ANNUAL REPORT2015
ANNUAL REPORT MILLENNIUM ANGOLA 2015 CONTENTS
ANNUAL REPORT2015 2015r"//6"-3&1035rContents 5
CONTENTS
5 Message of the Chief Executive Officer 6 Main Highlights 7 Key Indicators 8 Executive Committee 9 Shareholder Structure and Governing Bodies 10 Economic Environment 20 Regulatory Changes to the Financial System 24 Business Summary 38 Distribution Network 46 Financial Statements 51 Notes to the Financial Statements 93 Proposed Appropriation of Net Income 94 Independent Auditors' Report 96 Opinion of the Supervisory Board on the Account of 2015
#BODP.JMMFOOJVN"OHPMB 4" MESSAGE OF THE CHIEF EXECUTIVE OFFICER
ANNUAL REPORT2015 2015r"//6"-3&1035r.FTTBHFPGUIF$IJFG&YFDVUJWF0GàDFS 7
MESSAGE OF THE CHIEF EXECUTIVE OFFICER
Throughout 2015 and in the wake of the constraints of the economic context of 2014, the Angolan economy was severely affected by the sharply declining price of the barrel of oil in international markets and, consequently, by the lack of foreign currency to fund imports, on which Angola is heavily dependent. This scenario has made it very clear that there is an imperative need for economic diversification, in order to facilitate the business environment and attract direct investment towards other activity sectors, outside the petroleum sector, which shall boost the Angolan economy in the medium term. The fall in the price of oil significantly reduced fiscal revenue and the obtaining of foreign currency. This evolution particularly constrained private consumption and public investment, and contributed to the GDP growth rate having shifted from 4.8% in 2014, to 3.5% in 2015, according to IMF forecasts. In this environment, the kwanza devalued sharply and the inflation rate exceeded 14%, imposing the need for a more restrictive monetary policy. In 2016, the IMF expects that the GDP growth rate should continue at 3.5%, supported by the effects of the policies which have been progressively adopted with a view to reducing dependence on the petroleum sector and assuring a greater diversification of economic activity. In 2015, Banco Millennium Angola opened 2 Branches and 1 Prestige Centre, thus holding a network, as at 31 December 2015, of 89 Retail Branches, of which 54 are open every Saturday morning, 13 Prestige Centres and 8 Business Centres, of which 2 are dedicated to the oil industry, amounting to a total of 110 Customer attendance points by the end of 2015. As a result of the expansion of the network and the increasingly higher penetration rate in the market by the oldest Branches, the number of Customers grew by 12% in relation to the previous year. The net income of Banco Millennium Angola stood at 6,760 million kwanzas in 2015, corresponding to 18% more than the previous year. This figure was influenced by the positive evolution of net operating income, in spite of the growth of operating costs (derived from inflation, exchange rate devaluation and wage revision) and provisions. Net operating income increased by approximately 38% compared to 2014, driven by the performance of net interest income and the earnings from financial transactions, which recorded growth rates of 28% and 121%, respectively. The return on average equity (ROAE) stood at 17.0% in 2015 (16.1% in 2014), and the solvency ratio as at 31 December 2015 was 13.7% (-0.1 p.p. compared to 31 December 2014). The coverage ratio of loans overdue by more than 90 days by provisions evolved to 267%, as at 31 December 2015, compared to 196%, as at 31 December 2014. During 2015, BMA's staff grew by 7.2%, shifting from 1,143 Employees in 2014 to 1,225 Employees in 2015, which implied an increase of 82 new Employees, with the proportion of Angolans in the staff remaining stable, at around 98%. The Talent Management and Retention Policy included two new Programmes for Development of Skills – Millenniuns High Potential, held in collaboration with Universidade Católica de Lisboa, and People Grow (junior Employees aged below 35 years old with potential and employed for less than 2 years). Throughout 2015, 161 training actions were carried out, corresponding to 4,017 training hours, with natural focus on contents directed at duties of the Commercial Area, covering all the essential aspects for a good performance of daily activities, both from the technical and behavioural point of view. Finally, and as usual, my sincere gratitude is extended to all the Employees for the effort, dedication and care with which they dealt with the challenges faced in 2015. A special acknowledgment is also made of our Customers for the preference and confidence that has been unfailingly demonstrated and for the privilege of serving them, with the assurance of BMA's commitment to continue to endeavour towards the continuous and sustained improvement of the quality of the service provided. My sincere thanks to all.
"OUÓOJP(BJPTP)FOSJRVFT Chief Executive Officer 8 .BJO)JHIMJHIUTr"//6"-3&1035r 2015
MAIN HIGHLIGHTS
NET INCOME TOTAL CUSTOMER GROSS CREDIT FUNDS 6,760 249,111 146,936 million AOA million AOA million AOA
RETURN ON COST-TO-INCOME SOLVENCY AVERAGE EQUITY RATIO (ROAE) 17.0% 45.8% 13.7%
NUMBER OF NUMBER OF NUMBER OF BRANCHES, CUSTOMERS EMPLOYEES BUSINESS CENTRES AND PRESTIGE CENTRES 89+8+13 597,263 1,225 =110 2015r"//6"-3&1035r,FZ*OEJDBUPST 9
KEY INDICATORS
2015 2014 2015 2014 KEY MANAGEMENT INDICATORS (Million (Million (Million (Million "0" AOA) Change % 64% USD)(*) Change % BALANCE SHEET Total net assets 244,669 40% 2,378.6 7% Loans to Customers (gross values) 125,542 17% 1,220.5 -11% Loans to Customers, net of provisions 117,748 13% 1,144.7 -14% Total Customer funds 180,900 38% 1,759.0 5% Total net loans/Customer resources 65.1% -11.5 p,p, 65.1% -11.5 p,p, Net worth 38,092 18% 369.9 -10% Solvency ratio 13.8% -0.1 p,p, PROFITABILITY Net operating income 19,354 38% 196.9 13% Operating costs 9,815 25% 99.9 3% Provisions 2,705 148% 27.5 103% Industrial tax 1,018 10% 10.4 -10% Net income for the year 5,741 18% 58.4 -3% Net interest income/Net operating income 58.5% -4.3 p,p, Net fees/Net operating income 22.2% -4.5 p,p, Financial results/Net operating income 17.4% 10.5 p,p, Return on Average Assets (ROAA) 2.5% -0.1 p,p, Return on Average Equity (ROAE) 16.1% 0.9 p,p, STRUCTURE Number of Branches, Business Centres and Prestige Centres 110 107 3% Luanda 76 74 3% Other provinces 34 33 3% Number of active ATM (**) 120 119 1% Number of active POS (**) 1,938 48% Number of active Cards (**) 148,785 33% Number of Employees 1,143 7% Number of Customers 534,101 12% EFFICIENCY AND PRODUCTIVITY Cost-to-income 50.9% -5.1 p,p, Number of Employees/Number of Branches, Business 10.7 4.3% Centres and Prestige Centres Net income/Average number of Employees 5.2 8.9% Net operating income/Average number of Employees 17.6 27.4% Structural costs/Average number of Employees 8.9 15.9% Number of Customers/Number of Branches, Business 4,992 8.8% Centres and Prestige Centres CREDIT QUALITY Loans overdue > 90 days as % of loans to Customers 3.2% 0.2 p,p, Coverage of loans overdue > 90 days by provisions 196% 71 p,p, (*) Merely indicative values in USD (conversion of values in national currency at the average exchange rate of USD/AOA for the values of the Income Statement: 98.291 in 2014 and 119.717 in 2015; and at the exchange rate of USD/AOA at the end of the year for the Balance Sheet headings: 102.863 in 2014 and 135.315 in 2015). (**) Source: EMIS Monthly Statistics Report relative to the months of December 2014 and 2015. 10 &YFDVUJWF$PNNJUUFFr"//6"-3&1035r 2015
EXECUTIVE COMMITTEE
'FSOBOEP/PCSFEF$BSWBMIP João Matias "OUÓOJP(BJPTP)FOSJRVFT )FSNFOFHJMEB#FOHF 1BVMP$BSUBYP5PNÃT Member Member Chief Executive Officer Vice-President Member 2015r"//6"-3&1035r4IBSFIPMEFS4USVDUVSFBOE(PWFSOJOH#PEJFT 11
SHAREHOLDER STRUCTURE
5% GLOBALPACTUM, GESTÃO DE 15% ACTIVOS, S.A. BANCO PRIVADO AT LÂNTICO, S.A.
50.1% BCP ÁFRICA, SGPS, LDA.
29,9% SONANGOL – SOCIEDA DE NACIONAL DE COMBUSTÍVEIS DE ANGOLA, E.P.
GOVERNING BODIES
#0"3%0'%*3&$5034 CHAIRMAN: Miguel Maya Dias Pinheiro MEMBERS: Maria Conceição Mota Soares Oliveira Calle Lucas Hermenegilda de Fátima Agostinho Lopes Benge António Augusto Decrook Gaioso Henriques Fernando Gomes dos Santos João Matias Fernando Manuel Nobre de Carvalho Paulo Fernando Cartaxo Tomás
&9&$65*7&$0..*55&& CHIEF EXECUTIVE OFFICER: António Augusto Decrook Gaioso Henriques VICE-PRESIDENT: Hermenegilda de Fátima Agostinho Lopes Benge MEMBERS: João Matias Fernando Manuel Nobre de Carvalho Paulo Fernando Cartaxo Tomás
#0"3%0'5)&(&/&3"-.&&5*/( CHAIRMAN: Mateus Neto DEPUTY CHAIRMAN: Ana Isabel dos Santos de Pina Cabral SECRETARY: Graça Maria de Jesus Vieira Lopes Pitra Costa
461&37*403:#0"3% CHAIRMAN: Miguel Anacoreta Correia PERMANENT MEMBERS: Madalena Adriano Domingos de Lemos Neto Luzia Rosário de Fátima Oliveira ALTERNATE MEMBERS: João Manuel Francisco Maria Inês Ribeiro Filipe 12 &DPOPNJD&OWJSPONFOUr"//6"-3&1035r 2015
ECONOMIC ENVIRONMENT
GLOBAL ECONOMIC ENVIRONMENT
According to the projections of the International Monetary Fund (IMF), the rate of expansion of global economic activity, in 2015, is estimated to have fallen to the lowest level since 2009, in a context where the strong dynamics of the developed economies was not sufficient to offset the loss of vibrancy of the emerging markets. The pronounced decline in the price of raw materials, in addition to having intensified the split between the two groups of economies, further deepened global deflationary pressures, creating a scenario of greater financial vulnerability, as well as the need to maintain widespread accommodative monetary conditions.
GLOBAL ECONOMIC GROWTH REMAINS MODERATE Annual growth rate of real GDP (in %)
8 8
6 6
4 4
2 2
0 0
-2 -2
-4 -4
2009 2010 2011 2012 2013 2014 2015 2016(p.)
World economy Developed economies Emerging economies
Source: IMF WEO (January 2016).
In the euro zone, the improvement of monetary conditions, derived from the more expansionary position endorsed by the European Central Bank (ECB), the effective depreciation of the euro, the reduction of the cost of energy and the greater neutrality of the budgetary policies of the "peripheral" countries have boosted the process of economic recovery. In fact, after the 0.9% growth in 2014, the European Commission (EC) estimates that GDP should have grown by 1.6% in 2015 and that in 2016 the rate of expansion should increase to 1.8%. However, the weakness of the emerging economies, the aggravation of geopolitical tensions and the risks inherent to the need to continue with the structural reforms in course in various Member States may eventually constrain the rate of recovery of the euro zone.
In the USA, the sustained increase of employment and real disposable income, combined with the low level of interest rates, have driven consumption and residential investment. Nonetheless, the recession associated to the collapse of the price of oil which has ravaged the North American energy sector and the appreciation of the dollar have exerted an adverse effect on business investment and exports, which resulted in a GDP growth rate similar to that observed in 2014, which stood at 2.4%. In 2016, the evolution of private consumption should be the pendulum determining the robustness of economic growth, which in turn should imply a good performance of the labour market, under circumstances hampered by the presumable normalisation of monetary policy and concomitant intensification of the trend of appreciation of the dollar relative to all the other main international currencies. 2015r3&-"5¶3*0&$0/5"4r&DPOPNJD&OWJSPONFOU 13
The Chinese economy continued to show clear signs of loss of vigour throughout 2015, especially in terms of the demand components which had substantiated its growth model, namely concerning exports and investment. The principal risk for 2016 resides in the possible further weakening of the renmimbi, which would carry the associated risk of capital flight and consequent deterioration of financial conditions for Chinese households and businesses.
In 2016, the global economy shall face complex and varied risks. The negative spiral lodged between the productive sector of commodities and the emerging economies threatens to continue to restrict the recovery of global demand and cause a correction in international financial markets. On the other hand, the expected increase of reference interest rates set by the Federal Reserve and the consequent aggravation of the high level debt service of the business sector of the USA embody the risk of retraction of investment and, furthermore, consumption. Finally, the prevalence of various focus points of geopolitical tension and security issues in Europe constitute barriers whose effects are difficult to quantify, but even so are considered potentially adverse to the consolidation of the economic upswing of the euro zone.
GLOBAL FINANCIAL MARKETS
The evolution of the financial markets in 2015 was dominated by increased volatility, presumably derived from the uncertainty relative to the implications for the global economy of the slowdown of the emerging markets and the beginning of the process of reversal of the expansionary policy of the North American Federal Reserve. In this context, the geographic areas where monetary policy was more accommodative, as was the case of the euro zone and Japan, as a rule, recorded levels of appreciation of financial assets above those of the economies in which monetary conditions had become more restrictive, as occurred in the USA and, with less intensity, in the emerging markets. The reference stock market indices of the USA closed the year with zero or negative appreciation, while the equivalent European and Japanese indices recorded gains of around 10%. Concerning exchange rates, the most notable development was the appreciation of the United States dollar, in particular, relative to the currency of countries that are most dependent on commodity exports.
GLOBAL STOCK MARKET INDEX DEVALUED AND VOLATILITY INCREASED
125 45
120 40
115 35 110 30 105 25 100 20 95
90 15
85 10 Jan. 15 Mar. 15 May 15Jul. 15 Sep. 15 Nov. 15 Dec. 15
World equity index (Jan 2014 = 100) Euro Stoxx 600 bank index (Jan 2014 = 100) Volatility index (VIX)
Source: Datastream.
In contrast to the previous years, the performance of the international debt market in 2015 was marked by a clear divergence between the stability of the prices of securities issued by extremely credit-worthy entities on the one hand, and the devaluation of higher risk bonds on the other hand. In the euro zone, in spite of the ECB having 14 &DPOPNJD&OWJSPONFOUr"//6"-3&1035r 2015
implemented a public debt purchase programme, the risk premiums of the sovereign debt of the "peripheral" countries showed an erratic performance, but without a defined direction, after the very significant compression which occurred between 2013 and 2014. Even so, the intensification of the expansionary content of the ECB's monetary policy, including the setting of the deposit facility interest rate at negative values, produced a shift of the Euribor rates to levels below zero up to the period of six months and contributed to the depreciation of the euro, especially relative to the dollar.
OUTLOOK FOR THE PORTUGUESE ECONOMY
The recovery of the Portuguese economy consolidated throughout 2015 benefited from the lower funding costs, the fall in the price of oil, the acceleration of the European economy, the gains of external competitiveness derived from the effective depreciation of the euro and, in a more indirect manner, from the structural reforms implemented during the adjustment programme. According to the European Commission estimate, GDP should have grown by 1.5% in 2015, above the 0.9% recorded in 2014. The greater strength of economic activity was essentially due to the buoyancy of private consumption and exports, as investment continued at a lower rate than in the preceding year.
In 2016, the trend of recovery of activity should continue supported by domestic demand, which should benefit from the increased employment and disposable income, the low cost of energy, the low level of interest rates and also from the implementation of the new European funding framework, namely the Portugal 2020 programme. However, the risk of slowdown of the international economy combined with the fragility of the emerging markets, and the possible occurrence of a significant correction in financial markets, constitute the main barriers to the sustained recovery of the national economy.
PORTUGUESE ECONOMY CONTINUES ALONG THE PATH OF RECOVERY
4 4
2 2
0 0
-2 -2
-4 -4
-6 -6 Mar. 10 Mar. 11 Mar. 12 Mar. 13 Mar. 15
GDP (real year-on-year growth rate in %) Coincident indicator (Millennium bcp)
Source: Datastream and Millennium bcp.
The postponement of the process of sale of Novo Banco to 2016 and the application, at the end of the year, of a measure of resolution to Banco Banif were marking events in the evolution of the Portuguese banking system in 2015, disturbing the process in course of improved profitability, and consolidation of the liquidity and solvency position of credit institutions in Portugal, reflected in the progressive attenuation of the trend of reduction of credit granted to the economy.
The profitability of the financial sector in 2015, excluding the cases mentioned above, tended to improve in relation to the previous year, based, on the one hand, on the favourable evolution of the core income (i.e. net interest income and fees) and on the gains in financial transactions associated to the improvement of the country's risk premium, especially in the first half of the year, and on the other hand, due to the less negative evolution of the cost of risk and greater contention of operating costs in Portugal. 2015r3&-"5¶3*0&$0/5"4r&DPOPNJD&OWJSPONFOU 15
Sustaining the process of improved profitability remains one of the primary challenges to be faced in 2016, the success of which shall greatly depend on the risks and uncertainties of the international context, the recovery of the Portuguese economy and the relative evolution of the cost of risk and net interest income. The repercussions of the resolution process constitute latent factors of uncertainty in the banking business, both in terms of the confidence shown by Customers and investors, and regarding the profound alteration of the competitive context of the Portuguese market. The deepening of the Banking Union and the consequent regulatory framework, the financial integration under the wings of the Capital Markets Union project and the use of new business concepts derived from the endorsement and application of new technological potentialities shall continue to be motives for the banks to rethink their business strategy and positioning.
INTERNATIONAL OPERATIONS
According to IMF estimates, Poland recorded a GDP growth rate of 3.5% in 2015, presenting itself as one of the most dynamic economies of the European Union. The primary contribution to this performance came from private consumption, underpinned by the increased disposable income, the easy access to credit and the improvement of the labour market, further boosted by the favourable evolution of investment. In turn, net external demand should have contributed nothing to GDP. The scenario of great buoyancy in economic activity was not, however, reflected in a rise of inflation, due to the persistence of strong external deflationary pressures. In this context of low levels of inflation, the monetary policy continued accommodative, which contributed to the relative stability of the zloty in relation to the euro for the year as a whole. For 2016, the IMF forecasts that Poland should maintain robust growth levels, not excluding, however, the risks for economic activity, sustainability of public finance and compliance with the European commitments that may arise from the policies announced by the government which took up office following the legislative elections of October 2015.
After five consecutive years recording growth rates above 7%, the Mozambican economy appears to have slowed down in 2015, with the IMF projecting an expansion of 6.3%. This evolution was determined by the reduction of commodity prices, in particular of gas, coal and aluminium, which led to a decline of revenue from export of commodities and cooling down of direct foreign investment, which resulted in a deterioration of the current account of the balance of payments and, consequently, the devaluation of the metical. The exchange rate instability, particularly accentuated in November, led the Mozambican government to request an emergency loan from the IMF and adopt a more restrictive monetary and budgetary policy aimed at restoring economic stability. In this context, concerns deepened regarding the sustainability of public debt (primarily denominated in foreign currency), which led to a downward revision of the ratings attributed by the international agencies. For 2016, in spite of the international scenario being challenging, the IMF foresees a minor acceleration of the Mozambican economy, underpinned by productivity gains expected in agriculture and by the expansion of coal production, following the opening of new transport channels, namely by railway.
In 2015, the Angolan economy pursued its trajectory of deceleration. The fall in the price of oil significantly reduced fiscal revenue and the obtaining of foreign currency inherent to exports of the energy sector, which particularly constrained private consumption and public investment, having contributed to the GDP growth rate having shifted from 4.8% in 2014, to 3.5% in 2015, according to IMF forecasts. In this environment, the kwanza recorded a sharp devaluation and the inflation rate stood at close to 10%, imposing the need for more restrictive monetary policy. In 2016, the IMF expects that the GDP growth rate should continue at 3.5%, supported by the effects of the policies which have been progressively adopted with a view to reducing dependence of the petroleum sector and assuring a greater diversification of economic activity, as the external context should remain adverse, especially with respect to the progression of the Chinese economy and evolution of the price of oil.
GROSS DOMESTIC PRODUCT Annual growth rate (in %) 2013 2014 2015 2016 2017 EUROPEAN UNION 0.2 1.5 1.5 1.4 1.3 Portugal -1.6 0.9 1.6 1.5 1.4 Poland 1.7 3.4 3.5 3.5 3.6 SUB-SAHARAN AFRICA 5.2 5.0 3.5 4.0 4.7 Angola 6.8 4.8 3.5 3.5 3.8 Mozambique 7.4 7.4 6.3 6.5 7.9 Source: IMF (February 2016). IMF estimate. 16 &DPOPNJD&OWJSPONFOUr"//6"-3&1035r 2015
ANGOLAN ECONOMY
Throughout 2015 and in the wake of the constraints of the economic context of 2014, the Angolan economy was severely affected, experiencing situations of evident economic and financial crisis derived from the abrupt, accentuated and persistent decline of the prices of the barrel of oil in the international market and, consequently, the lack of foreign currency to fund imports, on which Angola is heavily dependent. These two aspects significantly compromised the continued growth of the Angolan economy over the entire year in reference. These factors influenced the volume of revenue obtained to maintain macroeconomic stability, reflected in the reduction of domestic production, in the aggravation/increase of the exchange rate and inflation rate – which shows a galloping upward trend – and in the significant decline of purchasing power parity, affecting the disposable income of the population in a widespread manner, which has felt in the slowdown of demand.
EVOLUTION OF THE AVERAGE PRICE AND MONTHLY CHANGE IN THE PRICE OF THE BARREL OF OIL
120 20%
15% 100 10%
80 5%
0 60 -5%
40 -10%
-15% 20 -20%
0 -25% Jul. 14 Jul. 15 Jan. 14 Jan. 15 Jun. 14 Jun. 15 Feb. 14 Feb. 15 May 14 May 15 Sep. 14 Sep. 15 Apr. 14 Apr. 15 Mar. 14 Mar. 15 Oct. 14 Oct. 15 Aug. 14 Aug. 15 Dec. 14 Dec. 15 Nov. 14 Nov. 15 Monthly Average Price of the Barrel of Oil (USD) Change (%)
Source: World Bank.
The initial outlook embodied in the Angolan State Budget for 2015 indicated that the country should see its public accounts shift from a surplus to a deficit position due to the reduction of fiscal revenue derived from the lower price of oil, implying a reduction in budget results. Public debt should reach a figure of 38.7 million euros, equivalent to 35.5% of GDP, combining External Debt (24.5%) and Domestic Debt (11%). The State deficit should grow 38 times between 2014 and 2015. The stock of public debt should be exacerbated with an estimated debt of 7.6% in public accounts, signalling the enormous difficulties expected in 2015, despite the outlook of year-on-year GDP growth of 9.7%.
The Angolan State Budget for 2015 was drawn up with forecast expenditure of 5,215 trillion AOA and revenue of 4,184 trillion AOA, the latter corresponding to 11.80% less than in 2014, with fiscal revenue derived from oil standing at 2.5 trillion AOA, representing a decline of 16% in relation to the estimate for this year and 66% of current revenue. Production is estimated to increase by 10.7%, from 604.4 million barrels in 2014, to 669.1 million barrels in 2015. The Budget also forecast an inflation rate of 7%, an exchange rate of 99.10 AOA per dollar, and a money growth rate based on M2 of 16%, with a stock of net international reserves of 23.5 billion dollars.
Operating in a context of uncertainty and as a precautionary measure, the Angolan State Budget was prepared based on a fiscal price of 81 dollars per barrel, forecasting a revenue of 2,551 billion AOA (21.2 billion euros). In view of the persistent slump in the price of the barrel of oil in the international market, it was decided that a budgetary review was required which established the budgetary average reference price of crude oil at 40 USD, reflecting a loss of 14 billion USD, to levels above 50%, and a cut in State current expenditure (goods and services) of 50% and 53% in public investment. 2015r3&-"5¶3*0&$0/5"4r&DPOPNJD&OWJSPONFOU 17
The economy and consequently the Angolan financial system have been visibly shaken by the current situation of world markets. In order to reduce the identified vulnerabilities and reinforce the measures aimed at containing the downward spiral of the country's economic and financial circumstances, the government embarked upon a series of initiatives aimed at maximising the reversal of the scenario of economic deterioration, triggering and reinforcing actions aimed at (1) diversifying the economy circumscribed in the national objectives of the policy to promote and diversify economic development, 2013-2017; (2) intensifying the implementation of the tax reform, so as to widen the tax base and lower the vulnerability of public expenditure to fluctuations in the price of the barrel of oil; and (3) reverse the course of contractionist fiscal policy, seeking to expand non-oil revenue and enhance the quality of State expenditure. For this purpose, urgent resources for the funding of the economy have been mobilised, domestically and externally, namely through the issue of public debt on the domestic and external market – Angola made its first incursion into the internal capital market, with the issue of eurobonds, on 5 November, launching a public debt issue of 1.5 billion dollars at ten years, with an annual interest rate of 9.5%, as well as via the attraction of domestic and external loans from China, Brazil and the International Bank of Reconstruction and Development (IBRD). By mid October, the value of public debt corresponded to 5.8% of the GDP projected for 2015.
Economic and social development programmes were implemented, aimed at reinforcing and improving the water supply and sanitation system, expanding the capacity of production and system of transport of electricity, involving logistics platforms, the recovery and maintenance of roads and hospital and education infrastructures. The petroleum sector is expected to grow by around 7.8% – as a consequence of increased oil production of around 1.8 million barrels of crude per day, while the non-oil sector is forecast to grow by 2.4%, which aggregates growth levels of 2.5% in agriculture, 2.6% in manufacturing industry and 2.2% in trade services. The energy sector should grow by 12%, the construction sector by 3.5% and the diamond sector by 3.2%.
The government was forced to optimise the burden of subsidies, due to the effect associated to the slump in oil revenue and adjustment of the exchange rate on the import price of petroleum derivatives. Fuel prices were increased, significantly reducing the State monetary contribution in this range of products. From 1 January 2016 onwards, diesel was no longer subsidised by the Angolan government with the price becoming subject to the free market system, and likewise for petrol since April, with new price increases having occurred on that date.
Also in terms of government policy to address the less favourable international and domestic economic and financial environment, and aimed at optimising the burden of subsidies and lowering them to the levels of coverage of the fiscal revenue, the government also adjusted electricity and drinking water tariffs for the provinces of Luanda and Benguela, pursuant to Executive Decree 705/15 and the combined Executive Diploma, both of 30 December, of the Ministry of Finance and Ministry of Energy and Water.
The adjustments carried out to the fuel, energy and water subsidies enabled the saving of funds aimed at the rational coverage of public and private expenditure and creation of space to assure the coordinated conduct of fiscal, monetary and foreign exchange policies as well as the funding of actions relative to the objectives of the National Development Plan 2013-2017.
The Angolan financial system has recorded a significant liquidity deficit in terms of external currency/USD to meet market needs, in particular relative to imports, remittances and transfer of foreign currency and payments abroad, via debit/credit cards, indicating a decline in the country's Net International Reserves – the total value of the amount auctioned in November represented merely 33.6% of the corresponding amount auctioned in June. This illustrates the country's difficulty in dealing adequately with the Balance of Payments imbalances, controlling and influencing the exchange rate, assuring confidence in the national currency and promoting a reference monetary policy for foreign investors and loans.
The supply of dollars to the market via the banking system has proved to be increasingly more rationed and restricted, with the evident reduction of the offer of foreign currency in the primary market, giving rise to galloping speculation around the dollar in the informal market. In view of a context aggravated by the need for foreign currency and in an attempt to develop mechanisms to adjust/stabilise the foreign exchange market and money market, Banco Nacional de Angola (BNA) set in motion a series of actions, aimed at maintaining the control/tight hold of monetary and exchange rate policy, via devaluation of the Angolan currency during the year, specifically on 4 June and 10 September. The kwanza lost 37% of its value with respect to the American dollar, in the primary market, the strongest annual devaluation of the dollar since October 2009. As at 31 December 2015, the dollar stood at 400 AOA on the informal market. Nevertheless, on 4 January 2016, BNA once again increase the dollar exchange rate to 156.386 kwanzas. 18 &DPOPNJD&OWJSPONFOUr"//6"-3&1035r 2015
EVOLUTION OF THE INFLATION RATE
16%
14%
12%
10%
8%
6%
4%
2%
0% July May June April March August January October February December November September Monthly inflation Accumulated inflation Inflation over the last 12 months
Source: BNA.
The deterioration of the USD/AOA exchange rate undermined the confidence of economic agents and significantly affected the inflation rate, which surpassed two digits. One of the focus points of the government's measures to control the fiscal and monetary policy should involve the challenge of controlling the rate of inflation, combined with the protection of net international reserves. The control of this issue shall be one of the arguments to boost the recovery of the confidence of the domestic and external market.
Another measure taken by BNA, aimed at safeguarding the exercise of transparency in banking activity and fostering confidence in the Angolan financial system, in line with the foreign pressure derived from the drying up of dollars in Angola by North American banks, was the publication of Directive 2/DRO/DSI/15, Guidelines on the Prevention of Money Laundering and Combat of Terrorist Financing in Relations with Correspondent Banks and Client Banks, and the launch of a media campaign aimed at reiterating the commitment to combat illegal financial flows. These measures seek to strengthen the regulatory mechanisms and guidelines on this matter, in relations with correspondent banks and client banks. On this issue, the impact of the EIU (Economist Intelligence Unit) forecast is that the BNA's commitment to clean up the country's financial system is positive. Albeit addressing illegal financing flows, this Directive shall also require strong enforcement measures; hence, while not being guaranteed in the opinion of the EIU, its forecasts continue unchanged.
During 2015, the Angolan economy was subject to an adverse circumstantial context, which shows no prospect of recovery in the short and medium term. The significant variation of the targets associated to the fundamental assumptions of the Angolan economic model has compromised the achievement of the State Budget targets, as well as the goals and objectives of the National Development Plan 2013/2017. The price of its most important resource, oil, has stood, in some circumstances and in an accentuated form, at levels below USD 40, having reached the average value of USD 36.5 in the month of December and annual value of USD 53. Consequently, Angolan fiscal revenue fell by 850 billion kwanzas, with this indicator having plunged by 26.35% over a 12 month period, from the total of 4,096 billion kwanzas in 2014, to 3,242 billion kwanzas in 2015. The exchange rate on the primary market stood at 130.68 AOA per dollar and the inflation rate reached 14.27%, greatly above the projected 7.46%. Net international reserves declined by 11.53%, corresponding to 24.1 billion dollars for around six months of imports. The expected economic growth of 4.8% was cut to effective growth of merely 2.8%, in spite of the increased oil production of very close to 1.8 barrels/day.
2015r3&-"5¶3*0&$0/5"4r&DPOPNJD&OWJSPONFOU 19
OUTLOOK FOR 2016
2016 shall be a difficult year for Angola, as the uncertainty around the evolution of the price of oil presents considerable risks for budgetary implementation and for the prospects of economic growth, with the forecast maintenance of the restrictive macroeconomic scenario. The world economic context of the petroleum sector, concerning the constraints on demand and supply, point to a gloomy outlook for oil producing countries, in view of the persistent outlook of the descending price of the barrel.
The slump in the price of oil has significantly reduced fiscal revenue and exports. The need to resolve the identified vulnerabilities, and also to diversify the economy, improve the management of oil revenue volatility and implement structural reforms to assure macroeconomic stability and the sustainability of national debt shall constitute the primary challenges of the Angolan government in 2016. Accordingly, there is also a continuous need to search for solutions for debt problems, relaunch imports, reduce the exchange rate, aimed at restoring the value of the national currency, and reduce the inflation rate to stimulate demand.
According to the Angolan State Budget for 2016, the economy should grow at a more moderate rate, with a stagnation of the administrative public sector. The Angolan government estimates real GDP growth of 3.3% – slightly above the population growth rate of 3%/year –, relative to the estimated growth of the previous year (2.8%), underpinned by an expected growth of 4.8% forecast for oil production, which should record an acceleration of 1.89 million barrels/day, following the expected increased production in the oil blocks of Cabinda and operationalisation of the Mafumeira and Satelite Kizomba projects.
EVOLUTION AND FORECAST OF GDP AND GDP PER CAPITA
8 7
7 5.8 6
6 5 5 4 4 3.3 3 3 2 2
1 1
0 0 2010 2011 2012 2013 2014 2015 2016
GDP (%) GDP Per Capita (000)
Source: EIU/MINFIN-OGE/FMI.
Also according to the State Budget, the sectors of the national economy which shall show strongest development shall be energy, with a forecast growth of 20%, agriculture with expected growth of 4.6%, and the manufacturing industry and construction sectors with 3.1%. Overall, in 2016, the non-oil sector shall record a moderate reinforcement, with expected growth of 2.7%, in 2016, when compared with the 2.4% growth projected for 2015. In terms of participation in GDP, the oil and non-oil sectors should contribute with 1.5% and 1.9%, respectively.
Budgeted in overall terms, with revenue and expenditure of equal value, at 6,429,287,906,777 kwanzas (38.2 billion euros), the State Budget for 2016, approved at the National Assembly in December, is described by the government as maintaining the austerity, due to the oil price crisis which, just in 2015, forced the cutting of one third of expenditure and implies a deficit of 5.5%. According to the State Budget, all the wealth generated in Angola by oil should reach 3,301 billion kwanzas (19.3 billion euros) this year, with a forecast 3% increase in crude oil exports, to 689.4 million barrels. The budget also forecasts an increased stock of public debt to 49.2 billion dollars, 49.7% of GDP (31.1% external and 18.6% domestic), equivalent to half the national wealth that shall be generated by the country in 2016. 20 &DPOPNJD&OWJSPONFOUr"//6"-3&1035r 2015
The Angolan government projected for 2016 an average price of 45 USD per barrel exported, whereas the price on the international market fell to values below 28 dollars in January, aggravating fears on the implementation of some projects, investments and public expenditure of the country. The inflation rate was placed at 11%, corresponding to the adjustments to be carried out in the economy, in line with the forecast in the National Development Plan 2013-2017, with a forecast deficit of 781.2 billion kwanzas, equivalent to 5.5% of GDP.
The principal potential risks for the national economy in 2016, related to international and national economic circumstances, according to the State Budget, are: 1) the volatility of the price of oil and 2) exchange rate depreciation. It is expected that the State Budget will be revised if the price of petrol does not rise, as the capacity to repay foreign loans is strongly limited by the current capacity to generate foreign currency. In view of the current scenario of the national economy and in the context of maintenance of the national objectives of the policy to boost and diversify economic development for 2013-2017, the government has highlighted a series of priorities that will be enforced under the following fundamental action programmes: Programme of Diversification of National Production, which shall assure the construction of a solid and diversified economic base, aimed at reducing the dependence on consumer product imports and the high dependence on oil sector exports, where this programme shall include a structural reform in agriculture; Programme of Creation of Priority Clusters, directed at the development of economic sectors which shall enable the constitution of comparative and competitive advantages capable of relaunching the Angolan economy; and the Angola Invest Programme, which should create and drive the Angolan business structure, strengthening it to a positioning that is more active, employment creating and wealth generating for the country.
According to the IMF, public debt should increase significantly, but growth should remain stable, warning that the economic and financial situation in Angola shall continue to be a challenge in 2016, because an oil price recovery is not expected. However, the IMF noted that the growth of the Angolan economy in 2016 should continue stable at around 3.5%.
The Centre for research and Scientific Studies (CEIC) estimates that the Angolan economy lost 555 million dollars in the first 20 days of the year, due to the fall in the price of the barrel of crude oil in the international market, based on the figures of the Angolan State Budget for 2016 for the export of the barrel of crude at 45 dollars, when the price was already below 30 dollars. This aspect constitutes an indicator of the eminent possibility of a State Budget revision.
The government has recently delineated a crisis mitigation strategy, as a consequence of the decline of the price of the barrel of oil, assuring that it will focus on increasing non-oil tax revenue, optimising public expenditure and rationalising the import of goods. On this last issue, the new customs tariff was enforced on 1 January, referring to duties on imported items, such as mineral water. The measures to be adopted involve fiscal, monetary, external trade and real economy aspects, aimed at reducing the impact of the scarcity of foreign currency in the national economy.
Following this, the special contribution was announced applicable to most banking operations, at a rate of 0.1%, except wages and deposits, which shall be enforced three months after the publication in Diário da República, and the alterations to the Urban Property Tax, as a condition, among others, to offset the potential restriction in the maintenance of the social programmes foreseen in the National Development Plan (PND) 2013-2017. Other measures included the strengthening of action mechanisms of the General Tax Administration (AGT) to ensure the continued growth rate of non-oil revenues; the stimulation of the tax enforcement mechanisms of taxpayer debts; the continuation of the process of inspection of taxpayers receiving tax benefits; and the continuation of the process of taxpayers in breach of labour income tax (IRT) obligations; follow-up of the process of optimisation of subsidies in the price of fuel, energy and water (already undertaken), and collective urban, railway, sea or land transport, through revision of the respective tariffs.
2015r3&-"5¶3*0&$0/5"4r&DPOPNJD&OWJSPONFOU 21
Despite premature, the revision of the State Budget may be imminent, which is not a good sign for national and foreign investors, as this scenario places in question the country's macroeconomic stability. This revision shall naturally depend on the trend followed by the price of oil in the near future. The OPEC estimates that the demand for oil should reach 31.6 million barrels per day in 2016, i.e. 1.7 million more than that estimated in January of approximately 1.5 million barrels per day. Goldman Sachs lowered the forecast for Brent prices in 2016, 2017 and 2018 to 45 USD, 62 USD and 63 USD per barrel, respectively. Standard & Poor's reduced its oil price estimates in 2016 to 40 USD per barrel, from previous projections of 55 and 50 USD.
EVOLUTION AND FORECAST OF THE PRICE OF THE BARREL OF OIL
120 112 111 109
100 96
80 80
62 60 53 55 45 37 40
20
0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Source: EIU/World Bank.
The World Bank issued a downward revision for its forecast oil price for 2016. The projection disclosed in October 2015 pointed to 51 dollars per barrel, while it is currently standing at 37 dollars per barrel. This revision takes into account the restarting of exports from Iran and the slowdown of growth in the main emerging economies. Oil prices fell by close to 47% in 2015 and, on average, should descend a further 27% in 2016. However, a gradual recovery over the year is also expected, with probable cuts in production and strengthening of demand.
The economic context of 2016 faces numerous uncertainties, whose underlying theme gravitates around the expected evolution of the price of oil. The International Monetary Fund and the World Bank prepared a loan of 4 billion dollars, which may be the first of a series of financial bailouts to oil-producing countries affected by the decline of oil prices, which have experienced an imbalance in their public finance and entered an exchange rate crisis following the appreciation of the dollar.
Regarding Angola, the IMF advocates that the priorities should be: making the labour market more flexible; promoting private investment; improving the business environment, especially reducing bureaucracy, facilitating the process of incorporation of companies, strengthening the supremacy of the law and improving physical infrastructures and human capital. The IMF also recommends the continued cutting of fuel subsidies, while at the same time expanding delineated assistance to the poor.
Recently, Standard & Poor’s downgraded the rating of Angolan sovereign debt from "B+" to "B", but with an outlook of "stable" evolution. This downward revision of the rating is justified by the decline of the price of oil and dependence on these exports, leading to the country's increased indebtedness. For this agency, the State's domestic and external loans, combined with a weak exchange rate, have elevated the weight of public debt, with it being expected that Angola's gross debt should reach 50% of GDP by this year. Now, the outlook of "stable" evolution is justified by the forecast of a gradual decrease of the Angolan deficit, thus reducing the risks of external financing, also taking into account the government's response to the crisis, aimed at preventing the deterioration of the fiscal and debt situation.
Standard & Poor’s also foresees the need for Angola's gross external financing of approximately 31 billion USD, this year and the next, of which around half is short term. 22 3FHVMBUPSZ$IBOHFTUPUIF'JOBODJBM4ZTUFNr"//6"-3&1035r 2015
REGULATORY CHANGES TO THE FINANCIAL SYSTEM
NOTICES
Notice 08/2014, of 04 December Establishes the period as of which the "Series 1999" notes and coins shall no longer be in circulation. Pursuant to this Notice, notes and metal coins of the "Series 1999" shall only remain in circulation, together with notes and metal coins of the "Series 2012", up to 31 December 2014.
Notice 09/2014, of 05 December Establishes the rules and principles ruling the advertising of financial products and services marketed by financial institutions under the supervision of Banco Nacional de Angola.
Notice 10/2014, of 05 December Regulates the characteristics and requirements of the guarantees which financial institutions receive, as well as the respective guarantors, in order to be eligible for prudential effects.
Notice 11/2014, of 10 December Establishes specific requirements for credit operations made by financial institutions authorised by Banco Nacional de Angola or which, under the terms and conditions stipulated in the Law of Financial Institutions, are under its supervision.
Notice 12/2014, of 10 December Regulates the process of constitution of provisions of financial institutions.
Notice 01/2015, of 26 January Readjusts the regulations on the import, export and re-export of foreign currency by banking financial institutions, and determines the information that should be provided to Banco Nacional de Angola.
Main alterations: a) Exempts prior authorisation – Banking institutions are henceforth authorised to import, export and re-export of foreign currency, as well as travel cheques, without prior authorisation by Banco Nacional de Angola; b) Duty of disclosure – Banking institutions should inform Banco Nacional de Angola about each foreign currency import and export operation carried out. The information should be reported through the System of Financial Institutions (SSIF) by the last day of the week when the operation took place.
Notice 02/2015, of 26 January Updates the regulations on the limit of exposure to exchange rate risk and gold of financial institutions under supervision of Banco Nacional de Angola.
Main alterations: a) Treasury securities indexed to foreign currency are exempt from calculation of foreign exchange exposure.
Notice 03/2015, of 20 April Establishes the minimum requirements, rules and principles to be observed by financial institutions when advertising the financial products and services marketed to the public.
Notice 04/2015, of 20 April Establishes the period as of which the "Series 1999" and "2003" notes and coins shall no longer be in circulation.
Notice 05/2015, of 20 April Defines the requirements of the cheque forms used in the Payment System of Angola.
2015r"//6"-3&1035r3FHVMBUPSZ$IBOHFTUPUIF'JOBODJBM4ZTUFN 23
Notice 06/2015, of 20 April Establishes the rules for identification of Deposit Accounts.
Notice 07/2015, of 20 April Defines and establishes the dates and requirements for the extinction of the Securities Clearing Service (SCV) and operationalisation of the Cheque Clearing Subsystem (SCC).
Notice 08/2015, of 20 April Establishes the conditions of compulsory settlement of inter-bank transfers in the Payment System by Gross in Real Time (SPTR).
Notice 09/2015, of 20 April Establishes the execution times for transfers and remittances, as well as the deadline for funds to become available to the beneficiary, following the deposit of cash and cheques, transfers or remittances.
Notice 10/2015, of 16 June Establishes the terms and conditions for the inflow and outflow of domestic and foreign currency, held by individuals, foreign exchange residents or non-foreign exchange residents, whose destination or origin is the Republic of Namibia, using the land border of Santa Clara (Cunene – Angola) or Oshikango (Namibia).
Notice 11/2015, of 25 December Regulates the classification of the clearing and settlement subsystems of the Payment System of Angola (SPA), with a view to the adoption of risk control mechanisms, and stipulates and functioning and operationalisation of these sub-systems and the responsibilities of the operators.
Notice 12/2015, of 29 December Monetary Conversion Agreement concluded between Banco Nacional de Angola and the Bank of Namibia. Adopts a new implementation mechanism and establishes new procedures on the transport of domestic and foreign currency across the land border of Santa Clara (Angola) and Oshikango (Namibia) and defines the new rules of the framework of procedures for transactions carried out by financial and banking institutions and foreign exchange bureaus, under the aforesaid agreement.
INSTRUCTIONS
Instruction 07/2014, of 03 December Adjusts the rules for calculation and compliance with the required reserves to the current context of macroeconomic stability.
Main alterations: a) Increase of the coefficient of required reserves in national currency, from 12.5% to 15%; b) The requirement in national currency can be deducted by the amount of up to 60% of the assets representing the value of the credit disbursement granted in domestic current in the sectors of Agriculture, Fisheries and Production of Food Products, provided that the maturity is more than or equal to 36 months.
Instruction 01/2015, of 26 January Establishes criteria for classification of countries and identification of multilateral development banks and international organisations, for prudential effects.
Instruction 02/2015, of 14 January Establishes the methodologies that can be used to define the minimum amounts of provisions that should be constituted, in the context of the determinations on the process of constitution of provisions stipulated in Notice 12/2014, of 17 December.
Instruction 04/2015, of 02 March This instruction adjusts the procedures relative to the holding of sessions to purchase and sell foreign currency established in Instruction 01/2011, of 12 April, aimed at preserving balance in the foreign exchange market, instructing additional operating rules relative to the purchase and sale of foreign currency, amending the text of points 3.1.2, 3.1.5 and 8, adding points 3.1.7, 3.1.8 and 3.1.8.1, defining priorities to the destination of foreign currency acquired by commercial banks from Banco Nacional de Angola and/or its Clients, namely Transaction of Goods and Current Invisibles. 24 3FHVMBUPSZ$IBOHFTUPUIF'JOBODJBM4ZTUFNr"//6"-3&1035r 2015
Instruction 05/2015, of 02 March Defines the technical specifications of the Standard Cheque, in conformity with article 1 of Notice 05/2012, of 20 April. This "Cheque" is named "Standard Cheque Model 2.1" (two point one).
Instruction 06/2015, of 26 May Establishes rules for containment of the risk of settlement in the subsystems of the Automatic Clearing Chamber of Angola (CCAA), considering the negative impact of the impossibility of payments due to insufficient backing of a participant over the others or users of the Payment Subsystem of Angola (SPS), defining, among others, the mechanisms for constitution, composition, assessment, operationalisation and default.
Instruction 07/2015, of 25 May Regulates the terms and conditions under which foreign exchange bureaus can purchase and sell foreign currency.
Instruction 08/2015, of 03 June Proceeds with the adjustment of the rules for calculation and compliance with the required reserves to the current context of macroeconomic stability.
This Instruction establishes that the coefficient of reserves applicable to the daily balances of the items comprising the base of incidence, with the exception of the accounts of the Central Government, Local Government and Municipal Administrations, is 25% (compared to the previous 20%), where banks may meet up to 10% (compared to the previous 5%) of the requirement in Treasury Bonds, weighting the respective maturities, provided that they were issued from January 2015 onwards and belong to the banks' own portfolio.
Instruction 09/2015, of 04 June Establishes the methodologies that can be used to define the minimum amounts of provisions that should be constituted, in the context of the determinations on the process of constitution of provisions stipulated in Notice 12/2014, of 17 December.
Instruction 10/2015, of 04 June With a view to preserving a balance between the operationalisation of the foreign exchange market and the objectives of exchange rate policy, this instruction establishes requirements, criteria and adjustments to the procedures of holding of sessions to purchase and sell foreign currency.
Instruction 11/2015, of 18 June Establishes the operating rules to be observed by banking financial institutions and foreign exchange bureaus, located along the border zone of Santa Clara, province of Cunene, for foreign exchange transactions involving Namibian Dollars (NAD) and to monitor the flow of operations carried out under the Monetary Conversion Agreement concluded between Banco Nacional de Angola and the Bank of Namibia.
Instruction 12/2015, of 24 June Following Instruction 10/2015, this instruction defines new requirements to be observed by financial institutions in the process of carrying out foreign exchange operations involving goods, current invisibles, capital and sale to Foreign Exchange Bureaus.
Instruction 13/2015, of 01 June Establishes that, under their essential duties, Development Banks may participate in the interbank money market to assign liquidity, through submission or not of guarantees by the receiving banking institutions.
Instruction 14/2015, of 07 July(1) Establishes that the effective exchange rate to be applied by Banking Financial Institutions authorised to conduct the foreign exchange trade, in each sale of foreign currency transaction, intended for the payment of operations of import of goods, i.e. the effective nominal exchange rate plus all the fees and costs net of taxes, should not exceed the reference exchange rate for sale published by Banco Nacional de Angola, plus a spread of up to 3% (three per cent).
In all other foreign exchange operations, including the purchase and sale of foreign notes or travel cheques, the effective exchange rate to be applied by Banking Financial Institutions authorised to conduct foreign exchange trade, in each operation of sale of foreign currency, is freely negotiated.
(1) This Instruction was replaced by Instruction 15/2015, of 13 July. 2015r"//6"-3&1035r3FHVMBUPSZ$IBOHFTUPUIF'JOBODJBM4ZTUFN 25
The sale of foreign currency by Banking Financial Institutions to foreign exchange bureaus can only involve notes and travel cheques.
Instruction 15/2015, of 13 July Suspends the enforcement and consequent applicability of Instruction 14/2015, of 07 July, and re-establishes the enforcement of Instruction 03/2014, of 04 April, and all the regulations that are not contradictory to it.
Instruction 16/2015, of 22 July Determines the establishment and maintenance of required reserves in national currency and foreign currency, pursuant to Instruction 08/2015, of 3 June, which has been revoked, with some amendments concerning the form of calculation, namely the weekly calculation formula for the arithmetic average of the balances stated in the respective accounts during business days of the week (numbers 9 and 10) and the contents of numbers 15 and 18.
Instruction 17/2015, of 20 August Establishes the operating procedures for the holding of auctions for the sale of foreign currency to Foreign Exchange Bureaus. For example: 1) only foreign exchange bureaus that are authorised by Banco Nacional de Angola can conduct foreign exchange trade; 2) the sessions are carried out based on the best offer; 3) the sessions are not attended in person and are operationalised under the terms of number 3 of the present instruction: on the date and at the time stipulated by the Asset Market department, the foreign exchange bureaus should send their bids to the electronic address [email protected], indicating: 1) the purchase amount in foreign currency of each bid and exchange rate; 2) the maximum of three names of banking financial institutions domiciled in the country, for purposes of settlement of the operation by Banco Nacional de Angola, namely the realisation of the credit of the foreign currency and debit in national currency; the sum of the bids submitted by each foreign exchange bureau cannot exceed twice the value of its own funds; the amount of each bid cannot be less than 50,000 USD.
Instruction 18/2015, of 21 August Establishes the frequency, form and content of the statistical information to be provided to Banco Nacional de Angola by the issuers and acquirers of payment cards and by the firm operating the Multicaixa subsystem, where the frequency and period depend on the type of data in question (information of statistical nature should be sent monthly, up to 10h00 of the day of the month following that to which it refers), highlighting various exceptions relative, for example, to the context of fraud or attempted fraud or operational problems, whenever it is deemed that the seriousness of the occurrence requires urgent measures by third parties.
Instruction 20/2015, of 21 August Establishes rules and procedures inherent to the system for monitoring and treating foreign exchange operations, aimed at improving the information provided by Banking Financial Institutions, assuring the correct definition and monitoring of the execution of Banco Nacional de Angola's exchange rate policy.
DIRECTIVES
Directive 02/DRO/DSI/2015, of 10 December Guidelines on the Prevention of Money Laundering and Combat of Terrorist Financing in Relations with Correspondent Banks and Client Banks, regulating the conditions of exercise, the duties of disclosure and clarification, as well as the instruments, mechanisms and formalities necessarily applicable to the effective compliance with the obligations established in the law.
Directive 03/DRO/DSI/2015, of 23 December Considering the need to adjust the interest rates for the Permanent Facilities of Assignment and Absorption of Liquidity, and in conformity with the decision of the fifty-first ordinary meeting of the Monetary Policy Committee held on 21 December 2015, this directive establishes a 2.5% increase of the Rediscount Interest Rate, shifting it from 12.5% to 15%, which should be reviewed periodically by the Monetary Policy Committee.
Directive 13/DMA/2015, of 28 December Grants Banking Financial Institutions the prerogative to make liquidity absorption investments at seven days, with the rate for this maturity being established at 1.75%, and this rate being subject to periodic review by Banco Nacional de Angola.
26 #VTJOFTT4VNNBSZr"//6"-3&1035r 2015
BUSINESS SUMMARY
NET INCOME NET INCOME Million AOA The net income of Banco Millennium Angola stood at 6,760 million 6,760 kwanzas, in 2015, corresponding to 18% more than the previous year. This 5,741 figure was influenced by the positive evolution of net operating income (in particular net interest income and earnings from financial transactions), 4,872 in spite of the growth of operating costs (derived from inflation, exchange rate devaluation and wage revision) and provisions.
NET OPERATING INCOME
Net operating income increased by approximately 38%, compared to 2014, driven by the performance of net interest income and the earnings from financial transactions, which recorded growth rates of 28% and 2013 2014 2015 121%, respectively.
2015 2014 Chan. % NET OPERATING INCOME .JMMJPO"0" (Million AOA) Million AOA Net interest income 11,320 28% 26,646 Net fees 4,300 10% Earnings from financial 3,365 121% transactions 19,354 Other income 56 368 -85% 17,281 NET OPERATING INCOME 19,354 38%
Net interest income amounted to 14,446 million kwanzas in 2015. The growth of this margin was essentially due to the increased average volume, average rate of loans and average yield of public debt securities, in spite of the higher average volume of deposits and the higher average volume and rate of liquidity funding. 2013 2014 2015 Net fees reached 4,724 million kwanzas in 2015, compared to 4,300 million kwanzas in 2014. The increased fees resulted from the favourable evolution of fees related to credit operations and documentary credit, notwithstanding the reduction observed in fees related to remittances and cards.
Earnings from financial transactions amounted to 7,420 million kwanzas, corresponding to an increase of 121% in relation to the previous year, where the positive effect of the exchange rate devaluation was particularly influential, despite the reduction of the supply of USD in the Angolan foreign exchange market.
OPERATING COSTS
Operating costs, which aggregate staff costs, external supplies and services and the depreciation and amortisation for the year, reached 12,295 million kwanzas, in 2015 (9,815 million kwanzas in 2014), representing a 25% increase in comparison to the previous year. 2015r"//6"-3&1035r#VTJOFTT4VNNBSZ 27
OPERATING COSTS 2015 2014 Chan. % .JMMJPO"0" (Million AOA) Million AOA Staff costs 4,227 39% 12,295 External supplies and services 4,314 8% 9,815 Depreciation and amortisation 9,085 1,274 40% for the year OPERATING COSTS 9,815 25%
This evolution was essentially the result of the impact of the exchange rate devaluation, the effect of inflation, the annual wage update and adjustments derived from the career progression and increased number of Employees (to meet the expansion of the commercial network and creation of a new organic unit of the central services). 2013 2014 2015 The efficiency ratio (cost-to-income) stood at 45.8% in 2015, an improvement compared to the 50.9% recorded in 2014, due to the operating costs having CUSTOMER FUNDS grown at a lower rate than that of net operating income. Million AOA
PROVISIONS 249,111
2015 2014 Chan. % .JMMJPO"0" (Million AOA) 180,900 Provisions for loans 2,524 165% 162,727 Other provisions -1 176 -101% PROVISIONS 2,700 148%
Provisions for loans reached 6,697 million kwanzas in 2015, 165% more than in the previous year, due to the worsening economic conditions associated to the context in which the Bank operates.
PROFITABILITY 2013 2014 2015 The return on average equity (ROAE) stood at 17.0% in 2015 (16.1% in 2014). GROSS LOANS NET ASSETS Million AOA
Total assets amounted to 342,914 million kwanzas as at 31 December 2015, 146,936 compared to 244,699 million kwanzas as at 31 December 2014, with this net change corresponding to a 40% increase in the year under review. 125,542
FUNDS AND LOANS 86,653 Customer funds recorded impressive growth, of approximately 38% year-on-year, amounting to 249,111 million kwanzas as at 31 December 2015.
The portfolio of gross loans increased by 17%, to 146,936 million kwanzas.
It should be stressed that BMA maintained its position of leadership in support to the Angolan productive sector replacing imports through the 2013 2014 2015 Angola Invest Programme (a programme created by the Executive in partnership with the Commercial Banks).
The loan-to-deposit ratio fell by 11 p.p., from 65% in 2014 to 54% in 2015, due to stronger growth of funds in relation to loans. 28 #VTJOFTT4VNNBSZr"//6"-3&1035r 2015
BRANCHES, BUSINESS CENTRES CREDIT QUALITY AND PRESTIGE CENTRES
107 110 The quality of the loan portfolio, assessed by the proportion of loans overdue by more than 90 days, stood at 3.4% as at 31 December 2015 95 13 12 (3.2% as at 31 December 2014). 7 8 8 6 The coverage ratio of loans overdue by more than 90 days by provisions evolved to 267% as at 31 December 2015, compared to 196% as at 31 December 2014.
SOLVENCY
2015 2014 Chan. % 82 87 89 .JMMJPO"0" (Million AOA)
2013 2014 2015 Risk weighted assets (RWA) 219,547 25% Qualified own funds 30,217 24% Branches SOLVENCY RATIO 13.8% -0.1 p.p. Business Centres Prestige Centres As at 31 December 2015, the solvency ratio corresponded to 13.7% (-0.1 p.p. relative to 31 December 2014), a figure rather above the regulatory minimum 10%. NUMBER OF CUSTOMERS DISTRIBUTION NETWORK 597,263 534,101 In 2015, BMA inaugurated 2 Branches and 1 Prestige Centre. As at 31 December 2015, the Bank had a network of 89 Retail Branches, 54 of which 437,635 are open on Saturday morning, 13 Prestige Centres and 8 Business Centres.
CUSTOMERS
As a result of the expansion of the network and the increasingly higher penetration rate in the market by the oldest Branches, the number of Customers grew by 12% in relation to the previous year.
REMOTE CHANNELS
2013 2014 2015 As occurred in the previous year, Banco Millennium Angola showed strong dynamics in the placement of Automatic Payment Terminals (EFTPOS – electronic funds transfer at point of sale) and cards in 2015.
The total number of EFTPOS grew by 48% compared to the previous year. The number of active cards stood at approximately 198 thousand by the end of the year, corresponding to 33% growth over 2015.
A total number of 120 Automatic Teller Machines (ATM) had been installed by the end of 2015.
MARKETING, COMMUNICATION AND SOCIAL RESPONSIBILITY
In 2015, the expansion of the network included the inauguration of 2 Branches and 1 Prestige Centre, leading to a total of 89 Retail Network Branches, of which 54 are open on Saturday morning, 13 Prestige Centres and 8 Business & Corporate Centres, two of which intended for the oil industry. The number of Customers amounted to 597,263 in December 2015, having grown by 11.8% in relation to the previous year. 2015r"//6"-3&1035r#VTJOFTT4VNNBSZ 29
The Easy Payment service was continued in 2015 for products and EFTPOS services, with an increasing number of Customers using remote channels 2,859 of Millennium Angola, and corresponding reduction in physical visits to the Branch. This service includes Internet Banking, SMS Banking, App Millennium AO and the Contact Centre. Follow-up was also given to the "I am + Millennium" campaign, a Customer loyalty programme which 1,938 attribute "Millenniuns" (points worth prizes) to Customers for their intensive use of the Bank's products and services. The Woman Offer was also re-launched, which is a series of products and services of exclusive 1,215 subscription by women, covering: a specific Woman demand account and Multicaixa ATM card, a saving plan aimed at family protection, health and automobile insurance and access to credit, which supports the creation and development of business by Angolan female entrepreneurs. With respect to saving, new products were launched with attractive growing rates at 24 months: the Always Rising term Deposit for the Mass Market segment, and 2013 2014 2015 the Growing Rate Deposit for the Prestige segment. The Net Super Deposit has also been launched, a term deposit at 30, 90, 180 and 360 days, of exclusive constitution on Millennium Angola's website, with a promotional ACTIVE CARDS differentiating rate (weekly) and subject to limited stock. 198,186
Regarding companies, the Bank has maintained its focus on Small and Medium-Sized Enterprises (SME), through the Excellent SME initiative. 148,785 This innovative programme in the market seeks to distinguish, within the entire group of Customers of Millennium Angola, the Companies which 120,436 are outstanding due to their good economic performance, professionalism, financial solidity, qualified labour and position in the market. In 2015, 575 companies were distinguished in the 2nd Excellent SME Gala, a number considerably higher than in the previous year (230), confirming the Bank's affirmation in this segment. As a corollary of this positioning, Millennium Angola upheld its strong leadership in all the indicators of the Angola Invest Programme, a programme created by the Executive, in partnership with the commercial banks, which seeks to boost credit concession to Micro, Small and Medium-Sized Enterprises (MPME). 2013 2014 2015
Aimed at attracting new talent, the Bank has maintained its participation in employment fairs (in Luanda and Lisbon) and delivered presentations at Universidade Agostinho Neto.
The Talent Management and Retention Policy included two new Programmes for Development of Skills – Millenniuns High Potential, held in collaboration with Universidade Católica de Lisboa, and People Grow (junior Employees aged below 35 years old with potential and employed for less than two years). A Process of Certification of Managers of Individual and Company Customers has also been developed in partnership with the Portuguese Bank Training Institute (IFB). In 2015, a total of 4,017 training hours through personal attendance were administered and 6,136 training hours via e-learning.
Concerning the attribution of awards, BMA received a new certification of Software Quality based on ISO/IEC 25010, attributed by the prestigious technological institute ISQapave and SQS Portugal, and was distinguished with the awards of Best Commercial Bank Angola 2015 by Capital Finance International (cfi.co), a highly reputed British journal specialised in economic and financial affairs, and Best Internet Bank Angola 2015 by Global Banking & Finance Review.
Recently, the Bank became one of the first members of the Angola Securities and Debt Stock Exchange (BODIVA), after signing the contract qualifying it to trade securities issued by the State. The agreement allows Millennium Angola to participate on behalf of its Customers in the Treasury Securities Registration Market (MRTT), in the Wholesale Trading Market (MTG) and Continuous Trading Market (MTC).
Finally, the Bank has also invested in sponsorships and attendance of events, such as the Offshore World Championship of Sport Fishing; the Benguela International Fair (FIB); the First Scientific Congress and Third Symposium of Cardiology and Cardiac Surgery dedicated to the theme "40 Years Health – Conquests and 30 #VTJOFTT4VNNBSZr"//6"-3&1035r 2015
Challenges towards Excellence"; the Angola Observatory – a study which raises a series of questions about how the phenomenon of social ascension is processed and the models sought by Angolans for their lives and for the future of their children. In art and music, BMA supported the painting exhibition "The Proverbial Singularity of the Baobab Tree" by the artist Don Sebas Cassule at the Portuguese Cultural Centre, as well as the tour to Portugal of the singer Yolanda Semedo (prescriber of the Millennium Angola brand).
Under Social Responsibility, the Bank continued its support to Lar de Nazaré, in Cacuaco, assisting vulnerable children. HUMAN RESOURCES
In 2015, BMA's Policy on Human Resources continued with its strategy of consolidation, focused on talent management and strengthening Millennium Culture among our People.
In this context of development which is intended to be sustainable, the assessment of performance, planning of careers and overall enhancement of skills has acquired new vibrancy, with the implementation of human capital development projects.
Likewise, and because the motivation, commitment and well-being of all the Employees are fundamental vectors for success, new plans were also implemented in a structured form for Internal Communication and Internal Social Responsibility.
Main accomplishments by areas of intervention:
RECRUITMENT AND SELECTION The focus on this activity has been replacement, with priority given to the recruitment and selection of high potential staff. 216 persons have been contracted, representing an increase of 7.2% relative to 2014, thus contributing to enhance the staff, once again, with most incidence in the Commercial Area, with 76% of the recruits.
The recruitment activity is sustained and supported by campaigns and actions, among which the following in particular: rPartnerships with reference recruitment companies in the Angolan market; rAgreements with the best Angolan higher education institutions; rParticipation in employment fairs (national and international); rBMA presentation sessions at Universities; rAdvertisements in newspapers (national and international);
The Bank continued to offer scholarships to talented young people, giving priority to opportunities of academic and end of course internships.
TRAINING Throughout 2015, 161 training actions were carried out, corresponding to 4,017 training hours, with natural addressing of contents directed at duties of the Commercial Area, covering all the essential aspects for the good performance of daily activities, both from the technical and behavioural point of view.
The Certification of Managers of Individual and Company Customers was created in partnership with the Portuguese Bank Training Institute (IFB), aimed at conveying a series of technical skills and knowledge for this duty, with a component of training through physical attendance, essentially via e-learning. The success rate was 60% of passes.
Technical and behaviour training was also developed, together with Career Management, to support the development programmes People Grow and Millenniuns High Potential.
The e-learning training was followed up, with emphasis in the Money Laundering Course, in which 1,198 Employees were enrolled. The completion rate was 48%.
For the central services, specific technical and behavioural training was ministered, such as Development of Human Capital and Proactiveness, the General Labour Law and Disciplinary Process.
CAREER MANAGEMENT In 2015, the Career Management area developed various actions aimed at valorising the existing talent at the Bank, developing skills, motivating and retaining our Employees, through actions such as: rEmployee Management and Retention Programme; rMotivational interviews; rMobility interviews; rMonitoring of performance assessments; rAssessments – Personal Development Analysis (PDA). 2015r"//6"-3&1035r#VTJOFTT4VNNBSZ 31
Following these actions, two development programmes were successfully implemented: rMillenniuns High Potential (advanced training programme – MBA in Bank Management, in partnership with Universidade Católica de Lisboa); rPeople Grow (programme directed at Employees working at the Bank for less than two years and young recent graduates).
In this way, by using different management tools, we have managed to plan and monitor the growth of the Employees, stimulating their career progression through continuous and systematic focus on being driven by the business, Customer and results.
ADMINISTRATIVE AND STAFF MANAGEMENT BMA's staff grew by 7.2%, moving from 1,143 Employees in 2014 to 1,225 in 2015, which implied an increase of 82 new Employees, with the proportion of Angolans in the staff remaining stable, at around 98%.
Regarding services to Employees and their households, there was: rAn increase of the volume of travel by the end of the year (Development Programmes, People Grow, Certification of Managers, Integration Training, Family Party and Commercial Target Meetings); rA high number of statements for acquisition of residence in central areas and acquisition of land for directed self-construction; rUnder the health benefits, the health insurance available to Employees and their household was maintained.
EMPLOYEE BRANCH The Employee Branch is directed at the internal Customer, and focused its activities on the following topics: rReview of loan conditions: increase of the debt-to-income ratio and mortgage loans were changed from USD to AOA; rAll the Employees have access to the credit simulator; rEasy Payment conditions with special pricing; rCreation of the DP 9th Anniversary; rAgreement with Millennium bcp, for the opening of accounts for Employees with advantageous conditions; rManagement of a monthly ceiling for purchase of foreign exchange.
INTERNAL COMMUNICATION AND SOCIAL RESPONSIBILITY In 2015, and always with the strategy of attracting the loyalty of the internal Customer, reinforcement of the Company Culture and enhancement of the Organisational Atmosphere, the BMA Employee Centres (Solidarity, Culture and Sports) were constituted and stimulated, in order to develop and support the internal Social Responsibility activities. Various campaigns were developed around the theme of the Bank's anniversary month, Woman March, the Children's Month and Christmas, focusing on the distribution of toys to all the Employees' children aged between 0 and 18 years old.
TECHNICAL AREA The main strategic mission of the technical area was to assure the reliability of the outputs, legal compliance, control and support to the maintenance and management of the information of the Department of Human Resources, in the execution of the budget and preparation of the management information, statistics and reports for the Organic Units of BMA, the Group's entities and the State.
Especially this year, consolidation was achieved in the use of the mechanism developed for the automatic processing of the cash shortage grant for Employees of the commercial services and central treasury.
Two People Grow Employees passed through the area, with whom a project was developed involving simulation of Employee cost and emotional receipt, still at an experimental stage. QUALITY DEPARTMENT
In order to assure the continuous provision of quality service recognised by the users of Banco Millennium Angola, the Quality Department has dedicated special attention to the Satisfaction Management Systems, providing satisfaction questionnaires. The purpose of this survey is to identify weaknesses and vulnerabilities, for the subsequent implementation of solutions to overcome them by the Organic Units involved.
Each report issued with the conclusions of the assessments that have been conducted is presented to the areas concerned with the topics addressed, in order to endow them with information related to each assessment and enable the incorporation of actions of improvement, as soon as opportune, in their procedures and processes.
This aims to achieve improved quality of the services provided, while maintaining the culture of rigour sustained by initiative and attitude. ANNUAL REPORT2015 2015r"//6"-3&1035rBusiness Summary 33 AWARDS
BEST COMMERCIAL BANK 2015 BEST INTERNET BANK ANGOLA 2015 SOCIAL RESPONSIBILITY
SOFTWARE QUALITY CERTIFICATE 2015-2016 2015 2016 LAR DE NAZARÉ – HERMENEGILDA BENGE, BENGE VICE-PRESIDENT VICE PRESIDENT OF MILLENNIUM ANGOLA, HANDING OVER THE CHEQUE IN THE AMOUNT OF 1.000.000 AOA EXHIBITIONS
DON SEBAS CASSULE EXHIBITION ANGOLA OBSERVATORY 34 #VTJOFTT4VNNBSZr"//6"-3&1035r 2015
FAIRSFAIRS
FILDA 20152015 FIB 20152015
EXPOEXPO INDINDUSTRYUSTRY 22015015 EXPOEXPO FARMA 20201515
1ST CONGRESSCONGRESS OOFF HHOSPITALOSPITAL JJOSINAOSINA MAMACHELCHEL 5TH CCISIS EMPLEMPLOYMENTOYMENT FAIR 2015r"//6"-3&1035r#VTJOFTT4VNNBSZ 35
FAIRSFAIRS
UCANUCAN EMPLEMPLOYABILITYOYABILITY FFAFAIRIR 20120155 UULALA EMPLEMPLOYABILITYOYABILITY FAIR 20201515
ELITE FAIR 2015
BRANDBRAND AACTIVATIONCTTIVATIONIVATION
EASY PAYMENT AND I AM + MILLENNIUM WOMANWOMAN OFFEROFFER 36 #VTJOFTT4VNNBSZr"//6"-3&1035r 2015
EVENTS
1ST EXCELLENTEXCELLENT SSMEME GGALAALA 2NDND I AM + MILLENNIUMMILLENNIUM RARAFFLEFFLE
ANGOLA-SWITZERLAND ECONOMIC FORUM 1STST INTERNETINTERNET BANKINGBANKING FORUMFORUM
2015r"//6"-3&1035r#VTJOFTT4VNNBSZ 37
MASS MARKET LAUNCHES OF 2015
I AM + MILLENNIUM ALWAYS RISING DEPOSIT
EXCELLENT SME 2015 WOMAN OFFER 38 #VTJOFTT4VNNBSZr"//6"-3&1035r 2015
MASS MARKET LAUNCHES OF 2015
EFTPOS ADVANTAGE ALWAYS RISING DEPOSIT
EASY PAYMENT SMS BANKING NET SUPER DEPOSIT 2015r"//6"-3&1035r#VTJOFTT4VNNBSZ 39
PRESTIGE LAUNCH OF 2015
GROWINGGROWING TERM DEPDEPOSITOSIT
DISTINCTIONSDIDISSSTINCTIONSTINCTIONS OOFF 2015
BEST COMMERCIAL BANK 2015 BEST INTERNET BANK ANGOLA 2015 40 %JTUSJCVUJPO/FUXPSLr"//6"-3&1035r 2015
DISTRIBUTION NETWORK
3
CABINDA UÍGE MALANGE LUNDA-NORTE 2 2
ZAIRE 1 1 1 KWANZA-NORTE 57 1 LUANDA 4 LUNDA-SUL 2 BENGO
KWANZA-SUL 1 2 5 BIÉ BENGUELA 1 3 MOXICO
HUÍLA 1 1 1
NAMIBE KUANDO-KUBANGO
HUAMBO CUNENE
BRANCHES CONTACTS Rua Comandante Nicolau Gomes Spencer – Maianga – Luanda 1.º DE MAIO ATRIUM Tel.: 222 632 431 / 222 632 432 / 923 167 044 / 912 000 446 Rua Comandante Stona – Maianga – Luanda ALVALADE Tel.: 222 632 194 / 222 632 199 / 923 167 020 / 912 000 420 Rua das Irmãs – Ambriz – Bengo AMBRIZ Tel.: 222 632 113 / 222 632 118 / 923 167 045 / 912 000 461 Rua Amílcar Cabral, N.º 185-187 – Mutamba – Luanda AMÍLCAR CABRAL (*) Tel.: 222 632 411 / 222 632 420 / 923 167 005 / 912 000 405 Avenida de Portugal, N.º 77 – Luanda AVENIDA DE PORTUGAL Tel.: 222 632 423 / 222 632 424 / 923 167 002 / 912 000 402 Rua Stuart Carvalhais, 19 – Luanda BAIRRO POPULAR (*) Tel.: 222 264 692 Bairro Benfica, Município da Samba – Luanda BENFICA BRICOMAT (*) Tel.: 222 632 547 / 222 632 687 / 923 167 084 / 912 000 437 Via Expresso Benfica – Viana BENFICA POSTO CONTROLE (*) Tel.: 222 632 170 / 222 632 171 / 923 167 093 / 912 000 457 Rua Dr. António Agostinho Neto, N.º 6, R/C – Benguela BENGUELA CORINGE Tel.: 222 632 131 / 222 632 132 / 923 167 047 / 912 000 463 Rua Dr. António José de Almeida, N.º 112 - 116 – Benguela BENGUELA MERCADO (*) Tel.: 222 632 123 / 222 632 124 / 923 167 046 / 912 000 462 (*) Open on Saturday. (Continues) 2015r"//6"-3&1035r%JTUSJCVUJPO/FUXPSL 41
(Continuation) BRANCHES CONTACTS Estrada de Cacuaco, km 1.2 – Bairro da Boavista Município do Sambizanga – BOAVISTA (*) Luanda Tel.: 222 632 603 / 222 632 604 / 923 167 035 / 912 000 435 Bairro Cabassango, Estrada Nacional Subantando – Cabinda CABINDA CABASSANGO Tel.: 222 632 134 / 222 632 142 / 923 167 048 Rua Comendador Henrique Serrano S/N – Bairro Deolinda Rodrigues – CABINDA DEOLINDA Cabinda RODRIGUES Tel.: 222 632 427 / 222 632 428 / 923 167 049 / 912 000 470 Rua do Comércio – Ed. Nogueira, R/C – Cabinda CABINDA RUA DO COMÉRCIO (*) Tel.: 222 632 134 / 222 632 142 / 923 167 048 / 912 000 494 Rua Direita de Cacuaco, N.º 8 L – Luanda CACUACO (*) Tel.: 222 632 600 / 222 632 601 / 923 167 006 / 912 000 406 Estrada de Camama, km 14 A – Viana Luanda CALEMBA (*) Tel.: 222 632 667 / 222 632 453 / 923 167 083 / 912 000 440 Rua Camama – Auto-estrada, acesso a rua do Condomínio Austin – Luanda CAMAMA ARCO IRÍS Tel.: 222 632 496 / 222 632 497 / 923 167 117 Rua do Cemitério – Comuna do Camama – Município de Belas CAMAMA ESTRADA DIREITA (*) Tel.: 222 632 114 / 222 632 141 / 923 167 105 / 912 000 450 Comuna Vila Estoril, Bairro Vitória Certa – Município do Kilamba Kiaxi CAMAMA VILA ESTORIL (*) Tel.: 222 632 557 / 222 632 179 / 923 167 087 / 912 000 449 Caop Velha – Comuna da Funda – Luanda CAOP VELHA (*) Tel.: 222 632 648 / 222 632 176 / 923 167 085 / 912 000 442 Estrada de Catete, km 47 – Cerâmica do Bengo CATETE IMOFIL Tel.: 222 632 152 / 222 632 154 / 923 167 051 / 912 000 465 Rua Cadavés – Vila de Catete – Bengo CATETE VILA Tel.: 222 632 146 / 222 632 151 / 923 167 050 / 912 000 464 Bairro Riceno – Comuna de Caxito – Bengo CAXITO Tel.: 222 632 185 / 222 632 458 / 912 000 477 / 923 167 115 CENTRO COMERCIAL Rua 17 de Setembro – Kilamba Kiaxi – Luanda DO GOLFE (*) Tel.: 222 632 433 / 222 632 435 / 923 167 036 / 912 000 436 Via CA3, Loja N.º L – Município da Samba – Luanda CENTRO LOGÍSTICO TALATONA (*) Tel.: 222 632 443 / 222 632 445 / 923 167 038 / 912 000 438 Rua Che Guevara, N.º 40-41 – Luanda CHE GUEVARA (*) Tel.: 222 632 605 / 222 632 606 / 923 167 019 / 912 000 425 Rua Comandante Gika, Torre A Bloco A2, Loja C, Piso 1 – Bairro Alvalade – COMANDANTE GIKA (*) Município da Maianga Tel.: 222 632 429 / 222 632 430 / 923 167 018 / 912 000 418 Av. Cmdt. Valódia, N.º 252-254 – Luanda COMANDANTE VALÓDIA (*) Tel.: 222 440 179 / 923 167 012 Rua Cónego Manuel das Neves, N.º 381 R/C – Município do Sambizanga – Luanda CÓNEGO MANUEL DAS NEVES (*) Tel.: 222 432 183 / 222 432 199 / 222 442 574 / 222 443 983 / 222 446 762 / 222 449 184 / 923 167 042 Avenida Hoji Ya Henda S/N – Bairro Rangel – Município do Rangel – Luanda CONGOLESES (*) Tel.: 222 632 618 / 222 632 619 / 923 167 010 / 912 000 410 Rua Francisco das Necessidades Castelo Branco, N.º 21-21s, R/C – Luanda COQUEIROS Tel.: 222 632 454 / 222 632 455 / 923 167 015 / 912 000 415 Rua Cónego Manuel das Neves N.º 144-148 – Município do Sambizanga CRUZEIRO – Luanda Tel.: 222 632 191 / 222 632 692 / 923 167 078 / 912 000 451 Gaveto entre a Rua Diogo Cão (actual Rua Joaquim Kapango) e a Rua da Índia CUBAL (actual Dack-Doy) – cidade do Cubal – Província de Benguela Tel.: 222 632 159 / 222 632 161 / 923 167 052 / 912 008 414 Located on the right side of the avenue that leads to the airport DUNDO and that is in front of Sonangol gas station – Chitato – Lunda-Norte Tel.: 222 632 162 / 222 632 163 / 923 167 053 / 912 000 471
(*) Open on Saturday. (Continues) 42 %JTUSJCVUJPO/FUXPSLr"//6"-3&1035r 2015
(Continuation) BRANCHES CONTACTS Rua Ngola Kiluanje N.º 217 – Luanda ESTRADA DA CUCA (*) Tel.: 222 632 465 / 222 632 466 / 923 167 003 / 912 000 403 Rua da Filda, Loja A, Piso 0, bloco N.º 1 – Cazenga – Luanda FILDA (*) Tel.: 222 632 468 / 222 632 469 / 923 167 033 / 912 000 433 Avenida 21 de Janeiro – Luanda GAMEK (*) Tel.: 222 632 471 / 222 632 472 / 923 167 021 / 912 000 421 Rua 1.º Dezembro, Cidade Alta – Huambo HUAMBO JARDIM DA CULTURA Tel.: 222 632 166 / 222 632 169 / 923 167 055 / 912 000 467 Rua Mariano Machado, N.º34 – Huambo HUAMBO MARIANO MACHADO (*) Tel.: 222 632 164 / 222 632 165 / 923 167 054 / 912 000 466 Rua Joaquim Kapango, N.º 135 – Luanda JOAQUIM KAPANGO Tel.: 222 632 614 / 222 632 615 / 923 167 022 / 912 000 422 Rua Comandante Valódia, Bairro Patrice Lumumba, N.º 8372, Zona 7, KINAXIXI N.º 37/41, R/C – Município de Luanda Tel.: 222 632 120 / 222 632 139 / 923 167 097 / 912 000 458 Rua Joaquim Kapango, Bié – Kuito KUITO (*) Tel.: 222 632 182 / 222 632 187 / 923 167 091 / 912 000 468 Rua Kwame Nkrumah, N.º 173 R/C – Ingombotas – Luanda KWAME NKRUMAH Tel.: 222 632 682 / 222 632 685 / 923 167 016 / 912 000 416 Estrada do Lar do Patriota S/N, Bairro Benfica – Município da Samba – Luanda LAR DO PATRIOTA (*) Tel.: 222 632 473 / 222 632 476 / 923 167 043 / 912 000 445 Gaveto, entre a Rua Major Kanhangulo e o Largo do Ambiente LARGO DO AMBIENTE Município das Ingombotas – Luanda Tel.: 222 632 144 / 222 632 135 / 923 167 072 / 912 000 434 Rua 15 de Agosto N.º 34 R/C – Lobito – Benguela LOBITO (*) Tel.: 222 632 188 / 222 632 190 / 923 167 057 / 912 000 469 Zona Industrial, Bairro da Luz – Benguela LOBITO RETAIL PARK (*) Tel.: 222 632 531 / 222 632 636 / 923 167 081 / 912 000 490 Avenida 4 de Fevereiro – Huíla LUBANGO AEROPORTO Tel.: 222 632 691 / 222 632 155 / 923 167 059 / 912 000 489 Avenida Heróis da Cahama – Lubango Huíla LUBANGO ARCO-ÍRIS Tel.: 222 632 569 / 222 632 145 / 923 167 080 / 912 000 488 Gaveto Aníbal de Melo e Cmdt. Hoji-Ya-Henda – Lubango – Huíla LUBANGO CENTRO (*) Tel.: 261 225 780 / 261 225 781 / 261 225 782 / 923 167 059 Rua Pioneiro Ngangula – Luena – Moxico LUENA (*) Tel.: 222 632 477 / 222 632 452 / 923 167 060 / 912 000 487 Rua Comandante Dangereux – Malange MALANGE (*) Tel.: 222 632 686 / 222 632 688 / 923 167 062 / 912 000 486 Avenida 4 de Fevereiro N.º 49 – Luanda MARGINAL Tel.: 222 632 620 / 222 632 621 / 923 167 017 / 912 000 417 Rua Marien Ngouabi (“António Barroso”), N.º 85, Zona 5, MARIEN NGOUABI (*) Maianga – Luanda Tel.: 222 632 487 / 222 632 488 / 923 167 030 / 912 000 430 Rua Porto Santos N.º 24, Bairro Hoji Ya Henda – Município do Cazenga – MAXI HOJI YA HENDA (*) Luanda Tel.: 222 632 695 / 222 632 408 / 923 167 079 / 912 000 448 Retail Park Zango – Bairro do Zango – Luanda MAXI ZANGO (*) Tel.: 222 632 684 / 222 632 566 / 923 167 082 / 912 000 453 Rua do Aeroporto – Menongue – Kuando Kubango MENONGUE (*) Tel.: 222 632 624 / 222 632 625 / 923 167 063 / 912 000 476 Rua da Missão, N.º 43 – Luanda MISSÃO Tel.: 222 632 501 / 222 632 506 / 923 167 008 / 912 000 408 Avenida 21 de Janeiro, Município da Samba – Luanda MORRO BENTO (*) Tel.: 222 632 607 / 222 632 608 / 923 167 028 / 912 000 428 Estrada de Cacuaco, N.º 10 R/C – Cacuaco – Luanda MULEMBA (*) Tel.: 222 632 511 / 222 632 515 / 923 167 031 / 912 000 431 Avenida Hoji Ya Henda – Namibe NAMIBE Tel.: 222 632 626 / 222 632 627 / 923 167 064 / 912 000 477 (*) Open on Saturday. (Continues) 2015r"//6"-3&1035r%JTUSJCVUJPO/FUXPSL 43
(Continuation) BRANCHES CONTACTS Estrada Direita Luanda Malange, Cazengo – Kwanza-Norte NDALATANDO (*) Tel.: 222 632 628 / 222 632 629 / 923 167 065 / 912 000 478 Rua I, Bairro Popular, N.º 2 – Negage – Uíge NEGAGE Tel.: 222 632 631 / 222 632 632 / 923 167 066 / 912 000 479 Estrada do Projecto Nova Vida, Lote N.º 2055 E – Kilamba Kiaxi – Luanda NOVA VIDA (*) Tel.: 222 632 126 / 222 632 128 / 923 167 077 / 912 000 443 Bairro Naipalala, Município do Kwanhama – Ondjiva – Cunene ONDJIVA (*) Tel.: 222 632 650 / 222 632 652 / 923 167 056 / 912 000 480 Rua Saidy Mingas, Zona B – Porto Amboim – Kwanza-Sul PORTO AMBOIM Tel.: 222 632 653 / 222 632 654 / 923 167 067 / 912 000 481 Rua Comandante Arguelles, N.º 2 – Maianga – Luanda PRENDA (*) Tel.: 222 632 622 / 222 632 623 / 923 167 026 / 912 000 426 Rua Rainha Ginga, N.º 30 – Ingombota – Luanda RAINHA GINGA (*) Tel.: 222 632 689 / 222 632 181 / 923 167 086 / 912 000 491 Rua Rei Katyavala, N.º 109 R/C A e B – Luanda REI KATYAVALA Tel.: 222 632 192 / 222 632 193 / 923 167 009 Avenida 21 de Janeiro – Rocha Pinto ROCHA PINTO (*) Tel.: 222 632 437 / 222 632 438 / 923 167 103 / 912 000 455 Avenida Comandante Gika, N.º 311 R/C, Zona 5 – Maianga – Luanda SAGRADA FAMÍLIA (*) Tel.: 222 632 516 / 222 632 520 / 923 167 027 / 912 000 427 Travessa da Samba 1.º R/C – Município da Samba SAMBA BAIRRO AZUL (*) Tel.: 923 167 011 Rua da Samba, 197-199 – Bairro do Prenda – Luanda SAMBA COMISSARIADO Tel.: 222 632 156 / 222 632 158 / 923 167 106 / 912 000 452 SÃO PAULO COMANDANTE Rua Comandante Bula, N.º 45 R/C – Município do Sambizanga – Luanda BULA Tel.: 222 632 522 / 222 632 523 / 923 167 032 / 912 000 432 Rua Ndunduma N.º 222 – Município do Sambizanga – Luanda SÃO PAULO NDUNDUMA (*) Tel.: 222 632 529 / 222 632 530 / 923 167 001 / 912 000 401 Bairro Agostinho Neto – Saurimo – Lunda-Sul SAURIMO (*) Tel.: 222 632 655 / 222 632 659 / 923 167 068 / 912 000 482 Base Sonils – Boavista SONILS (*) Tel.: 222 632 140 / 222 632 172 / 923 167 102 / 912 000 459 Rua Principal do Aeroporto Série 6, Quarteirão 5 casa 19 – Soyo – Zaire SOYO Tel.: 222 632 668 / 222 632 670 / 923 167 069 / 912 000 483 Edifício Alfândega, Base do Kwanda – Soyo – Zaire SOYO BASE KWANDA Tel.: 222 632 167 / 222 632 168 / 923 167 089 / 912 000 493 Rua da 2.ª Guerra da Libertação Nacional, Largo Comandante Kassanje – SUMBE (*) Cidade do Sumbe – Kwanza-Sul Tel.: 222 632 672 / 222 632 674 / 923 167 070 / 912 000 484 Via S8 – Talatona – Luanda TALATONA CIDADE FINANCEIRA Tel.: 222 632 198 / 222 632 482 / 923 167 104 / 912 000 461 Via AL 16, S/N – Bairro Talatona – Município da Samba – Luanda TALATONA IMBONDEIRO Tel.: 222 632 534 / 222 632 537 / 923 167 024 / 912 000 424 Avenida Pedro de Castro Van-Dúnem Loy (nas instalações da Maxi) – Luanda TALATONA MAXI (*) Tel.: 222 632 546 / 222 632 549 / 923 167 013 / 912 000 413 Rua Dr. António Agostinho Neto, Loja N.º 5 – Uíge UÍGE (*) Tel.: 222 632 679 / 222 632 681 / 923 167 071 / 912 000 485 Estrada de Catete km 12, S/N – Município de Viana – Luanda VIANA ESTALAGEM (*) Tel.: 222 632 616 / 222 632 617 / 923 167 023 / 912 000 423 Estrada de Calumbo, Pólo Industrial – Município de Viana – Luanda VIANA PARK (*) Tel.: 222 632 594 / 222 632 598 / 923 167 039 / 912 000 439 Loteamento Centro Ortopédico, Quarteirão C, lote 7, Bairro da Sanzala – VIANA PINGO DE ÁGUA (*) Município de Viana – Luanda Tel.: 222 632 136 / 222 632 137 / 923 167 094 / 912 000 456 Rua 11 de Novembro N.º 16 – Município de Viana – Luanda VIANA VILA (*) Tel.: 222 632 555 / 222 632 585 / 923 167 004 / 912 000 4404 Projecto do Zango, Quadra G, Rua G2 – Município de Viana – Luanda ZANGO Tel.: 222 632 612 / 222 632 613 / 923 167 041 / 912 000 441 (*) Open on Saturday. (Continues) 44 %JTUSJCVUJPO/FUXPSLr"//6"-3&1035r 2015
BUSINESS AND CORPORATE CENTRES
LUANDA
Rainha Ginga Rua da Rainha Ginga, N.º 83 – Luanda Tel.: 222 632 119 / 923 167 034 / 912 000 492
Oil Industry Cidade Financeira Via S8, Talatona – Luanda Sul Tel.: 222 632 614 / 222 632 615 / 923 167 022 Financial City Cidade Financeira Via S8, Talatona – Luanda Sul Tel.: 222 632 416
Comandante Gika Rua Comandante Gika, Torre A, Bloco A2, Loja C, Piso 1 – Luanda Talatona Imbondeiro Tel.: 222 632 100 / 923 167 108 Via AL 16, S/N – Bairro Talatona – Município da Samba Tel.: 222 632 697 / 222 632 440 / 923 167 025 / 912 000 473 2015r"//6"-3&1035r%JTUSJCVUJPO/FUXPSL 45
Sonils Corporate Centre Base Sonils, Boavista – Luanda Tel.: 222 632 133 / 923 167 101 / 912 000 460
Marginal Av. 4 de Fevereiro N.º 49 – Luanda Tel.: 222 632 586 / 923 167 040 / 912 000 447
Viana Park Estrada de Calumbo, Pólo Industrial – Município de Viana – Luanda Tel.: 222 632 698 / 222 632 699 / 923 167 029 / 912 000 475
PRESTIGE CENTRES CONTACTS Rua Comandante Stona – Maianga – Luanda ALVALADE Tel.: 222 632 481 / 923 167 114 Rua Dr. António José de Almeida, 112-116 BENGUELA MERCADO Tel.: 222 632 123 / 222 632 124 / 923 167 096 CABINDA RUA Rua do Comércio – Ed. Nogueira, R/C DO COMÉRCIO Tel.: 222 632 142 / 222 632 134 / 923 167 107 / 912 000 495 CENTRO LOGÍSTICO Via CA3 Loja N.º L – Município da Samba – Luanda DE TALATONA Tel.: 222 632 119 / 222 632 184 / 923 167 075 / 912 000 454 Rua Comandante Gika, Torre A, Bloco A2, Loja C, Piso 1 – Luanda COMANDANTE GIKA Tel.: 222 632 429 / 222 632 430 / 923 167 074 / 912 000 419 Rua Joaquim Kapango, N.º 135 R/C – Luanda JOAQUIM KAPANGO Tel.: 923 167 116 / 222 632 112 Zona Industrial, Bairro da Luz – Benguela LOBITO RETAIL PARK Tel.: 222 632 531 / 222 632 636 / 923 167 090 Gaveto Aníbal de Melo e Cmdt. Hoji-Ya-Henda – Lubango – Huíla LUBANGO CENTRO Tel.: 261 225 780 / 261 225 781 / 923 167 096 Avenida Marginal N.º 49 – Luanda MARGINAL Tel.: 222 632 620 / 222 632 621 / 923 167 073 / 912 000 429 Rua Rainha Ginga, N.º 30 – Luanda RAINHA GINGA Tel.: 222 632 180 / 923 167 113 SÃO PAULO COMANDANTE Rua Comandante Bula, N.º 45 R/C – Município do Sambizanga – Luanda BULA Tel.: 222 632 178 / 923 167 111 TALATONA CIDADE Via S8 Talatona – Luanda Sul FINANCEIRA Tel.: 923 167 109 Estrada de Calumbo, Pólo Industrial – Município de Viana – Luanda VIANA PARK Tel.: 222 632 177 / 923 167 110 FINANCIAL STATEMENTS ANNUAL REPORT2015 48 'JOBODJBM4UBUFNFOUTr"//6"-3&1035r 2015
FINANCIAL STATEMENTS
#"-"/$&4)&&5 as at 31 December 2015 and 2014 Thousand AOA Notes 2015 2014 ASSETS DISPOSABLE ASSETS 4 36,683,909 LIQUIDITY INVESTMENTS 5 11,940,781 Inter-financial money market transactions 11,938,556 Investments in gold and other precious metals 2,225 SECURITIES 6 45,826,816 Trading – Available for sale 45,826,816 Held to maturity – DERIVATIVE FINANCIAL INSTRUMENTS 7 – LOANS IN THE PAYMENT SYSTEM 8 260,619 FOREIGN EXCHANGE TRANSACTIONS 9 2,650,272 LOANS 10 117,748,249 Loans 125,541,749 (-) Provisions for bad debt (7,793,500) OTHER VALUES 11 2,782,746 FIXED ASSETS 26,775,291 Financial fixed assets 12 2,961,826 Tangible fixed assets 13 19,099,514 Intangible fixed assets 13 4,713,951 TOTAL ASSETS 244,668,683 DEPOSITS 14 180,899,911 Demand deposits 95,982,876 Term deposits 84,917,035 LIQUIDITY FUNDING 15 16,618,162 Inter-financial money market transactions 16,618,162 DERIVATIVE FINANCIAL INSTRUMENTS 7 – OTHER FUNDING - 7,104 Other contracted funding - 7,104 LIABILITIES IN THE PAYMENT SYSTEM 16 2,023,433 FOREIGN EXCHANGE TRANSACTIONS 17 2,641,786 OTHER LIABILITIES 18 3,723,222 PROVISIONS FOR PROBABLE LIABILITIES 19 662,661 TOTAL LIABILITIES 206,576,279 EQUITY 20 38,092,404 Share capital 4,009,894 Reserves and funds 28,040,838 Adjustments to fair value of financial assets 300,471 Net income for the year 5,741,201 TOTAL LIABILITIES + EQUITY 244,668,683 EARNINGS PER SHARE 0.575 2015r"//6"-3&1035r'JOBODJBM4UBUFNFOUT 49
*/$0.&45"5&.&/5 as at 31 December 2015 and 2014 Thousand AOA Notes 2015 2014 I. NET INTEREST INCOME (II+III) 24 11,320,401 INCOME FROM FINANCIAL INSTRUMENTS (ASSETS) II. (1+2+3) 16,064,337
1. Income from liquidity Investments 512,046
2. Income from securities 3,068,330
3. Income from loans 12,483,961
III. (-) COSTS OF FINANCIAL INSTRUMENTS (LIABILITIES) (4+5) (4,743,936)
4. Costs of deposits (4,249,010)
5. Liquidity funding costs (494,343)
6. Other funding costs - (583)
IV. EARNINGS FROM TRADING AND FAIR VALUE ADJUSTMENTS 25 -
V. EARNINGS FROM FOREIGN EXCHANGE TRANSACTIONS 26 3,364,807
VI. EARNINGS FROM FINANCIAL SERVICES RENDERED 27 4,204,312 (-) PROVISIONS FOR BAD DEBT AND PROVISION OF VII. GUARANTEES 19 (2,597,887) EARNINGS FROM FINANCIAL BROKERAGE VIII. (I+IV+V+VI+VII+VIII) 16,387,369 (-) ADMINISTRATIVE AND MARKETING COSTS IX. (6+7+8+9+10+11) (10,032,155)
7. Staff 28 (4,226,781)
8. External supplies 29 (4,218,148)
9. Tax and rates not incident on earnings 30 (215,724)
10. Penalties applied by regulatory authorities 30 (1,268)
11. Depreciation and amortisation 30 (1,274,498) (-) PROVISIONS FOR OTHER VALUES AND PROBABLE X. LIABILITIES 31 (99,119)
XI. EARNINGS FROM FINANCIAL FIXED ASSETS 32 405,481
XII. OTHER OPERATING INCOME AND COSTS 31 178,739 OTHER OPERATING INCOME AND COSTS XIII. (XI+XII+XIII+XIV) (9,547,054)
XIV. OPERATING EARNINGS (IX+X+XV+XVI) 6,840,315
XV. NON-OPERATING EARNINGS 33 (81,082) EARNINGS BEFORE TAX AND OTHER CHARGES XVI. (XVII+XVIII) 6,759,233
XVII. (-) CHARGES ON CURRENT EARNINGS 21 (1,018,032)
XVIII. NET CURRENT EARNINGS (XIX+XX) 5,741,201
XIX. NET INCOME FOR THE YEAR (XXI+XXII) 5,741,201 50 'JOBODJBM4UBUFNFOUTr"//6"-3&1035r 2015
$"4)'-0845"5&.&/5 as at 31 December 2015 and 2014 Thousand AOA CONTIF Code Description 2015 2014 NET INTEREST CASH INCOME CASH FLOW (I+II) 10,690,830 INCOME RECEIVED FROM DERIVATIVE FINANCIAL INSTRUMENTS I. 15,293,323 ASSETS (1+2+3+4) 1. 6.10.10.10.10.20 Income received from liquidity investments 667,232
2. 6.10.10.10.10.30 Income received from securities 3,039,167
3. 6.10.10.10.10.40 Income received from derivative financial instruments - -
4. 6.10.10.10.10.70 Income received from loans 11,586,924 (-) PAYMENT OF COSTS OF FINANCIAL INSTRUMENTS LIABILITIES II. (4,602,493) (5+6+7+8+9) 5. 6.10.10.10.20.10 Payment of costs of deposits (4,119,100)
6. 6.10.10.10.20.20 Payment of liquidity funding costs (483,393)
7. 6.10.10.10.20.30 Payment of funding costs related to securities - -
8. 6.10.10.10.20.40 Payment of costs of derivative financial instruments - -
9. 6.10.10.10.20.70 Payment of other funding costs - - CASH FLOW OF EARNINGS FROM TRADING AND ADJUSTMENTS TO IV. 6.10.10.20 - FAIR VALUE V. 6.10.10.60 CASH FLOW OF EARNINGS FROM FINANCIAL TRANSACTIONS 3,177,152
VI. 6.10.10.80 CASH FLOW OF EARNINGS FROM FINANCIAL SERVICES RENDERED 4,300,048
CASH FLOW OF EARNINGS FROM INSURANCE PLANS, VII. 6.10.10.95 - - CAPITALISATION AND SUPPLEMENTARY HEALTH OPERATING CASH FLOW OF FINANCIAL BROKERAGE VIII. 18,168,029 (I+II+IV+V+VI+VII) CASH FLOW OF EARNINGS FROM GOODS, PRODUCTS AND OTHER IX. 6.10.75 - - SERVICES 10. 6.10.80.10 (-) Payment of administrative and marketing costs (8,465,680)
11. 6.10.80.30 (-) Payment of other charges on earnings (1,410,079)
12. 6.10.80.50 Cash flow of the settlement of transactions in the payment system (281,457)
13. 6.10.80.80 Cash flow of other values and other liabilities 102,330
14. 6.10.80.90 Income received from financial fixed assets - -
15. 6.10.80.99 Cash flow of other operating costs and income 227,749 OTHER OPERATING INCOME AND COSTS RECEIVED AND PAID X. (9,827,137) (10+11+12+13+14+15) XI. CASH FLOW OF OPERATIONS (VIII+IX+X) 8,340,893
16. 6.20.10.20 Cash flow of liquidity investments 20,856,663
17. 6.20.10.30 Cash flow of investments in securities (assets) (3,951,509)
18. 6.20.10.40 Cash flow of investments in derivative financial instruments - -
19. 6.20.10.60 Cash flow of investments in foreign exchange transactions (789,873)
20. 6.20.10.70 Cash flow of investments in loans (37,992,012)
(Continues) 2015r"//6"-3&1035r'JOBODJBM4UBUFNFOUT 51
(Continuation) Thousand AOA CONTIF Code Description 2015 2014 CASH FLOW OF INVESTMENTS IN FINANCIAL BROKERAGE XII. (21,876,731) (16+17+18+19+20) XIII. 6.20.80 CASH FLOW OF INVESTMENTS IN OTHER VALUES - -
21. 6.20.90.10 Cash flow of investments in fixed assets (2,211,197)
22. 6.20.90.20 Cash flow of earnings from divestment of fixed assets (76,851)
23. 6.20.90.80 Cash flow of other non-operating gains and losses -
XIV. CASH FLOW OF FIXED ASSETS (21+22+23) (2,288,048)
XV. CASH FLOW OF INVESTMENTS (XII+XIII+XIV) (24,164,779)
24. 6.30.20.10 Cash flow of financing with deposits 11,875,814
25. 6.30.20.20 Cash flow of financing with liquidity funding 3,442,956
26. 6.30.20.30 Cash flow of financing with funding related to securities - -
27. 6.30.20.40 Cash flow of financing with derivative financial instruments - -
28. 6.30.20.60 Cash flow of financing with foreign exchange transactions 810,884
29. 6.30.20.70 Cash flow of financing with other funding - 7,104 CASH FLOW OF FINANCIAL BROKERAGE FINANCING XVI. 16,136,757 (24+25+26+27+28+29) XVII. 6.30.30 CASH FLOW OF FINANCING WITH MINORITY INTERESTS - -
30. 6.30.40.10 Revenue from share capital increases - -
31. 6.30.40.20 (-) Payments due to share capital reductions - -
32. 6.30.40.30 (-) Payment of dividends - -
33. 6.30.40.40 Revenue from divestment of own treasury shares - -
34. 6.30.40.50 (-) Payments due to the acquisition of own treasury shares - -
XVIII. CASH FLOW OF FINANCING WITH EQUITY (30+31+32+33+34) - -
XIX. 6.30.80 CASH FLOW OF FINANCING WITH OTHER LIABILITIES - -
XX. CASH FLOW OF FINANCING (XVI+XVII+XVIII+XIX) 16,136,757
OPENING BALANCE OF DISPOSABLE ASSETS FOR THE PERIOD 36,371,038
6.90.10 CLOSING BALANCE OF DISPOSABLE ASSETS FOR THE PERIOD 36,683,909
6.90.10 CHANGES IN DISPOSABLE ASSETS (XI+XV+XX) 312,871 52 'JOBODJBM4UBUFNFOUTr"//6"-3&1035r 2015
45"5&.&/50'$)"/(&4*/&26*5: as at 31 December 2015 Thousand AOA Share Legal Other Issue Potential Net income Total capital reserves reserves premium earnings for the year equity BALANCE AS AT 31 DECEMBER 2014 4,009,894 3,934,908 16,975,465 7,130,465 300,471 5,741,201 38,092,404 Effects of adjustments in securities ----207,097 - 207,097 available for sale Effects of tax charges on potential earnings ----(62,129) - (62,129)
Constitution of reserves 1,148,240 4,592,961 - - (5,741,201) -
Net income for the year of 2015 ----6,759,876 6,759,876
BALANCE AS AT 31 DECEMBER 2015 4,009,894 5,083,148 21,568,426 7,130,465 445,439 6,759,876 44,997,249
45"5&.&/50'$)"/(&4*/&26*5: as at 31 December 2014 Thousand AOA Share Legal Other Issue Potential Net income Total capital reserves reserves premium earnings for the year equity BALANCE AS AT 31 DECEMBER 2013 4.009.894 2.960.414 13.077.487 7.130.465 943.613 4.872.472 32.994.345 Effects of adjustments in securities ----(1.022.468) - (1.022.468) available for sale Effects of tax charges on potential earnings ----379.326 - 379.326
Constitution of reserves 974.494 3.897.978 - - (4.872.472) -
Net income for the year of 2014 ----5.741.201 5.741.201
BALANCE AS AT 31 DECEMBER 2014 4.009.894 3.934.908 16.975.465 7.130.465 300.471 5.741.201 38.092.404 2015r"//6"-3&1035r/PUFTUPUIF'JOBODJBM4UBUFNFOUT 53
NOTES TO THE FINANCIAL STATEMENTS as at 31 December 2015 and 2014
(Values in thousand Angolan kwanzas – '000 AOA, unless explicitly indicated otherwise, pursuant to Notice number 15/2007, of 12 September)
1. INTRODUCTION
Banco Millennium Angola, S.A. (hereinafter also referred to as "Bank" or "BMA"), with head office in Ingombota at Avenida de Portugal, number 77, Luanda, develops its activity in the area of commercial banking, reflected in financial operations and the provision of services permitted to commercial banks pursuant to the legislation in force, namely foreign exchange transactions, credit concession and attraction of deposits of individual, institutional and company Customers.
In order to achieve its objectives, the Bank has a commercial network on Angolan territory which, as at 31 December 2015, reached 110 Branches, where it should be noted that two of these opened during the last year.
BMA resulted from the transformation of the Angolan Branch of Banco Comercial Português into a bank constituted under local law, with the consequent integration of all its Assets and Liabilities, under authorisation of the Council of Ministers of 22 February 2006. The public deed of incorporation was signed on 3 April 2006.
Regarding the shareholder structure and as detailed in Note 20, the Bank is majority held by Banco Comercial Português, S.A. (BCP Group) where Note 21 describes the main balances and transactions with companies of the BCP Group and other related entities.
2. COMPARABILITY OF THE INFORMATION
The annual financial statements presented herein were published in a manner enabling comparison with those of the previous period. The Bank's financial statements presented herein were prepared in accordance with the Accounting Plan for Financial Institutions (CONTIF).
3. BASIS OF PRESENTATION AND SUMMARY OF THE MAIN ACCOUNTING POLICIES 3.1. BASIS OF PRESENTATION The financial statements presented in this report were prepared on a going concern basis, according to the ledgers and records kept by the Bank, and pursuant to the accounting principles established in the CONTIF, as defined in Instruction 9/7, of 19 September, of the National Bank of Angola (hereinafter also referred to as "BNA") which was enforced as of 1 January 2010, and Directive number 4/DSI/2011, which establishes the compulsory adoption of the international accounting standards IAS/IFRS for all matters related to accounting procedures and criteria which are not established in the CONTIF.
The Bank's individual and consolidated financial statements relative to the financial year ended on 31 December 2015 were approved by the Board of Directors on 25 January 2016.
The Bank's financial statements as at 31 December 2015 and 31 December 2014 are expressed in thousand Angolan kwanzas (AOA), pursuant to BNA Notice number 15/2007, article 5, whereby all the assets and liabilities denominated in foreign currency were converted at the reference average exchange rate published by the BNA on the reporting date.
54 /PUFTUPUIF'JOBODJBM4UBUFNFOUTr"//6"-3&1035r 2015
As at 31 December 2015 and 2014, the exchange rates relative to the AOA of the currencies to which the Bank is most exposed are the following:
Average rate Rate of 31.12.2014 2015 2014 2015 2014 USD 98.291 102.863 EUR 130.406 125.195
The main accounting principles underlying the preparation of the financial statements are presented below:
3.2. ACCOUNTING PRINCIPLES
"DDSVBMTCBTJT The Bank recognises income and costs when obtained or incurred, regardless of when they are received or paid, and are included in the financial statements for the periods to which they refer.
Income is considered realised: a) in transactions with third parties, when the payment is made or a firm commitment is undertaken to carry this out; b) in the partial or total extinction of a liability, whatever its motive, without the simultaneous disappearance of an asset of equal or higher value; c) in the natural generation of new assets, independently of the intervention of third parties; or d) when donations and subsidies are effectively received.
In turn, costs are considered incurred: a) when the corresponding asset value no longer exists, due to transfer of its ownership to a third party; b) through the reduction or extinction of the economic value of an asset; or c) through the arising of a liability, without the corresponding asset.
'PSFJHOFYDIBOHFUSBOTBDUJPOT Spot foreign exchange transactions are recorded in the Bank's asset and liability accounts. If the settlement takes place after the contracting date, they are also recorded under off-balance sheet accounts.
Foreign exchange transactions are recorded in the respective currencies, pursuant to the principles of the multicurrency system, based on the reference exchange rate of the day of the transaction, disclosed by the BNA. Unrealised income and costs, arising from asset and liability transactions indexed to the exchange rate variation are recorded in the accounts representing the investment income or funding cost carried out.
Variations and differences of rates relative to the purchase or sale of foreign currencies to be settled, occurred between the contracting date and settlement date of the currency conversion contract are stated in the Net Income from Foreign Exchange Transactions, against the asset account of Income from Foreign Exchange Transactions Receivable or Costs of Foreign Exchange Transactions Payable, as applicable.
4FDVSJUJFT The securities acquired by the Bank are recorded at the value effectively paid and according to their characteristics and intention at the time of their acquisition, classified into the following categories:
a) Securities held for trading; b) Securities available for sale; c) Securities held to maturity.
Securities acquired for the purpose of active and frequent trading are recorded under the category of securities held for trading.
Securities acquired for the purpose of possible trading and which, consequently, do not fall under any other category, are recorded as securities available for sale.
The category of securities held to maturity records securities for which the Bank has the intention and financial capacity to keep them in its portfolio until their maturity.
2015r"//6"-3&1035r/PUFTUPUIF'JOBODJBM4UBUFNFOUT 55
This financial capacity is confirmed based on cash flow projections, not considering the possibility of the sale of the securities before their maturity.
The income produced by the securities from interest earned over the period until their maturity or declared dividends is considered directly through profit or loss for the period, independently of the category into which they have been classified.
Income relative to shares acquired less than six months previously is not recognised against the account recording the corresponding acquisition cost.
Securities classified in the categories of securities held for trading, available for sale and held to maturity are initially recorded at acquisition cost. Securities held for trading and available for sale are subsequently adjusted by their market value, where appreciation or devaluation is recognised against: a) The income or cost account, through profit or loss for the period, when relative to securities classified in the category of securities held for trading; b) The equity account, when relative to securities classified in the category of securities available for sale, at their value net of tax effects, and should be transferred to profit or loss for the period at the time of their definitive sale.
The methodology of calculation of the market value (fair value) of the securities used by the Bank is established based on criteria that are consistent and capable of verification, taking into consideration the rates applied in trading rooms, and may use the following parameters: a) Probable net value of realisation obtained for the very short term (spot) trading book, assuming that this value is very close or identical to par value; b) Cash flow projections of all other securities, taking into account the specific payout of each security, discounting these cash flows at a market interest rate plus a credit risk spread obtained by comparison with similar issues in terms of maturity period, currency, issuer and classification, with the Bank adopting a conservative perspective.
On 1 October 2015, considering the management and investment policy objectives followed by the Bank, a series of Treasury Bonds was reclassified from the portfolio of securities available for sale to securities held to maturity.
The fair value of securities in kwanzas, dollars and indexed to the dollar correspond to their market value, estimated through internal models based on cash flow discount techniques (discounted cash flows).
Permanent losses on securities are recognised immediately through profit or loss for the period, where the adjusted value arising from the recognition of these losses becomes the new basis of value for the effect of appropriation of income.
Central Bank Securities and Treasury Bills are issued at discount and recorded at their redemption value (nominal value). The difference between this value and the acquisition cost is reflected in the liabilities heading "Deferred income", over the period between the purchase date and the maturity date of the securities.
Treasury Bonds acquired at discount are recorded at their redemption value (nominal value), where the difference from its acquisition cost is stated as deferred income between the acquisition date and maturity date of the securities.
Treasury Bonds issued in national currency are indexed to the USD exchange rate and are subject to exchange rate updating. Hence, the result of the exchange rate updating of the nominal value of the security, discount and realised interest, is reflected in the income statement for the year when it occurs.
56 /PUFTUPUIF'JOBODJBM4UBUFNFOUTr"//6"-3&1035r 2015
Classification in risk categories Pursuant to the CONTIF, the Bank classifies securities in increasing order of risks, in accordance with the same provisioning criteria defined for loans, in the following levels:
rLevel A: Zero risk rLevel B: Very low risk rLevel C: Low risk rLevel D: Moderate risk rLevel E: High risk rLevel F: Very high risk rLevel G: Risk of loss
The Bank classifies debt securities of the Angolan State and Banco Nacional de Angola in Level A.
Reclassification between categories of securities Transfers from one category to another can only occur for motives that are one-off, unusual, non-recurrent and could not have been reasonably anticipated, occurred after the classification date.
The transfer from one category to another should take into account the institution's intention and financial capacity, and be recognised at the market value of the security, also observing the following procedures:
a) In the transfer from the category of securities held for trading to all other categories, the chargeback of values already recorded through profit or loss arising from unrealised gains or losses is not permitted. b) In the transfer from the category of securities available for sale, any unrealised gains or losses, recorded as a component listed under equity, should be recognised through profit or loss for the period: i. immediately, when transferred to the category of securities held for trading; ii. according to the remaining period to maturity, when transferred to the category of securities held to maturity; c) In the transfer from the category of securities held to maturity to all other categories, any unrealised gains or losses should be recognised: i. immediately through profit or loss for the period, when transferred to the category of securities held for trading; ii. as a component listed under equity, when transferred to the category of securities available for sale.
The Bank has reclassified securities in the category of available for sale to the category of securities held to maturity.
Any reclassification of securities held to maturity which are not realised close to their maturity, shall require the Bank to reclassify the entire portfolio to assets available for sale and the Bank will not be permitted to classify any assets under this category for the following two years.
-PBOT Loans are financial assets, recorded at their contracted values when originated by the Bank, or recorded at the values paid when acquired from other entities. Loans are initially recorded by debit under a loan heading, depending on their type and currency, with this same heading being credited according to the corresponding income received.
Pursuant to BMA's General Credit regulations, at the Bank credit concession is based on the following key principles:
Formulation of proposals The loan operations or guarantees subject to BMA's decision:
rAre suitably characterised in a Technical Form, containing all the essential and necessary elements to formalise the operation; rRespect the respective product form; rAre accompanied by duly substantiated credit risk analysis, and contain the signatures of the proposing bodies.
2015r"//6"-3&1035r/PUFTUPUIF'JOBODJBM4UBUFNFOUT 57
Liabilities related to guarantees and sureties are recorded under off-balance sheet headings at their nominal value, with flows of interest, fees or other income recorded under profit or loss headings throughout the life of the operations.
Renegotiated loans are recorded at the total value of the loan plus the respective late payment interest. Gains or income derived from the renegotiation are recorded at the time they are effectively received.
Pursuant to Notice number 3/2012, the Bank annuls interest overdue by more than 60 days and does not recognise interest from this date up to the time when the Customer settles the situation.
Provisions for credit risk The described arrangement has been in force since March 2008, pursuant to Notice number 9/2007, of 12 September. With Notice number 4/2009, of 18 June, the BNA amended the level of classification through spill- over (article 3), restricting its scope to objective criteria.
On 28 March 2012, the BNA published Notice number 03/2012 which revoked BNA Notice 4/2011, of 8 June.
Therefore, the methodology of calculation of provisions for loans granted to Customers, in general, remains unchanged in relation to the previous year, and is described below.
Provisions for loans and interest Under the terms of Notice number 3/2012, the Bank classifies loan operations by increasing order of risk, according to the following categories: rLevel A: Zero risk rLevel B: Very low risk rLevel C: Low risk rLevel D: Moderate risk rLevel E: High risk rLevel F: Very high risk rLevel G: Risk of loss
The classification of each loan operation is reviewed at least on an annual basis, through a re-appraisal/assessment of the criteria which determined its initial classification: economic profile and proposer/Customer behavioural pattern and any related guarantee, as well as its type, quality and amount of coverage.
The classification of all the loans in the portfolio, or those whose debtors act in a certain economic activity sector or geographic area, is reviewed whenever the Executive Committee believes there is risk of significant changes in the economic circumstances that might affect the risk of its operations.
Without prejudice to the review described in article 9 of the aforesaid Notice, the Bank conducts monthly reviews of the classification of each loan according to any delay which might have occurred in the payment of the instalment of the principal or charges, where the classification of loan operations to the same Customer, for the constitution of provisions, is made in the category showing highest risk.
Loans are classified into risk levels according to the time that has elapsed since the date of the operation's entry into default, with the minimum provisioning levels being calculated pursuant to Notice number 3/2011 as described below:
Risk levels A B C D E F G % provision 0% 1% 3% 10% 20% 50% 100% Time elapsed since entry Up to 15 to 1 to 2 to 3 to 5 to Over into default 15 days 30 days 2 months 3 months 5 months 6 months 6 months
Pursuant to article 10 of the aforesaid Notice, for loans with a maturity period above 24 months, the periods established for the monthly review are doubled when the payment of the instalment of the principal or charges takes place correctly. 58 /PUFTUPUIF'JOBODJBM4UBUFNFOUTr"//6"-3&1035r 2015
Provisions for the loans granted are classified under assets at credit, in the heading "Provision for bad debt" (Note 10) and provisions for guarantees and sureties provided and documentary credit for imports that are unbacked as at the reporting date are presented under liabilities, in the heading Provisions for probable liabilities related to guarantees provided (Note 19).
Operations which have been renegotiated are kept, at least, at the same risk level in which they were classified in the month immediately before their renegotiation.
Reclassification to a lower risk level only occurs if there has been regular and significant repayment of the operation, the payment of overdue and late payment interest, or as a result of the quality and value of new guarantees submitted for the renegotiated operation.
Gains or income derived from the renegotiation are recorded when they are effectively received.
The Bank annuls interest overdue by more than 60 days, and also does not recognise interest from this date up to the time when the Customer settles the situation.
'JOBODJBMàYFEBTTFUT
Holdings in related entities and equivalent Holdings in related entities or equivalent are considered stakes in which the Bank, directly or indirectly, holds a percentage equal to above 10% of the respective voting share capital, without controlling the entity.
The relevant equity stakes in each related entity or equivalent, when the Bank has influence in its management or when the Bank's percentage holding, directly or indirectly, represents 20% (twenty per cent) or more of the voting share capital of the entity, are measured by the equity method.
All others are recorded at acquisition cost minus the provision for losses.
Holdings in other companies Holdings in other companies are considered those in which the Bank, directly or indirectly, holds a stake below 10% of the respective voting share capital.
These assets are recorded at acquisition cost minus the provision for losses.
5BOHJCMFàYFEBTTFUT Tangible fixed assets are recorded at acquisition cost. This includes indispensable accessory costs, even if before the deed, such as notary fees, brokerage fees, tax payable on acquisition and others.
The depreciation of the fixed asset is calculated on a straight-line basis at the maximum rates acceptable as costs for tax purposes, pursuant to the Industrial Tax Code, which correspond to the following estimated years of useful life:
Description Years of useful life Properties for own use (Buildings) 50 Equipment: Furniture and material 10 Computer equipment 3 Interior facilities 10 Transport material 3 Machines and tools 5 – 7 2015r"//6"-3&1035r/PUFTUPUIF'JOBODJBM4UBUFNFOUT 59
*OUBOHJCMFàYFEBTTFUT Intangible Fixed Assets include costs related to the acquisition and development costs of software used in data processing, costs inherent to the constitution, organisation, restructuring, expansion and/or modernisation of the Bank, goodwill paid on acquisition, improvements to property owned by third parties, and products under development classifiable as assets. Intangible Fixed Assets are recorded at acquisition cost, being depreciated in a straight-line over a period of three years, with the exception of construction works in rented properties, where the depreciation period corresponds to the expected rental.
Costs incurred during the research phase for the development of new products are not recognised as intangible assets, but are recorded as costs for the year when they are incurred.
"TTFUTOPUGPSPXOVTF This heading records assets received in lieu of repayment, following the recovery of non-performing loans, if intended for subsequent divestment.
As defined in the CONTIF, the value of assets received in lieu of repayment is recorded in accordance with the amount stated upon valuation, against the value of the recovered loan and respective provisions that were specifically constituted.
When the valuation of the assets is lower than the book value of the loan operation, the difference should be recognised as a cost for the year.
When legal period of two years has come to an end without the assets having been divested (extendable by authorisation of the BNA), a new valuation is made, aimed at estimating the updated market value, with a view to the possible constitution of the corresponding provision.
*ODPNFUBY BMA is subject to Industrial Tax and considered, for tax purposes, a Group A taxpayer. Its income is taxed under the terms of number 1 of article 64 of Law number 19/14, of 22 October, with the applicable tax rate being 30%.
Income tax includes current and deferred tax. Income tax is recognised through profit or loss, except when related to items that are not recognised directly under equity, in which case it is also stated against equity.
Current taxes are those which are expected to be paid based on the tax base calculated in accordance with the tax rules in force and using the tax rate referred to above.
Deferred tax assets and liabilities are recorded when there is a temporary difference between the value of an asset or liability and its taxable base. Its value corresponds to the value of the tax that is recoverable or payable in future periods. Deferred tax assets and liabilities are calculated based on the tax rates in force for the period when the respective asset or liability is expected to be realised.
Tax returns are subject to review and correction by the tax authorities for a period of five years.
Different interpretations of the provisions may imply possible corrections to the taxable profit of the last five years.
5BYSFGPSN The tax reform in Angola included an important series of new tax regulations, published in the Diário da República, as well as significant amendments to already existing codes and their consequent republication, namely: a) Tax Regime of Collective Investment Bodies (approved by Presidential Legislative Decree number 1/14, of 13 October); b) Capital Gains Tax Code (approved by Presidential Legislative Decree number 2/14, of 20 October); c) Stamp Duty Code (approved by Presidential Legislative Decree number 3/14, of 21 October); d) Employee Income Tax Code (Law number 18/14, of 22 October); e) Industrial Tax Code (approved by Law number 19/14, of 22 October); 60 /PUFTUPUIF'JOBODJBM4UBUFNFOUTr"//6"-3&1035r 2015
f) Tax Enforcement Code (approved by Law number 20/14, of 22 October); g) General Tax Code (approved by Law number 21/14, of 22 October); h) Consumption Tax Regulations (approved by Presidential Legislative Decree number 3-A/14, of 21 October).
Due to their relevance, pursuant to article 67, of Law number 19/14 of 22 October, provisions of services of any nature are subject to taxation, by withholding at source at the rate of 6.5%.
3FEVDUJPOJOUIFSFDPWFSBCMFWBMVFPGOPOàOBODJBMBTTFUT JNQBJSNFOU The Bank assesses its assets periodically, with a view to the identification of assets which show a recoverable value below their book value. The reduction of the book value (impairment) of an asset is always recognised when its book value exceeds its recoverable value.
For the assessment of impairment, the Bank takes into account the following indicators:
a) Significant decline in the value of an asset, higher than would be expected from its normal use; b) Significant changes in the technological, economic or legal environment, with adverse effects on the Bank; c) Increase in interest rates or other market rates, with adverse effects on the discount rates and consequent reduction in the present value or recoverable value of the assets; d) Book value of net assets higher than the market value; e) Evidence of obsolescence or loss of physical capacity of an asset; f) Significant changes in the form of use of the asset, such as discontinuity or restructuring, with adverse effects on the Bank; and g) Indication that the economic performance of the asset will be worse than that expected.
&NQMPZFFCFOFàUT
a) Liabilities related to retirement pensions Law number 7/4, of 15 October, which revoked Law number 18/90, of 27 October, and regulates the Angolan Social Security system, foresees the attribution of retirement pensions to all Angolan workers enrolled in Social Security. The value of these pensions depends on the number of years of work and the average monthly gross wages received in the periods immediately before the worker's date of retirement. Pursuant to Decree number 7/99 of 28 May, the rates of contribution to this system are 8% for the employer entity and 3% for the workers.
A retirement pension due to old-age is attributed to Employees who complete 60 years of age and have been employed continuously at the Bank for at least five years.
An invalidity benefit is attributed to Employees who have been diagnosed total and permanent invalidity equal to 100% and have been employed continuously for at least five years. Employees may name the beneficiaries and respective percentage share of their death benefit.
Liabilities related to the contributions payable as at 31 December 2014 are recognised under the heading Provisions for probable liabilities (Note 18) and includes liabilities concerning compensation of retirement pensions following the provisions in Law number 2/2000 and articles 218 and 262 of the General Labour Law, legislation which determines the Bank's payment of compensation in the case of expiry of the contract. This compensation is calculated by multiplying 25% of the monthly base wage applied on the date when the worker reaches the legal age of retirement by the number of years of employment.
On 15 June 201, Diário da República de Angola published Law number 7/15 which approved the new General Labour Law that entered into force on 14 September 2015, having revoked Law number 2/2000, of 11 February.
In 2015, the Bank derecognised the liabilities concerning retirement pension compensation established in Law number 2/2000.
b) Variable remuneration paid to Employees and Directors The Bank attributes variable remunerations to its Employees and Directors as a result of their performance (performance bonus), following criteria defined by the Board of Directors and Remuneration Board. The variable remuneration attributed to the Employees and Directors is recorded against profit or loss for the year to which it refers, despite being paid-up in the following year (Note 28). 2015r"//6"-3&1035r/PUFTUPUIF'JOBODJBM4UBUFNFOUT 61
c) Provisions for holidays and holiday allowance The General Labour Law, in force as of 31 December 2013, determines that the amount of holiday allowance paid to the workers in a particular year is a right acquired by them in the immediately preceding year. Consequently, the Bank records the book values in the year relative to holidays and holiday allowances payable in the following year.
1SPWJTJPOTBOEDPOUJOHFODJFT Provisions are recognised when (i) the Bank has a present obligation, legal or constructive; (ii) it is probable that its payment will be required; and (iii) a reliable estimate can be made of the value of this obligation.
Contingent liabilities are recognised in off-balance sheet accounts when (i) the Bank has a possible obligation whose existence will be confirmed only by the occurrence or not of one or more future events that are beyond the control of the institution; (ii) a present obligation which arises from past events, but which is not recognised because it is not probable that the institution will have to settle it or the value of the obligation cannot be measured with sufficient reliability. Contingent liabilities are revalued periodically to determine if their previous valuation continues valid. If it is probable that an outflow of resources will be required for an item previously treated as a contingent liability, a provision is recognised in the financial statements for the period when the change in the estimated probability occurs.
Contingent assets are recognised in off-balance sheet accounts when a possible present asset, arising from past events, whose existence will be confirmed only by the occurrence or not of one of more future events that are beyond the control of the institution. Contingent assets are revalued periodically to determine if their initial assessment continues valid. If it is practically certain that any inflow of resources will take place on account of an asset, and this entry has been classified previously as probable, the asset and corresponding gain will be recognised in the financial statements for the period when the change in the estimated probability occurs.
3FDPHOJUJPOPGJODPNFGSPNTFSWJDFTBOEGFFT Fees charged for services rendered are recognised as income throughout the period that the service is rendered or when the significant act is concluded, if the income derives from a significant act.
.POFUBSZVQEBUJOH Pursuant to Notice number 2/2009 of 8 May, the financial statements consider the effects of change in the purchasing power of the national currency, based on the Consumer Price Index (IPC) disclosed by the National Statistics Institute (INE), in the case of variations (inflation) above 100% over the last 3 (three) years, through correction of the book value of the Fixed Asset and Equity accounts. The Bank did not carry out any monetary updating during the year under review.
$BTIáPXT For purposes of the preparation of the cash flow statement, the Bank defines disposable assets as the total balance of the headings of Cash, Disposable assets at the central bank and Disposable assets at financial institutions.
.BJOFTUJNBUFTBOEVODFSUBJOUJFTBTTPDJBUFEUPUIFBQQMJDBUJPOPGBDDPVOUJOHQPMJDJFT The Bank's accounts include estimates made under conditions of uncertainty, however, no hidden reserves or excessive provisions have been created, or inadequate quantification made of assets and income or liabilities and costs.
The principle of prudence imposes the choice of the option that results in lower net assets, when equally valid options are presented before all other accounting principles. This principle determines the adoption of the lower value for asset components and higher for liability components, whenever equally valid alternatives are presented for the quantification of changes in assets and liabilities which alter net worth.
In the preparation of the financial statements, the Bank made estimates and used assumptions that affected the reported amounts of assets and liabilities. These estimates and assumptions are appraised regularly and based on various factors, including expectations on future events which were considered reasonable under the circumstances.
Estimates and assumptions were used, namely, in significant areas of Provisions for Loans Granted, Other Provisions and Current and Deferred Tax and the Securities Valuation Model. 62 /PUFTUPUIF'JOBODJBM4UBUFNFOUTr"//6"-3&1035r 2015
4. DISPOSABLE ASSETS
As at 31 December 2015 and 2014, this heading is detailed as follows: Thousand AOA 2015 2014 CASH IN HAND 10,436,192 Cash in national currency 6,701,682 Cash in foreign currency 3,734,510 VALUES IN TRANSIT 689,753 Cash in national currency 676,337 Cash in foreign currency 995 13,416 DISPOSABLE ASSETS AT THE CENTRAL BANK 25,456,127 Demand deposits in national currency 16,394,411 Demand deposits in foreign currency 9,061,716 DISPOSABLE ASSETS IN FINANCIAL INSTITUTIONS 101,837 Banco Comercial Português 101,837 36,683,909
The demand deposits at the BNA aim to comply with the provisions in force on maintenance of required reserves and are not remunerated.
The required reserves are currently calculated under the terms established in Instruction number 16/2015, of 22 July, and are constituted in national and foreign currency, according to the respective denomination of the liabilities constituting their basis of incidence.
As at 31 December 2015, the reserve requirement is calculated through the application of a coefficient of 25% of eligible liabilities in national currency, excluding Local Government deposits which are subject to a rate of 50% for national currency and 100% for foreign currency, and Central Government deposits subject to a rate of 75% for national currency and 100% for foreign currency, and a coefficient of 15% on eligible liabilities in foreign currency.
On 10 December 2015, the Banco Nacional de Angola converted part of BMA's required reserves in USD into securities denominated in the same currency, with the nominal value of 57,790,000 and maturity of seven years. These debt securities were recognised at their acquisition cost and subsequently measured as described in accounting policy 3.2.2.
Pursuant to Instruction number 19/2015, which entered into force on 4 January 2016, the required minimum reserves can be composed up to 20% with the amounts deposited at Banco Nacional de Angola and 80% in Treasury Bonds in foreign currency, with the securities identified in the preceding paragraph being eligible. 2015r"//6"-3&1035r/PUFTUPUIF'JOBODJBM4UBUFNFOUT 63
5. LIQUIDITY INVESTMENTS
As at 31 December 2015 and 2014, this heading corresponds to investments at Credit Institutions and is detailed as follows:
Thousand AOA 2015 2014 6QUP 6QUP "WFSBHF Up to Over Average 5PUBM Total XFFL NPOUI SBUF 1 week 1 year rate MONEY MARKET TRANSACTIONS 10 – 11,938,556 – – 11,938,556 Investments in national credit institutions – 11,938,556 – 4.14% 11,938,556 Investments in credit institutions abroad 10 – – 10 ––– – PURCHASE OF THIRD PARTY SECURITIES ––––––– – WITH REPURCHASE AGREEMENT NUMISMATICS – – – 2,225 – 2,225 LIQUIDITY INVESTMENTS 10 11,938,556 2,225 11,940,781
6. SECURITIES
As at 31 December 2015 and 2014, the Bank's portfolio of securities is composed of securities held for trading, securities available for sale and securities held to maturity.
As at 31 December 2015 and 2014, this heading is detailed as follows:
Thousand AOA 2015 Risk Nominal Amortised Fair value Book Average Country Currency level value cost adjustment value interest rate DEBT SECURITIES Trading securities Treasury Bonds indexed to the USD A Angola AOA 334,311 315,623 14,307 329,930 5.00% exchange rate Securities available for sale Treasury Bills in national currency A Angola AOA 10,651,676 10,347,538 66,129 10,413,667 12.91% Treasury Bonds indexed to the USD A Angola AOA 54,808,931 55,592,345 398,787 55,991,132 7.15% exchange rate Treasury Bonds in foreign currency A Angola USD 8,677,751 8,706,505 2,484 8,708,989 4.85% Securities held to maturity Treasury Bonds in national currency A Angola AOA 9,964,200 9,785,299 168,941 9,954,240 7.62% 84,436,86984,747,310 650,648 85,397,958
Thousand AOA 2014 Risk Nominal Amortised Fair value Book Average Country Currency level value cost adjustment value interest rate DEBT SECURITIES Securities available for sale Treasury Bills in national currency A Angola AOA 17,041,073 16,737,891 25,204 16,763,095 5.22% Treasury Bonds in national currency A Angola AOA 6,853,100 6,910,748 165,377 7,076,125 7.73% Treasury Bonds indexed to the USD A Angola AOA 20,803,012 20,894,809 236,801 21,131,610 7.05% exchange rate Treasury Bonds in foreign currency A Angola USD 849,648 854,125 1,861 855,986 6.15% 45,546,83345,397,573 429,243 45,826,816 64 /PUFTUPUIF'JOBODJBM4UBUFNFOUTr"//6"-3&1035r 2015
As at 31 December 2015 and 2014, the distribution of debt securities by indexer is as follows: Thousand AOA Book value 2015 Amortised cost Market value Fixed rate Libor 6 months Total Fixed rate Libor 6 months Total DEBT SECURITIES
Trading securities Treasury Bonds indexed 315,623 – 315,623 329,930 – 329,930 to the USD exchange rate Securities available for sale
Treasury Bills in national currency 10,347,538 – 10,347,538 10,413,667 – 10,413,667 Treasury Bonds indexed 55,592,345 – 55,592,345 55,991,132 – 55,991,132 to the USD exchange rate Treasury Bonds in foreign currency 7,843,356 863,149 8,706,505 7,845,361 863,628 8,708,989
Securities held to maturity
Treasury Bonds in national currency 9,785,299 – 9,785,299 n,a – n,a
83,884,161 863,149 84,747,310 74,580,090 863,628 75,443,718
Thousand AOA Book value 2014 Amortised cost Market value Fixed rate Libor 6 months Total Fixed rate Libor 6 months Total DEBT SECURITIES
Securities available for sale
Treasury Bills in national currency 16,737,891 – 16,737,891 16,763,095 – 16,763,095
Treasury Bonds in national currency 6,910,748 – 6,910,748 7,076,125 – 7,076,125 Treasury Bonds indexed 20,882,881 11,928 20,894,809 21,119,696 11,914 21,131,610 to the USD exchange rate Treasury Bonds in foreign currency – 854,125 854,125 – 855,986 855,986
44,531,520 866,053 45,397,573 44,958,916 867,900 45,826,816
As described in the accounting policy mentioned in Note 3.2.2, on 1 October 2015, the Bank reclassified Treasury Bonds in kwanzas which had been recorded in the category of securities available for sale to the category of securities held to maturity.
As at 31 December 2015 and 2014, the trading securities and securities available for sale in portfolio had been entirely issued by the BNA or Angolan Treasury, and showed the following structure, according to their respective maturity periods: 2015r"//6"-3&1035r/PUFTUPUIF'JOBODJBM4UBUFNFOUT 65
Thousand AOA 2015 Maturity period Amortised cost Market value Up to 3 months 10,046,691 10,113,371 3 to 6 months 3,155,376 3,159,593 6 months to 1 year 6,542,053 6,581,272 Over 1 year 55,217,891 55,589,482 74,962,011 75,443,718
Thousand AOA 2014 Maturity period Amortised cost Market value Up to 3 months 8,546,333 8,556,752 3 to 6 months 7,319,361 7,353,671 6 months to 1 year 11,105,706 11,182,592 Over 1 year 18,426,713 18,733,801 45,397,573 45,826,816
The policy on investment in securities adopted by BMA is appropriate to the reality of the Angolan market, focusing on public debt and Central Bank securities, using criteria based on yields, with strict control of risks, namely liquidity and market risks.
7. DERIVATIVE FINANCIAL INSTRUMENTS
As at 31 December 2015 and 2014, this heading is detailed as follows: Thousand AOA 2015 2014 "TTFUT -JBCJMJUJFT Assets Liabilities Currency swaps –– Derivative financial instruments ––
As at 31 December 2015, the portfolio of derivative financial instruments showed the following structure, according to their maturity periods: Thousand AOA 2015 Fair value – assets Fair value – liabilities Less than 3 months More than 1 year Less than 3 months More than 1 year Currency swaps 31,784 – 19,665 – Derivative financial instruments 31,784 – 19,665 –
As at 31 December 2015, the heading "Currency swaps" corresponds to operations made with the BCP Group. 66 /PUFTUPUIF'JOBODJBM4UBUFNFOUTr"//6"-3&1035r 2015
8. LOANS IN THE PAYMENT SYSTEM
As at 31 December 2015 and 2014, this heading is detailed as follows: Thousand AOA 2015 2014 Own funds in transit – 413 Clearing of cheques and other papers 206,437 Other operations pending settlement 53,769 260,619
As at 31 December 2015 and 2014, the heading "Clearing of cheques and other papers" includes the amount of 104,362 thousand AOA and 71,027 thousand AOA, relative to deposited cheques which shall be cleared in January 2016.
9. FOREIGN EXCHANGE TRANSACTIONS
As at 31 December 2015 and 2014, this heading is detailed as follows: Thousand AOA 2015 2014 Purchase of currency National currency 347,348 Foreign currency 2,302,924 2,650,272
As at 31 December 2015, the heading in foreign currency includes the amount of 2,291,396 thousand AOA, relative to USD/EUR swaps, with the counterpart being Banco Comercial Português.
The values relative to the sale of currency are presented in Note 17. 2015r"//6"-3&1035r/PUFTUPUIF'JOBODJBM4UBUFNFOUT 67
10. LOANS
As at 31 December 2015 and 2014, this heading is detailed as follows: Thousand AOA 2015 2014 /BUJPOBM$VSSFODZ 'PSFJHO$VSSFODZ National Currency Foreign Currency OVERDRAFTS Companies 4,717,702 34,032 Individuals 124,305 2,443 4,842,007 36,475 CREDIT Companies 66,255,692 30,985,833 Individuals 10,854,430 1,992,390 77,110,123 32,978,223 LEASING Companies - 4,084,609 - Individuals - 673,299 - - 4,757,908 - FACTORING Companies - 5,421,040 - Individuals --425 - - 5,421,465 - CARD Companies - 129,179 - Individuals - 266,370 - - 395,549 - TOTAL 92,527,052 33,014,697 GROSS LOANS TO 125,541,749 CUSTOMERS (NC+FC) PROVISION FOR LOAN (7,793,500) NET LOANS TO 117,748,249 CUSTOMERS (NC+FC) 68 /PUFTUPUIF'JOBODJBM4UBUFNFOUTr"//6"-3&1035r 2015
As at 31 December 2015, the capital and interest in portfolio showed the following structure, according to maturity and activity sector: Thousand AOA Up to 6 6 to 12 Overdue Activity sector months months 1 to 5 years Over 5 years loans Total Other activities of collective, social and 9,210,587 1,334,874 16,893,789 3,182,497 1,475,867 32,097,614 personal services Construction 16,548,241 866,350 11,687,195 1,619,665 185,344 30,906,795 Wholesale trade 9,381,119 588,202 3,301,662 630,307 1,327,470 15,228,759 Consumer credit 231,399 423,313 11,281,603 2,064,615 916,539 14,917,469 Retail trade 3,597,353 213,115 3,070,506 7,852,031 598,280 15,331,285
Manufacturing industries 1,641,924 102,499 1,790,504 3,063,131 3,849 6,601,907
Other 10,181,615 3,495,972 10,277,004 7,184,502 713,172 31,852,265 50,792,238 7,024,326 58,302,263 25,596,748 5,220,520 146,936,095
As at 31 December 2014, the capital and interest in portfolio showed the following structure, according to maturity and activity sector: Thousand AOA Up to 6 6 to 12 Overdue Activity sector months months 1 to 5 years Over 5 years loans Total Other activities of collective, social and 7,507,370 883,618 16,371,184 2,886,575 1,797,876 29,446,623 personal services Construction 12,625,543 1,427,266 4,603,206 4,236,436 365,233 23,257,684 Wholesale trade 9,718,636 231,725 3,100,477 2,057,816 732,555 15,841,209 Consumer credit 480,618 255,355 9,502,466 2,813,641 984,884 14,036,964 Retail trade 3,109,956 499,371 2,671,562 6,569,856 306,524 13,157,269
Manufacturing industries 1,046,837 323,417 744,974 619,776 161,486 2,896,490
Other 3,336,769 223,822 8,645,470 14,413,141 286,306 26,905,510 37,825,729 3,844,574 45,639,339 33,597,243 4,634,864 125,541,749
As at 31 December 2015, the Bank's portfolio showed the following distribution relative to credit risk: Thousand AOA Outstanding Risk level loans Overdue loans Interest Total % Provision Provisions A 2,115,543 - 24,841 2,140,384 - - B 92,276,069 9,994 1,908,449 94,194,512 1% 950,344 C 35,475,889 163,567 695,565 36,335,021 3% 1,090,051 D 1,710,633 28,575 9,731 1,748,939 10% 174,893 E 1,125,820 88,899 5,831 1,220,550 20% 244,110 F 554,351 119,325 3,772 677,448 50% 338,726 G 5,807,909 4,810,160 1,172 10,619,241 100% 10,619,241 139,066,214 5,220,520 2,649,361 146,936,095 13,417,365 2015r"//6"-3&1035r/PUFTUPUIF'JOBODJBM4UBUFNFOUT 69
As at 31 December 2014, the Bank's portfolio showed the following distribution relative to credit risk: Thousand AOA Outstanding Risk level loans Overdue loans Interest Total % Provision Provisions A 11,523,379 - 256,397 11,779,776 - - B 67,210,842 3,826 851,298 68,065,966 1% 680,660 C 33,858,571 618,672 646,688 35,123,931 3% 1,053,718 D 1,223,800 77,228 10,318 1,311,346 10% 131,134 E 3,559,611 674,420 730 4,234,761 20% 1,019,510 F 162,664 70,864 1,452 234,980 50% 117,490 G 1,599,962 3,189,854 1,173 4,790,989 100% 4,790,988 119,138,829 4,634,864 1,768,056 125,541,749 7,793,500
As at 31 December 2015 and 2014, the Loan Portfolio showed the following weighted average interest rates:
Average rates 2015 2014 Descoberto 7.39% Leasing 12.62% Factoring 11.55% Credit cards 35.00% All other loans 12.15%
During 2015, the total value of 1,799,900 thousand AOA was written-off from active loans. The value of the provision for bad debt, constituted and used during the financial year is described in Note 19.
As at 31 December 2015 and 2014, the Loan Portfolio showed the following distribution by Province and Indexer:
1307*/$& Thousand AOA Código Descrição 2015 2014 500 Bengo 99,731 1000 Benguela 4,085,625 1500 Bié 27,105 2000 Cabinda 561,234 2500 Kuando-Kubango 6,958 3000 Cunene 34,173 3500 Huambo 978,605 4000 Huíla 4,075,409 4500 Kwanza Norte 516,009 5000 Kwanza Sul 134,629 5500 Luanda 113,963,714 6000 Malanje 94,934 6500 Namibe 447,170 7000 Moxico 88,823 7500 Lunda Norte 4,508 8000 Lunda Sul 17,987 8500 Uíge 88,240 9000 Zaire 316,850 125,541,749 70 /PUFTUPUIF'JOBODJBM4UBUFNFOUTr"//6"-3&1035r 2015
*/%&9&3 Thousand AOA Code Description 2015 2014 20000 Interest rates 48,763,563 21826 Libor 26,992,289 21973 Average rate of BNA securities 439 3,565 99000 No Indexer 49,782,332 505"- 125,541,749
$3&%*5."53*9 Thousand AOA Dez. 2015
Portfolio Risk Paid distribution as levels A B C D E F G Written-off Amort. Total at 31/12/2014 A 6.78% 23.41% 0.87% 0.02% 0.08% 0.00% 0.01% 0.00% 68.83% 9.38% 11,779,776 B 0.00% 58.70% 4.18% 0.49% 0.02% 0.01% 1.17% 0.00% 35.43% 54.22% 68,065,966 C 0.03% 13.15% 56.96% 1.72% 2.12% 0.96% 2.85% 0.00% 22.22% 27.98% 35,123,930 DEC.14 D 0.00% 0.00% 0.64% 16.19% 3.90% 0.15% 68.81% 0.00% 10.30% 1.04% 1,311,347 E 0.00% 0.00% 0.18% 0.66% 4.06% 0.31% 87.89% 0.00% 6.89% 3.37% 4,234,762 F 0.00% 0.00% 0.00% 0.00% 0.00% 53.33% 44.47% 0.00% 2.21% 0.19% 234,981 G 0.00% 0.00% 0.09% 1.24% 0.27% 0.00% 62.22% 31.42% 4.77% 3.82% 4,790,988 TOTAL 0.64% 37.70% 18.30% 0.99% 0.80% 0.39% 7.57% 1.20% 32.41% 100.00% 2014 PORTFOLIO DISTRIBUTION 809,141 47,330,266 22,973,471 1,237,646 1,003,670 484,777 9,508,877 1,505,130 40,688,771 - 125,541,749 AS AT 31/12/2015 2015r"//6"-3&1035r/PUFTUPUIF'JOBODJBM4UBUFNFOUT 71
Analysis of the migration matrix shows that of the total loans as at 31 December 2014, of the value of 125,541,749 thousand AOA, 51.1% of the operations did not undergo any change of level.
The movement between risk levels also indicates that 3.9% of the operations reduced their risk level, 11.4% of credit operations migrated to more severe risk levels, and 1.2% were written off from the assets (transferred to loss).
As at 31 December 2015 and 2014, the residual period of the loans, including income receivable, showed the following structure: Thousand AOA 2015 No late Late payment Late payment Risk level payment ≤ 60 days > 60 days Total A 1,010,530 1,129,853 - 2,140,383 B 77,113,116 17,081,395 - 94,194,511 C 24,498,561 11,675,884 160,576 36,335,021 D 1,158,281 378,509 212,148 1,748,938 E 383,051 15,638 821,861 1,220,550 F 236,977 170 440,302 677,449 G 85,476 14,846 10,518,921 10,619,243 104,485,992 30,296,295 12,153,808 146,936,095
Thousand AOA 2014 No late Late payment Late payment Risk level payment ≤ 60 days > 60 days Total A 11,060,872 718,904 - 11,779,776 B 59,881,363 8,184,603 - 68,065,966 C 25,551,707 9,406,092 166,132 35,123,930 D 530,845 235,705 544,796 1,311,347 E 1,345,636 3,379 2,885,747 4,234,762 F - 130,315 104,666 234,981 G 159,251 42,344 4,589,392 4,790,988 98,529,674 18,721,342 8,290,733 125,541,749
The Bank defines renegotiated loan operations as operations whose initially contracted conditions partially or entirely change any payment terms without reinforcement of guarantees or payments of late interest.
As at 31 December 2015 and 2014, the renegotiated loans amounted to 10,495,144 thousand AOA and 7,596,038 thousand AOA, respectively.
As at 31 December 2015 and 2014, the total amount of recovered loans and interest previously annulled or written-off from the assets stood at 45,694 thousand AOA and 48,201 thousand AOA (Note 31). 72 /PUFTUPUIF'JOBODJBM4UBUFNFOUTr"//6"-3&1035r 2015
11. OTHER VALUES
As at 31 December 2015 and 2014, this heading is detailed as follows: Thousand AOA 2015 2014 OTHER CORPORATE OR STATUTORY AMOUNTS Dividends and other income receivable from BPA 477,507 477,507 OTHER TAX RELATED AMOUNTS Tax to be offset - - OTHER CIVIL AMOUNTS Miscellaneous debtors Cash shortages 22,353 Visa and SME collateral 566,873 Fraud 458,565 ATM withdrawals 170,740 Values receivable from sale of fixed assets - Other debtors 96,610 1,315,141 OTHER ADMINISTRATIVE AMOUNTS Advances and prepayments of wages Advances to Employees - Prepaid expenses Insurance 30,846 Hire and rental charges 360,381 Software licenses and maintenance 31,952 Miscellaneous 38,661 Office material 43,633 Other advances Advances to suppliers 48,451 553,924 SPECIFIC PROVISIONS FOR LOSSES (234,144) ASSETS NOT FOR OWN USE 670,318 2,782,746
The heading Visa and SME collateral includes the amount of 5,415,000 USD, relative to a deposit given as collateral, under the contract concluded between BMA and Visa International, in which the Bank undertakes to maintain a collateral deposit at Visa's custodian bank (Barclays Bank London). This deposit is remunerated at the annual interest rate of 0.10%.
As at 31 December 2015 and 2014, the heading Fraud corresponds to operations pending settlement, whose lawsuits are underway, and other liabilities, with the Bank having constituted the necessary provisions based on the information currently available in the heading Specific provisions for losses.
The heading Values receivable from sale of fixed assets includes the amount of 878,848 thousand AOA relative to the sale of a real estate property received in lieu of repayment.
2015r"//6"-3&1035r/PUFTUPUIF'JOBODJBM4UBUFNFOUT 73
As at 31 December 2015 and 2014, the heading "Assets not for own use" records the cost of acquisition and construction of real estate properties received in lieu of repayment as a form of settlement of a loan, of the value of 1,664,109 thousand AOA.
As at 31 December 2015 and 2014, the recorded value is supported by valuations of the aforesaid property.
12. FINANCIAL FIXED ASSETS
As at 31 December 2015 and 2014, this heading may be detailed as follows:
Thousand AOA
Number of Net income Equity Additional % holding shares Equity for the year 2014 Additions Transfer method paid-in capital 2015 HOLDINGS IN RELATED ENTITIES AND EQUIVALENT
Academia Millennium 33% 16,500 (20,428) (18,853) ------Atlântico
HOLDINGS IN OTHER COMPANIES BPA 6.66% 2,276,084 - - 2,832,297 - - - - EMIS 2.58% 17,800 1,477,413 111,025 100,837 - - - - Angolan Stock Exchange 2.00% 3,000 n.d n.d 28,592 - (1,732) - - Securities and Derivatives Other financial n.a n.d n.d 100 - - - - 100 fixed assets 2,961,826 - (1,732) - -
Thousand AOA
Number of Net income Equity Additional % holding shares Equity for the year 2013 Additions Transfer method paid-in capital 2014 HOLDINGS IN RELATED ENTITIES AND EQUIVALENT
Academia Millennium 33% 16,500 (5,245) (18,063) 4,230 - - (4,230) - - Atlântico
HOLDINGS IN OTHER COMPANIES BPA 6.66% 2,276,084 44,842,342 6,153,964 2,713,825 118,472 - - EMIS 2.58% 17,800 1,377,815 111,290 101,290 - - - (453) Angolan Stock Exchange 2.00% 3,000 n.d n.d 28,592 - - - - Securities and Derivatives Other financial n.a n.d n.d 99 1 - - - 100 fixed assets 2,848,036118,473 - (4,230) (453) 74 /PUFTUPUIF'JOBODJBM4UBUFNFOUTr"//6"-3&1035r 2015
The 10% holding in BPA was acquired during 2009, for the value of 21,342 thousand USD.
In 2011, the General Meeting of BPA approved a share capital increase, with BMA having accompanied this increase, maintaining its stake of 10%.
In 2012, the share capital increase was authorised by Banco Nacional de Angola, followed by its recognition in the heading Holdings in related entities and equivalent.
In 2013, the General Meeting of BPA approved a new share capital increase, with BMA's stake having fallen to 6.66% and the number of shares increased to 2,276,084.
In 2014, the distribution of dividends for BPA's stake was announced, of the value of 405,481 thousand AOA of which 118,472 thousand AOA through incorporation in the capital.
In 2015, the distribution of dividends for BPA's stake of the value of 303,223 thousand AOA was announced, with no proposed or paid dividends having been recorded for the other holdings.
During 2010, BMA was one of the founding members of the Millennium Atlântico Academy, where it holds a stake of 33%, together with Sonangol, BPA and individual shareholders. The objective of the Academy is to provide high quality training to the staff of shareholder companies, thus contributing to the training of highly qualified Angolan staff.
A loss of 4,230 thousand AOA was recognised for the Angola Millennium Academy, with neither loss nor profit having been recorded for the other holdings.
In 2013, the Angolan Stock Exchange of Securities and Derivatives approved the extinction of the company in consideration of the return, to the Shareholders, of the nominal paid-up share capital.
13. INTANGIBLE AND TANGIBLE FIXED ASSETS, AND FIXED ASSETS IN PROGRESS
As at 21 December 2015 and 2014, the movement of the intangible and tangible fixed assets and fixed assets in progress is presented in the table below. Thousand AOA Write-offs/ Gross fixed assets 2014 Additions settlements Transfers 2015 INTANGIBLE FIXED ASSETS 7,259,506 375,630 (271,900) 84,970 Automatic data processing system 1,711,377 236,685 (28,928) 133,541 Works in rented properties 4,363,766 50,114 (233,757) 678,990 Advances for intangibles 60,989 62,617 - (109,130) Other intangibles 1,123,374 26,214 (9,215) (618,431) TANGIBLE FIXED ASSETS 21,489,299 1,583,905 (75,770) 283,224 Buildings and land 11,651,666 882,975 (10,591) (239,764) Major repairs and improvements 5,254,380 212,592 (8,319) (331,867) Furniture and material 472,433 25,796 (2,564) 20,162 Machines and tools 1,015,784 189,301 (11,547) (962) Transport material and IT equipment 1,441,281 102,412 (39,740) (6,215) Other 1,653,755 170,829 (3,009) 841,870 FIXED ASSETS IN PROGRESS 433,923 310,854 (57,812) (368,194) Fixed assets for own use 115,299 156,283 - (270,934) 648 Advances for tangibles 133,982 1,673 (2,632) (133,023) - Others in progress 184,642 152,898 (55,180) 35,763 29,182,728 2,270,389 (405,482) - 2015r"//6"-3&1035r/PUFTUPUIF'JOBODJBM4UBUFNFOUT 75
Thousand AOA Write-offs/ Gross fixed assets 2013 Additions settlements Transfers 2014 INTANGIBLE FIXED ASSETS 6,726,280 503,936 (221,290) 250,580 Automatic data processing system 1,255,213 198,413 (41) 257,792 Works in rented properties 4,291,239 150,824 (221,249) 142,952 Advances for intangibles 56,454 154,699 - (150,164) Other intangibles 1,123,374 - - - TANGIBLE FIXED ASSETS 11,071,052 3,483,876 (165,975) 7,100,346 Buildings and land 2,300,321 2,926,206 - 6,425,139 Major repairs and improvements 5,061,644 91,756 - 100,980 Furniture and material 425,388 46,185 (1,200) 2,060 Machines and tools 851,059 41,998 - 122,727 Transport material and IT equipment 1,065,320 150,582 (149,962) 375,341 Other 1,367,320 227,149 (14,813) 74,099 FIXED ASSETS IN PROGRESS 6,426,146 1,366,590 (7,887) (7,350,926) Fixed assets for own use 5,794,945 892,056 (4,523) (6,567,179) Advances for tangibles 344,932 246,731 (3,363) (454,318) Others in progress 286,269 227,803 (1) (329,429) 24,223,478 5,354,402 (395,152) -
The additions to the heading Tangible fixed assets – Buildings and land include the amount of 2,874,450 thousand AOA relative to the Cidade Financeira apartments which had been classified as Assets not for own use in 2014. Thousand AOA Accumulated amortisation/ Write-offs/ Amort/Depr. depreciation 2014 settlements Transfers 2015 for the year 2015 INTANGIBLE (2,545,553) 207,202 (41,226) (798,366) FIXED ASSETS Aut. data proc. system (1,100,992) 1,706 - (345,119) Works in rented (886,787) 205,496 (89,583) (450,812) properties Other intangibles (557,774) - 48,357 (2,435) TANGIBLE (2,823,710) 50,649 41,226 (980,948) IXED ASSETS
Buildings and land (220,703) 167 32,859 (198,288)
Major repairs and (442,967) 30,857 57,792 (109,829) improvements
Furniture and material (197,144) 1,278 192 (50,102)
Machines and tools (540,501) (93,885) 1,309 (179,017) Transport material and IT (842,414) (6,533) 17,059 (267,813) equipment Advances for fixed assets (579,981) 118,765 (67,985) (175,899) (5,369,263) 257,851 - (1,779,314) 76 /PUFTUPUIF'JOBODJBM4UBUFNFOUTr"//6"-3&1035r 2015
Thousand AOA Accumulated amortisation/ Write-offs/ Amort/Depr. depreciation 2013 settlements Transfers 2014 for the year 2014 INTANGIBLE (2,149,312) 116,732 51 (513,024) FIXED ASSETS Key money 5,320 (5,320) - - - - Aut. data proc. system (804,165) 1 - (296,828) Works in rented (802,767) 116,731 51 (200,802) properties Other intangibles (547,700) 5,320 - (15,394) TANGIBLE (2,215,766) 153,581 (51) (761,474) FIXED ASSETS
Buildings and land (113,644) - (39,306) (67,753)
Major repairs and (344,235) 239 39,286 (138,257) improvements
Furniture and material (153,858) 539 - (43,825)
Machines and tools (374,025) - - (166,476) Transport material and IT (782,064) 146,901 - (207,251) equipment Advances for fixed assets (447,940) 5,902 (31) (137,912) (4,365,078) 270,313 - (1,274,498)
14. DEPOSITS
As at 31 December 2015 and 2014, the demand deposits heading is detailed as follows: Thousand AOA 2015 2014 /BUJPOBM 'PSFJHO National Foreign $VSSFODZ $VSSFODZ 5PUBM Currency Currency Total DEMAND DEPOSITS – RESIDENTS Public sector 1,940,488 679,975 2,620,463 Private sector 75,109,333 16,206,678 91,316,011 77,049,821 16,886,653 93,936,474 DEMAND DEPOSITS 1,644,306 402,096 2,046,402 – NON-RESIDENTS DEMAND DEPOSITS 78,694,127 17,288,749 95,982,876 2015r"//6"-3&1035r/PUFTUPUIF'JOBODJBM4UBUFNFOUT 77
As at 31 December 2015 and 2014, term deposits showed the following structure by currency and type:
Thousand AOA 2015 2014 /$ FC 5PUBM NC FC Total TERM DEPOSITS – RESIDENTS Public sector 601,265 23,822 625,087 Private sector 44,358,627 39,328,745 83,687,372 44,959,892 39,352,567 84,312,459 TERM DEPOSITS 454,264 150,312 604,576 – NON-RESIDENTS TERM DEPOSITS 45,414,156 39,502,879 84,917,035
As at 31 December 2015 and 2014, the term deposits of Customers in portfolio showed the following structure, according to their residual duration:
Thousand AOA 2015 2014 MATURITY PERIOD Up to 3 months 35,776,120 3 to 6 months 21,447,050 6 months to 1 year 27,693,865 Over 1 year - - 84,917,035
15. LIQUIDITY FUNDING
As at 31 December 2015 and 2014, these headings are detailed as follows: Thousand AOA 2015 2014 FC /$ FC 1 to 2 "WFSBHF 6QUP 1 to 3 3 to 6 "WFSBHF Up to 1 1 to 3 3 to 6 Average 5PUBM Total ZFBST SBUF XFFL NPOUIT NPOUIT 5PUBM SBUF week months months rate TERM Funds raised from national credit –– ––– –– institutions
Funds raised from credit institutions ––– 4,809,583 6,778,433 5,030,146 16,618,162 3.05% abroad
LIQUIDITY – – 4,809,583 6,778,433 5,030,146 16,618,162 – FUNDING 78 /PUFTUPUIF'JOBODJBM4UBUFNFOUTr"//6"-3&1035r 2015
16. LIABILITIES IN THE PAYMENT SYSTEM
As at 31 December 2015 and 2014, these headings are detailed as follows: Thousand AOA 2015 2014 /$ FC NC FC
OWN FUNDS IN TRANSIT
Own funds in transit 66,875 – CLEARING OF CHEQUES AND OTHER PAPERS Bank cheques – 182,075 – Certified cheques – 294,350 – EMIS clearing 875 –– OTHER OPERATIONS PENDING SETTLEMENT Orders payable 1,336,398 210,610 1,812,823 210,610 2,023,433
The heading Clearing of cheques and other papers represents the value of the Bank cheques and certified cheques that have been issued and are yet stated in the clearing.
The heading Other operations pending settlement refers to the value of payment orders that are made at two days.
17. FOREIGN EXCHANGE TRANSACTIONS
As at 31 December 2015 and 2014, this heading is detailed as follows: Thousand AOA 2015 2014 SALE OF CURRENCY National currency – 1,544,895 Foreign currency 1,096,891 2,641,786
As at 31 December 2015, the heading in Foreign currency includes the amount of 2,303,515 thousand AOA, relative to a USD/EUR swap operation, with the counterpart being Banco Comercial Português.
The values relative to the sale of currency are presented in Note 9. 2015r"//6"-3&1035r/PUFTUPUIF'JOBODJBM4UBUFNFOUT 79
18. OTHER LIABILITIES
As at 31 December 2015 and 2014, this heading is detailed as follows: Thousand AOA 2015 2014 /$ FC NC FC OTHER TAX RELATED LIABILITIES Stamp Duty 53.826 781 Urban Property Tax – 2.630 1.120 Withholding Law 7/97 ––16.985 5.342 Provisional tax withheld on provision –– of services Industrial Tax – 1.018.032 – Consumption Tax – 207 243
Tax on Dependent Income 104 – 255 –
Capital Gains Tax 3.515 14.385
Provision for deferred tax charges – 128.773 –
1.224.016 21.871 OTHER CIVIL RELATED LIABILITIES Payables due to acquisition of assets and rights Suppliers 2.772 2.635 Miscellaneous payables Rents payable ––3.583 – Assistance contracts – 252.859 – Other services provided – 211.045 – Other values withheld in favour of – – 904.683 BCP CDI deferred fees – Other 337.476 2.315 807.735 909.633 OTHER LIABILITIES OF ADMINISTRATIVE NATURE Staff, wages and remunerations 752.323 – Other – 7.644 – 759.967 – 3.723.222
As at 31 December 2015, the heading Staff, wages and remunerations corresponds to values already recorded as costs but that have not yet been paid-up. 80 /PUFTUPUIF'JOBODJBM4UBUFNFOUTr"//6"-3&1035r 2015
As at 31 December 2015, the heading Industrial Tax records the amount of 1,111,065 thousand AOA, relative to Industrial Tax payable, as mentioned in Note 21.
Pursuant to Law number 19/14 of 22 October, the value of Industrial Tax is calculated by applying a rate of 30% on taxable earnings.
The heading Provisions for deferred tax charges refers to deferred tax liabilities, derived from calculating the fair value of the portfolio of securities.
As at 31 December 2015, the heading Other values withheld in favour of BCP corresponds to the value of credit that has been paid by Customers of Banco Comercial Português at Banco Millennium Angola, awaiting authorisation from Banco Nacional de Angola for its transfer.
As at 31 December 2015 and 2014, the deferred tax liabilities generated by temporary differences are of the following nature: Thousand AOA 2015 2014 Central Bank securities - - Treasury Bills 7,561 Treasury Bonds 49,613 Treasury Bonds indexed to the USD and in foreign currency 71,598 DEFERRED TAX LIABILITIES 128,772
The Bank records deferred tax liabilities in the calculation of securities against the heading of reserves, assuming the existence of future taxable earnings and based on the tax legislation in force.
19. PROVISIONS
Thousand AOA 2015 Balance Recovery/ Exchange rate Balance 31/12/2014 Reinforcement Annulment Uses differences 31/12/2015 Credit – Risk levels 7,793,500 14,691,993 (7,994,937) (1,799,900) 726,708 13,417,364 (Note 10) Signature credit 466,606 217,773 (163,459) - 6,469 527,389 Miscellaneous risks 234,144 153,224 (12,914) (44,300) 6,405 336,559 (Note 11) Retirement/Survival 196,055 - (196,055) - - - pensions 8,690,305 15,062,990 (8,367,365) (1,844,200) 739,582 14,281,312
Thousand AOA 2014 Balance Recovery/ Exchange rate Balance 31/12/2013 Reinforcement Annulment Uses differences 31/12/2014 Credit – Risk levels 5,198,841 2,523,951 - (20,305) 91,013 7,793,500 (Note 10) Signature credit 392,671 195,224 (121,289) - - 466,606 Miscellaneous risks 185,763 58,381 - (10,000) - 234,144 (Note 11) Retirement/Survival 151,916 44,139 - - - 196,055 pensions 5,929,191 2,821,695 (121,289) (30,305) 91,013 8,690,305 2015r"//6"-3&1035r/PUFTUPUIF'JOBODJBM4UBUFNFOUT 81
The provision for Miscellaneous risks aims to meet estimated costs and potential losses arising from the Bank's activity (Fraud), as mentioned in Note 11.
The provisions for credit and signature credit are made pursuant to the accounting principles described in 3.2.4 of Note 3.
20. SHARE CAPITAL AND MOVEMENT IN EQUITY
SHARE CAPITAL The value recorded under the heading Share Capital corresponds to the direct investment made by the Shareholders. On 15 May 2008, a partnership agreement was concluded between Millennium BCP, the Angolan State oil-producer Sonangol and Banco Privado Atlântico, S.A. (BPA), which covered the entry of these entities in the share capital of Banco Millennium Angola (BMA) and the acquisition by BMA of a 10% holding in the share capital of BPA.
In January 2012, the deed of the share capital increase was registered, which enabled the entry of the new Shareholder, Globalpactum.
As at 31 December 2015 and 2014, the Bank's shareholder structure is as follows:
2015 2014 /VNCFSPGTIBSFT Number of shares % BCP África, SGPS, Lda 4,998,000 50.08% BCP Investment Bank B.V. 500 500 0.01% BCP Bank & Trust Company Ltd 500 500 0.01% BCP Finance Bank LTD 500 500 0.01% BCP Finance Company 500 500 0.01% Sonangol 2,984,032 29.90% BPA 1,497,006 15.00% Globalpactum 499,002 5% 9,980,040 100.00%
EARNINGS PER SHARE The earnings per share are obtained by dividing the Bank's net income by the number of shares.
2015 2014 Earnings per share 0.606
RESERVES AND FUNDS Thousand AOA 2015 2014 RESERVES AND FUNDS Adjustment to the fair value of financial assets available for sale 300,471 Legal reserve 3,934,908 Other reserves 24,105,930 28,341,309
Pursuant to the current legislation, the Bank should reinforce the legal reserve on an annual basis by 10% of the net income. For this purpose, a minimum of 10% of the net income of the previous year is transferred annually to this reserve. This reserve may be used to cover accumulated losses only when all other constituted reserves have been depleted. 82 /PUFTUPUIF'JOBODJBM4UBUFNFOUTr"//6"-3&1035r 2015
21. TAXES
The Bank is subject to Industrial Tax and considered, for tax purposes, a Group A taxpayer. Its income is taxed under the terms of number 1 of article 64 of Law number 19/14, of 22 October, with the applicable tax rate being 30% (3.2.9. of Note 3).
As at 31 December 2015 and 2014, the calculation for purposes of determining the industrial contribution may be detailed as follows: Thousand AOA 2015 2014 EARNINGS BEFORE TAXES 6,759,233 Value to be deducted (3,473,811) Value to be added 108,018 TAXABLE PROFIT 3,393,440 Nominal tax rate 30% CALCULATED CURRENT TAX 1,018,032 DEFERRED TAX - NET INCOME FOR THE PERIOD 5,741,201 Effective tax rate 15.1%
The value to be deducted identified above refers to the interest of public debt securities (Treasury Bonds and Treasury Bills), as well as the dividends receivable from Banco Privado Atlântico, S.A., which essentially correspond to income subject to capital gains tax, thus being deductible for purposes of determining the tax base, up to its concurrence for the year, as established in article 47 of the Industrial Tax Code.
22. BALANCES AND TRANSACTIONS WITH RELATED ENTITIES
According to International Accounting Standard (IAS) 24, related entities are considered those where BMA exercises, directly or indirectly, a significant influence on their management and financial policy and, the entities which exercise a significant influence on the Bank's management. 2015r"//6"-3&1035r/PUFTUPUIF'JOBODJBM4UBUFNFOUT 83
As at 31 December 2015 and 2014, the main balances and transactions maintained with related entities are as follows:
Thousand AOA BMA Shareholders and Participated Companies
Members of the Board of 2015 Mbcp Group Sonangol BPA AMA Directors of BMA Total DISPOSABLE ASSETS Sight deposits at credit institutions 6,116,838 - - - - 6,116,838 LIQUIDITY INVESTMENTS Capital 10 - 6,585,662 - - 6,585,672 Interest and equivalent income 1,252 - 337,366 - - 338,618 LOANS GRANTED Capital - 1,257,345 - - - 1,257,345 Interest and equivalent income - 113,209 - - - 113,209 BANK OVERDRAFTS Capital 344,186 - - - - 344,186 Interest and equivalent income 11,638 - - - - 11,638 DEPOSITS Demand deposits - 2,905,836 - 3,317 30,629 2,939,782 Term deposits - 6,686,886 - - 332,514 7,019,400 Interest and equivalent costs - - - - 11,116 11,116 OTHER LIABILITIES Other payables 1,190,100 - - - - 1,190,100 Accrued costs 12,558 - - - - 12,558 LIQUIDITY FUNDING Capital 19,414,280 - - - - 19,414,280 Interest and equivalent income 396,978 - 86,973 - - 483,951 FEES – INCOME - 7,649 - 273 7,922 FEES – COSTS 383,756 - - - - 383,756 ADMINISTRATIVE COSTS 277,852 - - - - 277,852 DIVIDENDS Dividends and other income - - 806,739 - - 806,739 receivable from BPA Earnings from financial fixed assets - - 303,223 - 303,223 INTEREST OF DIVIDENDS Interest and equivalent costs - - 58,161 - - 58,161 FOREIGN EXCHANGE TRANSACTIONS Foreign currency purchases 2,660,976 - - - - 2,660,976 Foreign currency sales 2,673,703 - - - - 2,673,703 FOREIGN EXCHANGE SWAPS Currency swaps (assets) 31,784 - - - - 31,784 Currency swaps (liabilities) 19,665 - - - - 19,665 GUARANTEES PROVIDED Guarantees provided - 172,911 - - - 172,911 GUARANTEES RECEIVED Guarantees received 2,214,194 - - - - 2,214,194 CREDIT LINES Unused limit ------84 /PUFTUPUIF'JOBODJBM4UBUFNFOUTr"//6"-3&1035r 2015
Thousand AOA BMA Shareholders and Participated Companies
Members of the Board of 2014 Mbcp Group Sonangol BPA AMA Directors of BMA Total DISPOSABLE ASSETS Sight deposits at credit 101,838--- -101,838 institutions LIQUIDITY INVESTMENTS Capital - - 4,937,424 - - 4,937,424 Interest and equivalent income 4,875 - 293,798 - - 298,673 LOANS GRANTED Capital - 990,959 - - - 990,959 Interest and equivalent income - 76,380 - - - 76,380 BANK OVERDRAFTS Capital 193,081--- -193,081 Interest and equivalent income 13,093--- -13,093 DEPOSITS Demand deposits - 6,999,583 - 4,682 24,216 7,028,481 Term deposits ----199,677 199,677 Interest and equivalent costs ----6,922 6,922 LIQUIDITY FUNDING Capital 16,322,408 - - - - 16,322,408 Interest and equivalent income 416,168--- -416,168 FEES – COSTS 43,429--- -43,429 Values receivable - - 477,507 - - 477,507 Earnings from financial fixed - - 405,481 - - 405,481 assets FOREIGN EXCHANGE TRANSACTIONS Foreign currency purchases 1,051,638 - - - - 1,051,638 Foreign currency sales 750,900--- -750,900 GUARANTEES RECEIVED Guarantees received 21,396--- -21,396 CREDIT LINES Unused limit 834,342--- -834,342 2015r"//6"-3&1035r/PUFTUPUIF'JOBODJBM4UBUFNFOUT 85
23. BALANCE BY CURRENCY
As at 31 December 2015 and 2014, the Bank's balances by currency show the following composition:
Thousand AOA 2015 Code Description AKZ USD EUR Other Total 110 Disposable assets 68,335,834 11,092,330 835,013 384,657 80,647,834 12010 Inter-money market transactions - 6,585,662 - - 6,585,662 Purchase of third party securities with 12020 ----- repurchase agreement 12040 Investments in gold and other precious metals 2,210---2,210 13010 Trading - 329,930 - - 329,930 13020 Available for sale 10,413,667 64,700,121 - - 75,113,788 13030 Held to maturity 9,954,240 - - - 9,954,240 140 Derivative financial instruments 31,784---31,784 150 Loans in the payment system 130,420 - 20,639 - 151,059 160 Foreign exchange transactions 1,262,877 21,951 2,660,976 - 3,945,804 17010 Loans 117,765,713 29,161,344 9,038 - 146,936,095 17090 (-) Provisions for bad debt (10,652,254) (2,765,110) - - (13,417,364) 180 Other values 4,827,209 709,476 (20,639) - 5,516,046 190 Fixed assets 27,117,003 - - - 27,117,003 TOTAL ASSETS 229,188,703 109,835,704 3,505,027 384,657 342,914,091 21010 Demand deposits 111,561,702 17,775,373 1,009,218 592 130,346,885 21020 Term deposits 71,287,108 45,730,050 1,746,814 - 118,763,972 22010 Inter-money market transactions 11,562,245 19,791,980 432,889 - 31,787,114 240 Derivative financial instruments 19,665---19,665 250 Liabilities in the payment system 1,725,906 5,262,663 11,830 - 7,000,399 260 Foreign exchange transactions - 3,613,582 125,141 - 3,738,723 27080 Other funding raised ----- 280 Other liabilities 2,831,466 2,842,288 58,941 - 5,732,695 290 Provisions for probable liabilities 496,493 - 30,896 - 527,389 TOTAL LIABILITIES 199,484,585 95,015,936 3,415,729 592 297,916,842 410 Share capital 4,009,894 - - - 4,009,894 430 Reserves and funds 33,782,040 - - - 33,782,040 5 Net income for the year 6,759,876 - - - 6,759,876 440 Adjustments to fair value of financial assets 445,439---445,439 TOTAL EQUITY 44,997,249 - - - 44,997,249 TOTAL LIABILITIES + EQUITY 244,481,834 95,015,936 3,415,729 592 342,914,091 86 /PUFTUPUIF'JOBODJBM4UBUFNFOUTr"//6"-3&1035r 2015
Thousand AOA 2014 Code Description AKZ USD EUR Other Total 110 Disposable assets 23,772,429 10,655,717 1,952,551 303,212 36,683,909 12010 Inter-money market transactions 7,000,333 4,938,223 - - 11,938,556 Purchase of third party securities with 12020 ----- repurchase agreement 12040 Investments in gold and other precious metals 2,225---2,225 13020 Available for sale 23,289,739 855,986 - 21,681,091 45,826,816 150 Loans in the payment system 250,235 669 9,474 241 260,619 160 Foreign exchange transactions 347,348 1,551,754 751,170 - 2,650,272 17010 Loans 92,527,052 32,973,773 40,924 - 125,541,749 17090 (-) Provisions for bad debt (5,956,658) (1,836,842) - - (7,793,500) 180 Other values 2,053,051 727,699 1,995 - 2,782,746 190 Fixed assets 26,775,291 - - - 26,775,291 TOTAL ASSETS 170,061,045 49,866,979 2,756,115 21,984,544 244,668,683 21010 Demand deposits 78,694,128 16,506,604 781,728 415 95,982,875 21020 Term deposits 45,414,156 38,863,538 639,341 - 84,917,035 22010 Inter-money market transactions - 15,450,215 1,044,466 123,481 16,618,162 250 Liabilities in the payment system 1,812,823 209,585 1,025 - 2,023,433 260 Foreign exchange transactions 1,544,895 1,044,084 52,549 258 2,641,786 27080 Other funding raised 7,105---7,105 280 Other liabilities 2,791,719 923,108 5,546 2,849 3,723,222 290 Provisions for probable liabilities 662,661---662,661 TOTAL LIABILITIES 130,927,487 72,997,134 2,524,655 127,003 206,576,279 410 Share capital 4,009,894 - - - 4,009,894 430 Reserves and funds 28,040,838 - - - 28,040,838 5 Net income for the year 5,741,201 - - - 5,741,201 440 Adjustments to fair value of financial assets 300,471---300,471 TOTAL EQUITY 38,092,404 - - - 38,092,404 TOTAL LIABILITIES + EQUITY 169,019,891 72,997,134 2,524,655 127,003 244,668,683
As at 22 January 2016, Banco Nacional de Angola sent BMA a letter with clarifications concerning the exchange rate to be considered in the preparation of the financial statements as at 31 December 2015. This letter indicated that, although the AOA/USD exchange rate to be used should be 135.315, as published on the website of Banco Nacional de Angola, the Bank should also present the impacts derived from the exchange rate variation which occurred between 31 December 2015 and 4 January 2016 in the "explanatory notes" to the financial statements. 2015r"//6"-3&1035r/PUFTUPUIF'JOBODJBM4UBUFNFOUT 87
To this effect, the Bank considered the exchange rate of 155.612 AOA/USD and 154.838 AOA/USD to convert the balance sheet values denominated in USD and indexed to the USD, respectively. The estimated impacts on the main indicators are detailed in the following table: Thousand AOA &YDIBOHF3BUF Exchange Rate Heading 4.1.2016 Loans 137,000,870 Total assets 358,911,974 Deposits 258,636,553 Total liabilities 312,715,495 Net income 7,916,974 Total equity 46,196,479
24. NET INTEREST INCOME
As at 31 December 2015 and 2014, this heading is detailed as follows: Thousand AOA 2015 2014 INCOME FROM LIQUIDITY INVESTMENTS 512,046 Income from inter-financial money market transactions From inter-money market transactions 160,810 Term deposits at credit institutions abroad 4,875 Term deposits at national credit institutions 283,064 Income from purchase of securities from third parties – 63,297 with repurchase agreement INCOME FROM SECURITIES 3,068,330 From trading securities Treasury Bonds in national currency indexed to foreign currency – and in foreign currency From securities available for sale Treasury Bills 1,103,682 Treasury Bonds in national currency indexed to foreign currency 1,964,648 and in foreign currency INCOME FROM LOANS 12,483,961 INCOME FROM FINANCIAL INSTRUMENTS (ASSETS) 16,064,337 COSTS OF DEPOSITS 4,249,010 Demand deposits 21,051 Term deposits 4,227,959 LIQUIDITY FUNDING COSTS 494,926 Inter-money market transactions 561 Term deposits at credit institutions abroad 493,782 Term deposits at national credit institutions 583 COSTS OF FINANCIAL INSTRUMENTS (LIABILITIES) 4,743,936 NET INTEREST INCOME 11,320,401
The heading "Income from Securities" refers to interest of Treasury Bonds and Treasury Bills issued by the Angolan State which are exempt from industrial tax and subject to capital gains tax when issued from January 2013 onwards (Note 21). 88 /PUFTUPUIF'JOBODJBM4UBUFNFOUTr"//6"-3&1035r 2015
25. EARNINGS FROM TRADING AND FAIR VALUE ADJUSTMENTS
As at 31 December 2015 and 2014, this heading is detailed as follows: Thousand AOA 2015 2014 TRADING SECURITIES Treasury Bonds indexed to the USD exchange rate - SECURITIES AVAILABLE FOR SALE Treasury Bonds indexed to the USD exchange rate - EARNINGS FROM TRADING AND FAIR VALUE ADJUSTMENTS -
26. EARNINGS FROM FOREIGN EXCHANGE TRANSACTIONS
As at 31 December 2015 and 2014, the heading of earnings from foreign exchange transactions is detailed as follows: Thousand AOA 2015 2014 1SPàU -PTT /FU Profit Loss Net Earnings from: Notes and coins - - (30,436) (30,436) Foreign currencies - 3,395,243 - 3,395,243 EARNINGS FROM FOREIGN EXCHANGE - 3,395,243 (30,436) 3,364,807 TRANSACTIONS 2015r"//6"-3&1035r/PUFTUPUIF'JOBODJBM4UBUFNFOUT 89
27. EARNINGS FROM FINANCIAL SERVICES RENDERED
As at 31 December 2015 and 2014, this heading is detailed as follows: Thousand AOA 2015 2014 INCOME FROM SERVICES RENDERED 5,026,689 Credit card fees 1,529,496 Documentary credit fee 544,961 Electronic clearing fee 357,421 Fee for guarantees provided 443,234 Leasing and factoring fee 155,198 Account management and maintenance fee 373,913 Transfer fee 608,025 Loan management fee 381,972 Fee for renewal of pledged current accounts 92,917 Loan opening fee 204,565 Cash withdrawal fee 174,946 Fee for blocking pledged current accounts 67,050 Fee on sales of foreign currency 84,482 Fee on purchase and sale of securities - Documentary remittance fee 6,397 Other income from services rendered 2,112 COSTS RELATED TO FEES AND CUSTODY 822,377 Fees – VISA 311,710 Electronic clearing fees 432,089 Other costs related to fees 78,578 EARNINGS FROM FINANCIAL SERVICES RENDERED 4,204,312 90 /PUFTUPUIF'JOBODJBM4UBUFNFOUTr"//6"-3&1035r 2015
28. STAFF
As at 31 December 2015 and 2014, this heading is detailed as follows: Thousand AOA 2015 2014 MEMBERS OF THE MANAGEMENT AND SUPERVISORY BODIES 183,338 Basic retribution 140,067 Representation allowance 24,527 Allowances (Christmas + Holidays) 18,744 EMPLOYEES 4,043,443 Basic retribution 2,247,290 Other additional remunerations 112,757 Allowances 758,705 Social Security 264,904 Time exemption 111,418 Health expenses 206,865 Other expenses 341,504 STAFF 4,226,781
As at 31 December 2015 and 2014, the number of Employees at the Bank stood 1,224 and 1,107, respectively.
29. EXTERNAL SUPPLIES
As at 31 December 2015 and 2014, this heading is detailed as follows: Thousand AOA 2015 2014 Maintenance and repair 443,887 Hire and rental charges 836,372 IT services 382,996 Security and surveillance services 434,918 Communications 350,204 Transport 313,912 Publications, advertising and publicity 328,020 Other specialised services 192,625 Energy and fuel 127,264 Cleaning services 162,532 Travel, hotel and representation costs 248,508 Staff recruitment and training 87,362 Insurance 38,948 Auditors and consultants 41,538 Retainers and fees 88,313 Consumables 111,002 Water 29,747 EXTERNAL SUPPLIES 4,218,148 2015r"//6"-3&1035r/PUFTUPUIF'JOBODJBM4UBUFNFOUT 91
30. OTHER ADMINISTRATIVE AND MARKETING COSTS
As at 31 December 2015 and 2014, this heading is detailed as follows: Thousand AOA 2015 2014 TAXES AND RATES NOT INCIDENT ON EARNINGS 215,724 Customs duties 970 3,595 Rates 16,693 Other taxes 195,436 PENALTIES APPLIED BY REGULATORY AUTHORITIES 1,268 DEPRECIATION AND AMORTISATION 1,274,498 Tangible fixed assets 761,474 Intangible fixed assets 513,024 OTHER ADMINISTRATIVE AND MARKETING COSTS 1,491,490
31. OTHER OPERATING INCOME AND COSTS AND PROVISIONS FOR OTHER VALUES AND PROBABLE LIABILITIES
As at 31 December 2015 and 2014, this heading is detailed as follows: Thousand AOA 2015 2014 MISCELLANEOUS COSTS AND LOSSES (I) 159,193 Costs related to levies 24,031 Costs related to insurance sales 30,000 Other costs 105,162 MISCELLANEOUS INCOME (II) 337,932 Income from miscellaneous services rendered 134,777 Reimbursement of communication and dispatch costs 41,104 Income from insurance sales 69,734 Income from recovered loans and interest 48,201 Other income 44,116 OTHER OPERATING COSTS AND INCOME (II)-(I) 178,739 Indemnities for breach of contract 3,400 Provisions for supplementary retirement pensions (44,138) Other provisions (58,381)
PROVISIONS FOR OTHER VALUES AND PROBABLE LIABILITIES -99,119
79,620 92 /PUFTUPUIF'JOBODJBM4UBUFNFOUTr"//6"-3&1035r 2015
32. EARNINGS FROM FINANCIAL FIXED ASSETS
As at 31 December 2015 and 2014, this heading is detailed as follows: Thousand AOA 2015 2014 Gains on financial fixed assets 405,481 Losses on financial fixed assets - - EARNINGS FROM FINANCIAL FIXED ASSETS 405,481
As at 31 December 2015 and 2014, the heading Gains on financial fixed assets refers to announced dividends to be distributed by BPA.
33. NON-OPERATING EARNINGS
As at 31 December 2015 and 2014, this heading is detailed as follows: Thousand AOA 2015 2014 Capital gains of tangible fixed asset divestment 33,276 Capital gains of intangible fixed asset divestment - Capital losses of tangible fixed asset divestment (110,128) Gains and losses relative to previous years - Loss through equity method - (4,230) NON-OPERATING EARNINGS (81,082) 2015r"//6"-3&1035r/PUFTUPUIF'JOBODJBM4UBUFNFOUT 93
34. OFF-BALANCE SHEET ITEMS
As at 31 December 2015 and 2014, this heading is detailed as follows: Thousand AOA 2015 2014 THIRD PARTY LIABILITIES 268,226,841 Irrevocable credit lines - 834,342 Guarantees received 266,482,066 Asset option – Sale of securities 910,433 LIABILITIES TO THIRD PARTIES 28,240,402 Guarantees provided 17,717,144 Documentary credit 10,523,258 Revocable commitments to third parties 10,549,204 LIABILITIES DUE TO SERVICES PROVIDED 66,384,617 Deposit and custody of values by third parties 45,546,833 Deposit and custody of values by the entity 18,905,001 Collection of values 1,932,783 SECURITIES HELD TO MATURITY - Securities held to maturity - FOREIGN EXCHANGE TRANSACTIONS 5,291,953 Purchase of foreign currency payable 2,650,272 Sale of foreign currency receivable 2,641,681 PRESENT VALUE OF LOAN OPERATIONS 130,487,741 Loans maintained in the assets 128,410,977 Loans transferred to loss 2,076,764 OTHER CONTROL ACCOUNTS 74,864,711 94 /PUFTUPUIF'JOBODJBM4UBUFNFOUTr"//6"-3&1035r 2015
As at 31 December 2015 and 31 December 2014, the provisions for guarantees provided amounted to 265,681 thousand AOA and 261,722 thousand AOA.
As at 31 December 2015 and 31 December 2014, the guarantees received by the BCP Group amounted to 2,214,193 thousand AOA and 21,396 thousand AOA.
35. SUBSEQUENT EVENTS
TRANSITION TO THE INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS)
*NQBDUPOUIFDPOWFSTJPOPG#."hTBDDPVOUT BMA's financial statements presented were prepared in accordance with the accounting principles established in the Accounting Plan for Financial Institutions (CONTIF), as defined in BNA Instruction 09/07, of 19 September, and subsequent updates, namely Directive 04/DSI/2011, which establishes the compulsory adoption of the international financial reporting standards (IFRS) for all matters related to accounting procedures and criteria which are not established in the CONTIF.
Under the process of adoption of the IFRS by financial institutions in Angola, following the guidelines issued by the BNA, and considering the timings defined for the accomplishment of the conversion process, BMA is currently initiating its conversion process, but has not yet undertaken a qualitative and quantitative assessment of the possible differences which may arise from changing its accounting rules.
The supervisory entities and the International Accounting Standards Board (IASB) continue to develop rules which might affect the differences between the CONTIF and IFRS described in this Note, as well as differences in future Financial Statements.
1MBOGPSDPOWFSTJPOUPUIF*'34 In 2015, BMA started its conversion plan with a view to preparing its Financial Statements pursuant to the IFRS from 1 January 2016 onwards, on other words, with the first Financial Statements published in accordance with the IFRS as at 31 December 2016.
The plan defined by BMA also seeks to comply with all the interim reports requested by the BNA under the conversion process.
36. RELEVANT FACTORS
A merger of Banco Millennium Angola and Banco Privado Atlântico was agreed during 2105, which was submitted to Banco Nacional de Angola for appraisal and approval.
With over two thousand Employees, one hundred and fifty Branches all over the country and over half a million Customers, the new institution shall create synergies and economies of scale, which shall enable providing an offer more directed at the challenges and needs of families, including a strong commitment towards the growth of banking inclusion, through its national network and offer of digital banking technological solutions. The new scale of intervention also aims to create new solutions for small and medium-sized enterprises operating in Angola, which are the foundations of employment generation, as occurs in all countries that are under a process of economic diversification and sustainability. 2015r"//6"-3&1035r1SPQPTFE"QQSPQSJBUJPOPG/FU*ODPNF 95
PROPOSED APPROPRIATION OF NET INCOME
Considering the legal and statutory provisions relative to the legal reserve and special reserves;
Under the terms of the special regulations of Banco Nacional de Angola, namely number 1 of article 89 of the Financial Institutions Law, of Instruction 09/07, of the prudential rules issued by the Supervisor and of article 35 of the Articles of Association of Banco Millennium Angola, the proposed appropriation of the net income for 2015, amounting to 6,759,876,296.92 AOA, is as follows: a) 1,351,975,259.38 to the Legal Reserve; b) 5,407,901,037.54 for reinforcement of the Free Reserves and/or distribution to the shareholders, as decided at the General Meeting.
96 *OEFQFOEFOU"VEJUPSTh3FQPSUr"//6"-3&1035r 2015
INDEPENDENT AUDITORS' REPORT 2015r"//6"-3&1035r*OEFQFOEFOU"VEJUPSTh3FQPSU 97 98 0QJOJPOPGUIF4VQFSWJTPSZ#PBSEPOUIF"DDPVOUTPGr"//6"-3&1035r 2015
OPINION OF THE SUPERVISORY BOARD ON THE ACCOUNTS OF 2015
Honourable Members of the Board of Directors
1. Under the duties entrusted to the Supervisory Board, pursuant to articles 21 to 30 of the Articles of Association of Banco Millennium Angola, S.A., this Governing Body, composed of Miguel Anacoreta Correia (Chairman), Luzia Rosária de Fátima Oliveira de Lemos Neto, via attendance or using modern technologies to cover all the points raised and texts, performed their duties exclusively through supervision of the Bank’s activity and exclusively based on the accounts provided for the effect, in due time, by the Executive Committee.
2. Relative to the financial year of 2015, the Supervisory Board held meetings to examine the accounts of the four quarters of the year (based on budget control documents) and the Interim Report for the first semester. In these meetings, no aspect was detected that justified being specifically addressed in the Board of Directors' meetings. The Supervisory Board expressed a favourable opinion of all the aforesaid accounts.
On 25 February, the Supervisory Board examined the Financial Statements reported for the fourth quarter of 2015 and the full year of 2015, which merited its favourable opinion.
3. For the purposes of preparation of this Opinion, to be submitted to the appraisal of the Members of the Board of Directors and the Annual General Meeting for examination and voting on the accounts relative to the financial year of 2015, the elements described below were presented to the Supervisory Board:
a) Accounts for the financial year of 2015, accompanied by the Notes to the Financial Statements;
b) Report of the Independent Auditor.
4. The Supervisory Board carefully analysed the documents referred to above and drew the following conclusions from this appraisal:
a) That the Balance Sheet, as at 31 December 2015, appropriately reflects the financial situation of BMA – Banco Millennium Angola, S.A.;
b) That the Income Statement correctly portrays a Net Income of 6,759,875 thousand AOA for the year. 2015 r"//6"-3&1035r0QJOJPOPGUIF4VQFSWJTPSZ#PBSEPOUIF"DDPVOUTPG 99
5. As a result of the verification and analyses carried out, and in view of the complete audit of the annual Financial Statements, conducted by the External Auditor, as well as its favourable opinion, albeit subject to confirmation after decisions of the next Board of Directors' meeting, the Supervisory Board:
5.1. Is of the opinion that the Financial Statements of Banco Millennium Angola, S.A., reported as at 31 December 2015:
a) Are in conformity with the Law and comply with the statutory provisions, as well as the rules issued by Banco Nacional de Angola;
b) Reflect, in a true manner, the Bank's financial situation as at 31 December 2015, as well as the result of the operations carried out during 2015.
5.2. Its opinion is that the Board of Directors:
a) Should approve the Management Report of the Executive Committee and the Financial Statements accompanying this Report, relative to the financial year ended on 31 December 2015;
b) Record a vote of praise for the work developed by the Executive Committee and by the workers of the Bank.
Luanda, 25 January 2016
Miguel Anacoreta Correia, Chairman of the Supervisory Board
Luzia Rosária de Fátima Oliveira, 1st Member of the Supervisory Board
Madalena Adriano de Lemos Neto, 2nd Member of the Supervisory Board Annual Report 2015
Banco Millennium Angola, S.A. www.millenniumangola.ao
Head Office: Avenida de Portugal, n.º 77 Luanda, Angola
Share Capital: 4,009,893,495.15 AOA
Registered at Luanda Commercial Registry under number 425/06 and with legal person number 5 410 000 560
Published: May 2016
Graphic production: Choice – Comunicação Global, Lda.