Saifaddin Galal
Research Expert North Africa
Angola’s bank industry has flourished in recent decades. From 2012 to 2020, banking assets increased by over 185 percent, a rapid growth boosted by the country’s simultaneous economic development. In the years following the end of the civil war in 2002, Angola’s GDP recorded tremendous growth, driven largely by the oil industry. The cash flow originating from petroleum exports helped the impressive expansion of the financial sector. However, the banking market remains marked by concentration and limited financial inclusion.
Bank concentration
As of 2020, 25 commercial banks operated in Angola. Five of them concentrated the majority of the country’s banking capital. Together, the leading institutions held nearly 20 billion U.S. dollars in assets in 2021. Additionally, national private banks held nearly 71 percent of the total bank assets. Indeed, another significant characteristic in the Angolan banking industry is the strong presence of domestic banks and low competition from international institutions. In the first quarter of 2020, there were five subsidiaries of foreign banks and only one foreign bank branch active in Angola.Higher earnings achieved in 2021
Angolan banks operate mostly in the domestic market, with treasury bonds and securities as the main assets. As of December 2021, the industry's return on assets improved to 2.2 percent, after falling to minus 2.9 percent in December 2020, meaning that banks generated more earnings. The capital adequacy ratio stayed at around 20 percent, which remains above the regulatory minimum, according to the National Bank of Angola. On the other hand, Angola recorded one of the highest ratios of non-performing loans in Africa. Loans in default, or close to being in default, corresponded to 23 percent of the total gross loans in the country.A gap in financial inclusion
The fast development of Angola’s banking industry did not result in greater financial inclusion. Although the number of bank branches has increased in the country, over 50 percent of adults still did not have their own bank account. This share was nearly 60 percent among females. Also, 62 percent of adult Angolans did not have any kind of access to credit. Nevertheless, for the financially excluded segments of the population in Angola, the usage of mobile money has become a solution. In 2015, there were some 2,000 registered mobile money accounts in the country. Only four years later, there were 208,000.
