Angola’s Banco BIC, backed by the billionaire daughter of the country’s president and a Portuguese cork tycoon, plans to ramp up its branch network at home while also expanding overseas to operate in four continents, its chief executive said.
Speaking as part of the Reuters Africa Summit, Fernando Teles also said Angola’s banks were ready to finance the oil-rich country’s economic diversification drive, but the private sector needed to do a better job of identifying viable projects.
BIC is Angola’s biggest private bank by branches, its strategy based on building a wide presence across the country to benefit when investment in non-oil sectors like farming starts to deliver growth in regions outside the capital, Luanda.
“We’ve already opened 10 branches this year and are building another 25 to add to the 202 with which we ended 2013,” Teles said. “Our shareholders have backed us to grow and they have the necessary funds to invest when needed.”
BIC’s main rivals are local banks BAI and BPC and the units of Portuguese banks Banco BPI and BES. Mid-sized local banks and new foreign players are also gaining ground, with South Africa’s Standard Bank and London-listed Standard Chartered arriving in recent years.
Isabel dos Santos, daughter of Angolan President Jose Eduardo dos Santos and who ranks as one of the continent’s richest businesswomen, owns a quarter of BIC Angola. Americo Amorim, one of Portugal’s richest men, also owns 25 percent.
BIC also operates in Portugal, where it bought bailed-out bank BPN in 2012 for 40 million euros, giving it a branch network and client base that helped BIC Portugal swing to a profit of 2.5 million in 2013 from losses in the previous years.
BIC is expanding across borders in its own region, having opened an office in Johannesburg in February and requested a licence to operate in Namibia.
“We’re looking at all the countries around us. Sooner or later the Southern African Development Community will be even more interconnected and we have to be ready for the business that will occur in that economic zone,” Teles said, referring to a 15 state organisation forging political and economic links.
He added that BIC planned to open an office in China, which is Angola’s main oil buyer.
In Brazil, where BIC bought BPN’s network, it expects to obtain a licence from the central bank in the next months. BIC plans to open branches in several cities and serve a niche of clients which do business between Brazil, Portugal and Angola.
CASH FOR INVESTMENTS
The bank’s profitability at home means it has capital reserves of $889 million and does not have to rely entirely on its shareholders’ deep pockets to expand.
It posted a 20 percent rise in net profits to $201 million last year, which Teles attributed to the reach of the retail network and lending to state and new sectors.
Loans of $6 billion, up 15 percent from 2012, were evenly split between the private sector and the state.
“We would like to lend more to the private sector, but there have to be credible projects, ones that show the business will work and can repay loans,” Teles said.
Angola has rebuilt after a 27-year civil war ended in 2012, but analysts say the economy is too reliant on the state and on oil production, which is Africa’s highest after Nigeria.
“In Angola there is still so much to be done, various sectors like agriculture, mining and transport have to be developed,” Teles said. “The state has done a lot, built infrastructure, now private business has do its bit.”
Many of Angola’s banks have been hit by a surge in bad loans in the last two years as the economy cooled down from double-digit growth posted up to 2009.
Teles said BIC had controlled the surge by negotiating with clients which had assets to guarantee loan extensions. But he expects smaller players among Angola’s 23 banks may suffer.
“There are too many banks, but it’s nothing that the market cannot absorb,” he said. “Sooner or later there will be small banks in trouble and they will be bought by bigger ones.”
He added that BIC had in the past tried to acquire a smaller bank but the deal fell through. “It’s no drama, there will be other opportunities,” he said.
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