Ver Angola

Banking and Insurance

Moody's improves BFA's outlook and maintains its and BAI's rating

The financial rating agency Moody's improved the outlook for the evolution of Banco Fomento Angola (BFA), maintaining the 'rating' of this bank and also of Banco Angolano de Investimentos, which saw its outlook maintained.


The rating action against these two banks, both in B3, follows the improvement in the outlook for the evolution of the Angolan economy, announced last week.

"Today's actions follow the change in the outlook ['outlook'], from stable to positive, of the B3 sovereign rating on October 20, 2022, evidencing the assessment that the outlook for robust economic growth and significant growth in revenues due to the high price of oil", reads the note giving an account of the decision on the two banks.

Moody's decision, the text adds, "reflects the view that banks' ratings adequately capture high levels of asset risks and modest capital buffers, particularly in light of recent and future regulatory changes ".

BFA has a level of non-performing loans at 14.6 percent and in the case of BAI the level is higher, with half of the loans having payment problems.

Furthermore, concludes Moody's, "the bank's statement reflects the same action taken with respect to the sovereign issuer, to which banks have large exposures in the form of public assets and loans".

Despite the improvement in the outlook for the evolution of the economy, this is not, however, enough for Moody's to have improved its 'rating', which remains at B3, that is, below the investment recommendation, or 'junk', as is generally known.

"The decision to affirm the rating at B3 reflects Moody's view that, despite the continued improvement in fiscal positions and the current account, Angola's credit profile remains constrained by vulnerability to oil shocks due to its rigid economic structure. and weak institutional capacity," the analysts write.

The experts recognize that "the continuity of the policies and the reform agenda of the new Government will naturally take time to reduce the structural vulnerabilities of Angola".

The change in the outlook for the rating's evolution indicates that analysts believe that, if the current trajectory is maintained, Angola will see Moody's opinion on sovereign credit quality improved within a period that normally does not exceed 12 months.

The last time Moody's had improved Angola's rating was in September last year, when the sovereign credit quality assessment went from Caa1 to B3, which happened after four consecutive declines, in 2016, 2017, 2018 and 2020.

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