Angolan bank has overcome difficult beginnings to become a multi-continental player
Founded in 1996, Banco BAI ranks highly among Angolan banks in terms of assets, deposits, number of clients, and credit portfolio.
Created at the height of the civil war, just after a failed peace agreement, the project was a major challenge in a country engulfed in deep financial crisis. Nevertheless, all faith was put in Angolan executives and a trusted local workforce with great administration skills.
With its headquarters in Angola, the bank has a nationwide reach, including 106 branches focused on investment banking and a vast range of retail services provided by a primarily local workforce of 1,538 well-trained staff.
As the leading financial institution in the country it ended 2009 with assets valued at more than $8bn, a solvency ratio higher than 14 percent and its own resources topping $625m. Its credit value increased to $1.3bn and a 42 percent increase of its client base guarantees its position as an invaluable government partner in the efforts to rebuild the economy after more than 30 years of civil war.
The introduction of private banking products and services like electronic banking (internet and SMS Banking), central bank securities, mortgage loans, and bank transfers have all seen a massive investment, as well as Kwanza savings products, to help maintain the bank’s competitiveness and contribute to the country’s economic growth with prudence and safety. BAI is forward-thinking and always aims to be a step ahead in the Angolan financial market. Since July 2010, the bank has separated credit analysis and recovery to strengthen its capacity to manage associated risk and closely observe its clients’ activities in order to reduce non-performing loans.
BAI – financial group
BAI Micro-Finances (BMF) is part of BAI Group and was created to provide banking services to lower-income Angolans struggling to create their own businesses and empower them to increase their standard of living. Since it opened in August 2004, over 70,000 clients have benefited from credit loans.
BMF was not only part of a lucrative return investment strategy, but was also motivated by a deep-rooted sense of social responsibility as a means to respond to the needs of the community.
Other member companies of the BAI Group include BAI Europa (banking), BAI Cape Verde (banking), Nossa Seguros (insurance company), Griner (construction), Imogestin and Novinvest (real estate).
Steps towards internationalisation
In 1998 BAI started its international expansion strategy by opening two branches in Portugal, a country with which Angola has a close commercial and financial relationship. BAI Europa has already has assets valued at more than €1bn.
The next step was to expand to Cape Verde, a fertile and receptive market that provided new insights and more investment opportunities in conjunction with native Cape Verde institutions and people; six branches have been opened so far. BAI is making the most of this by working hard, giving opportunities, investing and empowering the local people and resources. So far it has created 64 direct jobs, and 894 more through the creation of new business. The bank’s social responsibility initiative is targeted at children’s health and education projects.
The main objective of the representative office recently opened in Johannesburg, South Africa, is to strengthen not only commercial relations between the two countries, but also to facilitate and explore opportunities between Angola and the SADC region. According to Chamber of Commerce statistics, since December 2009 6.6 percent of Angolan imports are from South Africa and 28 percent of exports make the reverse journey. BAI has also has minority shareholdings in BPN Brazil and in the International Bank of São Tomé e Príncipe.
Maintaining the leadership
After winning a few international awards, the bank is now seeking to maintain its top-ranking position, and is therefore making a major investment in developing its employees’ skills at its state-of-the-art training centre, as well as providing training overseas whenever necessary. The bank is convinced that investment in people will bring better results in terms of relationship with clients, by improving confidence and decreasing transaction risks. The bank will continue to prioritise its financial results by making the country’s credit requirements its number-one priority, together with compliance issues and giving back to the community.
As part of its ongoing human capital development strategy, last year the bank invested $60m in the Academia BAI, a BAI Group training centre, the main purpose of which is to retain and attract highly-qualified professionals with skills in the areas of banking, IT, client relationships, legislation processes, and insurance.
The regulation of the banking sector in Angola is progressing satisfactorily, and in recent years BAI has assisted in the creation and implementation of a series of relevant legal regulations as crucial tools for the healthy functioning of the financial sector. Although the bank is aware that the current local regulations may not be the best in Central and Southern Africa, the efforts being made towards the adoption of the International Financial Reporting System, and the implementation of Basel II, shows a growing level of convergence of the banking system and with international standards.
Basel introduced changes in banking regulation through its measures to strengthen global capital and liquidity rules, assessed by liquidity coverage ratios and net stable funding ratios. This financial reform increases the minimum solvency ratio by including a systemic risk component in the Tier 1 Capital.
Although the Angolan financial services authority does not yet require the implementation of this agreement, the bank conducts its activities with a conservative risk and liquidity management policy, often prioritising liquidity over profitability.
In December 2011, cash ratio and reduced liquidity ratios reached 60.85 percent and 17.91 percent, respectively; the bank intends to maintain these levels of solvency. BAI has consistently presented solvency levels that are significantly above the regulatory limit of 10 percent, mainly as a result of its emphasis on systemic risk. In December 2011, the Tier 1 Capital Ratio reached 17.83 percent. Another important step was the establishment, in July 2010, of a Compliance Office to supervise internal, national and international compliance rules, as well as to increase awareness. Considering all these facts it is believed that BAI should not have any major problems with the implementation of Basel, should the financial services authority enforce it.
In the field of Corporate Social Responsibility, the bank has directed its resources to contribute for a more equal society being the main recipient of its social involvement directed towards sports, culture, education and children’s health for social integration.
Some of the most notable initiatives are the TISA, a project aimed at equipping classrooms with computers in Lumbago province, a strong step towards technological inclusion: one of the Angolan government’s objectives in the fight against poverty.
The bank also pays special attention to health issues, particularly on equipment and services. In the last two years it has invested in paediatric facilities, furnishing the paediatric ward of Américo Boavida Hospital with technical equipment. The bank also maintains a partnership with the biggest burns hospital in Luanda, and last year donated a high voltage power generator to Neves Bendinha Hospital.
BAI also invests in national sports supporting the National League of Basketball BAI, and in the arts through BAI Art, an annual art event aimed at supporting local artists. BAI believes its activities set a good example of how corporate institutions should interact with their communities and stress the importance of giving back to society.
2011 financial results
The 2011 BNA annual report (Angolan central bank) demonstrates that BAI currently holds 27.22 percent of the total market share in terms of deposits and is responsible for 12.2 percent of all credit offered by commercial banks in Angola. Considering its footprint on investment infrastructures, the bank still holds a strong grip on sectors that really matter. According to the report, BAI kept its leading position on the market by total deposits, credits, and by the capture of a share of 20 percent, thus closing the fiscal year 2011 with net assets exceeding $11.8bn (growth of about 42 percent compared with 2010), which was one percentage point higher than in 2010.
BNA’s report points out that the volumes of deposits and credits of BAI in 2011 stood at $10,455m and $3,235m, respectively. The remaining indicators in 2011 state that the regulatory own funds grew by 16.3 percent, corresponding to $813m.
BAI has also increased the number of branches to 106, against 85 in the previous year, increasing its reach to economic agents across the country. It has a total of 1526 direct employees and more than 414 thousand customers, which represents a 29 percent growth comparing with 2010.
The Banker magazine ranked BAI in 22nd position (24th position in 2009) in the ranking of the 25 largest banks in Africa, and in the 686th position (711th in 2009), in the ranking of the 1,000 largest banks in the world, which is indicative of the bank progression in recent years.
A new perspective
In 2012, BAI will continue to invest in its new headquarters, with the aim of combining the various units into a single structure, and step up liaison with its affiliate entities (including BAI Europa, BAI Cabo Verde, BMF, Nossa Seguros, Griner, Imogestin and Novinvest), through the creation of financial group BAI. The international expansion is expected to continue prudently, on the basis of studies that are to be carried out.