"BAI's rating reflects the limited likelihood of support from the Angolan authorities; the authorities' propensity to support the bank is high, but their ability to do so is limited, as indicated by the rating of Angola, B with Perspective of Negative Evolution", it is read in the note that accompanies the decision to maintain the opinion on BAI's credit quality.
In the note, analysts at FItch Ratings stress that the Government has a "reasonable propensity" to support the bank and the banking sector, in general, "because a large proportion of deposits in foreign currency are in public banks and in the strategic oil segment" .
At the same time, they add, "the health of the banking sector is poor and Angolan banks are strongly linked to the issuer, suggesting that there is an exacerbated risk of systemic crises if there is a Financial Default by the sovereign that would jeopardize the foreign currency resources of the banks", says Fitch Ratings.
The bank rating, placed in B, below the investment recommendation ('rubbish', as it is usually called) is influenced "by the weak operating environment that has a big influence", warn the analysts, adding that "the operating environment too influences the bank's business and expansion model ", described as" one of the main ones in Angola, but with a shrinking client portfolio".
The core business, moreover, "is hampered by the focus on investments in government assets with high interest rates and by deals in foreign currency, which increases the volatility of the business model".
The feasibility rating, rated at b-, below the bank's overall rating, "also takes into account the impact of Angola's weak governance framework on the bank's strategy and management", write the analysts, directly pointing out the links between the political elite and the management of this financial institution.
"We also question the ability of BAI's management to act independently given the political influence of large customers, shareholders and other related players", reads the rating action disclosed.
BAI had a bad credit level of 35 percent at the end of June 2019, with loans representing only 28 percent of assets, and of poor quality, says Fitch Ratings, which also points out that the top 20 loans represent about 70 percent of the total.
In the analysis, Fitch Ratings also says that the opinion on BAI's credit quality "is sensitive to the rating of Angola, which is in Perspective of Negative Evolution", therefore "a rating increase is unlikely and if the Republic's rating degraded, the same will happen to BAI ".
BAI is one of the six largest banks in Angola, with assets of around 6.6 billion dollars, and has an 8.5 percent stake in oil company Sonangol, one of which is expected to be sold by the state later this year. .
According to the bank's website, BAI has 147 service points in Angola, with 11 service centers for companies, nine service stations, two premium service centers and a non-face-to-face channel, BAI Directo.
Internationally, the bank is present in Portugal, BAI Europa, in Cape Verde, BAI Cabo Verde, and with partnerships that ensure the BAI business in São Tomé and Príncipe.
