"The main difficulty for the three banks that we evaluate in Angola is the quality of assets, the ratio of non-performing loans and the level of foreign currency, although in this last point there have been improvements," said Peter Mushangwe.
In an interview with Lusa via video conference from London, the analyst said that Moody's "expects continued pressure on banks due to the high risk of assets and a bad credit level above 30 percent, which it needs to be improved.
In Angola, Moody's attributes a stable evolution outlook to two of the three banks it evaluates, putting Banco Económico under review for a rating downgrade due to delays in the capitalization process.
"The review is a result of delays in the recapitalization process," said Peter Mushangwe, pointing to "weak capital levels" as one of the bank's weaknesses.
"The difficulties facing banks in Angola date back to the period of the oil crisis of 2015, when the price of oil fell to unprecedented levels," added the analyst.
Asked if he expects the almost 30 banks in Angola to converge in a concentration movement, Peter Mushangwe said that this is a trend in the region and highlighted the role of the Government in mergers and acquisitions.
"In most countries in sub-Saharan Africa there are a large number of banks and there is news of mergers and acquisitions, in which larger banks are encouraged to stay with small ones, it is a trend in the region and Angola is no exception," he said, noting that "most mergers and acquisitions in sub-Saharan Africa are defined by the authorities, and everything will depend on what the Angolan authorities will want to do".
Regarding the performance of the central bank, Peter Mushangwe considered it positive, namely the review of asset quality carried out in 2019.
"The asset quality review was positive from a credit standpoint because it identified banks' weaknesses and pointed out which ones needed to be recapitalized; in general, I would say that many of the directives coming from the central bank were positive and helped financial stability "in Angola, concluded the analyst.
