Consultancy firm Fitch Solutions considers that the banking sector in Angola has “considerable growth potential” despite the difficulties arising from the country’s economic situation and the effects of the Covid-19 pandemic.
“The financial and banking services sector in Angola offer considerable potential for growth,” reads the report.
In an analysis of Angola’s banking sector, Fitch analysts write that “the country has a relatively large population and its middle class has been growing strongly, with financial inclusion rates indicating that the base of consumers has great potential”.
Still, Fitch Solutions points out that there are challenges, listing “high levels of bad debt in the banking sector, a poorly diversified product portfolio in the insurance industry, and a lack of capacity in asset management and the investment sector.”
Banking, they argue, “is working to address these issues, with rapid growth expected from a low starting base, but this is dependent on economic trends in Angola, which in the short term, at least, are exposed to downside risks due to the Covid-19 pandemic”.
The Angolan banking sector is dealing with a number of structural challenges, among which are the decline in the volume of credit granted, which fell 2.5% last year, and a high double-digit rate of nonperforming loans, and with the public sector warding off an otherwise faster private sector growth, according to Fitch Solutions.
“In this context, and with a moderate pace of depreciation of the kwanza in the coming quarters, we expect moderate loan growth this year, accelerating from 2022 onwards”, the analysts conclude.