a new world, driven not by the Marxist tenets of previous years, but by capitalism.
One bank in particular that has consistently outperformed is BAI. The bank made a $78m net profit in 2007, up 77% on the 2006 figure. Its return on equity has grown steadily over the past three years and now sits at a healthy 34.4%. Simultaneously the bank’s cost-to-income ratio has fallen, as has the non-performing loan ratio.
BAI focused on boosting its deposit base and putting those resources to good use. It invested in low-risk treasury bills that offered a 15% yield per annum as well as treasury bonds used to finance national reconstruction. Aside from its drive to increase retail deposits, BAI has focused on its investment banking operations. Last year, it participated on the $3bn syndicated loan to Angolan oil giant Sonangol. It also co-led a $1bn placement of treasury bonds for the Angolan government.
BAI is not only interested in the bigger deals. It aims to capitalise on the fact that only 6.7% of Angolans have a bank account, and last year bought a microfinance bank, called NovoBanco, in order to build business in poverty stricken Angolan neighbourhoods. “BAI views itself an integral force in the resurgence of the Angolan economy, building capacity, strengthening itself in accordance with international standards, and delivering enhanced returns to its stakeholders,” says BAI chief executive Jose de Lima Massano.
