Fitch Ratings expected Angola's banking sector to remain weak and fragmented in coming years, despite the Banco Nacional de Angola's (BNA) recent efforts to increase the banks' capital requirements. It said that eight out of the 29 banks operating in Angola will have to increase their paid-in capital this year in order to comply with the BNA's latest capital requirements. Also, it anticipated that increasing capital internally could be difficult for some banks unless they cut dividends, while the new minimum requirement could force some smaller banks to close. It considered that bank closures could be positive for the credit quality of the banking sector, as it would reduce the prevailing competitive pressure on the banks.  

In parallel, Fitch pointed out that the banking sector’s capital adequacy ratio reached 23.2% at the end of 2017. But it noted that the banks’ exposure to country risk is high, given that they operate almost exclusively in the domestic market and have a high proportion of their assets invested in domestic government securities. Further, it said that the sector's asset quality is weak, volatile and closely linked to local economic cycles. Overall, the agency considered that the outlook for Angolan banks is negative amid a decrease in lending, difficulties in accessing foreign currency and outflows of deposits.
Source: Fitch Ratings