Annual Report’1 6 BFA has pressed ahead on a steady growth path throughout 2016, reporting financial performance indicators, which once again strengthen our financial identity. – The BFA Fortress. 2016 in Review
+23%
Market leader in banking Number of BFA Employees services offering in December rose from 2016, with the following market shares: 1.365 First Digital Annual Report issued in Angola 2.610 in December 2015 Transactions registered on BODIVA 24,4% to Share of Debit Cards 26,3% 2.632 +64% eFormar Share of POS terminals In December 2016 increase over 2015 BFA secured 67% of the market share of registered 4.332 Hours of Training 56,0% +0,8% conducted via the eLearning Share of Visa Cards Growth rate over 2015 transactions in 2016. platform: eFormar
+8,4% AKZ +6,8% Net profit increase of Number of Customers BFA is the bank of choice of Sirius award in the in December 2016 “Best Financial Sector Company” reached 24.046 60,0% category. Amount stated in AOA million The Banker magazine Award for of Private Customers, “Bank of the Year in Angola 2016”. 1.571.107 according to the national +63,5% Customer Satisfaction Growth over 2015 EMEA Finance Award for survey. “Most Innovative Bank 2016”.
BFA Annual Report AKZ Public access to BFA’s Annual Report Increase of can be done through laptop or tablet. Asset Portfolio Growth to A Customer growth of with This Annual Report can be downloaded at 108.939 www.bfa.ao in AOA million in securities (TBonds and TBills) BFA Net Service The Bank keeps its buying 1.312.880 position with respect to securities, +7.147 in AOA million 39,4% +6,8% Securities Market Share over 2015
2 Banco de Fomento Angola | Annual Report’16 CONTENTS REPORT Message from the Executive Committee of the Board of Directors 4 Our Strategy 6 Vision, Values and Commitments 6 Strategy 7 How We Add Value 8 Key Indicators 10 Business Performance: 2014 – 2016 12 +23% Outlook for 2017 14 ECONOMIC ENVIRONMENT Market leader in banking Number of BFA Employees Global Economy 18 Angolan Economy 21 services offering in December rose from 2016, with the following Regulatory Changes 28 market shares: 1.365 First Digital Annual Report issued in Angola O BFA 2.610 Corporate Governance 34 in December 2015 Transactions registered on BODIVA Corporate Governance and Internal Control System 34 24,4% to Guiding Principles of Corporate Governance 34 Share of Debit Cards Shareholding and Governance Model 35 eFormar Composition of Governing Bodies 41 26,3% 2.632 +64% Organization Chart 41 Share of POS terminals In December 2016 increase over 2015 Executive Committee of the Board of Directors 42 Internal Control System 46 BFA secured 67% of the Remuneration of Governing Bodies 46 4.332 Hours of Training market share of registered Profit Appropriation Policy 47 56,0% +0,8% conducted via the eLearning Share of Visa Cards Growth rate over 2015 transactions in 2016. Ethical Principles and Conflict of Interest 48 platform: eFormar Risk Management System 49 Internal Reporting 50 Monitoring 51 Core Business Areas 52 Individuals and Companies 54 AKZ Investment Centres 58 +8,4% +6,8% Companies 60 Oil & Gas 64 Net profit increase of BFA is the bank of choice of Capital Market 65 Number of Customers Sirius award in the Business Development Unit 68 in December 2016 “Best Financial Sector Company” Human Resources 70 reached 24.046 category. Innovation & Technology 73 60,0% Payment System 76 Amount stated in AOA million The Banker magazine Award for BFA in Digital Banking 80 of Private Customers, “Bank of the Year in Angola 2016”. 1.571.107 according to the national Communication 82 +63,5% Customer Satisfaction Social Responsibility 89 Growth over 2015 EMEA Finance Award for Awards 92 survey. “Most Innovative Bank 2016”. RISK MANAGEMENT Governance and Organization of Risk Management 96 Credit Risk 99 BFA Annual Report Liquidity Risk 106 Public access to BFA’s Annual Report Foreign Exchange Risk 108 AKZ Interest Rate Risk 110 can be done through laptop or tablet. Increase of Operational Risk 112 Asset Portfolio Growth to Compliance Risk 116 A Customer growth of with This Annual Report can be downloaded at 108.939 www.bfa.ao FINANCIAL REVIEW in AOA million in securities (TBonds and TBills) BFA Net Service Financial Review 122 The Bank keeps its buying 1.312.880 Proposal for the Appropriation of Profits 133 position with respect to securities, in AOA million +7.147 FINANCIAL STATEMENTS AND NOTES Financial Statements 136 39,4% +6,8% Notes to the Financial Statements 140 Securities Market Share over 2015 Audit Report 212 Report and Opinion of the Supervisory Board 214
ANNEXES Glossary 218 BFA Contacts 222 Message from the Executive Committee of the Board of Directors
“The outlook for 2017 is for a moderate recovery, underpinned by a boost in global economy growth and prospects of commodity prices steadily higher than those prevailing in 2016.”
In the challenging macroeconomic environment that persisted institution, a position acknowledged by the several domestic and throughout 2016, BFA has pressed ahead on a steady growth international awards received in the course of the year. path throughout 2016, reporting financial performance indicators, which once again strengthen our financial identity MAIN FOCUS ON SERVICE QUALITY – The BFA Fortress. Two new Mystery Shopper Surveys were carried out A Fortress built on a strict and rigorous management model, strengthening the commercial team’s focus on the improvement permanently striving for improvement of Customer service of key issues of Customer service. In addition, the breadth and and fully dedicated to implementing and developing rules and depth of in-house training has also increased and our e-learning procedures that meet each and every challenge arising from platform, eFormar, now offers 19 courses and over 4 300 hours prudential regulations and the Anti-money Laundering and of training recorded. Terrorist Financing Scheme. BFA’s increasingly stronger electronic banking approach has STRONG GROWTH brought Customers closer and made access to the Bank more convenient. This translates into a marked improvement BFA’s net profit totalled 61.9 billion AOA (USD 377.2 million) in our feedback ability and efficiency concerning Customer in 2016, representing the highest result ever and an year-on- interactions. year growth of 63.5% (20.9% in USD). Hand-in-hand with these figures, the Bank reported high levels of efficiency The corporate website registered over 700 thousand visits and and profitability and a balance sheet showing high liquidity the homebanking and mobile banking services, BFA Net, BFA and capitalization, all of which are reflected in the following Net Empresas and BFA App, have been enhanced with new indicators: features linked to services payment. • Cost-to-income ratio stood at 32% (33% in 2015); • Return on Equity reached 41.4% in 2016 (33.6% in 2015); BFA’s Customer Support Line has enhanced its position as the • Loan-to-deposit ratio stood at 22%; preferred communication channel on issue clarification and • Regulatory Capital Adequacy Ratio reached 31.7%, well above complaint handling, recording a year-on-year 40% increase in the stipulated 10%. contacts received.
Such strong economic indicators are paired with a strong Systematic assessment of Customer Satisfaction began with a Customer acquisition performance. A record-breaking 160 nationwide survey which assesses and ranks BFA within a set 000 new Customers were achieved in 2016, taking the Bank’s of variables over its key competitors. The outcome is extremely Customer base over the 1.5 million mark. This figure strengthens positive when coupled with the favourable indicators disclosed BFA’s performance momentum in the retail banking area, in the AAMPS Luanda 20161. In this market research BFA was where once again it asserts itself as a benchmark financial ranked first for the second year running in areas such as swift
1Angola All Media & Products Study – Luanda 2016 (AAMPS). Market survey carried out by Marktest Angola.
4 Banco de Fomento Angola | Annual Report’16 application process. Thisapplication endeavour has made it possible to lay process. streamlining the Customer’s experience regarding the loan well as guarantees substantially as control loan over process available coupled with giving loan products, the Bank greater At this insurance exclusively are network. stage, early products market and available are throughout our commercial banking to underline that insurance placed have onthe been products is concerned, wewish offer and products services as far As OFFERING ONGOING DEVELOPMENT PRODUCT OF AND SERVICE initiatedprocess in 2014. 2016 and is in amilestone fact marking the end of acomplex innovationmain accounting/tax to occur important in and most currentlyare BFA’s financial standard. reporting key This was the International Financial Reporting Standards (IAS/IFRS) which Another topic of mention worthy the full was adoption of the following of mention: is worthy mitigatingat operational risk. Within this in area 2016 the Furthermore wecontinued aimed of measures onaset to work training.managerial staff and strengthening of effective tools, improvement of processes theat top of leading our agendas, to the implementation of more Anti-Money Laundering and Terrorist Financing, kept this matter and the customers globalfrom financialconcerning system stemming legislation from Pressures and regulation well as as REGULATORY CHALLENGES AND RISK MANAGEMENT which led us here. of endeavour with and ahead willingness degree look the same whileresults, increasing our responsibility and commitment to waiting time.and shortest Our motivation is driven by these customer support failures,troubleshooting, system best least in eMudar@BFA, namely incorporation of new processes • The to Processing the new Data migration• Application process allowed asignificant for clearing progress system • Check clearing. and wire deposit/check transfers the term deposit process, applications;and support and redundancy all for BFA including systems the central system (CPD)Centre in EMIS launched was in 2015 and full provides reduction of operational risk within the clearing procedure;
of it thesecurity provides. banking services improve the quality and the and standard of customer service continue to doall to in continuously power its and sustainably that BFA assured privilege them rest Theycan of will serving preference and confidence they have shown always and for the Lastly, aspecial of thanks word the for to our Customers the challenges in faced 2016. commitment, and diligence effort with which they have tackled you and acknowledgement goout to our Employees their for In marked by ayear achallenging economy, thank aheartfelt YOU THANK position within the Angolan banking sector. levels, thus strengthening BFA’s insurmountable market leading levels of liquidity and continuous improvement of efficiency levels and controlled high capital risk astrong base, exposure, thispreceding years; will coupled be with high operating revenue guidelinesstrategic that implemented have been the over thisAgainst backdrop, BFA will continue key to its deepen demand. credit slowdown, albeit high at in increase levels, and aprogressive 2016. Leading Global indicate organisations forecast an inflation material of raw consistently prices prospects in recorded above of the globalbacked by and accelerated growth economy the Angolan in is economy in 2017 economic to recovery amoderate facingDespite atangible in 2016, economic stagnant growth the 2017 position. leadership volumea 35.2% traded market share, strengthening market its BFA considerably was active in the BODIVA markets and secured diversifying solutions our Customers’ allocation for of resources. broadeningportfolio, the of range financial and products thereby able now we are to Investment incorporate Funds within BFA’s 2016.December Upon completion of this legalization process registration with the Securities Market in Commission occurred and the relevant S.A. Colectivos, de Organismos Gestora We have de BFA Activos incorporated –Sociedade Gestão insurance during portfolio 2017. the foundations the for development and diversification of the Report 5
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment AOur nos Strategysa Estratégia
VISÃO,VISION, VALORES VALUES E ANDCOMPROMISSOS COMMITMENTS
Vision Being the preferred Bank for all Angolans and playing a role in Angola's sustainable development Mission Innovation
Designing financial
solutions, products and
services that foster Closeness long-lasting relations with its Customers and Shareholders generate value for Add Value Shareholders
Transparency Angola Play a role in the development of the Angolan economy
Values Clients Assuring Staff satisfaction and service quality Focusing on personal and professional growth Commitments
8 6 Banco Banco de Fomento de Fomento Angola Angola | Relatório | Annual e ContasReport’16 2016 valores Inovação visão Transparência Proximdae de todososAngolanos C e contribuirparao o crescimento
desenvolvimento profissional l
Apostar no pessoal e a sustentável de b o Ser oBanco r a d o N r Angola e
s . º
compromissos 1
Garantir satisfação
e qualidade de serviço C lientes soluções, produtos duradouro comos criem valorpara relacionamento financeiros que seus clientese promovam um os accionistas Desenvolver e serviços
desenvolvimento
Contribuir parao da economia nacional Angola missão
Criação devalor Accionistas Estratégia do mercadoactual.NestasecçãoresumimosanossaestratégiaquetemcomofocooCliente. Em Marçode2015foramapresentadososdesafioseasprioridadesestratégicasdoBanco,parafazerfaceàsrápidasmudanças do mercado actual. Nesta secção resumimos a nossa estratégia que oCliente. tem foco estratégia como resumimos anossa actual. secção do mercado Nesta rápidasàs face Banco, fazer do mudanças para estratégicas prioridadesas e Em de 2015 Março desafios os apresentados foram is summarised infast-changing this Our strategy market needs. section: Bank’sThe challenges strategic and priorities Customer-focused are and intend the to involvement, broaden against the of background STRATEGY no menortempopossível. nos processosetomardecisões Clientes, precisamosserágeis Para melhorservirosnossos time possible. make decisionsintheshortest to streamlineprocessesand serve ourcustomers,weneed Speed upprocessestobetter os Clientes. relacionamento com 1. atendimento. Melhorar o nos processos Apostar no relationship. customer Investing in Rapidez Build distinctionthroughpropellinggreater Speed up processes Improving customer 1 service Criar diferenciaçãoatravésdeummaiorenvolvimentocomosClientes. COMMITMENT TOTHECUSTOMER: of Customers. understanding a better skills togain analytical Developing CRITICAL SUCCESSFACTORS: customer engagement FACTORES CRÍTICOSDESUCESSO: 2 COMPROMISSO COMOCLIENTE: 2. dos Clientes. melhor compreensão analíticas parauma competências canais digitais. electronic channels Aumentar os PRIORIDADES ESTRATÉGICAS: STRATEGIC PRIORITIES: Desenvolver Clientes nomundodigital. chave paraservirmelhorosnossos A excelênciaoperacionaléa environment. our Customersinthedigital a criticalroletobetterserving Operational excellenceplays Expanding PURPOSE: Operational OBJECTIVO: Excellence operacional Excelência needs. Customers’ keep pacewith innovation to Increasing 3 Streamlining processes 3. Clientes. necessidades dos acompanhar as inovação para Simplificar processos. Aumentar a banking. in electronic Investing 4 paramount focus. culture inwhichtheClientis We aimtodevelopanorganizational that willhelpusachieveourgoals. We needtoattractandretaintalent our thirdcriticalsuccessfactor. The financialinstitutionCultureis em queofocoénossoCliente. Pretendemos desenvolverumaCultura alcançar osnossosobjectivos. e retertalentosquenospossibilitem crítico desucesso.Necessitamosatrair A Culturaéonossoterceirofactor Diversifying products Culture BFA quality. loan portfolio Maintaining Cultura 4. banca digital. 5 os produtos. Diversificar BFA Apostar na Report 7
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment Demonstrações Enquadramento Anexos Financeiras Análise Finaceira Gestão de Risco O BFA Económico Relatório How We Add Value
Best Bank to Best Customer work in Bank
Focusing strongly on personal Making use of our branches and and professional development to electronic channels to build engage, employ and strengthen loyalty, ensure the delivery and Employee ties. fulfilment of more suitable options and an exceptional service.
Best Shareholder Best Community Bank Bank
Generating appealing and sustai- Supporting economic and social nable payback for Shareholders advancement in Angola particu- in the form of high yields, risk larly regarding educational invol- control and efficient equity vement. employment.
8 Banco de Fomento Angola | AnnualRelatório Report’16 e Contas 2016 asComplianceandAnti-MoneyLaundering. • Investmentintrainingonkeytopicalissuessuch CorporateFinance; andPostgraduateprogrammesinAccounting MBAs,ExecutiveMaster’sdegreesinBankManagement • Advancedqualificationofhigh-potentialstaffthrough productsportfolio; rulesandproceduresforacquiringusingthe products,servicesandmainfeaturesaswellthe sessions,withafocusonthehistoryofBFA,its • Mindfulorientationofinternsthroughtwotraining in-housetraining; • Creationofthee-learningplatformandother specializedtraining; • Talentmanagementthroughgeneral,initialand • Genderdiversityandequalityincareeropportunities; Best Banktoworkin • BFA'seconomicvalueongoinggrowth. • Assuranceofasoundbalancesheet; businesssustainability; • Reliablemanagementandriskcontroltoensure Best Bankforshareholders
Best BankforourCustomers efficiency ofbankbranches. increasing filescanningandimprovingenergy • of fiveyears; provisioned with5%ofBFA’stotalprofitoveraperiod to USD17millioninDecember2015.Thisfundwas • • • distinctionsandmeritawardstothetopstudents; • ofbranches. improvementthatwillaffecttheservicelevels • • toCustomers; • thatprovideCustomerssecurityandconvenience; • troubleshooting; productsandserviceswhenhandlinginquiries • Customerneeds; arestraightforward,affordableandindividualtailored • Best Bankforthecommunity Creation ofMysteryShoppertopinpointareasfor Profitability andsecurityofhouseholdsavings; Fulfilment ofcommitmentsandresponsibilities Innovation inpaymentmethodsandelectronicchannels Use ofclearandsuccinctlanguage,bothwhenoffering Reducing theBank’senvironmentalfootprintby Establishing andmanagingaSocialFundamounting Involving insolidaritycampaigns; Supporting regionaleventsthroughsponsorship; Establishing partnershipswithuniversitiesbygranting A comprehensiverangeofproductsandservicesthat Report 9
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment Key Indicators
Amounts expressed in AOA Million
AOA Dez. 14 Dez. 15 Dez. 16 Var. % 14-15 Var. % 15-16 Total Assets 1.073.056,4 1.229.579,2 1.312.879,6 14,6% 6,8%
Loans and advances to customers1 229.478,5 220.796,0 235.310,9 -3,8% 6,6%
Customer Deposits 929.382,2 1.017.159,6 1.079.702,0 9,4% 6,1%
Shareholders’ equity and equivalents 10 4.4 87,3 126.455,5 173.221,1 21,0% 37,0%
Operating income 53.919,3 69.769,6 99.571,6 29,4% 42,7%
Net interest income 30.728,8 41.022,1 66.945,3 33,5% 63,2%
Net non-interest income 23.190,4 28.747,5 32.626,3 24,0% 13,5%
Operating expenses2 19.585,0 25.043,8 35.829,6 27,9% 43,1%
Net operating income 37.0 47,1 48.760,5 68.379,5 31,6% 40,2%
Net profit for the year 31.796,1 37.866,3 61.912,1 19,1% 63,5%
Return on assets (ROA) 3,4% 3,2% 4,4% -0,2 p.p. 1,2 p.p.
Return on equity (ROE] 34,8% 32,0% 38,1% -2,8 p.p. 6,1 p.p.
Cost-to-Income ratio 36,3% 35,9% 35,9% -0,4 p.p. 0 p.p.
Total assets per employee 424,80 471,1 498,8 10,9% 5,9%
Loan-to-deposit ratio 24,7% 21,7% 21,8% -3 p.p. 0,1 p.p.
Regulatory Capital Adequacy Ratio 24,0% 24,3% 31,7% 0.3 p.p. 10,3 p.p.
Past-due loans / Total loans to customers 3,3% 4,6% 4,7% 1,3 p.p. 0,1 p.p.
Provision coverage ratio, past-due loans 136,0% 146,5% 125,4% 10,5 p.p. -21,1 p.p.
Provision coverage ratio, total loans 4,5% 6,7% 5,8% 2,2 p.p. -0,9 p.p.
Number of service outlets3 186 191 191 2,7% 0,0%
Number of employees 2526 2610 2.632 3,3% 0,8%
BFA Net penetration rate 38,8% 40,4% 37,2% 1,6 p.p. -3,2 p.p.
Debit card penetration rate 53,5% 57,6% 57,6% 4,1 p.p. 0 p.p.
(1) Loans net of provisions. (2) Includes staff costs, third-party supplies and services, other operating expenses and depreciation and amortization charges. (3) Retail branches + Corporate Centres + Investment Centres + Bank Service Points.
10 Banco de Fomento Angola | Annual Report’16 Debit card penetration rate penetration card Debit BFA Net penetration rate employees of Number Operating expenses Net operating income (3) Retail branches + Corporate Centres + Investment Centres + Bank Service Points. Service +Bank Centres +Investment Centres +Corporate (3) branches Retail charges. amortization and depreciation and expenses operating other services, and supplies third-party costs, staff (2) Includes provisions. of (1) net Loans USD Net interest income interest Net income Operating Shareholders’ equity and equivalents and equity Shareholders’ Deposits Customer Total assets per employee per Total assets ratio Cost-to-Income (ROE] equity Return on Return on assets (ROA) assets Return on year the for profit Net Net non-interest incomeNet non-interest Past-due loans /Total to loans customers loans Past-due Ratio Adequacy Capital Regulatory ratio Loan-to-deposit Loans and advances to customers advances and Loans Total Assets Provision coverage ratio, past-due loans past-due ratio, coverage Provision Provision coverage ratio, total loans total ratio, coverage Provision Number of service outlets service of Number 2 3 1 10.431,9 2.230,9 136,0% 9.035,1 1.015,8 Dez. 14 Dez. 38,8% 34,8% 36,3% 53,5% 24,0% 24,7% 235,4 322,0 375,8 198,7 47,0 5 311,6 2526 3,3% 4,5% 3,4% 4,13 186 9.086,8 146,5% 1.631,7 Dez. 15 Dez. 7.517,0 32,0% 35,9% 24,3% 40,4% 21,7% 57,6% 234,2 340,6 206,6 934,5 401,0 574,8 312,1 3,2% 4,6% 6,7% 2610 191 3,5 6.508,0 1.044,1 125,4% 1.418,4 7.913,5 Dez. 16 Dez. 35,9% 21,8% 38,1% 37,2% 31,7% 57,6% 200,4 2.632 218,2 07,2 4 377,2 607,6 417,7 5,8% 4,4% 4,7% 191 3,0 Var. %14-15 10,5 p.p. -0,2 p.p. -0,2 -0,4 p.p. -0,4 -2,8 p.p. -2,8 0,3 p.p. 0,3 2,2 p.p. 2,2 1,3 p.p. 1,6 p.p. 4,1 p.p. -26,9% -16,8% -12,9% -15,7% -3 p.p. -3 -8,0% -0,5% Amounts expressed in USD million in USD expressed Amounts -3,1% 4,0% 3,3% 9,3% 6,7% 2,7% 5,1% Var. %15-16 Report -21,1 p.p. 10,3 p.p. -3,2 p.p. -3,2 -0,9 p.p. -0,9 1,2 p.p. 6,1 p.p. 0,1 p.p. 0,1 p.p. -12,9% -13,6% -13,4% -14,4% -13,1% 20,9% 19,5% 11,7% 0 p.p. 0 0 p.p. 0 4,2% 0,8% 0,0% 5,6% 5,7% 11
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment Business Performance: 2014-2016
Activo Total (MAKZ)
Clients Total Assets BFA number of Clients’ upward trend has remained steady BFA’s business growth and strong deposit-taking in 2016 is experiencing a substantially higher growth compared to previous reflected in the 6.8% growth of Total Assets. years. 2016 2016 1.571.107
2015
2015 1.410.378 2014
2014 1.300.762
AOA Million
Depósitos Totais (MAKZ) Total Deposits Service Outlets Balcões The steady increase in core deposits shows market BFA has maintained the number of service outlets in Angola, confidence in the Bank, with deposits up nearly 6% with a total of 191 including Branches, Corporate Centres, compared to 2015. Investment Centres and Service Points.
2016 20201616 2.632 2016 1.571.107 2015 20201515 2.610 2015 1.410.378 2014 20201414 2.526 2014 1.300.762 AOA Million
Staff Fundos Próprios Totais (MAKZ) Total Equity Team growth presents a strong correlation with the BFA’s Equity growth rate accelerated in 2016 and reached expansion of the commercial network. In 2016 the Bank 38.6% strengthening the Bank’s financial standing and recorded a 1% increase positive change in the number of ability to meet its Customers’ needs. Employees.
2016 2016 2.632
2015 2015 2.610
2014 2014 2.526
AOA Million
12 Banco de Fomento Angola | Annual Report’16 Capital Adequacy RatioCapital 3.2 times minimum the above regulatory of 10%. BankThe is financiallysound, withcapital a adequacyratio Loan Quality Loan operations Customer-related a slight improvement in the loan quality. in indicating ratios, and Loan Provision Overdue Coverage Decrease growth in loans granted deposits. over growth to the previous year. is explained This growth by ahigher ratio aslight shows compared increase loan-to-deposit The 136,0 2014 3,3% 2014 24,0% 2014 2015 2016 % Customer Resources Customer Credit Defaulted Loans(%Total Loans) Provision coverageratio Regulatory CapitalAdequacyRatio Rácio deTransformação
Rácio Solvabilidade Qualidade doCrédito 21,8% 146,5% 24,3% 4,6%
2015 21,7% 2015 24,7% Loan-to-deposit Ratio
128,7% 128,7% 31,7% 4,7% 2016 2016 0 tration Rate aslight shows period. the over same decrease rate is in line with the while previous year the BFA Net Pene penetration and Debit Active The Card holders. Debit Card In 2016 BFA the both increased number of BFA users NET Services Profit Net ATM and Terminals POS customers. to providing awider choice of banking channels its for to grow, which once again BFA’s shows commitment numberThe of ATM terminals and POS has continued 62 billion to corresponding an of increase 63.5% 2015. over In 2016 BFA high aroundof arecord net profit AOA scored 2014 6.541 371 504.500 2016 2014 2015 AOA Million Nº ofClientsBFANET Debit CardsPenetrationRate 38,8% 53,5% 2 Active ATM units Active POSunits 0 1 447.688
4
Resultado Líquido(MAKZ) Serviços A 569.664 TM eTP 40,4% 57,6% 2 9.157 0 2015 375 1 500.535 A
5 Nº ofDebitCardsActive BFA NETPenetrationRate 576.811 37,2% 57,6% 2 0 1 553.382 6 Report 9.876 2016 382 13 -
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment Outlook for 2017
Business growth is not expected to be more than moderate II. Premium Service given the current setting of economic recovery. Therefore, 2017 will be dedicated mainly to improving the Bank’s In 2017 BFA will continue to strengthen and develop new operational performance and preparing it for the next growth procedures and tools to provide a better Customer service to cycle. this end, it proposes to:
I. Innovation & Technology • Proceed with the Mystery Shopper programme, carrying out further surveys in 2017, aimed to ensure the Bank’s The focus on technological innovation is one of BFA’s Customer service and Customer support ongoing strategy cornerstones. The investments made in information assessment; systems Information Systems investments and the projects undertaken in this area have yielded strong returns allowing • Support diversification and progress of the various Bank the Bank’s systems not only to keep pace with but also contact channels not only by enhancing the closeness foster their own growth. The goals for 2017, keeping up with strategy through refurbishing and rejuvenating the branch the advances accomplished are as follows: service outlets network, but also by enhancing the features of the home-banking websites, corporate website, mobile • Proceed with the eMudar@BFA project; banking solutions and call centres, with the purpose of bringing the Bank closer to its Customers; • Strengthen the information systems backbone in terms of concerning capacity, performance, resilience and • Develop/Expand the claims handling process, allocating security through improvement of the Bank’s core system, technical and human resources, in line with best communication network and data protection mechanisms international standards; security devices; • Invest in commercial teams training and qualification • Proceed with the customer closeness strategy by with the aim of improving Customer service quality and expanding the mobile platforms such as BFA Net, BFA Net closeness; Empresas and BFA App, as well as enhancing Customer’s multi-channel relationships; III. Human Resources
• Deploy solutions for the capital markets and BODIVA; In 2017 BFA will proceed with its talent acquisition strategy, aimed at recruiting highly qualified individuals. To this end, • Strengthen Anti-Money Laundering and Terrorist Financing it proposes to: measures; • Strengthen its online recruitment strategy through electronic • Develop technologically advanced solutions to meet the channels; evolving official reporting and disclosure demands. • Promote Build up the specific orientation programme for new employees, based on a schedule of workplace visits;
14 Banco de Fomento Angola | Annual Report’16 • trainingspecific havingscheduled the followingsteps: BFA will continue employee to target skill development through In addition and during of the the current (2017), course year • • • • In 2017 BFA will: the collection of required and information report and maintenance to ensure control and greater procedures regulations, BFA updated and account renewed its opening In to compliance order foster with applicable laws and IV. Laundering Anti-money and Terrorist Financing
and eLearning courses rolejob to integrate courses, classroom Building atraining position handbook according or to staff BFA’s e-learning platform –eFormar; To make available acomprehensive offering onthe course Banking Training Institute of Angola (IFBA); tosubject the Bank’s matters activity, in with partnership the Supporting ongoing training in the important of the most fields of management ,accounting and finance; Providing involvement in the programmes, in post-graduate practices; improvement and in compliance with international best techniques of continuous ameasure and as methodologies introducing and procedures, new globalexisting processes applicable laws and regulations, developing and improving Continue to enforce the full implementation of all
internships; in Financial Intermediation. Financial in take yet another step towards becoming partner apreferred company allowing the for marketing of pension funds and In 2017 BFA aims to establish apension fund management Customers. allow the Bank of the financial to offer broaden toproducts by thebusiness (Capital CMC Market Commission); this will for approved was S.A. Colectivos, de Organismos Gestora 2016In December de BFA Activos –Sociedade Gestão positionits market as leader. 2016.December BFA will continue working to consolidate and out May 73.8% carried 2015 of all between trades and tradingBFA registered BODIVAmember of the first became V. Markets Capital • • •
on the Intranet website. and the corporate Publish relevant information onthe subject of Compliance to achieve their goals; skillsthat they the necessary have the ability and possess the ComplianceStrengthen Management ensuring team the eLearning platform; Financing and training courses through classroom program with theProceed Anti-Money Laundering and Terrorist Report 15
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment
02 Economic Environment
International Economy 18 Angolan Economy 21 Regulatory Changes 28 International Economy
ECONOMIC ENVIRONMENT
The International Monetary Fund estimates that the global and are predominantly related to an increase in protectionist economy experienced a mild slowdown in 2016, to 3.1% policies and more restrictive global financial conditions. There (3.2% in 2015). The slack growth of the global economy is significant uncertainty surrounding the expectations for reflects mainly the low rate of growth in the developed recovery in the developed countries, especially considering economies (GDP increased by only 1.6% in 2016, -0.5 p.p. political factors surrounding the electoral timetable in the less than in 2015), as a result of political and economic European Union, scepticism around the policies of the newly factors that impacted the confidence and activity of the elected US Administration and the United Kingdom’s process economic players. The main such factors included the turmoil of withdrawal from the EU (“Brexit”). at the start of 2016 resulting from fears of a sharp economic slowdown, net capital outflows from China, the referendum In the US, the prospects of stronger growth and an inflation in the United Kingdom in June and the presidential elections rate performance in line with the targets set by the Federal in the USA towards the year-end. Hence, the emerging Reserve support the Fed’s intention to proceed with the economies performed very inconsistently and the IMF gradual normalisation of monetary policy. The European estimates their growth at 4.1% in 2016, in line with 2015. Central Bank strengthened the ultra-expansionary nature of its policy in 2016. In addition to reducing the benchmark The IMF has a more optimistic outlook on 2017 and expects rates to historical minimums, the ECB has increased the the global economy to grow 3.4%, with positive contributions monthly purchase volume of long-term assets to 80 billion from both the developed economies (1.9%) and the emerging Euros and included non-bank debt securities in the range of and developing economies (4.5%). According to the IMF, eligible assets. the risks for the emerging economies are on the downside
GDP - events and exposures
USA The Federal Reserve was cautious regarding its plan for the normalisation of the monetary policy, deferring the 0.5%-0.75% increase in the fed funds rate band EUROPE to December. An increase to 2.3% is anticipated in The IMF anticipates 1.6% eco- 2017 despite the prevailing uncertainty with regard to nomic growth, slightly above the economic policies to be implemented by the new 2016, for Euro area countries. administration and their effects.
CHINA Economic growth in 2016 totalled 6.7%, higher than expected. The IMF predicts 6.5% growth for 2017.
BRAZIL A weak economic perfor- mance in 2016 with a resulting GDP of 3.5%. The IMF predicts growth of 0.2% for 2017.
18 Banco de Fomento Angola | Annual Report’16
Public Debt Market Interbank Securities on Yield 10-year Euribor Yields LIBOR Dollar recovery. followed by a ofthethe year end towards low to arecord drop sharp a yieldsKey suffered benchmark refinancing 0.0% at redu and rate in 2016 March the main by setting policy ofits nature -expansionist the ultra 1. ECB bolstered The premium to 370 close in Bund. points relation to the German risk to 4.0% the and corresponding close was bonds yield treasury on the 10-year February, (Bund), tobenchmark 2015 compared of2.54% figures Towards 190 and points. of the end yield 3.76%, at 10-year in points relation a riskand premium 350 to the German of around with the in down Portugal wound year The risk premiums on ofvulnerable countries. pressure surrounding with zone upward the euro in markets debt observed was scenario A mixed growth ofthe yield end curve. the short on intentionannounced purchases to prioritise ofECB’s bias aconsequence and yield ofgrowth areflex climbed to to 0.3-0.35%, levels ofclose continued of2017 trend during days the deflationary first The -0.204%. while the corresponding aminimum rebounding from 0.207% at after the year Bund of closed German 10-year The year-end. at recorded UST yield to by the stabilisation levels those at of close the 10-year characterised of1.321%. alow recording 2.432% after at the year of2017 closed USA days The first The were entail Banks. for operations these that cost being the potential negative series distinction the previous from lating main The the credit market. ofstimu launched with the purpose -term refinancing operations) were 2. Four TLTRO new longer (targeted 2017. to December postponed which since has been programme, purchase date ofthe asset expiry the expected beyond unchanged should that this remain status stated it25%, Furthermore, respectively. lending to 0.4% facility rates and cing facility marginal and the deposit funds rate normalization cycle. normalization funds rate Federal the started Reserve fed - - - - rates: historically Euribor low in the mirrored are by the ECBestablished conditions monetary The of the European market. of the European in apickup and the ofarebound US market awareness well the as as instrumental policies were monetary The 2009 levels sinceto highest dollar climbs LIBOR rate six-month and Three - 12 -0.082% months: -0.221%- 6months: -0.319%- 3months: - 6 months: 1.3226%- 6months: 0.9982%- 3months: -0.33%. -0.33%. 2017February to to close untiltrend of the end downward its maintained rate Euribor 3-month The end ofFebruary. end 1.05% at standing by the Libor US 3-month the with rates interest short-term in the to anincrease led has This setting targets. its inflation aligned trend with an and the US economy of growth an energised for expectations on based policy tion ofthe monetary normalisa with the steady to proceed is encouraged In 2017 Bank the Central Economic Environment - 19
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment MONEY MARKET AND BONDS FOREIGN EXCHANGE MARKET Political and economic events have affected the In the foreign exchange market front, USD appreciated financial markets performance in 2016. The result of the sharply in 2016. The EUR/USD closed at 1.05 and the referendum in the United Kingdom on their membership USD aggregate exchange index (in relation to the main of the European Union and the surprise win of the market currencies) reached an all-time high of 103,60 presidential candidate, Donald Trump, have explained since 2002. The key factors were the USA’s positive why almost every asset class showed a volatile behaviour. economic performance in comparison with other parts The year was marked by different monetary policies in the of the world and the interest rate increase expectations major economic areas. (which materialised at the year-end only) broadening the differences to other currencies. Given the uncertain and disappointing economic growth in other regions of the world, the US Dollar became a safe currency. The British pound lost 16% to the US Dollar and the Euro as a result of the United Kingdom’s decision to withdraw from the European Union.
20 Banco de Fomento Angola | Annual Report’16 Angolan Economy Angolan ECONOMIC ACTIVITY ECONOMIC 2015 (+0.9% yoy). followed by aslightly development positive onyear for year of 4.7% decrease year duringmonths 9 of thethe first year the of 2016: 3rd quarter on ayear the underwent GDP significantly decreased economy activity in business until (publishedSystem by INE in 2017), February the Angolan According National to of Quarterly the new series Accounts Oil production (Million barrels/day) (Million production Oil Sector Non-oil
Note: With the exception of the global GDP growth figures, all other data was collected before the review of the National Quarterly Accounts series carried out by INE in February 2017 by INE in out February carried series Accounts Quarterly National the of review the before collected was data all other figures, growth GDP global the of exception the With Note: INE FMI, Source: F-Forecast P -Provisional; Angolan oil price (average, USD/barrel) (average, oil price Angolan Sector Oil %) (tvh, Product Domestic Gross of growth Real period) (USD billion, of end reserves international Gross period) of end (yoy Index change, Price Consumer Average exchange rate (AOA/USD) rate exchange Average Primary non-oil budget balance (% of non-oil GDP) (% non-oil of balance budget non-oil Primary (% GDP) of balance Budget ECONOMIC INDICATORS AND FORECASTS GDP Non-oil GDP Oil - in (- drop Q3 15.5% yoy); - in 4.0% yoy quarter; the 3rd recovering - sectors: non-oil in to adownturn led have in the oil sector Circumstances investment. and goods ofconsumer the import on the brakes put and exchange availability impaired foreign circumstances these revenue, tax by the reduced on brought demand domestic 2016. in low January a record In addition to the weakened which reached oil ofthe low USD, prices, aconsequence ofoil in revenue the loss from derives the economy on effect a4.6% quarter. primary inafter rise The the first -1.5% (respectively 2nd quarter 3rd and e-2.8% yoy yoy) in the refining and dropped oil operations Crude extraction government spendinggovernment and investment. -7.6%, -22.9%, -15.0%) owing to ashrinkage in period, in the same (respectively in the 3quarters activity adecline in in economy, witnessed the Angolan interest publicThe sector, which still vested a considerable has Trade of2016, fell in the 3quarters with anintensified 11.4% in 2nd and the 1st decline yoy quarter, respectively a15.8% and yoy suffered manufacturingThe industry 2016
15,3% 47,4 - 2010 76,5 19,7 91,9 1,76 -3,0 3,4 4,7 7,6 11,4% 108,7 -51,1 2011 93,9 1,66 27,5 -5,4 3,5 8,7 9,5 from oilfrom recovery. prices inA comeback activity in is expected 2017 resulting mainly -4.3%. at settled of 2015. In the this 3rd quarter decline slowed and down 7.8%when the was GDP than lower in period the same significant most The declineoccurred in the 2nd quarter
110,9 -53,7 9,0% 2012 32,2 95,5 1,73 8,5 4,5 5,5 4,6
107,7 manufacturing (+4.0%) sectors. (+40.2%), agriculture (+7.3%)energy and in the activity vibrant particularly forecasts 2017 The respectively. budgetsectors state of 1.8% 2.3% and in the oil non-oil and of2.1% growth economic this year, with hikes is an in turn expecting Government The by 1.3%. output its to grow market non-oil in should revenue allow increase theThe expectations. with government par on in operations, output 2017, underpinned by a1.82 increase mbd 2016. the oil will Hence, GDP 1.5% grow in for with the USD estimated 45 in comparison in USD 2017, at 46 level out ahumble rise should oil that Angolan predict prices budget, in line with the governmentIMF forecasts, 2013 47,4 - 7,7% 96,5 32,2 10,9 1,72 -0,3 -1,1 5,0 -43,2 2014 7,5% 98,3 96,9 1,67 27,8 -6,6 -2,6 8,2 4,1 2017 14,3% 2015P 119,7 -20,9 50,0 24,4 1,78 -3,3 6,4 0,9 1,6 Economic Environment 42,0% 2016F -12,9 40,5 22,4 1,79 -0,4 -4,1 0,8 0,0 - 20,0% 2017F -14,1 46,0 1,82 19,4 -6,7 1,3 1,3 1,5 21 -
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment Real GDP growth
12% 9% 6% 3% 0% -3% -6% 2010 2011 2012 2013 2014 2015E 2016E 2017P
Oil Sector Non-oil Sector GDP
Source: IMF; INE 2016
Real GDP growth Foreign exchange reserves
12% 35 9% 30 6% 25 3% 20 0% 15 -3% 10 -6% 5 2010 2011 2012 2013 2014 2015E 2016E 2017P 0 Oil Sector Non-oil Sector GDP 2008 2009 2010 2011 2012 2013 2014 2015 2016
Source: IMF; INE Unit: Billion USD Source: BNA
BALANCE OF PAYMENTS Foreign exchange reserves 2010 2011 2012 2013 2014 2015P 2016F 2017F Current account (% of GDP) 9,1 12,6 12,0 6,7 -3,0 -10,0 -4,3 -6,1 35 Trade Balance (% of GDP) 41,1 45,2 41,1 33,5 24,1 12,1 14,0 11,6 30 25Export of goods (% of annual change) 23,9 33,0 5,6 -4,0 -13,3 -43,9 -17,2 15,0 20of which: oil (%of annual change) 24,0 32,9 6,3 -4,0 -13,8 -44,7 -17,8 15,3 15 Import of goods (% of annual change) -26,4 21,4 17,2 11,1 8,5 -26,6 -32,2 25,4 10 Capital and Financial account (% of GDP) 14,4 18,3 15,5 7,1 -5,8 -12,6 -8,3 -8,6 5 Caption: P - Provisional F – Forecast Source:0 IMF (Article IV, Feb. 2017) 2008 2009 2010 2011 2012 2013 2014 2015 2016
Unit: Billion USD Source: BNA EXTERNAL SECTOR The marked recovery of imports, whose growth will be According to IMF forecasts, Angola’s balance of payments driven by a steady easing of the country’s economic plight, imbalance will have improved during 2016. On one hand, has helped deteriorate the trade balance of goods with although the balance on current account showed a deficit the subsequent worsening of the current account deficit, for the third year running, that deficit is now 4.3% of which the IMF expects will suffer a modest deterioration, GDP, well below the 10% recorded in 2015. Basically this standing at 6.1% of the GDP. Imports of goods are trend was caused by the considerable 32% fall in imports, forecasted to increase 25.4%. In combination with a less which offset the 17% decrease in exports, resulting in significant increase in exports (+15.0%) the trade balance an increase in the trade surplus to 14.0% of GDP (12.1% of goods should hold steady at 11.6%. Hence the balance in 2015), following 4 years of consecutive falls. As a of trade goods and services will, once again, record a result, the balance of trade of goods and services should deficit of 0.5% of the GDP. once again score a positive balance equivalent to 2.1% of the GDP. On the other hand, the capital account should The Government’s pursuit of a conservative exchange rate have recorded a lower deficit of 8.3% of the GDP as well policy has ensured a relative stability of the reserves when basically due to a retraction in Angolan foreign direct compared with similar economies. Nevertheless, there investment, largely by Sonangol, and which inevitably is a downward trend. The net international reserves have varies in accordance with the availability of funds and the amounted to USD 24 billion between June 2015 and April Company’s current situation. 2016. However, there were consecutive drops from May
22 Banco de Fomento Angola | Annual Report’16 was also revised,was although USD downwards, from 45 to realistic amore from stemmed oil price assumption, which revised upwards, 5.5% from was to 5.9%. This increase up by the Angolan government in August, the deficittarget of 5.9%. In with accordance the Amending Budget drawn having plans, its met 2016 will close with ahigh deficit With to public regard subject finances, to the government ACCOUNTS PUBLIC devaluations. further for noneed see authorities intend to keep the current exchange rate and around at USDtraded 490 in December. monetary The levels the reached as latter and of USD over rates, 600 theto official close and the gap between informalexchange value to approximately USD 166.7 still was not sufficient subsequent stabilisation. the However drop in the Kwanza of followed the year small-scale by several and drops devaluation first The of 15%occurredat beginning the amounting of 22.6% to adecrease against the US dollar. and January Aprilthe currency local of 2016, between BNA downward has devaluated trend after of the reserves stabilise the Kwanza; this in seen the be can consolidation to the from results Angolan government’s efforts reserves considered areference as level. Basically the decline in which7 months of the imports, official authorities once 21,4 billion 2016. by December This amount represents onward bringing to down USD the government reserve
tenth, to 5.8%. 5.8%. to tenth, impact ontheof percentage deficitthe GDP by oneas a high inflationrate in 2017), and ultimately have a negative the of increase the nominal (driven GDP by the reasonably reductionsreal of revenue and expenditure onaccount of untilrecorded 2016. Yet, increments translate these into a 7.5% respectively, thereby reversing the downwards trend an in increase revenue and expenditure of 5.5% and investment abrake. Angolan The as government predicts policy and the while encourage economy using public 2017 for strategy The is to fiscal sustain aconservative government. the budget with many planned investments being by deferred ineffective and managed to implement only 6.1% of the execution (28.9%). Investment expenditure particularly was Public spending, however, an even rate lower of recorded of budget execution in relation to oil revenue (34.3%). revenue collected, was by the strongly restricted low level 38.6% achieved.the was GDP semester of In the the first tremendous much restraint, that so so asurplus of 1.4% of implementation subjectwas tosemester in the first probable (according concerns tosources) official budget However, market in players and to their order appease therefore decided to aslightly accommodate higher deficit. the initial budget, 1.89 mbd. Angolan The government output price, circa 1.79 mbd, than the one considered in USD 40.9. This revision into also took account oil alower Economic Environment 23
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment 2016 2017
The IMF forecasts a The Government drop in public debt to resorted to T-Bonds, 62.8% of GDP (49.1% excluding Sonangol), According to the IMF, public debt which represent Internal debt whereas the as a percentage of the GDP should 12.4% of GDP (while Government has a less reach 71.6% by the end of 2016, simultaneously optimistic outlook and Sonangol debt included. This paying off 7.1% of projects an increase amounts to a 6 p.p. increase over the GDP in T-Bonds). to 53.3% in 2017. the projected 65.4% for 2015, a build-up year itself with an even Public higher debt position (40.7% in Debt 2014). External financing T-Bonds will be the main source of The IMF forecasts a considerably is expected to have funding in 2017 more subdued increase if the state accounted for around according to the oil company is not considered, 8.2% of GDP for Annual Borrowing from 51.2% in 2015 to 52.7% in national projects. Plan amounting to 2016. A forecast aligned with the The Government has AOA 1.803 billion, Government expectation of 52.5%. External debt repaid outstanding amounts raised with AOA 1.568 in previous year’s billion in Treasury equivalent to Bills (T-Bills) and approximately 3.4% AOA 123 billion in of GDP. co-financing.
Inflation and interest rates exceeded 3% for the first time since 2004 and remained The annual inflation rate returned to its former high values. above this level until August. After hitting a maximum of The price increase was felt in particular from January 4% in July the monthly inflation has since been steadily onwards when the monthly rate of change in prices decreasing.
2016
International factors: Inflation figures were • Inflationary pressure on food prices in Southern Africa fairly high during Inflation 2016, averaging Domestic factors: Rate 32% and closing • Cuts in subsidized oil prices Increase with an annual • Currency devaluation rate of 41.95% in • Restrictions on imports and consequent price increase of imported goods December.
Monetary policy took on a restrictive stance in order to • Increase in the 7-day liquidity absorption rate to counter this significant increase in inflation: 7.25% (1.75% at the beginning of the year); • BNA policy rates experienced several increases, • Increase in the marginal lending and rediscount rates especially the base interest rate, which was raised to 20% (both 13% at the beginning of the year); three times in 2016, from 11% to 12% in February, • Increase in the cash reserves requirement ratio from 14% in March and finally to 16% at the end of June; 25% to 30% in May.
24 Banco de Fomento Angola | Annual Report’16 from beingfrom asimple pricing resulting correction the from addition, 2016 apart of prices also marked the recovery accumulationand pressures deflationary stocks. of In in an environment of: trade, low global weak growth, supply by free a global and market demand lower tagged in material raw 2016 rock-bottomed Most prices amidst OIL PRICES RETURNS TO RECORD LOWS B In keeping with the trend of relative inflation deceleration, decidedBNA to maintain semester. rates the second in the 10% 15% 20% 25% 30% 14% 19% 24% 29% 34% 39% 44% Interbank MoneyMarketRates Annual Inflationrate(yoy) 0% 5% 4% 9% anking Source: BNA.LUIBORRates Source: BNA.AnnualCPIvariation Deposits Loans dez-12 2008 Overnight jun-13 2009 S ector dez-13 2010 30 d jun-14 growth in 2015.growth with the 10.7%in comparison average acceleration asignificant represents of21.1% growth average recorded The of6.5% to adrop in 2015.compared 18.3% in was loans 2016,domestic oftotal growth annualThe average 2011 dez-14 2012 360 d jun-15 2013 dez-15 2014 BNA benchmark jun-16 2015 dez-16 2016 2016
adjustment, namely market. in the energy supplyThe should goods subject of also certain be to steadier in an environment of improved financialbalance. should growth become whose the major economic sectors, in mid-2016, underpinned by asurge in consumption in that astrengtheningfor started of the economic recovery previous sharp decline. the Therefore, outlook 2017 for is 10% 15% 20% 25% 30% 14% 19% 24% 29% 34% 39% 44% Interbank MoneyMarketRates Annual Inflationrate(yoy) 4% 0% 5% 9% Source: BNA.LUIBORRates Source: BNA.AnnualCPIvariation dez-12 2008 32.7% deposits. oftotal 2016 year. than the previous In at December less theystood p.p. 0.2 of34.3%, to anaverage deposits, oftotal proportion slightly a as very decreased deposits currency Foreign 2016. September to 15.2% in debt rose oftotal ratio loans past-due The of20.5%. increase average significantly, expanded with loans anannual sector Private Overnight jun-13 2009 dez-13 2010 30 d jun-14 2011 dez-14 2012 360 d jun-15 2013 dez-15 2014 Economic Environment BNA benchmark jun-16 2015 dez-16 2016 25
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment Brent and WTI Price Crude Oil Demand* and Supply
mbd mbd 60 100
98 50
96 40 94
30 92
20 90 Feb-16 Apr-16 June-16 Aug-16 Oct-16 Dec-16 Feb-17 2ºT 13 1ºT 14 4ºT 14 3ºT 15 2ºT 16 1ºT 17 4ºT 17
Brent WTI Supply Demand
Source: Reuters Source: IEA
China’s growth and consumption, a major factor in administration’s promise of economic stimulus, such as the commodity market, initially caused considerable the increase in public investment in infrastructures and apprehension in 2016. China has been the frontrunner in taxOil incentivesconsumption for families of the and main corporations. economic Against sectors this both the supply and demand of raw materials over the last background, inflation is likely to increase, accompanied by an increase in commodity speculation, given the low returns from years and plays a pivotal part in pricing for both industrial mbd base metals and various sources of fossil energy and alternative instruments. 35.0 agricultural prices. The question lingered throughout most 30.0 of the year as to whether the downturn resulting from a In25.0 the energy sector, 2016 kicked off with the lowest business model more focussed on the internal middle-class Brent20.0 price in 13 years, of USD 27,10. A sustained growth consumption and new technologies and services would developed15.0 in the course of the year, closing at USD 56 be dramatic or mild. Despite some hesitation regarding (a10.0 107% appreciation) and subsequent stabilisation. The imbalances that have arisen, especially concerning sustained5.0 prices resulted from the agreement reached corporate debt, structural change is expected to be between0.0 OPEC and several non-OPEC countries aiming to progressive, stabilisation seems imminent and a new reduce2ºT 15daily production.4ºT 15 2ºT OPEC 16 agreed4ºT 16 to an2ºT output 17 cut4 ºT of17 1,2 growth standard is under way, China is to keep its global million barrelsEurope per day (mbd)China starting Restin Januaryof Asia 2017 and Americas Middle East Africa economic importance. guaranteed a cutback of 558 thousand barrels in non-OPEC Russia countries (Russia being the most representative country). The outlook for 2017 is for faster economic growth However,Source: IEA when the cuts were decided in November, the cartel and a slight improvement in global spending, chiefly by had attained a record production of 34,2 mbd (300 kbd more developed countries, which should be steered by the USA. than in October). Production in 2016 was 1,4 mbd above that The commodity markets are expected to witness a more of the previous year. Saudi Arabia, holder of the largest oil widespread effect and positive impact from the Trump reserves and output capacity, consented to a cut of 486 kbd,
26 Banco de Fomento Angola | Annual Report’16 techniques flexibility. and more with costs lower probable market using inflowproducers of unconventional a reality, although by due aslower at the pace to the offset price that thereforesustenance confirmed seems will become the International Agency) and rebalance Energy the market. It organisations, oil consumption should rise (opinion by shared thatexceeds of 2016, by leading forecast international as slowinghas been down. If 2017 global economic growth should year last in, factored also be although this trend substantial The impact onprices. oil overstocking the over oil supplybetween and demand, and aconsequent positive global to agreater promote output balance expected are caps allowedwas an output kbd, to of increase 90 3,8 mbd. These respectively. Iran, above, stated the third As producer, largest Iraqfor and the UAE 4,4 at now stand mbd and 2,9 mbd, respectively (also approximately 5%). new output The limits followed with 210 corresponding and kbd 139 cuts, kbd and ranked respectively, fourth second OPEC producers around 5%, to 10,1 mbd. Iraq and the United Emirates, Arab 100 10.0 15.0 20.0 25.0 30.0 35.0 Oil consumptionofthemaineconomicsectors Crude OilDemand*andSupply 90 92 94 96 98 0.0 5.0 2ºT 13 Source: IEA Source: IEA 2ºT 15 Russia Americas Europe Supply 1ºT 14 4ºT 15 4ºT 14 Demand Middle East China 2ºT 16 3ºT 15 4ºT 16 2ºT 16 Africa Rest ofAsia Economic Environment 2ºT 17 1ºT 17 4 ºT17 4ºT 17 mbd mbd 27
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment Regulatory Changes
The main regulatory changes introduced by the Supervisory authorities during 2016 are listed below:
Month Event
February Presidential Legislative Decree no. 1/16 Regulates the legal and tax relations which make the payment of the Special Levy on Banking Transactions mandatory. For the purpose of this Decree, banking transactions are any transactions settled or posted by banking and non-banking financial institutions. MARCH Executive Decree no. 111/16 Regulates the rules and procedures that allow for the control of taxpayers showing reiterated tax irregularities.
APril Instruction no. 2/16 Determines the level of Statutory Reserves of Banking Institutions established on national territory.
Directive no. 1/DRO/DSC/16 Determines the information that Institutions must submit to Banco Nacional de Angola within the scope of complaints reporting framework.
MaY Instruction no. 4/16 List of amendments to Instruction no. 2/2016 of 11 April.
Directive no. 01/DCC/16 Determines the rules for providing information regarding Foreign Exchange Transactions within the scope of the Monetary Policy. JunE Notice no. 2/16 Regulates the method of calculation, determines the minimum value of the capital adequacy ratio (CAR) and provides the framework and parameters for the basic components of regulatory capital (RC). It applies to Financial Institutions supervised by Banco Nacional of Angola in accordance with the provisions of Financial Institutions Basic Law.
Regulation no. 4/16 Sets the requirements for the fulfilment of obligations provided by Law no. 34/11 of 12 December, the Anti-Money Laundering and Terrorism Financing Law, and the tools, mechanisms and implementation measures needed to enforce it.
Notice no. 3/16 Sets the regulatory capital requirements that Financial Institutions should consider regarding credit risk and counterparty credit risk. Applies to Financial Institutions supervised by Banco Nacional de Angola in accordance with the provisions of Financial Institutions Basic Law.
Notice no. 4/16 Sets the regulatory capital requirements that Financial Institutions should consider regarding market risk and counterparty credit risk of the trading portfolio.
Notice no. 5/16 Sets the regulatory capital requirements that Financial Institutions should consider within operational risk framework.
Notice no. 6/16 Sets the general principles of compliance for Banking Institutions within the scope of International Accounting Standards/International Financial Reporting Standards (IAS/IFRS), from FY2016 onwards.
Notice no. 7/16 Sets the requirements and principles that should govern the internal risk management systems of Financial Institutions, in accordance with provisions of Notices no. 1/13 and no. 2/13 on Corporate Governance and Internal Control, Notice no. 3/16 on regulatory capital requirements for credit risk and counterparty credit risk, Notice no. 4/16 on regulatory capital requirements for market risk and counterparty credit risk in the trading portfolio, and Notice no. 5/16 on regulatory capital requirements for operational risk and in the BNA Instruction on liquidity risk instruction.
Notice no. 8/16 Describes the testing requirements to be followed by Financial Institutions under supervision by Banco Nacional de Angola within the scope of interest rate risk of the banking portfolio.
Notice no. 9/16 Sets the limitations regarding major risks and interests held in non-financial corporations.
28 Banco de Fomento Angola | Annual Report’16 Setembr August Month O to Banco Nacional de Angola. de Nacional to Banco points service and closing branches of and opening the regarding requirements and procedures reporting the Describes 11/16 no. Notice Accounts. closing Deposit of and operating opening, for conditions and terms general the Sets 10/16 no. Notice activity. deposit-taking the of Financial within Institutions scope non-Banking the Banking by and followed to be obligations reporting the Sets 22/16 no. Instruction Standards. Reporting Financial International of –1: Adoption First-time Standard Financial with International Reporting in accordance Standards, Financial applying the International Reporting first Bankingwhen by Institutions followed to be procedures the Sets 20/16 no. Instruction liquidity of risk. within and scope Angola the de Nacional Banco of Financial by supervision the under Institutions performed to be requirements analysis quantitative the Sets 19/16 no. Instruction capital. regulatory 2/16 no. regarding Notice of provisions the with Financial that include should information Institutions the plan in in guidelines their about action accordance Issues 5/DRO/DSI/2016 no. Directive 2/16. no. Notice of with provisions in accordance Angola de Nacional Financial by ratio to Banco Institutions adequacy capital the and capital regulatory on reporting Regulates 18/16 no. Instruction 4/16. no. Notice of with provisions Financial by in Angola Institutions de accordance Nacional to Banco risk operational on requirements equity regulatory regarding information of submission the Regulates 17/16 no. Instruction 5/16.no. Notice in provided risk operational on requirements equity regulatory regarding technical specificities the Regulates 16/16 no. Instruction 4/16. no. Notice of with provisions Financial by in Angola Institutions de Nacional accordance to Banco portfolio trading the of risk credit counterparty and risk market on requirements equity regulatory regarding information of submission the Regulates 15/16 no. Instruction 4/16. no. in Notice provided risk credit counterparty and risk credit on requirements equity regulatory regarding technical specifications the Describes 14/16 no. Instruction risk. credit counterparty and risk credit on requirements equity regulatory Financial by regarding Angola Institutions de Nacional to Banco information of submission the Regulates 13/16 no. Instruction 3/16. no. in Notice provided risk credit counterparty and risk credit on requirements equity regulatory regarding technical specifications the Regulates 12/16 no. Instruction portfolio. credit customer the of losses of processing prudential and dealing accounting with the Bankingwhen by Institutions followed to be procedures the Sets 11/16 no. Instruction securities. transferable of measuring and recognising Bankingwhen by Institutions followed to be procedures the Sets 9/16 no. Instruction with financial instruments. associated expenses and income of recognition to the method rate interest effective the applying Bankingwhen by Institutions followed to be procedures the Sets 7/16 no. Instruction financial instruments. about information disclosing Bankingwhen by Institutions followed to be procedures the Sets 6/16 no. Instruction portfolio. credit customer the of calculating losses Bankingwhen by impairment Institutions followed to be procedures the Sets 5/16 no. Instruction Event
Economic Environment 29
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment Month Event
Notice no. 12/16 Sets the rules and procedures to be followed when marketing financial products and services.
Notice no. 13/16 Sets the reporting obligations to be followed by Banking and non-Banking Financial Institutions within the scope of the deposit-taking activity.
Notice no. 14/16 Sets the reporting obligations to be followed within the scope of credit approval by Financial Institutions, customer obligations and the possibility of debt recovery in the event of financial difficulties.
Directive no. 3/DRO/DMA/16 Regulates the additional requirements that Financial Institutions supervised by Banco Nacional de Angola should comply with in order to access the Marginal Lending Facility within the scope of the provisions laid out in Notice no. 12/12.
Directive no. 4/DRO/DSC/DMA/16 Sets and regulates the charging of fees on the interest and custody of government bonds.
December Instruction no. 24/16 Sets the obligation of identification and of enhanced due diligence applicable to high risk individuals, regardless of nationality, place of residence or jurisdiction over the performance of respective duties.
Instruction no. 25/16 Regulates the implementation of activities, policies and risk management processes, in accordance with the provisions of Notice no. 7/16, for the purpose of identification, assessment, monitoring, control and supply of information regarding credit risk.
Instruction no. 26/16 Regulates the implementation of activities, policies and risk management processes, in accordance with the provisions of Notice no. 7/16, for the purpose of identification, assessment, monitoring, control and supply of information regarding liquidity risk.
Instruction no. 27/16 Regulates the implementation of activities, policies and risk management processes, in accordance with the provisions of Notice no. 7/16, for the purpose of identification, assessment, monitoring, control and supply of information regarding market risk.
Instruction no. 28/16 Regulates the implementation of activities, policies and risk management processes, in accordance with the provisions of Notice no. 7/2016 of 22 June, for the purpose of identification, assessment, monitoring, control and supply of information regarding operational risk.
30 Banco de Fomento Angola | Annual Report’16 Bancárias accordance withaccordance aforementioned legal framework. banking transactions and financialmovement of funds, in existenceexemptions of specific regardingparticular exceptand public for bodies, companies, and the to the institutions State and any departments, of its Mention should made regarding be the exemption granted in with accordance aforementioned legal framework. transactions and movement of funds arate at of 0.1%, institutions, bank account featuring holders banking public companies and banking and non-banking financial liability tax The fell persons, onnatural corporate or others. to or accounts deposit, loan, escrow savings, institutions subject were to CESOB, including relative those allAlmost debit out transactions by carried banking 1 July 2016 and 31 2016. December applied and was levy to all out transactions between carried 1/16 of 24 February. introduced CESOB was atemporary as the provisions of the Presidential Legislative no. Decree transactions and of funds movements in with accordance (CESOB - is Bankingthe on Special first The Levy Transactions special mention. topicsof noteworthy that deserve however, are, reform follows There tax course. its anumber From point of atax view 2016 brought nothing the new as CESOB AND THE IMPLEMENTATION IAS/IFRS OF ). levied CESOB was onbanking and financial Contribuição Especial Sobre as Operações Operações as Sobre Especial Contribuição part of BFApart to adapt accordingly. them,accommodate which an additional onthe posed effort regulations not subject were to any amendments in to order impactthe of the tax new accounting the standards, tax of implemented Furthermore, regardless procedures. anticipated and provided within for of the the scope heightened impact, implications tax whose had to be adoptionThe of new accounting also standards has a of BFA. areas several since of 2013 October impact -with on across-sectional adoption of IAS/IFRS National for Financial Institutions National Bank of Angola promoting has been the full consuming implementation -which, if process you recall, We witnessing are the outcome of acomplex and time- in 2016. significantachievement in accountingthe domain tax and BFA the as financial guidelines. reporting This was most the (IAS/IFRS) which currently are the key in standards by use adoption of the International Financial Reporting Standards Another topic of mention worthy in 2016 the full was banking own its also from operations. collection of CESOB not only Client from transactions, but To this extent, BFA had to setting ensure for IT its systems Economic Environment 31
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment
03 BFA Corporate Governance 34 Corporate Governance and Internal Control System 34 Guiding Principles of Corporate Governance 34 Corporate Structure and Governance Model 35 Composition of Governing Bodies 41 Organization Chart 41 Executive Committee of the Board of Directors 42 Internal Control System 46 Remuneration of Governing Bodies 46 Profit Appropriation Policy 47 Ethical Principles and Conflicts of Interest 48 Risk Management System 49 Internal Information 50 Monitoring 51 Core Business Areas 52 Individuals and Businesses 54 Investment Centres 58 Companies 60 Oil & Gas 64 Capital Market 65 Business Development Unit 68 Human Resources 70 Innovation & Technology 73 Payment System 76 BFA in Digital Banking 80 Communication 82 Social Responsibility 89 Awards 92 Corporate Governance
CORPORATE GOVERNANCE AND INTERNAL CONTROL SYSTEM
Corporate governance is a cornerstone of any financial corporate governance model complies with the relevant institution given its importance towards the enforcement of regulations. the regulatory framework. BNA’s Notice no. 1/13 regulates the introduction of Corporate Governance-related policies and To accommodate Instruction no. 1/13 of 22 March, which processes by financial institutions. regulates the submission of information by financial institutions to BNA, within the framework of Notices no. In view of this regulation, BFA sought to establish a set 1/13 and no. 2/13 of 22 March, BFA’s Board of Directors of Corporate Governance practices that would impact the submitted its Annual Report on Corporate Governance and management model through formulated measures aimed the Internal Control System on 30 November 2016. This at the capital and organisational structure, remuneration Report contains the opinion of the Supervisory Board and policy, code of behaviour and conflict management as well as External Auditor. transparency and disclosure processes, while simultaneously outlining reporting guidelines related to the governance GUIDING PRINCIPLES OF CORPORATE GOVERNANCE model. The guiding principles of the Corporate Governance policy The ongoing concern with the refinement of the relevant in force at BFA are aligned with international standards best structure and practices in these matters, has prompted the practices and follows BNA’s blueprint and requirements, Board of Directors to approve the enforcement of an action and those of its major shareholder BPI, of which BFA is plan in accordance with Notice no. 1/2013 (26)(2) and a subsidiary under the scope of consolidated supervisory Notice no. 2/2013 (22)(2), aimed at ensuring that the Bank’s regulations. The main principles are:
Ongoing and full reporting. It allows non-executive members of the Board of Directors In-House (BD) and members of the Supervisory Board to comply efficiently with their controlling and Management supervisory duties. Transparency Extensive and accurate reporting. It allows Shareholders, Authorities, Auditors, Investors and External stakeholders in general to assess the quality and appropriateness of the information provided and the outcomes obtained.
Independence Executive management autonomy in relation to Shareholders or individual interests.
Fairness Fairness within the scope of Shareholder, Customer and Employee relationships.
Loyalty achieved through the implementation of tools that prevent the occurrence of conflicts of Loyalty interest.
Efficiency Functional and interactive efficiency between all Corporate Management and Supervisory Bodies.
Strictness Strictness in the management of the different risks inherent to the Bank’s activity.
Participation Participation in the decision by adopting corporate models in the decision-making processes and in decision-making encouraging teamwork.
Performance and merit Performance and merit as key criteria of the Employee and Management remuneration policy.
Harmony Harmony in the alignment of Shareholder, Management and Employee interests.
Value creation A consequence of the aforementioned principles and the main goal of BFA Management and Employees.
34 Banco de Fomento Angola | Annual Report’16 issued;a market of cards share of 80% over of Management theUse new Platform, Card in which BFA has conditions; technical regards as standards access and service EMIS’ facilities, the to international designed meet highest Installation of the in new BFA Centre the Processing Data suchthe offered, solutions as: and services generallyBanks one of thein first the market to implement theand initiatives encouraged launched by EMIS, and is foundingAs shareholder, BFA has continuously endorsed currently are the two last inactive. Habitacional and Instituto de Capitais, of doMercado which BFA has legal in interest EMIS, Sociedade de Fomento S.A. UNITEL, and subsidiaries, BFA’s share capital is held by BPI Group, and wholly its owned CORPORATE STRUCTURE AND EQUITY INTERESTS made. were amendments amendments by public and since deed then nofurther subject were (AoA) to of Association substantial Articles The intoS.A. an Angolan bank, majority-held by the BPI Group. of the transformation of the Angolan branch of Banco BPI, BFA aresult as on26 by August 2002 deed incorporated was CORPORATE STRUCTURE AND GOVERNANCE MODEL Shareholding Structure 50,1% 49,9% ownedsubsidiaries *Banco BPIanditswholly UNITEL S.A. Banco BPI * character to perform theircharacter duties. to perform technical experience and professional moral expertise, Furthermore, all have the members Governance Bodies and principlespractices of sound and wise management. insider information, oninternational based best standards aimed preventing at conflictor theof misuse interest of of confidentialitystrict duty and subjectset of rulesto a All of BFA’s members bound are to Governance Bodies a Chairman. of the and Executive of of the its Directors Committee Board with appointed of the Directors Board the AoA, the members mandate: 2014-2016. date, the On same and in accordance MeetingGeneral 2014 held on20October athree-year for of the Governing members The appointed were Bodies the at and theCommittee Audit and Internal Committee. Control new commissions: up set two ofthe the Directors Board Risks Pursuant to the provisions of Notice no. 1/13 and no. 2/13, (ECBD)of Directors Auditor. and the External the Meeting, General the Executive of the Committee Board of the Board, Board and of the Directors Board Supervisory of:comprised the Meeting General and chairman, its the and Governing The are Bodies the are Statutory Bodies provisions of the Financial Institutions no. (Law Act 13/05). Meeting and held complies on27 with 2008, November the (AoA), whichAssociation General its at approved were BFA’s operating is model laid in down of Articles its GOVERNANCE MODEL by the following governing bodies: is delegated to an Executive BFA Committee. is represented while of Directors out bycarried aBoard current management Meeting of 17 2010, December management is corporate In with accordance EMIS’s the at approved General AoA, New digital check clearing using system images. ■ ■ Board of Dr. Directors: Board Otília Faleiro. BFA 35
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment The setting up of the Audit and Internal Control Committee contributing to major improvements in BFA’s Internal Control (CACI) and the Risks Committee, in 2014, was a critical step System, which started in 2015 and continued in 2016. toward compliance with the laws and regulations in force,
GOVERNING BODIES
Supervisory Board General Meeting External Auditor
Board of Directors
Risk Executive Audit and Internal Committee Committee Control Committee
General Meeting
Composition The General Meeting is the governing body made up of all the Bank’s Shareholders and its proceedings are governed by the AoA.
Powers and ■■ Appointment of the members of the Board of Directors, the Supervisory Board, the Chairman, the Duties Vice-Chairman and the Secretaries of the Board of the General Meeting and elect the External Auditor;
■■ Assess the Board of Directors’ annual report and discuss and vote on the balance sheet and consolidated and individual financial statements, considering the opinions of the Supervisory Board and the External Auditor;
■■ Approve the fixed and/or variable remuneration of the members of the corporate bodies;
■■ Decide on the appropriation of profits proposed by the Board of Directors;
■■ Decide on amendments to the Articles of Association;
■■ Decide on the increase or reduction of capital and the merger, demerger, transformation or dissolution of the company;
■■ Decide the acquisition and disposal of own shares or bonds.
36 Banco de Fomento Angola | Annual Report’16 Frequency Duties and Powers Composition Board of Directors of Board
The Board of Directors will of Directors Board The quarterly and whenever summoned least at by meet the Chairman of the Board. approval resolution and in the Executive operating own Committee Regulations. subjectExecutiveseven made upmembers, Committee or of three,to five the limitsset in the delegation- To regulate internal its operation, delegated of the current Directors Board management of the Bank to an in with acts accordance of and Directors with Board ofThe the Association Articles specific Regulations. by the Executive and by approved of Committee the Directors. Board proposed involved inDepartments their execution. is reflected in Annualthe This strategy Budget and Actionin Plans theas policies and actions required to achieve the established goals and implemented by of the each BFA’s is of also Directors responsible Board The approving for and monitoring well the as and business risk strategies Acquire, rights; or encumber of dispose or any assets - arbitration claims, accept proceedings, withdraw or desist in any legal action and in engage arbitration; members in of 2016. themembers course Shareholders’ Meeting. General current The is of made up Directors Board of 11 of two the loss after members (BD) of Directors Board The of aminimum is composed of 7and amaximum of 15 appointed members, the at ■ ■ ■ ■ ■ ■
■ ■ ■ ■ ■ ■ purpose, namely: purpose, Take to the undertake appropriate activities or measures included all in other necessary the corporate the of behaviourApprove code wholly for controlled companies; thatbonds fall by submitting to outside powers, its the Meeting; General proposals its amendments and including to share capital of the Association Articles increases, Propose the issuance of the Meeting; General the accountingPrepare documentation the for appropriation andsubmissionfor the proposal of profits to monitor onaregular their basis; performance the planApprove business and the annual and multi-annual plans their and budgets, amendments and BFA’sSet general policies; - - Appoint agents for specific acts, or classes of acts, setting the acts, of limitsor classes of acts, Appoint their specific for agents mandates. Represent theRepresent company in in out of court, or an manner, active passive or file and challengeor anycourt BFA 37
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment Executive Committee of the Board of Directors
Composition Executive management of the Bank is performed by three, five or seven Directors, appointed by the Board of Directors, and who’s Chairman will be chosen from among them.
Powers and It has the required and appropriate management powers for the performance of the banking activity, under the Duties terms and to the extent permitted by law, namely the power to decide and to represent the Company regarding specific matters. The Committee’s performance is subject to ongoing monitoring by the Board of Directors, the Supervisory Board and the External Auditor.
Frequency The Executive Committee of the Board of Directors meets whenever summoned by its chairman, usually once a week and at least once a month.
Risks Committee
Composition The Risks Committee comprises three to six executive or non-executive members of the Board of Directors (BoD) and, if the BoD so decides, by non-board members who are freely chosen specialists in the Risk Management area. Members are appointed by the BoD, who also appoints its Chairman and, should it so decide, a Vice-Chairman.
Powers and ■■ Advise the Board of Directors on risk strategy; Duties ■■ Monitor the management of the risk policy regarding the risks inherent to the Bank’s activity.
Frequency The Risks Committee meets quarterly or whenever convened by its chairman. Members of the Supervisory Board and the External Auditor may attend the meetings of the Risks Committee, without right to vote, provided they notify their intention to the Committee Chairman.
Audit and Internal Control Committee
Composition The Audit and Internal Control Committee comprises three to six members of the Board of Directors (BoD), non-members of the Executive Committee and, if the BoD so decides, by non-board members who are freely chosen specialists in the area for which they were chosen. Members are appointed by the BoD, who also appoints its Chairman and, should it so decide, a Vice-Chairman. The number of non-board members must never exceed half of the total Board members.
38 Banco de Fomento Angola | Annual Report’16 Audit and Internal Committee Control Directors of Board the of Executive Committee Duties and Powers Composition Frequency Duties and Powers Supervisory Board Supervisory Audit and Internal Committee Control ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ effective fulfilment entrusted of tasks to the them. qualifications experience,professional and including theoperational banking allowingexpertise, for the with natural fullmust be persons of the Law), Company (Article 433 legal capacity have the technical one of aChairman whichIt comprises permanent members, accountant. and is two achartered members Its provisions regulatory or and Regulations. own its and structurefollows operation is its by of Board governed the Association Articles the Legal Supervisory The Internal And The onaquarterly whenever basis summoned or by Chairman. meets its Committee Control ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ and results; assets of its assessment that accountingthe Confirm policies and valuationthe criteria by in use Bankthe accurate to an lead Validate the accounting consistency of the and books, supporting records documents; Monitor of the risk the effectiveness management, internal control and internal audit systems; Ensure compliance with the law and with of the Association; Articles To audit the Company’s management; of obtainingthe purpose the audit issued. findings and reports the activitiesSupervise and independence of the auditors external up and set acommunication channel for the how complianceSupervise function is performing; of their the activity implementation and supervise corrective measures; of proposed Check the independence and efficiency of the internal audit, approve and review and frequencyscope the accounts; Review all financial information for internal publicationor disclosure, namely the annual management the implementationSupervise of the Bank’s accounting policies and practices; of preparation and disclosure of the financial statements; Ensure that an effective and duly is documented in system reporting place and operational, including that
BFA 39
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment Supervisory Board
Powers and ■■ Prepare an annual report concerning its auditing activities, including its opinion on the Annual Report, Duties Statements and proposals submitted by Management;
■■ Receive reports on irregularities submitted by shareholders, employees and others;
■■ Call the General Meeting whenever the Chairman of the Meeting fails to do so;
■■ Comply with any other legal provisions, Articles of Association and directives of Banco Nacional de Angola.
Frequency The Supervisory Board meets at least once every quarter.
External Auditor
Composition The financial statements were submitted to an independent audit performed by the external auditors Deloitte & Touche – Auditores, Lda. Notice no. 4/13 lays down the rules governing the provision of External Auditing services.
The Bank maintains that its auditors are independent, within the scope of applicable regulatory and professional requirements, and that their objectivity is not compromised. In this regard, BFA has factored into its governance practices and policies various mechanisms to safeguard the independence of its auditors.
Powers and ■■ Audit BFA’s Financial Statements as of 30 June and 31 December; Duties ■■ Issue an opinion as to whether the Annual Report presents a true and fair view of corporate governance and the internal control system.
Frequency The External Auditor carries out an annual review of the procedures of selected Departments and/or processes wherein the inclusion of the General IT Controls is mandatory.
40 Banco de Fomento Angola | Annual Report’16 External Auditor External Board Supervisory Directors, provides aclear provides delimitationDirectors, and of separation tasks. areas of business BFA’s organizational is underpinned chart onamulti-disciplinary operational structure. Under the supervision Executive of each O B COMPOSITION OF GOVERNING BODIES Members Vice-Chairman Chairman B Secretary Chairman rgani G the of oard oard Accounts andPlanning Business Development Mariana Assis Audit andInspection Human Resources of Department Department Department D Unit z irectors ation M eneral Chart eeting
Manuela Moreira Manuela Costa Francisco FaleiroOtília Escórcio Vera António Matias Assis Mariana Marta Santa Diogo SilvaMário Amaral do Pena José Isabel dos Santos Ulrich Duarte Costa Fernando eVale Lucena Alexandre Rui Faria de Lélis António Matias Corporate Department Facilities andAssets Department International Department Marketing Department Vera Escórcio Assets Management Financial and Procurement Department Organisation andTraining Compliance Department Cards andAutomated Credit Processingand Deloitte &Touche Lda. –Auditores Deloitte E Accountant Chartered Member Chairman S Members Acting Chairman E Treasury Department Information Systems Banking Department Foreign Sectorand Otília Faleiro Support Department upervisory xternal xecutive New Business Department Department Department Auditor C ommittee B oard Individual andBusiness Francisco Costa Real EstateOperations Corporate CreditRisk
Loans Department Legal Department Structured and and Litigation
Henrique Camões Serra Serra Camões Henrique TrigoSusana Cabral Amilcar Safeca Moreira Manuela Francisco Costa FaleiroOtília Escórcio Vera António Matias Assis Mariana Monitoring, Department Department Department Investment Department Financing Recovery Individuals andBusiness Manuela Moreira Protocol Management Investment Centres Department Department Department BFA 41
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment Executive Committee of the Board of Directors Report Relatório Economic Económico Environment Enquadramento BFA BFA Gestão de Risco Risk Management Financial Review Análise Financeira s nt s Fi nanceiras tatem e ota s Otília Faleiro António Matias Vera Escórcio Francisco Costa Mariana Assis Manuela Moreira Notes N d e ões aç ões an
Director Director Director Director Director Director S nc ial Fi na De mo ns tr Anexos Annexes
42 Banco de Fomento Angola | AnnualRelatório Report’16 e Contas 2015 O BFA 43 44 Executive Co BancodeFomentoAngola |AnnualReport’16RelatórioeContas2015 mmittee of the Board of Directors an Accounting Director. She hol of the of Head (1989).asTe recruitedBFA1993asin served wasby chnicaland AnalystShe the Corporate De Bancária de A Adm e InBanking, AgostinhoUniverfromNeto degree in Banking Managemen of Business and Ec the stat 16 years’ experience in the banking sector, started in 2001 at BFA, where Vera Escórcio has been a member of the BFA Board of Directors since 2009. She holds Date of Birth: 17 September 1974 VERA ESCÓRCIO appointed Assistant Manager of the Credit De 1 January inBFA joinedhaving academicaninEccareer BancáriaFormaçãoInstituto dethe of Board the of António Matias has been a member of the Board of Directors since 2005 and Chairman Date of Birth: 1 ANTÓNIO MATIAS I Budget of (1979), Head A de A Comercialde Banco1975 inat out Marianastarts belt, her underexperienceyears’ Mariana Assis has been a member of the BFA Board of Directors since 2005. With 41 Date of Birth: 29 Septembe MARIANA ASSIS She graduated in Ec ngola, currently BPC, as a clerk in the d Finance from th l (C) h ws ed f h Gnrl Adm General the of Head was she (BCA) ngola istração). Mr. Matias is the Chairman of the Board of Institutoof Board the Chairmanof the isinistração).Matias Mr. AccountingDe us of Assistant Financial Director. S rance and Financial Markets from ISLA from FinancialMarkets and surance 9 ngola Jul partment in y onomics (Universidade Nova de Lisbo 1968 – Director Director onomics and specialised in Business Ec e Director IFBA. 1994 and 2001 wh 2001and 1994 between partment School o r 1953 omics he has more than15morehas onomicsexperienceyears’he in banking, mp ty’s College of EcCollegeofsity’s ds an Ec May 2005. He earned a degree in Business Management eetto ad oto (97 ad Chief and (1987) Control and lementation f t Ec 8. He held vari held He 998. fro onomic m onomy Degree with Post-graduation in Católica Executiv Accounting De s he was also Finance Director at Banco BIC. at Universida pa rtment in 2001 and Central Manager of omics and a postgraduate degree inpostgraduatedegree a andonomics tions in sales until he was untilhe sales insitions po ous partment. At the Banco Comercial A de e srto Coig De Closing inistration nstituto Superior de Línguas de Superior(Instituto a) and obtained a postgraduate Education Lisbon. de Agostinh ola (IFBA). In addition(IFBA).toIn ngola onomics at the UNL School she was promoted to promoted was she en o Ne Formação de to. she reached Accountant Accounting partment pone ha o te netet ete De Centre Investment the of head appointed been having duties during her career, namely within the bankingyears’ BFAexperienceatJanuaryin1997. began variperformedhas She Manuela Moreira has been a member of the BFA Board of Directors since 2014. Her 20 th EngineeringInstitutofrom Superior Técnico, inLisbon,Ecdegree a and (ISCTE). Lisbon’sInstitutoOrganizationSuperiorfrom CreditDe theof Methods,taking 2 in Network Business h pre She Accounting and Finance and (IMEL).She graduated from the Univer M the degree became a member of the Board of DirectorsoftheBoardmemberofin1995. a became holHe From 1989 onward he took on Management roles reac e Date of Birth MANUELA MOREIRA years 30-odd of experience in 2011.sinceDirectors His of BoardBFA the of member a been has Francisco Costa Date of Birth FRANCISCO COSTA department in 1 Technologies De 19Inexperience. alsoa is 2011andsince Directors of Board BFA the of member a been hasFaleiro Otília Date of Birth OTÍLIA FALEIRO mployed at e Coimbra Univer sr o Euain s tahr t nttt Médio Instituto at teacher a as Education of inistry non-executi i n l wre a te M the at worked viously Business Management. : : : B 2 28 September 1969 26 Au 2 PI as Project Analyst and later promoted to Project Coordinator in 1987. Au 998. She was appointed Proje partment and was promoted to Coordinating Manager wit rtment in 2010.inpartment hol She er as Central Head of RealFinanofCentralEstateHead as over gust 1954 gu she took on the role of Assistant Manager of BPI’sInformationof Manager Assistant of role the on took she 92 memberve of the Board of EMIS. She has Director sity’s School of Ec st 1951 Director 0 and in 2007 became Central Head of Organisation andOrganisation of Head Central became 2007 in and 000 Director f t rom the Getúlio Vargas Institute in he banking sector began in January 1984 when he was sr o Finance’s of inistry onomics. ty of Havansity ct Manager of the Individuals and Small Accounting, Credit and Sales De a degree in BusinessManagementinanddegree a ds Ciências do Trabalho e da Empresa da Trabalhoe Ciênciasdo de Cuba, hing Central Director in 1992. He utn De Accounting ina, 1995 with degreea in ng in 2009 and as Head asand in2009 cing pa Ec de er 40 yearsofover40 banking a degree a ds tet in rtments 2 0 onomia 05 with a Mast tet n for and partment onomicsfrom hin that same ctrical inEle 2006. May L de partments, uanda er’s ous BFA 45
Enquadramento AnnexesAnexos DemoFinansnctraçialões Statem Financeirasents AnáliseFinancial Financeira Review RiskGestão Management de Risco BFA Economic RelatórioReport ane dN Notesotas Environment Económico INTERNAL CONTROL SYSTEM
BFA’s internal control system is an organisational plan of all System by Financial Institutions, this is an adequate and the methods and procedures implemented by the Board of efficient Internal Control System based on which the Board Directors to achieve a reasonably methodical and efficient of Directors and the Management are reasonably assured performance of the Bank’s activities, including the following: that the Bank’s strategic and operational goals are met, the conjunction to management policies, asset protection, reporting system is reliable and the rules and regulations are fraud and error prevention and detection, accuracy and being followed. completeness of accounting records and timely preparation of reliable financial information. BFA’s current Internal Control System is adequately and comprehensively upheld by 4 components with unique goals In accordance with BNA’s Notice no. 2/13, which regulates and tools: the mandatory implementation of an Internal Control
Control The Control Environment concerns the posture and behaviour of the Bank’s governing bodies and Environment employees considering their respective levels of knowledge and experience and the high standard of ethics and integrity to which they adhere.
The Risk Management System aims to establish a comprehensive set of policies and procedures that Risk Management ensure proper risk identification, assessment, monitoring, controlling and reporting. All pertinent System risks must be taken into account and dealt with in an effective, consistent and timely manner.
The Bank’s information and Communication systems must not only provide full, reliable, consistent, Information and comprehensible information that is aligned with the designated goals and measures, but also the guidelines Communication for its collection, management and disclosure according to international standards best practices.
The supervision of the internal control system ensures the continuous, effective and timely detection Monitoring of shortcomings in terms of strategy, policy, procedures and all risk categories in addition to ethical and professional principles.
REMUNERATION OF GOVERNING BODIES ■■ Collective performance of structural units under the relevant Director’s responsibility; Remuneration Structure of Executive Directors ■■ Bank’s overall performance; The remuneration policy employed by BFA for the executive members of its management body - the Executive Committee ■■ Due regard for the standards, rules and internal and of the Board of Directors (ECBD) - is designed to include fixed external procedures applicable to BFA’s activity and the and variable components. The latter is awarded as a measure Code of Behaviour in particular. of the performance of both BFA and individual Directors during the year preceding the payment of said compensation. Os valores de remuneração fixa pagos aos membros da CECA, Furthermore, is designed to assess consistency with são consistentes com a prática de mercado e resultam da long-term performance and is based on the assessment of the aplicação do respectivo contrato de trabalho e da legislação following criteria, among others: de trabalho em vigor.
■■ Individual performance;
46 Banco de Fomento Angola | Annual Report’16 ■ follows: of the Meeting General amounted to AOA 656,7 million, as and the Board Board the Supervisory ofthe Directors, Board In 2016, remuneration paid of the to aggregate members Remuneration paid in out amounts 2016 Meeting. one is elected, directly or by the shareholders the at General made up when Committee of shareholder representatives, is determined Board by aRemunerationthe Supervisory of the the Meeting Board of General Directors, Board and amountThe of remuneration paid of the to members remuneration tasks. of those the for performance exclusively with remuneration afixed and receivevariable no of their the for compensated performance dutiesare Board of the MeetingBoard General and the Supervisory the of of the Directors, Board members Non-executive General Meeting the of and Board the Board Supervisory the Directors, of Board the of Remuneration Non-executive Members of remuneration supplement in question is fully paid in cash. Since BFA is not apublic company, traded the variable tax. after profit and tax before notably the historical of profit performance of the ECBDmembers most by is various affected factors, taking. total The amount of variable remuneration payable to variable becoming from pay an incentive risk- excessive for the variable remuneration of ECBD helps members to prevent Taking “consistent into performance” account when setting and of the BFA interests members and shareholders. its the alignmentstrengthen of the ECBD interests between of the variable purpose The remuneration element is to effect. individual employment and the labour contracts laws in is consistent with market practice and is determined by amountThe compensation ofpaid fixed to ECBDmembers ■ andfixed variable remuneration; of the ECBD,Members AOA 568,7 million, including both ■ ■ ■ ■ ■ ■ ■ Association whichAssociation the following set of priority: order appropriation profit policyThe stated is Articles in of the PROFIT APPROPRIATION POLICY free reserves. free dividends, as out 40% the remaining to to transferred be 60% the for appropriation 2016 proposal for The of profit is pay to respectively. to 60% of in 40% the proportion reserve free 2015The paid were as out dividends profits and allocated to the reserves. dividends while the remaining to free transferred were 50% In 2013 and 2014, paid were as out of net profits 50% reserves. dividends while the remaining 35% to the transferred free were and 2012, 2009 Between paid were 65%as out of profits fulfilled. are reserve the requirementsAt present, regarding funding of the legal ■ ■ ■ ■ ■ ■ ■ Bank may have namely issued, without those voting rights; dividends preferred Pay due onany the preference shares up replenish requiredSet or by law; the special reserves up replenishSet or the legal reserve; previous from years; forward carried losses Cover million88,0 in remuneration. fixed of and the Meeting, Board General Board AOA Supervisory of of the Directors, Board members Non-executive General Meeting.General Allocate the remainder decided as by simple majority of the investments ofspecific to interest the Bank; partially to or make replenish any other any reserves ofrepresenting the two-thirds share capital to fully or theunless Meeting General decides by amajority Distribute of the remaining 40% to all profit Shareholders, BFA 47
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment ETHICAL PRINCIPLES AND CONFLICTS OF INTEREST be treated with discernment and fairness to ensure fair treatment of the parties involved; ii) conflicts between The Code of Behaviour, the Regulation of the Board of Directors Customer interests, Bank interests, or of its Employees and and the Regulation of the Executive Committee of the Board of Directors, arising from current activities of the Bank must Directors set the highest standards of behaviour based on ethical be resolved in favour of the Customer, unless there are and professional principles, and lay down rules, principles and legal or contractual grounds for doing otherwise; procedures for identifying, monitoring and mitigating conflicts of interest. ■■ To preclude the improper gains and abuse of position: Governing Bodies members and Employees are not allowed Hence, they also foster relations clarity between corporate to request, accept or receive, for themselves or for third bodies and employees, discouraging the participation in illegal parties, benefits of any kind or promise thereof, related activities and excessive risk-taking, all of which contribute to to or constituting compensation for acts or omissions transparency in contractual relationships between the Bank and occurring in the performance of their duties at the Bank its counterparts; furthermore they provide that neither members (regardless of whether such an act constitutes a violation of of corporate bodies nor employees may accept gifts of more than their duties); token value that might compromise their independence. ■■ Relations with the authorities: In dealing with supervisory The professional activities of members of the Bank’s corporate banking, authorities and tax and judicial authorities, bodies and employees are governed by ethical principles set in Governing Bodies members and Employees must act BFA’s Code of Behaviour and approved by its Board of Directors diligently, seeking clarification from their respective (available on the Intranet and on the corporate website); please immediate superiors whenever necessary. see below a summary of the main points: ■■ Ensuring that loans granted to Shareholders, Governing ■■ To ensure that in addition to complying with the rules Bodies members, Employees or related parties follow and duties arising from applicable legal provisions and normal market conditions, bearing in mind their specific regulations, the members of BFA’s corporate bodies and risk profile (possibility of waiver of loans of a social nature, its employees act and conduct their business in strict such as mortgage loans or medical expenses). In this compliance with ethical principles and demonstrate regard, BFA has in place two Regulations for Subsidised exemplary civic behaviour; Employee Loans: - Mortgage Loans for Owner-Occupied Housing; and ■■ To proceed with professional diligence and competence in - Personal Loans. the performance of duties, in good faith and in compliance with high standards of diligence, loyalty and transparency, In their dealings with Customers and the market, BFA’s responding to the requests of customers and the competent governing bodies members and employees must exercise the authorities in a strict, timely and thorough manner, while utmost discretion and keep strictly confidential any services observing the duty of professional secrecy; provided to customers and any Customer or third party information they are privy to while performing their duties. ■■ To establish and uphold strict professional secrecy; RISK MANAGEMENT SYSTEM ■■ To provide Fair and Equitable Treatment to the Bank’s Customers unless there are legal and/or contractual and/or The Risk Management System enables for the comprehensive risk-related grounds for doing otherwise; overview and management of the risks inherent to financial institutions activities with a view to mitigate potential losses ■■ To manage Conflict of Interest: i) situations of conflict associated with risk events. between the interests of two or more customers should
48 Banco de Fomento Angola | Annual Report’16 ■ ■ ■ ■ ■ departments have particulardepartments responsibility credit for risk: of all BFA’s in general, areas although the following Identifying risk situations and assessing the are responsibility main indicators of risk and management. areas within of the of their the scope duties, the for assessment and theCommittee Risks also are responsible, Committee the Board, Audit and Internal Supervisory The Control includes and the Directors non-executive Risks Committee. fallssystem under of the Directors’ responsibility, Board which Currently, monitoring and control of the risk management of credit risk. anthen indispensable it became assessment proper tool for when BNA’s Credit Risk operational. became Centre Since control of creditproper risk, which reinforced were in 2011 by of another internal set to ensure rules and procedures BFA Credit of General has aset Regulations, supplemented no responsibilities in the commercial areas. to Director, the same report whohas All departments these ■ ■ ■ ■ ■ hotel developments. and of estate real is composed loan The portfolio portfolio. CRE or (commercial estate) loan real mortgage-backed of loan applications andassessment the monitoring of the -responsible the for Department Operations Real Estate by thecovered Angola Investe Program; and all investment loan applications, including those responsible structuring for complex, high-value financings Structured and Investment Finance - Department credit operations withinassessing this segment; Credit Risk -responsible for Corporate Department credit operations withinassessing this segments; Individual -responsible for and Department Business Loan recovery of overdue loans, in out of court. or recovery impairment. This is equally department responsible the for and managing level its by assessing of provisioning and responsible monitoring for the quality of the loan portfolio Credit Monitoring, and Litigation Recovery - Department risk chapter. aforementioned risks reviewed may be in detail in the relevant and when managing tools used of methodology The the each Behaviour.of complianceassessing with internal regulations and the Code hired auditor hired. is also responsible department The for audits out by carried the auditor external by aspecifically- or reviews supplemented are These by thematicperformed. the activities are of the Business Units and Services Central To and customers. of its thisassets end, regular reviews on (A&I) is to the protect integrity of and the security Bank’s of the task InternalThe Audit and Inspection Department affecting the financial institution. and check compliance with applicable laws and regulations identify sanctioned entities, detect suspicious transactions controls hoc to out and prior post carrying for procedures, of anti-money laundering and financing terrorist management ComplianceThe is responsible, within Department the scope losses. gathering information onoperational and preparing reports requiredthe support all at times. It is also responsible for view of efficiency and risk, and that management its receives appropriate are the from point of structure and processes and maintained, prepared are that BFA’s organizational to as ensure so that internaland procedures, regulations involved inprocesses and coordinates and defines projects and of rational the Bank.cost-effective It performance is managing operational risk, thereby contributing to the more OrganizationThe and Training is responsible for Department with matters. BNA onthese exchange limits. exposure It is also responsible liaising for ratio and the foreign in particular reserves the mandatory listed in the Limits department’s Manual, and Procedures rules in and force with ratios the approved and in-house limits (DFI) is responsible ensuring for compliance with supervisory and rate, interest the Financial and International Department the risk regards managementAs of liquidity, exchange rate BFA 49
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment INTERNAL MAGAZINE - BFA YETU INTERNAL COMMUNICATION BFA designed and launched the BFA YETU project in BFA’s commitment to and ongoing investment in Information 2013 with the aim of enhancing the Bank’s internal Systems is part of its strategy to achieve high levels of communication strategy. The suggestive title “YETU” innovation, modernization and risk control. Information means “ours” in the Kimbundo language. The magazine is systems promote the sustainable growth of the Bank, not printed quarterly and aims to disclose the Bank’s activities only optimizing procedures and processes but also customer to all its employees. service quality.
Corporate Communication REVISTA INTERNA Nº 7 MARÇO 2016 BANCO ALIMENTAR ANGOLA BFA places special importance on straightforward, open SOU SOLIDÁRIO QUALIDADE DE SERVIÇO relations with its Shareholders, the authorities, the media and 3ª VAGA DO ESTUDO CLIENTE MISTÉRIO other market players. DPN REUNIÃO ANUAL DE GERÊNCIAS
ENTREVISTAS Communication with the market in general is carried out FILOMENA BENCHIMOL MARLENE DA COSTA through publication of the Annual Report, the quarterly financial statements summaries and BFA’s corporate presentation, “bfa@glance”, which is available on the corporate website.
Employees are kept informed of the BFA’s regulations, performance and activities through the corporate intranet.
Every six months, the Bank holds a meeting with the senior management team, attended by members of the different departments, in order to discuss the presentation of financial Revista Interna n.º 7 Março 2016 results, forecasts and other subject matters.
REVISTA INTERNA Nº 8 NOVEMBRO 2016 23º ANIVERSÁRIO BFA MARCAMOS A NOSSA FORÇA
MÊS DA CRIANÇA ANGRY BIRDS MUSICAL PANDA
PROJECTO BANCASSURANCE NOVO SERVIÇO PARA CLIENTES BFA
ENTREVISTAS MANUEL SEBASTIÃO ALFREDO ZUA
Revista Interna n.º 8 Novembro 2016
50 Banco de Fomento Angola | Annual Report’16 Corporate Centres and Investment and Centres) Centres Central Corporate (Branches, DAIThe that Departments ensures Sales andcompliance procedures. with established processes efficiency and suitabilityeffectiveness, monitoringby its the internal to assess and undertakes control system AuditThe and (DAI) Inspection Department largely oversees MONITORING loan agreements originatedloan agreements in Departments. the Sales within mission Approvals. Its Loan quality is to assure in the A key element of the new operating is model the Quality Unit, Litigation. and General Support Services Approvals, Central Loan with Account Customer 31 Management, members: staff is made up of 4new divisions Department new Legal The by specializedresponse to the Bank’s staff legal issues. structure and organisationwhose facilitate an efficient operating to an environment designed foster model fresh BFA with has currently a Department Legal arestructured LEGAL DEPARTMENT LEGAL and disclose the information BFA among Employees. to the track publication of relevant legislation and progress aims to Department make Legal The of the Library use Legal updating of legal information relevant to the Bank’s business. collecting, structuring, disclosing, assessment, recording and Division, Support which Service Central is responsible for Capacity-BuildingLegal under Centre management by the BFA Library, anew Legal of the an integral part boasts now are inare line with applicable legislation affecting process. each sufficient to deal with new are risks theyare identified and verifyingfor that the in various control place procedures are regulations and risk control. Moreover, the DAI is responsible and ensure complianceassets with relevant internal the of BFA’ssafeguard integrity and safety and Customer order are in to subject to regularassessment Offices BFA 51
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment Core Business Areas
2 STRENGTHENING OF THE LEADERSHIP POSITION AND Development of the Penetration Rate BUSINESS DEVELOPMENT
Significant increase in the process of promoting Banking services within the Angolan population Development of the Penetration Rate2
One of the major focuses of the Financial Sector is the promotion of Banking Services within the Angolan population. Thanks to the joint efforts of BNA and the Financial Institutions, provisions have been made for a progressive implementation, reflected on the steady growth of the Banking services index. 2014 2015 2016
BFA 2nd Bank 3th Bank According to a 2016 survey carried out on Luanda and Benguela residents aged 15 and over, recorded a Banking services index of 2 Angola All Media & Products Study – Luanda 2016 (AAMPS). Sample of 51%, accounting for a 4 pp increase over 2015 and 11 pp over respondents who are bank account owners residing in Luanda aged 15 and over. 2014 2015 2016 2014. ThisBFA strong resilience2nd Bank coupled 3withth Bank BFA’s efforts to expand its nationwide footprint and broaden product and service offering Development of the Banking Services Index1 Development of the Market Share as Leading Bank is reflected in a 26%-sustained market share as the Angola 2016 leading Bank.
2015 Development of the Market Share as Leading Bank
2014
1 Angola All Media & Products Study – Luanda 2016 (AAMPS). As part of the All Media & Products Study (AMPS), Marktest, Angola carries out an annual study of the 2014 2015 2016 viewing and consumption habits of the Luanda and Benguela population. The surveys cover a sample of more than 3 500 inhabitants of both genders aged 15 or more. This nd th study is also subject to a three-stage quality control: monitoring, answer consistency BFA 2 Bank 3 Bank checks, and supervision.
Closely aligned with the Banking services rate development, 2014 2015 2016 BFA’s penetration rate within the population of Luanda BFA 2nd Bank 3th Bank province aged 15 or more has shown an increase. Hence, BFA’s market leadership remained unchanged with respect to other banks (40.6%), being strengthened in 2016. This is a major aspect because it stresses out BFA’s work and momentum with respect to customer acquisition, the Bank’s relationship with the market and with its customers.
52 Banco de Fomento Angola | Annual Report’16 focus onpersonalized customer care.*** with high-income for customers, a high-net-worth or Centres, tailored solutions to their and needs; specific Investment aimed medium at Centres, companies, and offering large-sized and operations banking business management; Corporate format, specialized in individual owners business customers, within of activity: the three areas basic Branches, retail banking is underpinned network by amarket strategy segmentation BFA’s customers, With its aview serving to better commercial Renewal Commercial the Network of RENEWAL AND MAINTENANCE THE OF BRANCH NETWORK 2015. over increase inthousand 2016 new Customers representing an 11.4% BFAgrowth. is reflected base in won customer years, 160 commercial of theevery Bank, area which, in as previous one of thehas been key principles applied and each across namely onquality based Improved care, customer service, Sustainability Position and Leadership Strengtheningof
BFA NetworkDistribution rejuvenated outlets. to old, look service run-down outlets willservice prevail throughout 2017 and will a afford commitmentThe to refurbishing instead of building new refurbishment of outlets. existing service locations, project approval and licensing, execution work and and is required premium for outlets to search service ofresponsible BFA’s the for growth commercial network Points. Facilities The is 7 Service Department and Assets and 9Investment Centres 16 Centres, Branches, Corporate outlets. Overall, the2 service BFA 159 features network and Centre, closed down outlets and 1Corporate service In 2016, BFA outlets, refurbished 2new service 4 opened 2 2 2 014 015 016 Investment Centres Branches Banking Agents Corporate Centres BFA 53
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment INDIVIDUALS AND BUSINESSES
Increased efficiency in Customer support survey was carried out with the aim to strengthen commercial team focus on key issues of Customer Service quality. Within the scope of service quality improvement, it should be highlighted the broadening of operations covered by the In 2016, BFA undertook second phase of the Customer eMudar@BFA project. This project introduces a new exterior Satisfaction Survey project: from a sample of 10 thousand image for Branch, Corporate Centre and Investment Centre individual Customers, we were able to determine that operations, which operates through an automated management 60% of them consider BFA as their Bank of Choice. The workflow, thus increasing operational efficiency and security. aforementioned positive outcomes are those that drive BFA Over the course of 2016, have been checked and embedded to strengthen its efforts to improve its Customer support the following procedures: term deposits, wire transfers, effectiveness and efficiency. account deposits, check clearing, coupled with opening and amendment of individual and corporate accounts, check Customer Acquisition Performance Strength requisition, subscription and activation of both Multicaixa cards and BFA Net, already built-in during the course of 2015. In 2016, the number of customers of the individual customers, Business owners and Business Operations sectors increased Furthermore, for the third year running, BFA has carried by 11.4% over 2015, a net growth of more than 160.000 new out a Mystery Shopper survey in all its service outlets to customers, a record-breaking high. This data strengthens BFA’s measure customer service quality and support, followed by the performance momentum in the retail banking area, where once establishment of target sets and areas of improvement. This again it asserts itself as the market leader.
CUSTOMER BASE AND SERVICE DEVELOPMENT – INDIVIDUALS AND BUSINESSES AKZ 2014 2015 2016 Var. % 14-15 Var. % 15-16 Customers (no.) 1.291.089 1.400.234 1.560.313 8,5% 11,4%
BFA Net (no.) 498.222 563.053 570.013 13,0% 1,2%
Debit Cards (no.) 692.420 808.871 893.558 16,8% 10,5%
Credit Cards (no.) 14.528 14.117 13.006 -2,8% -7,9%
Salary Accounts (no.) 70.012 80.701 90.169 15,3% 11,7%
There is a positive sales trend of products and services linked Debit Card and BFA Net Penetration Rate to means of payment and new online channels. As in the preceding year, Credit cards are the exception when compared 2016 with other payment methods and feature a drop of 7.9% over 2015. This decrease follows the restrictions imposed on credit card issuance, a direct result of the country’s foreign exchange framework during that period of time. 2015
The use of basic services, namely debit cards and BFA Net, retreated slightly 0.5 and 3.7 pp respectively. 2014
Debit Cards BFA Net
54 Banco de Fomento Angola | Annual Report’16 Province service outlets duringphase. outlets this first service Province in out Benguela and the Luanda carried also A pilot was study Index. Satisfaction up the Customer setting for thoroughly tested and assembled designed, was model in close 2014.to asuccessful assessment The project Survey Satisfaction Customer of its phase BFA the first drew Customer Satisfaction Survey quality. service ofCustomer team’scommercial the improvement concerning focus BFA’s the within strengthening is aimed at this area response meetings. during available distinct made are discussed sales and the Intranet on records the information on collected. These unit based business each up for drawn are improvement for aspects showing records Detailed background. in behaviour and asales streamlining support customer and image staff and to branch with regard improvement for areas and goals well to as set as offering, support and service customer (individual aim business). and The is to ofthis assess quality survey network outlets the entire banking throughout service surveys 2014Between 2016, and Shopper BFA five (5) out Mystery carried Survey Shopper Mystery SERVICE QUALITY SERVICE Least system BFA failures 2 nd Banco Shortest waiting time 3 th Banco troubleshooting Customer’s speed as theiras ofchoice. Bank BFA have 60% of10sample ofwhom individual thousand Customers in out 2016carried with a conducted This was anational on scale. was project Survey Satisfaction ofthe Customer phase second The bank. bank. a5,1time registering with the second-ranked in gap pp comparison waiting achange of6,9recording pp; lastly, and with Bank shortest a7,8 registering support customer staff with Bank gap; pp best Failures friendly System with Bank gap; a9pp showing most Least achange of11,5 recording Advertising Best were: bank ranked pp; in which in out BFA relation toFollow-up the second- categories stood bank. with adifferential higher than 11 the second-ranked from pp is BFA’s speed troubleshooting distinctive category most Customer year. in as the previous banks, rated third- and with second in positively out that BFA comparison stood concluded the analysis it was from in Furthermore, Banks general. ofthe perception anoverall have positive that Customers revealed in conducted Province the Luanda ofthe survey outcome The Study:AMPS Perception Bank Most affable staff Best customer support Best Marketing
BFA
55
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment CUSTOMER FUNDS - INDIVIDUALS AND BUSINESS AOA million AKZ 2014 2015 2016 Δ% 14-15 Δ% 15-16 Funds 329.817,2 372.619,0 423.822,4 13,0% 13,7%
Deposits 329.625,6 372.522,4 423.706,8 13,0% 13,7%
Demand Deposits 229.535,0 264.673,7 309.824,5 15,3% 17,1% Deposits Rate Development in Domestic Currency Term Deposits 100.090,6 107.848,6 113.882,3 7,8% 5,6% Individuals and Businesses Other Funds 191,6 96,6 115,6 -49,6% 19,7%
2016
Local Currency Deposits – Growth The largest source of funds, as in previous years, is demand deposits, which make up close to 73% of total deposits and 2015 Funds Development in Domestic Currency show a positive growth change of 17.1% in comparison with 2015. Even though term deposits decreased as a proportion of
Fundraising enables BFA to maintain high levels of liquidity, total201 deposits,4 they increased by 5.6% (AOA 6,033.7 million) in ensuring both the financing of the Angolan Economy and comparison with the previous year. BFA’s preparation for the challenges ahead. To this end, a key indicator for BFA performance assessment is the deposits rate The Checkingongoing Accountsde-dollarizationTerm of the Deposits economy has resulted in a development. steady increase in the proportion of local currency deposits, which reached 84.7% of total retail deposits, up 13.9 pp The volume of individuals and business deposits has increased compared to 2015. 13.7%, accounting for a total of AOA 423,706.8 million.
Deposits Rate Development in Domestic Currency Deposits Structure by Currency and Type Individuals and Businesses Individuals and Businesses
2016 2016
2015 2015
2014 2014
Checking Accounts Term Deposits Local Currency Foreign Currency
Deposits Structure by Currency and Type Individuals and Businesses
2016
2015
56 Banco de Fomento Angola | Annual Report’16
2014
Local Currency Foreign Currency with BFA’s business. for to and exposure support increased loans consist of mostly Investment financing (62.3%), in line to compared 2015. withloan portfolio growth a2% Business made up the segment remaining Businesses The 16% of the portfolio. on the Individuals which84% segment, of the represents by 7%, reaching AOA 61,495.8 million, with focus astrong keeping loanThe portfolio, with the previous year’s trend, grew Increase in and Advances Customers to Loans customers, increasing lending and increasing defaulted loan recovery. lending increasing defaulted recovery. increasing and loan customers, acquiring satisfaction, with scheduled new the aim are the level ofcustomer ofincreasing campaigns targeted training). Furthermore, and (support teams their and (companies sales employees) and with customers campaigns the proximity to and extend departments, In 2017, Bank with coupled other courses, coordinated and training team in segmented plans through to promotional invest the DGP In order to guarantee customer satisfaction and service quality the DGP offers specific products, including:products, specific offers quality the DGP service and satisfaction customer to guarantee In order the year. throughout conducted also were performance, protocol and satisfaction employee measuring and customers relations with corporate strengthening aimed at Follow-up actions, costs. transaction and rates, effort instalments, terms, amounts, primarily loan simulations, information regarding loan on with accurate and focused clear providing campaigns the employees The provided. services and products ofthe loan understanding and promotion well awidespread as as anational on scale, Customers with protocol proximity ofinitiatives, with achieving the development thereby ahead greater in made 2015,Following pressed the efforts management service. providing customer anexcellent personalized and with the aim companies of ofthese the Employees at directed campaigns promotional several coordinated also network, Centres Investment within ofthem During 2016, the most Public and Sector. DGP, protocols, The 23 new signed ofthe Branches DGP with the support BFA. at account asalary open who Institutions ofsaid Corporations and employees to the operations loan particular to benefits price and access offer protocols manner. in competitive and anorganized These customers aims (DGP) to enable with the signing Institutional up inSet ofProtocols July Corporate and 2013, Department Management Protocol ■ ■ PROTOCOL MANAGEMENT DEPARTMENT PROTOCOL ■ ■ oil companies. with established protocols under exclusively granted loans for guarantors, for need no and with subsidised rates Loan, Express Personal and housing and loans; car personal, special pricing for terms Offer, which proposes Civil Servant Individuals andBusinesses Loans andAdvances 2 2 2 014 015 016 Total Loans AOA million BFA 57
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment INVESTMENT CENTRES
CUSTOMER BASE AND SERVICE DEVELOPMENT - INVESTMENT CENTRES
2014 2015 2016 Δ% 14-15 Δ% 15-16 Customers (no.) 3.500 3.722 4.214 6,3% 13,2%
BFA Net (no.) 2.926 3.039 3.093 3,9% 1,8%
Debit Cards (no.) 2.868 2.932 2.874 2,2% -2,0%
Credit Cards (no.) 2.262 2.270 2.195 0,4% -3,3%
DEVELOPMENT OF CUSTOMER PORTFOLIO AND CUSTOMER BFA Net, Debit Card and Credit Card FUNDS Penetration Rate – Investment Centres
2016 With the aim to strengthen growth strategy and ongoing customer support improvement, the Investment Centre Support Office has provided an increasingly tailored and customer-focused service, also achieving its objective to provide administrative assistance to the management’s sales 2015 teams.
Customer Base Growth
2014 In 2016 the customer base experienced the greatest jump in recent years amounting to 13.2% and exceeding the 4 000 mark.
The total number of customers with active Homebanking services reached 3,099, which translates into a 1.8% rise in Credit Cards (no.) Debit Cards (no.) BFA Net (no.) comparison with 2015. Strong Growth of Customer Funds The number of new card-holders, both debit and credit, dropped slightly by 2% and 3.3% respectively. Customer funds followed recent trends and continued to register considerable growth in 2016, with an increase of 16.7%, to In recent years the Bank has placed special attention on reach AOA 211,918 million. increasing the number of solutions available to maximise customer-loyalty and satisfaction. This effort is reflected in the Term deposits amounted to AOA 177,721 million, up 13.2% high penetration rates, particularly regarding BFA Net and debit in comparison with 2015. They continue to account for a card services. much larger proportion (83.9%) of total deposits than demand deposits, highlighting the savings propensity and capacity in this market segment.
58 Banco de Fomento Angola | Annual Report’16 deposits, showingdeposits, that this is essentially asavings segment. Investment customer funds Centre consist largely of term 2015. to compared in securities amounted to AOA 78,3 billion, a61.6% when securities initiated in 2014. In 2016, the overall amount applied continued financial its brokering activity in relation to public debt opportunities and variation BFA customers’ of portfolios, its to liquidity for theIn need response investment and to satisfy total of AOA 34,096.7 million. running, with a39.3% to compared 2015, growth reaching a significantly also increased deposits Demand year second for the Investment Centres Deposits byTypeandCurrency off-balance-sheet. for accounted headings; off-balance-sheet under BFA by recorded and in custody held securities * Customer CENTRES INVESTMENT CUSTOMER - RESOURCES Deposits Funds Other Fund Other Term Deposits Deposits Demand Securities* 2 2 2 2 2 2 014 015 016 014 015 016 Checking Accounts Local Currency Foreign Currency Term Deposits 158.830,6 178.848,6 7. 07,0 179.0 10 484,4 20.018,1 158,4 2014 181.582,3 156.994,1 181.477,6 Investment Centres Customer Loans 48 440,2 24.483,3 AOA 11,930.8 million. 11,930.8 AOA adrop of 23% recorded in loan portfolio The 2016, totalling and Advances Customers to Loans Development of overall customer funds, accounting 82.3%. for withcompared the previous year, strengthening position its in of foreign currency is upproportion deposits 0.5 pp that analysis in-depth shows An the currency per type 2 2 2 014 015 016 104,7 2015 Total Loans 177.721,2 211.817,9 211.917,8 34.096,7 78 282,6 2016 99,9 Δ% 14-15 Δ% 362,0% -33,9% 22,3% -1,2% 1,5% 1,4% AOA million Δ% 15-16 Δ% AOA million AOA BFA 13,2% 39,3% 16,7% 16,7% 61,6% -4,6% 59
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment CORPORATE
CUSTOMER BASE AND SERVICE DEVELOPMENT - CORPORATE 2014 2015 2016 Δ% 14-15 Δ% 15-16 Customers (no.) 6.156 6.389 6.524 3,8% 2,1%
BFA Net (no.) 3.349 3.562 3.690 6,4% 3,6%
Improvement of Service Quality Development of Customer Funds
The effect of the economic turmoil in Angola became more In 2016, customer deposits within the Corporate Banking apparent during 2016, disrupting businesses in general, with segment recorded a decrease of 4.3% when compared to a noticeable decrease of economic activity and company 2015, amounting to AOA 439,912 million. This decrease closures. The sales teams had a more continuous presence in was triggered by a 12.4% decline in demand deposits (AOA the field, aimed at supporting business owners and continuing 38,392.1 million) and was offset by the 12.1% increase in on-site customer visits programme. Informal preparatory term deposits (AOA 18,294.4 million) in comparison to the meetings were held between Regional Managers and their previous year. teams to organize the schedule of visits. However, customer funds continue to grow (+17.6%), boosted Development of the Customer Base and Service by the securities portfolio high level performance (Treasury Penetration Rate Bonds), up 107.6%, in 2016.
The number of Corporate Banking Customers rose once again An in-depth analysis of the deposits structure per currency in 2016, reaching 6,524 customers. type once again reveals an increase in local currency deposits, up 2.6 pp of the total deposits in comparison with In 2016, BFA Net Empresas, which is equipped with specific 2015, a direct effect of the de-dollarization of the Angolan business tools, registered increases in both membership and economy. penetration rate of 3.6% and 56.6%, respectively.
This specialised service aimed at corporate customers allows Deposits Structure by Type and Currency Corporate Banking them to carry out online banking transactions conveniently and effortlessly. 2016
BFA Net Penetration Rate 2015 Corporate Banking
2014 2016
2015 EstruturaChecking deAccounts DepósitosTerm por Deposits Tipo e Moeda
2016 2014
2015
2014
Local Currency Foreign Currency
60 Banco de Fomento Angola | Annual Report’16 high-quality of the loan portfolio. and strength provisionThe ratio 104% was coverage in 2016, showing the approximately 6.2%. key indicators remained stable, with an overdue loan ratio of in overdue loans in this loan portfolio corporate segment, with 2015. the Despite drop in loans granted and the rise AOAincreased 775.1 million, in comparison an growth 8% volumeThe of overdue Banking loans in the Corporate sector Portfolio Loans Overdue Government’s decision to cut back onpublic projects. works asharp declinecaused in unsecured aresult loans, as of the foreignThe exchange constraints in experienced the country which AOAperformance, increased 10,647.3 million (7.1%). the single was to customers heading with apositive tocompared the previous year. and Loans advances by 3.3% decreased loan portfolio segment corporate The and Advances Customers to Loans Development of Others Provided Guarantees Credit of Letters Import Demand Deposits Demand Deposits Securities * Securities CUSTOMER FUNDS –CORPORATE SEGMENT Note: loan volume excluding accrued interest accrued excluding volume loan Note: CUSTOMER LOANS -CORPORATE SEGMENT off-balance-sheet. for accounted headings; off-balance-sheet under BFA by recorded and in custody held securities * Customer Guarantees and Letters of Credit of Letters and Guarantees Customer Loans Corporates Loans Total Funds Term Deposits 226.806,2 168.539,5 190.581,6 227.873,5 227.872,3 470.427,7 417.387,8 59.332,8 53.039,9 22.592,0 36.740,8 2014 2014 1,23 308.663,7 203.240,6 203.242,6 112.299,8 572.218,7 459.918,9 151.255,0 149.337,6 Corporate Banking Loan Quality 30.368,3 23.534,6 53.903,0 2 2 2 014 015 016 2015 2015 2,01 Overdue Loans(mAOA) 4,0% 673.063,0 196.609,9 159.984,9 233.132,0 439.921,0 169.549,4 270.371,6 196.607,2 36.622,3 27.825,5 8.796,9 6,2% 2016 2016 2,63 6,2% Overdue Loans(%TotalLoans) Δ% 14-15 Δ% 14-15 Δ% 111,7% -20,6% -10,8% -10,8% -11,4% -17,3% 62,9% 10,2% 21,6% 36,1% -9,2% 4,2% Δ% 15-16 Δ% 15-16 Δ% AOA million AOA million AOA BFA 107,6% -62,6% -32,1% -12,4% 30,7% 12,1% 17,6% -4,3% -3,3% -3,3% -8,4% 7,1% 61
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment SALES SUPPORT AND PROMOTION OFFICE
The Sales Support and Promotion Office (GADC) is accountable to the Corporate Department (DE) and its mission is to support, monitor and stimulate sales within this department.
The GADC is responsible to engage in defining and monitoring DE’s sales targets, oversee the outcomes, and propose courses of action, as well as to promote products and services offering that secure BFA’s competitiveness and market leadership position.
This GADC is made up of two specialised areas:
The Products and Operational Support Area, focused on:
■■ Developing and adapting products and services;
■■ Proposing changes in the product and service offering or coordinating and monitoring the launch of new products;
■■ Formulating customer support practices aimed at optimizing sales and service quality;
■■ Constantly monitoring the offering of main market rivals;
■■ Setting, creating and implementing cross-selling methods and business for the Corporate segment;
■■ Supporting the Marketing Department in developing sales content;
■■ Creating profile, segmentation, risk, abandonment and value reports.
The Sales Promotion and Corporate Support and Cooperation Office is focused on:
■■ Ensuring that sales teams are trained / informed about specific products and services offering;
■■ Visiting Corporate Centres on a regular basis;
■■ Implementing main elements of sales operations and management of the sales teams;
■■ Participating in key Customer meetings for the purpose of showcasing products;
■■ Detecting improvement of products and services;
■■ Taking part in the setting and monitoring of the Corporate Department’s (DE) sales targets;
■■ Ensuring that the information provided to the Corporate Centres about products, services and campaigns is disclosed across the organization with due quality control;
■■ Taking part in, vitalizing and monitoring the Corporate Centres’ teams in customer meetings for the promotion of Banking products;
■■ Supervising the powers of attorney of account contract’s expiration date registered on eMudar;
■■ Providing customer support with the aim of optimizing sales and service quality;
■■ Reviewing the DE database in order to provide support in the conceptualization of sales campaigns;
62 Banco de Fomento Angola | Annual Report’16 structure, namely: medium and long-term basis, characterized by acomplex legal responsible providing for tailor-made structured financinga on StructuredThe Financing and Investment Funding is area FinancingStructured and Investment Funding ■ ■ ■ ■ ■ ■ ■ ■ ■ and stimulate the diversification of economy.the of commoditiesimportation that national transform resources economy, with limited but also sectors to the access substitutionimport and diversification of the national manufacturing which contribute sectors, significantly to BFA prioritised not only the agricultural and the ■ ■ ■ ■ ■ ■ ■ ■ ■ investments covered by theinvestments covered loans the for financingor of non-current investments of the technical component,assessment and investment Agricultural loans, aimed the at farming sector, including bilateral credit agencies (ECAs); agencies and export withProjects risk, shared particularly with multilateral and in the loan; of away safeguarding groups as corporate the participation Restructuring of liabilities / substitution of liabilities in large Structured loans with bank syndicates; Angolan guarantee; State-backed toLoans government public or entities sector with and/or the risk has aconsiderable impact onthe company; Major investments in involving projects risk where corporate &acquisitions;Mergers Project Finance; Start-ups; Angola Investe Angola programme. toapprovalbytheMinistryofEconomy(MINEC). * Thesesectorsarenotthefocalpointofprogrammeandsubject It has two important mechanisms to mechanisms stimulate investment: important two It has projects. by financing investment Entrepreneurs (MSMES)enterprises micro, and small medium and Individual approved financing financing and approved reinforcements. to cover 15 and reinforcements guarantee guarantees government million. to AOA 5,835 Fund 44 Guarantee Credit issued The amounting to AOA 6,989 million amounting loans 56 paid and out 2016, ofDecember As BFA 61 applications approved had loan economy. of the the diversification and development contribute decisively so and to the country’s scale national MSMES, a large on enabling employment to them generate strengthen and is to create mainThe objective ofthe programme Investe Angola ■ ■ ANGOLA INVESTE ANGOLA ■ ■ 40% Agriculture, LivestockandFisheries Health andEducation* Manufacturing value ofthe investment. up covering to 70% ofthe guarantee with a government assets A public entities that no have mechanism to provide guarantee resulting in of5%; amaximum rate rates, Subsidised interest 9,31% 0,69% is a programme to support micro, small medium and to support is aprogramme 4,83% 36,90% 8,28% Construction Materials Support Services Productive Sector BFA 63
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment OIL & GAS
THREE AREAS OF ACTION: SPECIALISED SUPPORT, By the end of 2016, the country’s economic situation led to OPERATIONAL EFFICIENCY, SOUNDNESS AND SECURITY constraints in relation to the USD. Despite this, in keeping with its commitment to its customers, BFA continued to carry out Three major performance vectors underpin BFA’s response the following operations with the same level of efficiency: strategy to the challenges posed by Oil & Gas Corporations: Specialised Support, Operational Efficiency, and Soundness ■■ FX transactions with BNA to secure contract compliance and Security. and payment of local expenses in Kwanza;
The focus on these three areas of action allows the Bank to ■■ Oil Tax Payments (PIT); provide a superior service and ensure operational transparency, acknowledging daily the trust shown by its Customers. ■■ Tripartite Agreements.
The Bank relies on two dedicated Corporate Centres to address the specific needs of oil companies: - Oil & Gas Operators Corporate Centre; - Oil & Gas Vendors Corporate Centre.
Specialised The establishment of these units between 2012 and 2013 reaffirms BFA’s commitment to ensure wide Support availability and close monitoring of oil sector companies and its status as their preferred business partner.
Oil sector customers therefore have access to dedicated teams that are qualified to furnish fully customer- tailored solutions streamlined to their particular needs. The goal of providing support delivered by experts with a vast knowledge of the sector’s transactional features, as well as fast guidelines handling.
BFA’s operational payment system and wire transfer framework is designed to meet the high standards of oil-sector companies in light of their transactional needs: - The Bank provides automated file upload options from Customer systems in order to fulfill its Operational commitment to support and encourage the use of electronic means of payment; Efficiency - BFA enables Customers to receive statements according to chosen frequency by MT940 and Swift for transactions processed by MT101, in addition to PSX file batch payments that allow processing go to beneficiaries and other Banks ensuring greater payment confidentiality; - Tax payments are available on Homebanking through the creation of an access profile onBFA Net Empresas with restricted transaction permissions.
- BFA’s sound balance sheet and high liquidity ensure that the Bank is fully prepared for close cooperation with its oil-sector Customers providing them timely fulfilment of financial and operational needs; - The Oil & Gas Operators and Vendors Corporate Centres offer their Customers applications and technological solutions based on procedures and technologies aligned with best sector practices, thereby ensuring full operational security, speed, efficiency and integrity in the processing of transactions. The Soundness BFA Net Empresas service in particular guarantees full operational confidentiality and security in the and Security processing of transactions, by relying on the use of passwords and confirmation codes, which allows for the setting up of differentiated authorization profiles according to the nature of operations to be carried out; - The current economic landscape has changed the way Oil & Gas Customers protect and capitalize on their assets. Against this backdrop, BFA’s strong financial health has enabled the setting up of alternative sources of finance meaning. Hence, for Customers with surplus liquidity, BFA has provided T-Bonds in local currency indexed to the US dollar as insurance against the devaluation of domestic currency.
64 Banco de Fomento Angola | Annual Report’16 previous year.previous volume sales The by 22% in increased with comparison the million. 806.6 andlocal foreign currency with atotal trading volume of USD During 2016, BFA Public brokered in with Debt Customers its obtain areturn ontheir savings. whocapitaliseCustomers, to onthediversify and opportunity liquidityneed their for and business selling them to other BFA buying has been up Treasury Bills companies from that (mainly in the Public sector). Works USD, the to meet payment of supplier and debts contractor Negotiable Public Debt, namely Treasury Bonds indexed to the From 2013, November the Finance Ministry to issue began opportunities. investment liquiditywith and of 2014start an additional as providing tool for customers its BFA Public its began Securities the at Debt business Brokerage Brokerage Public Debt CAPITAL MARKET CAPITAL Public DebtOperationswithCustomersinMUSD 2 2 015 016 Sales Purchases December 2016,December 73.8% of which made by were BFA accumulated total of 2,981 May 2015 between trades and resulted figures 120%.in an reached These growth recorded With an approximate trading volume of 2,040, the annual In 2016, BODIVA doubled the trading volume of 2015. executing onbehalf of orders third parties. regulated account own markets onits and afinancial as broker BODIVA’s tradingmember, first authorized to trade in the in 2015. This consummated was status when BFA became linked to the opening of the Angolan Stock Exchange, BODIVA, Bank’sThe standing strong aFinancial as Broker is closely BODIVA the year-end. BFAbanks, the took lead, with amarket share of 23.6% by Regarding the of stock Public securities Debt held by Angolan demand. to market the the primary in high to order satisfy to resort readily willing to sell their securities to the Bank, forcing BFA environment, not were Given the macro-economic businesses BFA 65
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment DealsNegócios performance Realizados by por Quarter Trimestre
90,4% 91,0% 86,2% 90,4% 91,0% 86,2% 79,5% 76,7% 79,5% 76,7% 550 527 57,3% 550 527 497 57,3% 53,6% 497 53,6% 466 421 466 421 332 332 188 188
2ºT 2015 3ºT 2015 4ºT 2015 1ºT 2016 2ºT 2016 3ºT 2016 4ºT 2016 2Q 2015 3Q 2015 4Q 2015 1Q 2016 2Q 2016 3Q 2016 4Q 2016 Mercado Peso do BFA Market BFA Share
BFA secured its market leadership position in 2016, with a market share of 35.2% of the total amounts traded in the BODIVA markets.
Montante Acumulado de Negócios Realizados Milhões AKZ Cumulative Amount of Deals Closed AOA million
89,4% 89,4% 84,7% 81,3% 84,7% 81,3% 62,6% 62,6% 59,9% 59,9% 52,0% 52,0% 46,9% 46,9% 1,246,363 1,246,363 949,501 949,501 634,446 634,446 473,722 473,722 248,979 248,979 136,822 33,025 136,822 33,025
2ºT 2015 3ºT 2015 4ºT 2015 1ºT 2016 2ºT 2016 3ºT 2016 4ºT 2016 2Q 2015 3Q 2015 4Q 2015 1Q 2016 2Q 2016 3Q 2016 4Q 2016 Mercado Peso do BFA Market BFA Share
BODIVA is a regulated-market management company Registration as a BODIVA member allows all market players to responsible for implementing the trading environment that access the same information, ensuring full price transparency allows secondary market transactions of treasury bills, for those wanting to trade Treasury Bills. This is a critical and corporate bonds, equities, investment fund units and other crucial factor for the implementation of a Capital Market, securities. leveraging securities trading between the various market players.
66 Banco de Fomento Angola | Annual Report’16 a set of regulations,a set namely: thefor setting up of the capital market with the publication of the capital market, Angolan legislation has developed the basis of constructing alegislative the process for framework started Since the enactment no. (Securities 12/05 of Law Act), which Commission Market Capital ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ BFA is aqualified now institution for: BFA’s afinancial registration as broker institution.As aresult, market in Angola, the Capital Market Commission completed step in an important BFA’sAs in relation strategy to the capital operating in the variousstart sectors. Publication of this legislation the secured conditions BFA for to ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Collective Investment Schemes. Presidential Legislative no. 6/13 Decree governing Securities; andCompanies Financial in Transferable Services FrameworkLegal Regulated for Market Management Presidential Legislative no. 6/13 Decree governing the Securities firms; Brokerage Legislative Presidential no. 5/13 Decree regulating foundations the for creation of the public debt market; Presidential Legislative no. 4/13, Decree which laid the foundations the for creation of the public debt market; Presidential Legislative no. 4/13, Decree which laid the acquisitions; welland as and related company as issues, mergers in relationservices to capital structure, industrial strategy inProvide public assistance offerings and advisory Provide registry, deposit and custody services; Trade account; own onits elsewhere; onbehalf in of orders Execute others regulated markets or Receive and onbehalf transmit of orders third parties; ■ ■ ■ ■ Company toCompany market pension funds. In 2017, BFA aims to aPension incorporate Fund Management financialits product offering to its customers. concluded, has been BFAincorporation process broaden can 2016. inCommission occurred December that Now the S.A.) andColectivos, the registration with the Capital Market de Organismos (BFA de Activos –Sociedade Gestora Gestão Management –Collective Company InvestmentAsset Schemes structure, BFA with ahead the has forged incorporation of BFA investment as far fundsAs management requires acorporate ■ ■ ■ ■ the foreign exchange legislation. onthe termsto stipulated provide the foregoing services by in foreign order exchange services Provide the necessary execution of transactions to which the lender is aparty; Provide credit, including securities lending, the for placement as Act player in public offerings; underwritten placement as Act player offerings; in non-underwritten BFA 67
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment BUSINESS DEVELOPMENT UNIT
AN EXPERT TEAM WITH EXPERIENCED PROFESSIONALS
The Business Development Unit (BDU) is focused on placed national and international players to exploit whatever identifying investment opportunities in Angola, especially in opportunities have been identified. There are four phases in the sectors with the most growth potential, selecting the best the BDU’s activity:
PHASE I PHASE II PHASE III PHASE IV Business information Market analysis Analysis and assessment Implementation
■■ Information about ■■ Macroeconomics ■■ Entry strategy ■■ Counselling and support businesses and sectors in strategic partnership ■■ Selected economic sectors/ ■■ Business Plan preparation implementation ■■ Strategic partners areas ■■ Feasibility studies ■■ Support in selecting ■■ Tax and legal information ■■ Product and service supply/ locations/sites demand ■■ Investment decision ■■ Governmental investment advisory ■■ Support in obtaining promotion programmes ■■ Competitive analysis permits from the authorities ■■ Supply sources ■■ Implementation support ■■ Investment sources
The BDU business activity is carried out by an expert team Foreseeable Moderate Growth of experienced Angolan and Portuguese professionals with a proven track record in investment banking and financial Given the current Angolan economy landscape, which is still advisory and consulting services. feeling the crunch of historically low Brent crude oil prices, the BDU expects moderate growth of business during the coming In its six years of activity the BDU has strengthened its year. institutional marketing campaign, “Angola’s Opportunity”, through roadshows in various geographical areas, with the aim As in the previous year, Angola continues to attract foreign of identifying potential investors for new opportunities investment. This foreign investment, when coupled with a more professional approach to business and asset portfolio Backed by the BPI Group’s extensive international Investment reorganization and optimization by groups and companies Banking experience and know-how and aided by exploratory operating in Angola, gives the BDU a solid base on which to contacts established with some of the main international achieve continuous, sustained growth in its activity. players in sectors crucial to the development of the Angolan economy, the BDU is in a privileged position to support Angolan businesses in their efforts to spur the country’s agricultural and industrial development.
68 Banco de Fomento Angola | Annual Report’16 UBD SERVICESRANGE acquisition andstructuringoffunding Business plansandsupportforthe Advisory ofcompaniesentering Investment projectsAdvisory Advisory ofcompanieswith Privatisations andpublic internationalisation plans M&A andJoint-Ventures C Business andindustry the Angolanmarket o r pora restructuring in Angola tenders t e F i n a n c e PPPs (structuring,negotiation, Structuring ofloanfacilities (specific projects) P Private Investment implementation) ro State Advisory j ect F i n a n c e Privatizations andothercapital market transactions Capital Market Share Offering Debt Offering Trading BFA 69
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment Human Resources
ONGOING INVESTMENT IN HUMAN CAPITAL Workforce by Business Unit in 2016 Workforce by Business Unit in 2016
Talent Acquisition Policy to Support Growth 0,5% 0,5% BFA realizes that its strategy and aspiration of improved 20,7% customer service and closeness requires a substantial 20,7% investment in human resources. 4,2% 73,5% 1,1% 4,2% 73,5% In order to recruit highly qualified professionals the Human 1,1% Resources Department regularly attends job fairs at universities, both in Portugal and in Angola, which are an important avenue for attracting and taking on new employees.
Commercial Markets In the course of 2016, the digital channels were also Marketing,Commercial Organization and Systems Support,Markets Control and Audit streamlined as recruitment tools, especially through the Marketing,Administration Organization and Secretariat and Systems Support, Control and Audit corporate website and the LinkedIn network. Administration and Secretariat
In 2016, BFA hired 125 new employees with an average age A Young Workforce of 28. BFA invests not only in the acquisition of human capital but also in training and developing its workforce, aiming to boost Development of the workforce employees’ advancement potential and skill building within the Bank. In keeping with its policies, BFA has thus built up a 2016 2.632 young team where close to 67.2% of employees are under the age of 35.
2015 2.610 Workforce by Age 2014 2.526 Workforce by Age 1,4% 2,7%1,4%0,7% 2,7% 0,7% 7,9% 9,9% 9,9% At end of 2016, BFA had 2,610 employees, 0.8% more than 7,9% at the end of 2015. Of this total, 73.5% were assigned to the 20,2% 24,5% sales teams and 20.7% to the Support, Control and Audit 20,2% 24,5% Departments.
32,8% 32,8%
< 26 Years 26 a 30 Years 30 a 35 Years 35< 26 a 40Years Years 4026 a 4530 Years 3045 a 3550 Years 5035 a 5540 Years >40 Years a 45 Years 45 a 50 Years 50 a 55 Years > Years
70 Banco de Fomento Angola | Annual Report’16 Workforce AverageAge Workforce AverageAge 201 201 201 201 201 201 pertinent to the Bank’s activities. covering and activities awide areas of business variety and improvement employees of through its training courses To this end, BFA the in development invests on-the-job of improving quality. service of ensuring ameans employees as customer satisfaction and of its management and growth professional is the personal ofOne principles the core of the BFA’s human resources Qualificationof the Human Resources rate translates into 61,028 of absenteeism. hours 2.47% to compared the previous year, reaching 6.61%. This employeeThe aslight absentee rate recorded of increase A Healthy Workforce employees. a balanced composition of 53.7% male and 46.3% female Regarding by the gender, of breakdown the workforce BFA has In 2016 32.5. of employees was age the average Workforce byGender Workforce byGender 31,2 31,2 2 2 0 0 1 1 4 4 5 5 6 6 4 4 54,1% 54,1% 54,1% 54,1% 53,7% 53,7% 31,4 31,4 2 2 0 0 1 1 5 5 32,5 32,5 2 2 45,9% 45,9% 45,9% 45,9% 46,3% 46,3% 0 0 1 1 6 6
2016, the Bank onthe focused following training fronts: to training investment in staff and specialization. Throughout In 2016, in BFA as preceding years, maintained approach its ■ ■ ■ ■ ■ Marketing Promotion and Programme; Sales - Finance; Executive in Master Bank Management; - MBA Atlântico; - ■ ■ ■ ■ ■ particular that for of Treasurer. maintain the Training Cycle other for approach positions, in In Instructors. and In-House 2017 the intention is to of the IFBAsupport (Banking Training Institute of Angola) anddesigned administered throughout 2016 with the technical side of the Management Training Cycle was Functional Training Cycles Network Sales the for Bank at out counters. trainingclassroom and tackle the main operations carried the eLearning (eFormar) platform in 2016 to facilitate Bank Employees, training for designed were courses of the 2015 training new for remodel programme BFA In days. the aspan of over two aftermath occurs Employees withsales experience at of work one week Welcoming New of Employees (DC) and Audit and Monitoring (DAI). Department Technologies (DSI), Department Compliance Department Particular emphasis placed onthe was Information administered. were byarea of each the set head issues the for acquisitioncourses of technical in specific expertise Services Central TrainingTechnical for the following courses: postgraduate highof its potential staff, namely by enrolling employees in Education Academic developed in 2017. contents directed the at eFormar platform will be Additionally,and Management Department. programme training administered were courses to Network the Sales in 2016, Anti-Money Laundering several classroom- Training Prevention the on and Laundering Anti-Money : - Postgraduate Course in Accounting Course Postgraduate and Corporate : BFA in invests the training advanced : training of sessions : in 2016, training : the BFA 71
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment E-LEARNING PLATFORM - eFORMAR Over the course of 2016, 224 training sessions administered to 12,823 trainees in 51,904 hours corresponding to a 90% increase in number of sessions and 134% increase in the number of hours in comparison with 2015. This growth is owed to the eFormar platform which provided all BFA Employees with at least one training session in 2016, whether in a classroom environment or through eLearning.
Development of the no. of Participants in Training Activities
2016 12.823
2015 1.505
During 2016, several training courses were designed for this platform with the aim of complementing classroom courses 2014 2.857 and tackle the main operations carried out at Bank counters.
At the present time, eFormar provides 19 courses, which Workforce Distribution by Educational Level are established and designed by the Individuals and Small Businesses Department and the Organisation and Training 2016 Department. These courses encompass a wide range of subjects, namely computing, BFA Net / BFA SMS, Accounts and Agents, Wire Transfers and Checks. 2015
In 2016, the eFormar platform trained 7.594 individuals in a total of 4.332 hours. 2014
University Degree University Attendance Secondary Education Others
Following the previous year’s trend, around 65% of the Bank’s staff members either have a university degree or are attending university.
72 Banco de Fomento Angola | Annual Report’16 programme. programme. developed were withinnew features of this the framework technologicalof its During innovation 2016, cornerstones. continuesprogramme the for to apriority Bank be one as investmentThe and development of the eMudar@BFA focused on:focused To this end, in 2016 BFA’s investment in was technology improvement quality. of customer service but also continued of its and procedures driving processes ensuring the optimization not only of the Bank’s growth stimulate and thatSystems reflect sustainableits growth, aimed are projects equipping at the Bank with Information of initiatives and the launching of technological development Modernization and Risk Control. ongoing The implementation of the Bank’s acornerstone as Systems Innovation, During 2016, BFA continued to invest in Information its Ongoing Investment Systems its of in Modernization the SYSTEMS BFA’S STRENGTHENING IN THE MODERNI Innovation Technology & mitigation withinthescope of InformationSystems security andrisk activities and spans all that structures BFA’s of A project I. Implementation eMudar@BFA the of project: IT system II and cross-sectionaltoall of theeMudar@BFA project, structural of BFA’s activities Strengthening of Implementation IT System Capacity III I for businessgrowth and riskcontrol Z Support ATION ITS OF IV to the extent that: extent the to This is pivotal system the for development of BFA’s activities, efficiency and mitigating the level operationalof risk. tools allow ahigh for of dematerialization, degree increasing various out by operations carried banking These agents. onstandardizedtools based work that and Investment provides Centres Centres Corporate of afront-end consists application system The Branches, for ■ ■ ■ ■ ■ ■ ■ ■ platform. than more 4 millionrepresent managed by this new cases BFA Net (already during embedded 2015). activities These subscription and activation of Multicaixa debit and cards of individual check accounts, requisition, and corporate of opening and amendment withincorporated the processes and checkdeposits clearing. have been Furthermore, these onthisembedded new wire platform: term deposits, transfers, During 2016, reviewed were and the following processes ■ ■ ■ ■ ■ ■ ■ ■ Ensures service levels andEnsures service reduces processing time simplemore and intuitive; making procedures processes standardized Establishes risk operational in reduction asignificant Provides customer service quality service customer aclearProvides and unmistakable improvement of insecurity application management; and compatibleIs with employee the database Internet); Telephone, Services, Central (Sales used Network, standardization process Ensures monitoring and audit; documents and allowing later decentralized consultation, documents and hardcopy dematerialization processes of Enables times of ordinary approval operation channels;response automation process Enables replacing them, whenever possible, with digital . , enhancing and faster security fl ow methods for processing processing for methods ow regardless of the channel regardless , ensuring high ; ; BFA 73
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment + 1 Million 79% Automatic activation SMS sent of Debit Cards 4 Million No. of eMudar@BFA Cases Automatic activation Automatic activation 99,8% of BFA Net Access 74% of Checks
Apart from digitizing these files, subscription and activation ■■ Neutralizing cyber-attacks: detection and neutralization of control mechanisms were established for SMS dependent threats to application servers was expanded; products so that Customers could be notified at different stages of the subscription and activation process. A monthly ■■ Vulnerability Scanning: a vulnerability detection and average of more than 140 thousand SMS were sent in 2016, correction programme was executed; 45% more than in 2015, with high response rates in the activation processes. ■■ Disaster Recovery: work on system and procedure improvement programmes continued, as did the During 2016, additional capacity was added to the eMudar@ strengthening of vital components that ensure effective BFA-dedicated systems in order to ensure sufficient resources response capacity in contingency scenarios; for safe use at the required service level. ■■ System monitoring and management: the system II. Information Systems Security monitoring and management contract signed with IBM was and risk mitigation implemented and is fully operational; External monitoring of the BFA websites is also active, as is an in-house BFA recognizes that the security and availability of its developed software for intelligent application monitoring; systems directly affect its business performance. To improve availability BFA’s security components were further ■■ Process optimization and fault reduction: New operational strengthened in 2016 through the enforcement of several procedures, inspections and indicator monitoring were measures, including: implemented with the aim of improving service quality and reducing error; ■■ Infrastructure migration: system reorganization continued and the servers were moved to the main and secondary ■■ End of the credit card migration process: The migration data processing centres (DPC) according to function;; process of credit cards issued by BFA-owned companies to the new Electronic Interface for Card Management is ■■ Internet Access: internet security was enhanced through complete. This solution was designed by EMIS, with whose the use of state-of-the-art equipment and software coupled platform BFA’s purposely-modified system is integrated. with response capacity for detecting and blocking threats and malicious content; III. Strengthening of Information Systems Capacity ■■ Traceability: tracking capacity of accessed information assets was improved for early detection of suspicious Mindful of the vital importance of IS response capacity for behaviour; business development, BFA has strengthened the key system components:
74 Banco de Fomento Angola | Annual Report’16 the growth of BFA’sthe growth and business organization, including: out in carried were 2016 projects Several to directly support ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ volume of operations; completedbeen in critical with branches the highest operations Equipment with branches redundancy high for volume leadership position established; were trading BODIVAmember of first and enhance market its Market; All the connections to make needed BFA the integrated onlinesupports trading in the Angolan Stock BODIVA operations the Accounting and Planning departments. effective and more functionalprovides analytical tools for implemented; was Accounting this software software Financialfor Institutions) and IAS/IFRS-compliant software accounting New to the new EMIS concluded; platform was Check clearing of the: porting Bank’s check clearing system solutions. of the technical business some were as debt programme, structureupdated were the within IT support the scope update and hardware Software collectively. andvarious allow Bank to departments function the DPCs and resiliency to of ensure operation the the correct subject to improvements in terms of capacity, performance that the connects central buildings also was and DPCs mobile backup; network communications The network cable banking and fibre-optic with fast agents as twice redundant communications on imparted was standard network communications the of Improvement applications and customer service; improving and that support of business performance its overhauled were systems withsupport the aim of greatly buildingCapacity System Bank the Core of Risk Control Risk IV. and Business for Growth Support : Installation of multifunction equipment has : BFA is implementing atool that : new CONTIF of (Chart Accounts : Several components of components : Several : The Bank Core Bank: The Core : anew ■ ■ ■ ■ ■ ■ implementing CESOB and supporting Insurance marketing. Management by reformulating Targets the Sales System, aiding the CIRC (Credit Reporting Centre) and Prudential significant incrementprovided, in the number of reports Management Information of Development regulatory management has continued features in to order ensure management Currency continued in to order minimize the occurrence of errors; has software verificationof fileprocessing features Improvement file of processing
compliance; : implementation of currency : improvement of the : There was a was : There BFA 75
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment Payment Systems
EMIS - TRADITIONALLY STRONG TIES ASSERTION OF BFA’S LEADERSHIP IN SERVICES OFFERING EMIS (Empresa Interbancária de Serviços) is the body that AND MEANS OF PAYMENT currently manages the entire Angolan Payment System and whose mission it is to encourage the overall efficiency of said Debit Cards system, ensuring security, effectiveness, convenience and innovation.
The total number of active BFA debit cards in 2016 was over EMIS was founded in 2002 and BFA is one of the founding half a million, an increase of nearly 11% compared to the shareholders. The Bank is currently the largest private previous year, outpacing Market growth (9%). Consequently, shareholder with 6.5% of its capital and is also the main BFA’s share of total active cards increased to 24.17%, securing customer and user of the services provided by EMIS. The main shareholder is BNA, which holds 43.03% of its capital. BFA as the leading Multicaixa card operator in Angola. As founding shareholder, BFA is a strong supporter of the Active Debit Cards (no.) initiatives launched by EMIS and is generally one of the first Banks in the market to implement the solutions and services 2016 provided, such as the implementation of the new BFA Data Processing Centre in the EMIS facilities, use of the new Card Management Platform or the latest digital cheque clearance 2.294,415 system. 2015 Development of BFA Debit Cards EMIS currently provides Card Management Platform services for the Multicaixa (debit cards) and Visa (credit cards) networks, as well as Wire Transfer and Check Clearing Systems. 2016 24,4% 2014 EMIS also provides Payment Network members with a Host-to- 553,382 Host (H2H) channel that allows users to utilise BFA channels 2015 23,7% (BFA Net, BFA Net Corporate, BFA App and banking agents) to 500,535 access payment options available in the Multicaixa network. BFA Total 2014 23,2% 447,688 Development of BFA Debit Cards MIGRATION FROM MULTICAIXA CARDS TO EMV No. Active Debit Cards Active Debit Card Market Share CHIP TECHNOLOGY 2016 24,4% 553,382 The EMV Chip technology system ensures the protection of 2015 23,7% information and hinders card payment fraud such as card 500,535 copying. Certification of this new system began in 2016. System 2014 23,2% testing will begin once certification is complete, enabling the 447,688 Bank to issue cards equipped with EMV chips.
No. Active Debit Cards Active Debit Card Market Share As soon as testing has been completed and the process approved, BFA will commence production of Multicaixa cards equipped with EMV Chip technology and subsequent The debit card penetration rate was identical to that recorded in substitution of magnetic stripe Multicaixa cards with these 2015, 57.6%. new and more secure cards.
Debit Card Penetration Rate
57,6% 57,6% 53,5%
2014 2015 2016
Debit Card Penetration Rate
76 Banco de Fomento Angola | Annual57,6% Report’16 57,6% 53,5%
2014 2015 2016 Active POSUnits(no.) Registered POSUnits(no.) Registered POSUnits(no.) BFA POS Growth Trend BFA POSGrowth Trend Active POSUnits(no.) leader withleader 26% over of all units. POS by the end of the year. In 2016, BFA held position its market as to 9,876 network in increase a corresponding POS own its units thanmore in 2015. BFA’s contribution 8% to this meant growth closed 2016 of 37,561 with anetwork units, active 2,982 POS continued to grow, registering both an rise. 8% EMIS therefore numberThe of units active andPOS in registered Angola and ATM POS the of Growth Network 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 014 015 016 014 015 016 014 015 014 016 015 016 014 015 014 016 015 016 Active POSUnits Active POSUnits 6,564 6,564 BFA BFA BFA BFA 11,016 11,016 9,157 9,157 16,377 16,377 9,875 9,875 17,487 17,487 Total Total Total Total 23,9% 23,9% 26,3% 26,3% 26,5% 26,5% 27,413 27,413 47,076 47,076 Active POSUnitMarketShare Active POSUnitMarketShare 6,564 6,564 34,579 34,579 61,496 61,496 37,561 37,561 66,521 66,521 9,157 9,157 9,876 9,876 BFA POSGrowthTrend Active POSUnits(no.) Registered POSUnits(no.) Average AnnualATMUptimeRates ATM units. ATM and penetration rate of 13.4%, active to corresponding 382 with 2% amere adrop ofrecorded 0.7 pp in market share In 2016, the active ATM unit BFA market 7% grew whereas transactions availablethese through their ATM units. the Multicaixa responsible banks are member making for system mobile IBANtop-ups, inquiries, phone top-ups, on. and All so telephone wire payments, withdrawals, transfers, account service without of abanking the assistance agent, namely cash ATM units out various allow transactions to carry customers BFA ATMGrowthTrend Active ATMUnits(no.) 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 015 014 015 016 014 015 016 2 016 014 015 016 014 014 015 016 016 371 014
015
Average ATM Uptime Rates - BFA - Rates Uptime ATM Average Average ATM Uptime Rates - Market - Rates Uptime ATM Average 375 Active POSUnits No. ActiveATMUnits 6,564 BFA BFA BFA 11,016 382 9,157 16,377 9,875 17,487 13,4% Total Total Total 91,2% 14,1% 14,9% 371 23,9% 92,9% 26,3% 26,5% 2,484 27,413 47,076 93,5% Active POSUnitMarketShare 93,5% 375 Active ATMUnitMarketShare 6,564 34,579 2,659 61,496 37,561 2,845 66,521 95,6% 9,157 97,5% 9,876 382 BFA 77
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment 36,5% 38,6% 40,2% 53,6% 57,3% 57,8% Active ATM Units (no.) Active ATM Units (no.) 2016 2016 382 382 2,845 2,845 2015 2015 375 375 2,659 2,659 2014 2014 371 371 2,484 2,484
BFA Total BFA Total
BFA ATM Growth Trend Down-time owing to shortage of Bank Notes BFA ATM Growth Trend and Paper
2016 13,4% 2016 13,4% 382 382 30,5% 27,6% Down-time27,9% owing to shortage of Bank Notes 2015 14,1% 2015 14,1% and Paper 375 Down-time owing to shortage of Bank Notes 375 17,1% 14,1%
and Paper 12,4% 2014 14,9% 2014 14,9% 2014 2015 2016 371 30,5% 27,6% 371 Down-Time27,9% owing to shortage Down-Time owing to shortage of bank notes of paper No. Active ATM Units Active ATM Unit Market Share 30,5% 27,6% 27,9% No. Active ATM Units Active ATM Unit Market Share 17,1% 14,1% 12,4%
Following previous years’ trend, the average 2016 annual ATM InDown-time comparison2014 17,1% owing with tothe shortage market2015 average, of bank BFA notes continued2016 to 14,1% uptime rate registered an increase of 1.8 pp in comparison reduceDown-Time significantly owing to itsshortage percentage 12,4% Down-Timeof bank noteowing shortage,to shortage with 2015, 4 pp above the market average. althoughof bank20 1down-time4 notes owing 2to01 5paper ofshortage paper increased2016 by 0.6 pp, positioningDown-Time owing BFA to 8.3shortage and 4.9 pp,Down-Time respectively, owing to below shortage the of bank notes of paper Average Annual ATM Uptime Rates network average. 30,5% Average Annual ATM Uptime Rates 29,7% 27,9% Down-time owing to shortage27,6% of bank notes 24,8% 2016 22,2% Down-time owing to shortage of bank notes 2016 97,5% 57,3% 97,5% 57,3% 93,5% 2014 36,5% 2015 2016 93,5% 36,5% 30,5%
BFA 29,7% Network Average 27,9%
2015 27,6%
2015 24,8%
95,6% 22,2%
57,8% 30,5% 95,6% 29,7% 27,9% 92,9% 27,6% 57,8% 40,2% 24,8% 92,9% 22,2% 2014 2014 40,2%2015 2016 2014 Down-time owing to shortage of paper 93,5% BFA Network Average 93,5% 91,2% 2014 2015 53,6% 2016 53,6% 91,2% BFA Network38,6% Average 38,6% Average ATM Uptime Rates - BFA 17,1% Average ATM Uptime Rates - BFAMarket Down-time owing to shortage of paper 14,1%
Average ATM Uptime Rates - Market 12,4% 11,3% 9,2% 8,5% Down-time owing to shortage of paper 2014 2015 2016 Remark: The Uptime Rate is a measure of the degree of use of ATM and BFA Network Average is obtained as follows 퐔𝐩𝐭𝐢𝐦𝐞=�− 𝐍𝐨. 𝐃𝐚𝐲𝐬 𝐨𝐟 𝐃𝐨𝐰𝐧𝐭� 17,1% 14,1%
𝐭𝐡𝐞 𝐌consideringaninoperativeATMtobeonethatregistersno 12,4% 11,3% 9,2% 17,1% transactions 8,5% 14,1% 12,4% 11,3%
2014 2015 29,2% 016 Active VISA Credit Cards 8,5% (no.) Down-time Bank Due to Lack of Notes and Paper BFA Network Average 2016 2014 2015 2016 In 2016, the down-time percentages owing to lack of bank BFA Network Average 67,837 notes and paper increased by 2.8 and 1.7 pp, respectively. 38,012 Active VISA Credit Cards (no.) Total Number of Active Credit Cards Active20Total16 VISA No. Active Credit BFA CreditCards Cards (no.) 67,837 2016 38,012 67,837 ActiveTotal VISA Number Credit of Active Cards Credit38,012 MarketCards Share 78 Banco de Fomento Angola | Annual Report’16 Total No. Active BFA Credit Cards Total Number of Active Credit Cards Total No. Active BFA Credit Cards
Active44,0% VISA Credit Cards56,0% Market Share Active VISA Credit Cards Market Share
44,0% 56,0%
BFA44,0% Total 56,0%
BFA Total
BFA Total bills insurance or premiums. subscriptions,payment of mobile TV water phone top-ups, Multicaixa through their system channels own including the banks to provide the available payment features in the to connect tohost the main EMIS allows This host. service H2HThe is an EMIS system that subsystem allows abank’s Payments H2H 2016. active credit under cards EMIS in management recorded was aPrincipal as status its in of 30% of Agrowth Member Visa. translates to amarket share of 56%, allowing BFA to retain under EMIS management, 38,012 belonged to BFA, which At the end of 2016, of the 67,837 active credit cards Active NumberDevelopment of of Credit Cards CARDS CREDIT Active VISACreditCardsMarketShare Active VISACreditCards(no.) Active VISACreditCards(no.) Down-time owingtoshortageofpaper Down-time owingtoshortageofpaper Down-time owingtoshortageofbanknotes Down-time owingtoshortageofbanknotes and Paper Down-time owingtoshortageofBankNotes and Paper Down-time owingtoshortageofBankNotes Active VISACreditCardsMarketShare 2 2 0 0 BFA BFA of banknotes Down-Time owingtoshortage of banknotes Down-Time owingtoshortage Total No.ActiveBFACreditCards Total NumberofActiveCreditCards Total No.ActiveBFACreditCards Total NumberofActiveCreditCards BFA BFA BFA BFA 1 1 6 6 44,0% 44,0% 2 2 2 2 2 2
0 0 11,3%11,3% 0 0 29,7%29,7% 0 0 27,9%27,9% 1 1 1 1 1 1 4 4 4 4 4 4 17,1%17,1% 27,9%27,9% 17,1%17,1% Total Total Network Average Network Average Network Average Network Average 38,012 38,012 2 2 2 2 2 2 56,0% 56,0% 0 0 8,5%8,5% 0 0 24,8%24,8% 0 0 27,6%27,6% 1 1 1 1 1 1 5 5 5 5 5 5 12,4%12,4% 27,6%27,6% 12,4%12,4% of paper Down-Time owingtoshortage of paper Down-Time owingtoshortage 2 2 2 2 2 2
0 0 9,2%9,2% 0 0 22,2%22,2% 0 0 30,5%30,5% 1 1 1 1 1 1 67,837 67,837 6 6 6 6 6 6 14,1%14,1% 30,5%30,5% 14,1%14,1% this to Customers. its service makingpayments, BFA one of the leading banks providing and BFAEmpresas App) accounted 35.2% for of total In 2016, made via payments BFA (BFA Net, BFA Net Market ShareH2HPayments CREDIT WIRE TRANSFER SUBSYSTEM TRANSFER WIRE CREDIT that it be done by BPC via SPTR. by BPC done that it be (OS)Transfer ofrequesting directly instead STC on Orders Having the MinFin STC, joined able is to also process (Banks)allCustomers. and agents that benefited method payment safer and afaster was outcome The employees. ofPublic the salaries toSector pay using thisbegan system In 2016, the Finance (MinFin) Ministry and the STC joined circulationcurrency in the country. (SPA) System which Payment of the Angolan promotes (STC) Wire Transfer Credit The Subsystem is aninstrument BFA 53,165 Others 28,911 BFA 79
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment BFA in Digital Banking
In 2016, BFA maintained its presence on Digital Channels. This BFA Net – POSITIVE GROWTH OF THE HOMEBANKING year the focus was placed on the enrichment of information, SERVICE features and procedures inherent to digital channels in an effort aimed at further modernization of Customer relations. The year 2016, like previous years, was defined by the growth in the number of BFA Net members, which exceeded 576,000. PUBLIC BFA WEBSITE - COMMUNICATION HUB This growth was coupled with an even faster development of homebanking members with full access to all the available BFA Net features.
Aiming to broaden and improve BFA Net features, the following options were provided:
■■ Direct Top-ups – enables mobile phone top-ups and television payments;
■■ Contact form – enables inquiries, comments or complaints;
■■ Prepaid card loading request form.
In 2016, BFA Net registered a rapid growth of Services Payments, Tax Payments and Direct Top-ups. 8 BFA Net marketing campaigns carried out during the year accounted for this development. BFA’s Public Website continued to predominate as the Bank’s key digital communication channel. BFA Net and BFA App – NEW FEATURE During 2016, BFA’s Public Website was visited more than 770 thousand times, mostly originating from search-engine results In September 2016 BFA deployed the new Direct Top-up (48.8%). The 22 digital marketing campaigns account for the feature on its BFA Net, BFA APP and BFA Net Corporate 11.7% of the total number of visits. Homebanking service pages. This feature enables its members to instantly top-up mobile phones, data and SMS as well as pay television services. Visits via mobile devices (smartphones and tablets) registered growth of 93% in 2016. Access by these means accounted for With this feature Customers can send instructions for around 26% of the total visits to BFA’s Public Website. payments or mobile and TV top-ups simply by indicating their mobile phone number or Customer number and receive the requested amount instantly. The pages with the largest number of visits were the homepage, the currency exchange rate page and the BFA Net page. This initiative complements BFA’s Homebanking payment service offering and closes the gap with the Multicaixa network offering.
80 Banco de Fomento Angola | Annual Report’16 Faça odownloaddaBFAApp followers. Banco dethe Fomento year Angola onLinkedIn had 5,500 over 154 announcements and acquire 1,704 followers. the By end of institutional communication vehicle, to promote which served In 2016, BFA continued to invest in LinkedIn another as LinkedIn CUSTOMERS ITS BFA SOCIAL ON NETWORKS –CLOSER TO THE WORLD AND thousanddownloaded times 63 since launch. its Android.80% the By end of 2016, the BFA had App been times onmobile of which devices, Apple were 20% and During 2016, the BFA thousand downloaded 46 over was App Line BFASupport and find the nearest Branch. simulate check exchange call loan requests, rates, the BFA user,Every App including can non-Homebanking members, and wire payments. transfers perform Net to check their account balance, and cards operations, allows App The tablets. BFA of BFA and members customers to mobile any from user Appleaccess Android or or phones that enableshomebanking BFA and non-members members BFA App, which launched was in 2015, is an application for BFA A Download the the Download QR-C QR-Code pp –BFA’S FIRST MOBILE APPLICATION BFA App BFA ode of 95.9% of calls to calls handled translated into anrate overall efficiency 40.5% steadily grew of 2016,Support the over course by increasing numberThe of calls received and handled by BFA Customer response. and, delivering ofAgents course, timely amore Customer information,and service reducing queue Banking at length quality to product broadening of customer support, the access BFAThe Line Support is remains committed to improving the 120 120 on923 24/7 Launched the at end of 2014 BFA is available Support Customer BFA CUSTOMER SUPPORT – of BFA features used Net. videos that illustrate the inner of the workings ofmost some NET –Did that... you know In 2016 acollection launched of videos was under the title “ hits duringmost 2016, with atotal of 914 viewings. workings of BFA Balance and Inquiries Operations received the throughoutregistered the year. video The illustrating the channel in 2016. to views of Close BFA 8,900 videos were A total of 17 uploaded new videos were to the BFA YouTube YouTube between January and January December. ratio The between of incoming . . ” This collection is of comprised 12 923 120 120 120 923 BFA BFA BFA
81
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment Communication
CAMPAIGNS
In 2016 BFA organized five major campaigns and continued to implement its digital communication strategy. The campaigns were aimed at strengthening BFA’s brand positioning and the marketing of its new products and services and acquiring new customers.
BFA Net - Your statements at a click
The aim of the BFA Net - Your statements at a click campaign was to publicize the new Digital Documents functionality. This new functionality, available in BFA Net and BFA Net Empresas, allows customers to view, save and print all the transactions made through these channels, safely and conveniently.
82 Banco de Fomento Angola | Annual Report’16 their children’s education, training and health. intended and guardians to parents encourage to for save exclusively 0to 18. aged customers for It is mainly account available is aterm deposit in kwanzas, BFA The customers. offering youngest its Kandengue publicize the new savings BFA product to has added its children abrighter future campaign to and promote was aimThe of the BFA account Kandengue -Give your future. BFA Kandengue account -Give your children abrighter Multicaixa ATM. without having voucher goto to or a buy atop-up and BFANet Empresas any at App time, anywhere, from through BFA services Net, BFAphone and TV for pay functionality allows to top customers up their mobile functionality available in the online banking This service. aimed of the increasing at new direct charge awareness -It it’s now App was already fast, campaign, direct In September 2016 BFA launched the BFA /BFA Net direct. BFA Net /BFA App –It was already now it’s fast, BFA 83
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment BFA Net Empresas - Wherever you are, your company Road tax - Buy your road tax disc here doesn’t stop working As an authorized agent for the sale of road tax discs, The main objective of the BFA Net Empresas - Wherever in 2016 BFA launched the Buy your road tax disc here you are, your company doesn’t stop working campaign campaign as a way of promoting sales of road tax discs was to publicize the transaction approval functionality through its branches and outlets. The main objective is now available in BFA Net Empresas. Transactions can to increase the sales of discs and thus improve its profit be approved by account managers from anywhere in the margin. world, allowing companies to manage their business more efficiently, especially for paying salaries, invoices from suppliers or service providers, and taxes.
84 Banco de Fomento Angola | Annual Report’16 SPONSORSHIP league champions. league In the 2016 1° national were season Agosto football De Angola Trophy. 1° especially D’Agosto part, the takes Girabola and the senior football all covers team the competitions in which Club.D’Agosto bank’s Sports The the for club’s support For running, the sixth year BFA the 1° sponsored 1º AGOSTO DE CLUB SPORTS part with made a team up ofpart children employees. of its clubs. sponsoring the event, Besides BFA itself took D’Agosto, Luanda Petro, Kilamba and Luanda Inter Takingsport. in 2016 part children were the from 1° football tournament friendship promotes and youth Held annually, the Future Generation international TOURNAMENT -THE FUTURE GENERATION INTERNATIONAL CHILDREN’S FOOTBALL Mumuilas, one of the of tribes the of south Angola. Inpromenade. 2016 BFA decided to tribute pay to the gather onLuanda’scarnival groups and spectators, sea thanFor three more days, 15,000 Luandans, including is to celebratepurpose carnival through dance and music. Luanda Carnival is Angola’s cultural biggest event. Its LUANDA CARNIVAL exhibitions residencies during and artist seven the year. May 2016, it organized an international fair, art seven talks and individual and group exhibitions. in Opened residencies, throughemerging artist Angolan artists gallery in promotes Luanda. art ELA contemporary (ELA), Luanda a BFA Arte Espaço sponsored ESPAÇO LUANDA ARTE BFA 85
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment JAANGO MANGAIS/BFA ORDER OF MERIT
Jovens Artistas Angolanos (“Young Angolan Artists”, or The Order of Merit is a golf championship sponsored JAANGO) is a movement whose aim is to promote artists by BFA. The championship is made up of 11 monthly in a wide variety of areas, from painting to photography, events, held at Mangais Golf Resort, and is intended to decoration and sculpture, along with other initiatives. promote interaction between amateur and professional Each year, JAANGO organizes an artist residency in golfers living in Angola. In 2016 more than 106 Espaço Luanda Arte, with the objective of reinterpreting players of 10 different nationalities took part in the artistic ideas and concepts using recycled materials. championship.
KIZOMBA & SEMBA NATIONAL DANCE COMPETITION ANGOLA FASHION WEEK / BENGUELA FASHION WEEK
The Kizomba and Semba Competition is Angola’s Angola Fashion Week is one of the country’s top fashion biggest dance competition. Its purpose is to showcase events. Its purpose is to promote fashion professionals kizomba and semba dancing and promote networking in Angola by providing a platform for Angolan popular between professionals interested in the development culture and the latest work by Angolan fashion of dancing in Angola. This event has been sponsored designers, so as to raise their public profile. 2016 also by BFA since 2009 and draws participants from every saw the celebration of the first Benguela Fashion Week, province of Angola. which was also sponsored by BFA.
86 Banco de Fomento Angola | Annual Report’16 EVENTS experience. a unique the for sharing opportunity of knowledge and Angola,from of the Europe and world, the rest providing Taking governance experts various were corporate part stakeholders. challenges currently facing and companies, investors the to as meet so practices, governance best corporate This conference aims to the promote sharing of 2in theDecember Epic Sana Luanda Hotel. Governance in the CurrentCorporate Context”, held on CONFERENCE onthe subject of “Challenges of BFA the 2ND sponsored CORPORATE GOVERNANCE CONFERENCE GOVERNANCE CORPORATE F received 100 nearly day. CVs per BFA in with previousAs and years, astand present was Universidade Católica de Angola. employment opportunities of students for the mainThe aim of the employability fair is to promote Angola (UCAN). held June from 6to the 9at Universidade Católica de BFA in the 5th part took Employability Fair, which was FAIR EMPLOYABILITY UNIVERSIDADE CAT alta imagem Ó LICA DE ANGOLA LICA ANGOLA DE BFA 87
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment PANDA E OS CARICAS MUSICAL VACCINATION | AGAINST YELLOW FEVER
For the ninth year in a row, BFA sponsored the Panda Within the framework of the national campaign against e os Caricas Musical. Following the success of previous yellow fever and with the support of the World Health years, this year’s event was held in Benguela, Huambo, Organization, BFA conducted an internal yellow fever Huíla and Luanda. vaccination campaign among its employees in Luanda. Once again, the Bank offered the BFA Kandengues group A total of 443 employees were vaccinated in this the unique experience of taking part in the Panda e os campaign. Caricas Musical.
88 Banco de Fomento Angola | Annual Report’16 Social Responsibility Education, Health and Social Solidarity. activities several supported in of three activity: its major areas commitment, reflecting genuine its social concern. BFA In 2016, lent projects to substance several BFA’s commitment to the development of the Angolan community. BFA’s social responsibility is closely linked to values its and its Selda and the entertainer Nuno Cadilhe. singer Pais, Pedro the João Angolan singerPortuguese of the Christmas celebrations part was and featured the the David Bernardino Paediatric Hospital. concert The 10 onDecember a Christmas the for children concert at In Club, with partnership Ocean the Lookal BFA promoted HOSPITAL RIC CHRISTMAS KINDNESS -DAVID BERNARDINO PEDIAT - this project since 2008. inagents Angola, which is why BFA supporting has been entrepreneurial initiatives of the economic and social and relevant monitoring tool for and assisting the in Angola. GEM Angola important is an extremely independent study) entrepreneurship world’s largest In 2016 BFA continued the GEM to (the study support 2015 the of Presentation GEM Report GLOBAL ENTREPRENEURSHIP MONITOR (GEM) STUDY and the hospital’s staff. spacious environment and doctors comfortable users, for the HPDB’s creating amore Department, Emergency aim of this initiative to the of increase was capacity and the imaging The service paediatric service. surgery which includes Department, the Emergency new the financial to help support finish construction the of Hospital (HPDB) in Luanda. In 2016, the Bank provided initiatives the at and David projects Bernardino Paediatric the 10 last Over BFA numerous years, has supported HOSPITAL PEDIATRIC BERNARDINO DAVID BFA 89
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment FIREFIGHTERS HELPING THOSE IN NEED COOPERATION AGREEMENT BETWEEN BANCO DE BFA SPONSORED FUNDRAISING EVENT FOMENTO ANGOLA AND FUNDAÇÃO CIDADE DE LISBOA
As part of Woman’s Month, BFA supported the women In 2016, BFA renewed the cooperation agreement with firefighters in a fundraising event. The event took place Fundação Cidade de Lisboa for another five years. The on 8 March at the main fire station in Largo 1º de Maio in cooperation agreement serves to maintain five annual Luanda. Around 300 children from five different homes study grants for university students, preferably from were invited for a special day out. The children took part Angola. in competitions and were treated to theatre and music. The grants are intended not only to finance the professional training of African managers but also their cultural, moral, and ethical education, so that when they return to their countries of origin, they are able to contribute to their countries’ economic and social development.
BANCO ALIMENTAR CONTRA A FOME ANGOLA (BACFA)
In 2016, BFA once again partnered with the Angolan food bank Banco Alimentar Contra a Fome Angola in carrying out the fifth BACFA Food Collection Campaign. As in previous campaigns, food was collected from various stores in Luanda, sorted and weighed, and then donated to charitable bodies.
90 Banco de Fomento Angola | Annual Report’16 knowledge of the population in general onthis subject. and also riskof to the improve factors, associated the abilities of healthcare technicians by informing them of thispurpose campaign to improve was the professional 27, placetook onOctober 28 and in 29 Luanda. The prevention Vascular of Cerebral Accidents (CVA), which campaignBFA the for the awareness sponsored CVA AWARENESS CAMPAIGN bottles, blanketsbottles, and hygiene products. included clothes diapers, and milk feeding newborns, for of Benguelaarea Hospital. Central donations The in Benguela, donations delivered were to the Paediatrics organizedConference by BFA’s and Cultural Sports Group Within of the the 1st framework Regional Delegates HOSPITAL CENTRAL BENGUELA DONATIONS Foundation. and the Calouste Gulbenkian Portuguesa Cooperação thefrom Ministry of the Health and financial from support public health level. CISA institutional receives support attention greater the at deserve their contagiousness, run,the they short highly are incapacitating and, given rate in that the increase mortality notdiseases are these fever,haemorrhagic filariasis and helminthiasis. Although Angola, especially schistosomiasis, tripanosomiasis, viral theagainstin “neglected” fight so-called the diseases scientificstudies that willpolicy makingsupport in in projects province Bengo aimedresearch producing at CISA out health has carried years, the two last Over posts. in the province’sservices health and health centres also to improve the provision health of primary care but of the Hospitalcapacity General Bengo laboratory province, intended are not only to the increase diagnostic which in Bengo will years two out the over carried next be in theprogramme municipality projects, of Dande. These and reinforcementof health the support primary care theat Hospital General Bengo and the implementation the creation in of the the microbiology laboratory service of the in Centre Health Angola Research (CISA), namely, In 2016, projects BFA research another two supported CENTRO INVESTIGAÇÃO DE EM SAÚDE ANGOLA) DE HEALTH RESEARCH CENTRE (CISA IN ANGOLA - BFA 91
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment Awards
The Banker Award I Bank of the Year in Angola BFA was awarded the title of Bank of the Year in Angola 2016 by The Banker magazine for the third time at an official ceremony held in London. Founded in 1926, The Banker is a British magazine specializing in the financial markets. The Banker has a database with information on Bank of the Ye ar 2016
ANGOLA more than 4,000 banks and is present in more than 180 countries. It is currently considered one of the world’s leading sources of financial news.
Sirius Awards I Best Financial Sector Company BFA was awarded the Best Company of the Year in the Financial Sector prize for the fourth time in the sixth Sirius Awards at a ceremony held in the Epic Sana Hotel in Luanda. The jury acknowledged BFA for its innovation, the quality of its products and services, its economic and financial performance and its contribution to the growth of financial inclusion in Angola.
EMEA Finance Magazine I Most Innovative Bank BFA was an award winner, for the first time, in the Most Innovative Bank category. EMEA Finance is a magazine, aimed at the financial community in Europe, the Middle East and Africa, which analyses and ranks the performance of the main banking institutions in various countries.
EMEA Finance Magazine I Best Bank in Angola BFA was voted Best Bank in Angola by EMEA Finance magazine, the eighth time it has won this award. EMEA Finance is a magazine, aimed at the financial community in Europe, the Middle East and Africa, which analyzes and ranks the performance of the main banking institutions in various countries.
Capital Finance International Magazine I Best Branch Network For the second year running BFA won the Best Branch Network prize, awarded by Capital Finance International (CFI) magazine. The prize was given in recognition of the Bank’s very large branch network, comprising more than 190 branches and outlets.
International Finance Magazine I Best Corporate Bank International Finance Magazine awarded BFA the prize for Best Corporate Bank in Angola for the IFM BEST CORPORATE BANK ANGOLA fourth year running. International Finance Magazine is a British online magazine with readers in AWARDS 2016 more than 180 countries. Each year it selects the top companies in the banking sector in each business segment.
Banker Africa Magazine I Best Retail Bank BFA won the Best Retail Bank 2016 award in the Banker Africa, Southern Africa Awards 2016, issued by Banker Africa magazine. Banker Africa analyses and ranks the performance of the main banks in various countries.
ANGOLA Superbrands I Brand of Excellence For the sixth time in a row BFA was honoured with Superbrand status by Superbrands, an
E L S independent international organization dedicated to promoting exceptional brands. Superbrands E E IT R O 2016 O P ID EL M OS CONSU Angola rewards excellent brands for their performance in the domestic market.
92 Banco de Fomento Angola | Annual Report’16 I Best Commercial BankFinance IBest in magazine Angola Digest services. BFA in brand the Angolan market and commitment its to implementing new customer support third time in arow. prize The in awarded was recognition of the in Bank’s building success the Global Brands Magazine BFA awarded Bank the Brand prize in Africa 2016 Best West for the for Bank Global Brand Brands IBest Magazine in Africa West ment of banks’ excellence, innovation and investment strategies. time.the second GFM is aleading onlineassess on awards an its financial bases and portal news GlobalThe Financial Market named BFA (GFM) Commercial portal Bank the in Best Angola for Global Financial Market Review Commercial Bank IBest in Angola banks’ excellence, innovation and investment strategies. time. GFM is of aleading onlineassessment on awards an its financial bases and portal news GlobalThe Financial Market named BFA (GFM) Retail portal the Best Bank in Angola the for first Global Financial Market Review Retail IBest Bank in Angola and market share growth. into consideration in granting the include award sales and clarity variety and services, of products BFA Retail received the Best Bank 2016 World from award Finance magazine. criteria The taken World Retail Finance IBest Bank Magazine solutionscreation of specific for customers. solidation of the Bank’s contribution its operations, to Angola’s economic development and the inyear arow. main The points considered by World Finance in awarding this title the were con World Finance magazine voted BFA Management the for third the bank Corporate with the Best ManagementWorld Corporate Finance IBest Magazine oneducation, focused programme, healthity and social solidarity. extensive its commercial and social its responsibil network wide and services, of range products Global Banking and Finance Review This primarily was award portal. in recognition of the Bank’s BFA Commercial Bank voted in Best was Angola running the for year fourth by the UK-based Commercial Bank Review Finance and IBest Banking Global the rate in high automatic of international success processing in payments 2015. row. In giving this prize Bank into took Deutsche account the improvement levels in and service Bank BFA awarded Deutsche the Prize STP (Straight the for 14th Through Processing) time in a Award ISTP Excellence Bank Deutsche banking, business, finance and and technology. finance banking, business, is aBritish online specializedzine. magazine Finance in Digest fields of in financialthe quarterly analyses BankCommercial 2016Angola in maga Best time, BFA the by Financegiven Digest award, the first for won, BFA - 93 - - -
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment
04 RISK MANAGEMENT
Governance and Organization of Risk Management 96 Credit Risk 99 Liquidity Risk 105 Foreign Exchange Risk 107 Interest Rate Risk 109 Operational Risk 111 Compliance Risk 115 Governance and Organization of Risk Management
In order to manage risk effectively, BFA aims to continuously model is prudent and aligned with best practice, based on the achieve and maintain a balance of risk and return appropriate following guiding principles: to its size, complexity and risk profile. BFA’s risk management
Principles of Risk Management
Involvement of senior management and directors in risk management and decision making
Integration and assignment of clearly defined responsibilities for ongoing risk management
Independence in risk monitoring and control through the separation of risk oversight functions from the risk-taking areas
Periodic review and audit of risk management mechanisms
Conservative stance in defining assumptions and setting limits
Material Risks
Given the nature of the Bank’s activity, the risks considered identification, assessment, monitoring and control, as well material and therefore subject to the most careful as systematic reporting and disclosure, are as follows:
Credit Liquidity
Risk Compliance Management Foreign exchange
Operational Interest rate
96 Banco de Fomento Angola | Annual Report’16 regular reports. rules and limits, and to submit principles, established the following basis,activities onaday-to-day units to manage the risks of their of the Bank’s area of each business It is the responsibility of the heads BFA’s risk consists essentially management model phases: four of Internal System. Control which regulates the risk function acomponent of as the laidthe in measures down BNA Notice 2/13 of 22 March, by defining and disseminating internal regulations on based responsibilities in area the Bank. ofThis every is achieved and management of is the an activities integral part and BFA an has created organization in which risk control shareholders andemployees, the community. Accordingly, all risks managed to are the satisfaction of customers, mainThe objective of risk management is to ensure that Model and Organization Risk Management 1st Line Defence of Business units Business
Identification Reporting strategy. activity and advising for onrisk all the risks inherent in the Bank’s monitoringfor the management of RisksThe is responsible Committee implementingfor recommendations. actively managed and controlled and responsible ensuring for that risks are riskThe management units are Risk management units and Risks Committee Risks and 2nd Line Defence of
organization, BFA has defined three lines of defence: In to order structure the risk control and management Executive of of the Directors. Committee Board is the responsibility and of of the the Directors Board the mainOverseeing risks inherent in the Bank’s activity
Monitoring andControl Assessment and rules external and regulations. applicable and internal procedures of compliance withthe assessment independence and objectivity in is responsible ensuring for Internal Audit and Inspection 3rd Line of Defence 3rd Line Defence of Internal Audit Internal
Risk Management
97
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment Identification Monitoring and Control
The actual and potential risks to which BFA is subject Risk management is subject to continuous monitoring. are identified based on up-to-date, timely and reliable For this purpose, risk limits and control mechanisms information from the various areas. The main activities in are established. The main activities in this phase are as this phase are as follows: follows:
■■ Gather reliable and timely information from the different ■■ Monitor risk indicators; areas; ■■ Monitor the limits set in the risk contingency plan; ■■ Define the strategy for identifying risks; ■■ Update and adapt the indicators and limits to the ■■ Identify existing and new risks; different economic cycles;
■■ Define and review risk indicators and limits; ■■ Develop risk control mechanisms and alerts;
■■ Implement recommendations from the risk reports. ■■ Perform stress testing based on defined risk scenarios;
Assessment ■■ Monitor the adequacy of the risk management system.
Assessment is based on all the information collected from Reporting the different areas, which is then subjected to consistent and auditable qualitative and quantitative assessment Reports on the results of risk management and the mechanisms. The main activities in this phase are as mechanisms used must be delivered whenever required or follows: at the intervals specified by regulatory bodies or internal rules. The main activities in this phase are as follows: ■■ Gather reliable and timely data from the different areas; ■■ Prepare reports based on the available information; ■■ Define risk measurement assumptions and models; ■■ Prepare recommendations for risk mitigation; ■■ Develop risk measurement models; ■■ Submit reports to the Board of Directors and the ■■ Calculate and analyze the impact of the identified risks; Executive Committee of the Board of Directors;
■■ Validate, update and adapt the risk measurement ■■ Prepare action plans and assign responsibilities for risk models; mitigation;
■■ Subject the measurement models to periodic audits and ■■ Disseminate the risk reports in a structured manner to implement any improvement recommendations. the various areas of the Bank;
■■ Monitor implementation of the activities defined in the action plan.
98 Banco de Fomento Angola | Annual Report’16 the followingthe situations: obligations to the Bank, that to in nor are customers any of of material incidents whohave or failed their to perform notlend whohave to Bank arecord The customers does RefusalsLoan Material Default to or Due Incidents counterparty, industry, maturity. or product, geography but concentration also from inby acounterparty aparticular It event arise not only can and aloss consequent from default their to meet customers obligations under credit agreements. Credit Risk with is the associated risk the failure of loss of RiskCredit ■ ■ ■ the Angola Investe programme; all investment financeincludingproposals, those included in responsible structuring for complex, high-value financings and FinanceStructured and Investment Finance Department segment; credit transactions in the Corporates Risk Credit Department Corporate segments; and Businesses credit transactions inresponsible assessing the for Individuals Lending for Individuals to Department and Businesses follows: as are and control responsible credit for areas The risk assessment ■ ■ ■ or financialor situation. that may have amaterial impact ontheir adverse economic entity or action takenLegal hasagainst been the person entity is or responsible; person which for payment systems or ofImproper cards use the than due;more 45 days past of principalPayments to interest or afinancial institution WHAT IS CREDIT RISK AND WHAT CAUSES IT? HOW IS CREDIT RISK MANAGED? : responsible for assessing : responsible assessing for : : Credit Risk Analysis Procedures within summarized of the the parameters framework below: requires application arigorousLoan analysis, assessment Specifications.Product Lending Regulations, the Lending Manual Procedures and the Lending limits laid are and loan procedures out in the General responsibilities in the commercial areas. to director, the same report All departments whohas no these loans by negotiation legal action. or of is overdue also responsible department the for recovery with associated impairment credit This portfolio. losses and managingoverseeing the level of provisioning and responsible monitoring for quality loan portfolio and for Credit Monitoring, and Recovery Litigation Department development and the projects hotel projects; the are estate real transactions portfolio in the estate real activities sector. in important the estate real most The income or commercial from assets backed by estate real loan applicationsassessing and monitoring outstanding loans Transactions Department Real Estate ■ ■ ■ ■ competent approval for must be: bodies to submitted be guarantees or toAny the loan proposals guarantees financial situation, the transaction be financedto and any information onthe borrower, economic the and borrower’s collection, verification and critical analysis of relevant creditNo without approved be transaction can prior ■ ■ ■ ■ specifications; consistent, applicable, where with the product in toneeded order complete the transaction; must include information all and essential accessory adequately form, in which described aloan proposal
provided; : responsible for Risk Management : 99
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment ■■ accompanied by a properly documented credit risk BFA does not grant loans with a risk level higher than B. For analysis; loans to individuals, BFA requires the signature of more than one income earner, with the exception of the protocols signed ■■ signed by the persons submitting the proposal; with companies.
■■ In the case of companies or corporate groups with accounts Review of Risk Classifications spread across several Corporate Centres or BFA branches, transaction proposals will be examined by the body A review of the classification of outstanding loans and the responsible for managing the relationship with the company associated provisions is carried out at least once a month in or group in question; accordance with BNA Notice no. 11/14.
■■ Credit risk analysis considers the Bank’s total exposure Proceedings of Decision-making Bodies to the customer, or to the group to which the customer belongs, in accordance with the legislation in force from ■■ The resolutions of each decision-making body are approved time to time. as collective decisions of the body’s respective members and are recorded in minutes, which are signed by all Analysis and Appraisal of Guarantees participants;
■■ All credit transactions are secured with guarantees ■■ Decisions are taken on a unanimous basis. Where there is appropriate to the borrower’s risk and the nature and term no unanimity, a proposal is submitted to the immediately of the loan. The documentation should provide assurance higher decision-making body; as to the adequacy and liquidity of the guarantees; ■■ Members of a decision-making body who have a direct ■■ Any real estate collateral is appraised before the loan or indirect interest in a transaction are prohibited from approval decision is taken. taking part in debate or decision making in respect of that transaction, which must be submitted to the next higher Based on BNA Notice 11/14, BFA has defined the following decision-making body. criteria for classifying new loans in the different risk levels: Validity of Decisions ■■ Level A (Lowest Risk) – Loans to the Angolan State, including central and provincial governments, by ■■ Loan approval decisions remain valid for 90 days and this central banks, international organizations or multilateral term of validity is notified to customers; development banks, or loans backed by captive bank accounts held at BFA or by government securities (Treasury ■■ All decisions specify a deadline by which the loan must be Bonds or bills or central bank bonds) in an amount equal to drawn or the guarantee issued; otherwise, the deadline is or greater than the value of the liability; 30 days from the signing of the agreement.
■■ Level B: (Very Low Risk) - Other loans. In 2016, continuing the project started in 2014, the staff of the commercial networks received further training through Exceptionally, other loans may be classified in risk levels A a specific programme that covered all stages of the lending or B, depending on the characteristics of the borrower and process, especially credit analysis, loan approval and recovery the nature of the transaction. These exceptional cases will of overdue loans. require the approval of the Board of Directors or the Executive Committee of the Board of Directors.
100 Banco de Fomento Angola | Annual Report’16 tasks: of the Bank,areas ensuring independence and division of implemented was model The with the collaboration of various of international practices. best June 2013 the to meet challenges arising timely from adoption BFA implemented the Impairment Calculation Loss in Model Calculation Model Impairment Loss decisions. this has helped BFAloan assessment, make informed more of an integral the Once BNA became part data borrowings. of customers’ existing bank comprehensivemore assessment during factor important this avery was in period allowing a consolidationThe of BNA’s Information and Credit Risk Unit ■ ■ ■ corporates and publiccorporates sector, and financial institutions. account: loans, consumer home loans, credit auto cards, loans, taking risk profiles, homogeneous the following categories into according is segmented the to impairment portfolio losses, ofFor assigning the purpose and risk calculating factors classified are in default. as classified are impaired. more thanLoans due past days 180 impairment, and 30 due 180 days past loans between whereas due considered are days past to30 show noevidence of onevidence of based impairment. portfolio its up Loans to characteristics of the Bank’s Bank The loan classifies portfolio. by defined BFA, on andhistorical series based the using measured are Impairment calculation losses methods ■ ■ ■ supervising individual customer analyses. individual customer supervising Transactions also play arole departments in and performing Investment and Structured Financing, and Real Estate toLoans Individuals Credit Risk, Corporate and Businesses, and governance. also model for Investment The Centres, responsible monitoring for the periodic calculation process Credit Monitoring, and Litigation Recovery – Department and maintaining ITfrom systems solution. the support –responsible information extracting for IT Area Systems approval of the results. Executive –responsible Committee final for validation and assessment: toLoans the following subject are customers to individual Individual Assessment the size of the loan: individual collective. or on based of assessment, subject mayLoans be types to two completed. has been period considered to remain risk increased at until cure the regulatory Restructured loans require special and treatment are ■ ■ ■ ■ ■ over the last five theover years: five last onan analysisbased of historical default in rates the portfolio taken are risk each into for segment factors consideration, the ofFor following collective the purpose assessment, risk Assessment Collective ■ ■ ■ ■ ■ AOA balance there25,000,000 is where apast-due than of more AOA 100,000,000 and than all of more AOA exposures In the Individuals than all of more segment, exposures Loss Given Default (LGD) Default Given Loss due;than days past 90 Probability Default (PD) of –probability of becoming more they belong. to ofindividual the which segment regardless assessment, are subjector loans loans reclassified to recovery under Additionally, all loans with or to customers restructured thanmore AOA 25,000,000; all segment, with of customers In exposure the Corporates monthly, on evidence of based impairment. time spent in default. assessed are Impairment losses which withreflecting loss, associated the the increases applied are LGDs to transactions that already are in default, intended given the this loss to reflect probability; durational applied to transactions that not yet are in default is and so time of default. LGD is divided LGD zero is areas: in two
1,000,000;
– loss likely– loss to incurred be the at Risk Management 101
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment The impairment charge is calculated as the difference between held as collateral were reappraised by expert valuers where the the carrying value and the net present value of the loan, which following circumstances obtained: is calculated as the discounted value of the expected future cash flows from the loan. ■■ Properties associated with loans more than 90 days past due, if the previous appraisal was more than two years old; The provisions recorded at 31 December 2016 comfortably cover the losses estimated by the model. ■■ at least every two years, where the positions at risk amount to more than 1% of the total loan portfolio at the previous WHAT WERE THE MAIN DEVELOPMENTS IN 2016? year-end or to more than AOA 100 million;
Impairment Loss Calculation Model ■■ Other evidence of impairment, in particular, market events or changes that could directly affect the value of real estate The impairment loss model has been adapted to make it more assets in general, depending on geographical location, rigorous and bring it into line with the new legislation published purpose and proximity. by Banco Nacional de Angola and with international best practices. This work will continue in 2017, assisted by the launch of a new database specifically developed for processing data on real BFA regularly subjects the model to sensitivity analyses and estate collateral in credit transactions. back-testing in order to ensure a good fit with the portfolio’s actual behaviour. Loan Portfolio Structure
Under BNA Notice 2/15, financial institutions may In 2016 the overall loan portfolio (excluding guarantees and calculate their loan loss provisions using their own internal letters of credit) increased by 5.2% in relation to 2015. This methodologies developed for that purpose, once the change was driven by the growth of the portfolio of loans to the methodologies have been approved by Banco Nacional de Corporates segment, which reached 7.1% compared to 2015, Angola. The rules set out in this BNA regulation are identical and the 7.9% increase in the portfolio of loans to Individuals and totally consistent with those already adopted by BFA and Businesses. The loan portfolio of the Investment Centres for internal use. On June 30, 2015, BFA submitted the new network, in contrast, decreased by 23.1% compared to the loan impairment calculation methodology, which replaces previous year. the previous direct methodologies, to BNA for approval, thus meeting the deadline stipulated by the regulator. Loan portfolio AOA million
Assessment of Collateral and Other Securities 2016
In 2016, following the trend observed in previous years, the granting and monitoring of loans to the construction sector 2015 was subject to strict control by the Operations and Real Estate Department. 2014
In the context of BFA’s Impairment Loss Calculation Model and
BNA Notice 10/14, the department continued to implement Individuals and Small Corporate Investment Centres the action plan started in 2014 for the assessment of real Business estate collateral in credit transactions. In summary, properties Note: Total loans not excluding guarantees and outstanding interest.
102 Banco de Fomento Angola | Annual Report’16
Loan Portfolio by Customer Type: Corporates and Individuals
23,6%
76,4%
Corporate Loans Individual Loans Note: Total loans not excluding guarantees and letters of credit. with notable and concentrations Construction. in Services is fairly loan portfolio sectors, corporate The balanced across of the total. astable proportion represent the of main the and economy the risk lower sectors classes In 2016, is well loan portfolio theacross corporate diversified lower-risk loans of diversification,proportion Cross-sectional withstable a Note: Totalloansnotexcludingguaranteesand lettersofcredit. by economicsector Diversification ofcorporateloanportfolio Note: Totalloansnotexcludingguaranteesandlettersofcredit. and Individuals Loan PortfoliobyCustomerType:Corporates Note: Loan portfolio 2 2 2 014 015 016 Business Individuals andSmall Industry Agriculture andFisheries Corporate Loans Total loansnotexcludingguaranteesandoutstandinginterest. 47,5% 23,6% 1,5% 5,7% 13,2% 76,4% 7,6% 24,4% Individual Loans Corporate Services Commerce Transportation Construction Investment Centres AOA million USD. currency significant against the most lending currency, the to an in increase default and the devaluation of the national by 8.7%increased to compared the previous year, mainly due loans ratio in increased 2016. amount The of overdue loans credit the portfolio, volume of overdue loans and the overdue by BFA in to order continuously improve the quality of its theDespite risk analysis and management policies pursued Ratio Loans Overdue than by “moderate” 0.1 risk) decreased points. percentage of BFA’sexposure to the loan higher portfolio (more risk classes total classified are loans andin advances levels A to The C. defined in Notice BNA 3/12 of 28 March.94.1% Nearly of is concentrated, in in as the previous risk lower years, classes Looking the at distribution in terms of risk, the loan portfolio diversifying to the exposure risks of the different sectors. This distribution is the result of BFA’s lending policy, aimed at Concentration of overduecorporateloansbysector Credit qualityintheCorporateBankingsegment Note: Totalloansexcludingguaranteesandletters ofcredit Total G -Loss High F -Very E -High D -Moderate C -Reduced Reduced B -Very A -Null Class LOANS BY RISK CLASS guarantees and letters of credit and letters guarantees exclude not does and loans past-due and performing both includes Total loans Note: 2 2 2 014 015 016 Industry Agriculture andFisheries Overdue loans(mAOA) 15,5% 6,5% 35,2% 5,7% 4,0% 3,3% 4,7% 4,6% 33,1% Services Commerce Overdue loans(%oftotalloans) 50,2% 42,9% 100% 0,8% 2,0% 1,0% 2,5% 0,6% 2014 Transportation Construction Risk Management 60,2% 30,5% 100% Total Loan Operations Total Loan 2,8% 2,6% 0,7% 1,5% 2015 1,6% AOA million 34,3% 58,7% 100% 0,2% 0,9% 1,6% 2016 3,1% 1,1% 103
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment Credit quality in the Corporate Banking segment
AOA million 2016 4,7%
2015 4,6%
2014 3,3%
Overdue loans (mAOA) Overdue loans (% of total loans)
Note: Total loans excluding guarantees and letters of credit The sector that accounts for the largest proportion of overdue The volume of loans written off was influenced by the lack of loans is Construction (approximately 35.2% of the total), success in renegotiating a number of past-due loans, which followed by Retail Trade and Manufacturing, whose contribution BFA therefore had to write off as a loss. Nevertheless, in 2016 to BFA’s portfolio of past-due loans was down 11.7 and 5 the Bank drastically reduced its volume of written-off loans by percentage points, respectively, compared to the previous year. 97.4%, demonstrating the effort invested in recovering loans by The Services sector stands out in the corporate loan portfolio, appropriate legal means, particularly through the courts. with only 6.5% of overdue loans.
Write-offs
Concentration of overdue corporate loans by sector AOA million 2016 4,0% 5,642 5,7% 2015 6,5% 1,072
15,5% 33,1% 2014 2,060
35,2%
Recovery of Overdue Loans Through Litigation
As of year-end 2016 a total of 607 legal proceedings had been Agriculture and Fisheries Commerce Construction started to recover overdue loans. Of this total, 138 concerned Industry Services Transportation loans to Corporates and 469 loans to Individuals.
At December 2016, the provision coverage ratio was a comfortable 125%, reflecting a particularly prudent risk management policy. In 2016, in contrast to the previous year, provisions fell 7% and the coverage ratio of the overall loan portfolio fell 0.8 percentage points. Even so, given the trend in lending, BFA maintained a stable position.
LOAN LOSS PROVISIONS AND PROVISION COVERAGE RATIO AOA million Classe 2014 2015 2016
Provisions 10.853,2 15.688,1 14.591,6
Provision coverage, total loans 4,7% 7,1% 6,3%
Provision coverage, Overdue loans 136% 146% 125% Note: Total loans excluding guarantees and letters of credit.
104 Banco de Fomento Angola | Annual Report’16 Liquidity RiskLiquidity ■ ■ management bodies, namely: bodies, management of documentsby that aset distributed are to various financialThe management of BFA’s liquidity risk is supported banks and the foreign correspondent at currency held. notes held in foreign currency the are sum of the liquid funds held also ensure that this limit is complied with. Available funds against risks arising swings from in the market. DFI must The foreignfor currency, which buffer an important provides Nacional de Angola, BFA an additional has set liquidity limit required by Banco reserves the from mandatory Apart reserves. mandatory currency onany given day, while maintaining compliance with of funds inflows localand outflows inthe difference between liquidity gap limit in currency. local daily The liquidity gap is DFI isThe responsible ensuring for compliance with the daily deposit (LTD) ratio aprudent at level. position, oneligible based liquid keeping the loan-to- assets, BankThe astable, and secure ensures sufficient liquidity financingactivities. of its management, BFA is in aprivileged position the regards as Thanks prudent to to approach extremely its liquidity (DFI) Limits Manual. and Procedures laidare in down the Financial and International Department’s rulesThe of financial management and the liquidity risk limits financial its to meet obligations. anfrom inability of the Bank to obtain sufficient liquid funds Liquidity risk is the probability impacts resulting of adverse ■ ■ international markets; of weekly thearetrospective summary main national and Documentation the for Finance with Committee, mandatory exchange and money markets) and compliance with andmovements transactions (in particular in the foreign and international the markets, day’s important most summarizesDaily key report: information the from domestic HOW IS LIQUIDITY RISK MANAGED? WHAT IS LIQUIDITY RISK AND WHAT CAUSES IT?
reserves; ■ ■ ■ ■ ■ follows: Bank’sThe organizational and decision-making is model as 1.5 for reports of material1.5 foreign currencies. reports for of all currencies) reports in currency local and and aggregate compliance respectively, ratios, than greater are 1(for reports months of publication48 of the Notice their liquidity and Financial institutions to ensure must work that within 36 and in all basis. currencies onan aggregate must also submit aliquidity showing statement flows the cash institution onastandalone At basis. monthly intervals they in flows and local foreign currency thatare material for the showingliquidity weeks, only two the cash every statements From 2017, 28 February financial institutions submitmust management. specific gives instructions of for the reporting liquidity risk August, 30 On BNA published Instruction 19/2016, which ■ ■ ■ ■ ■ compliance with all and internal regulatory limits. of Directors’ decisions onan ongoing well basis, as as implementation andmarket oversees of analyses the Board Executive considers theThe daily Committee and weekly limits loans for and and deposits. rates interest transactions with Angolan sovereign risk, counterparty Executive the and key takes Committee decisions on its from considers proposals of Directors Board The monthly money market summaries. Documentation which of the for Directors, Board includes indicators and risk limits; by the Management Information covering Area the key Monthly risk management dossier: adocument produced and proposes such actions needed. may as be and proposes of documentation and information, implements decisions FinanceThe weekly with meets portfolio own its Committee WHAT WERE THE MAIN DEVELOPMENTS IN 2016? Risk Management 105
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment MANDATORY RESERVES IN ANGOLA
BNA Instruction 02/2016 on Mandatory reserves, aimed at making mandatory reserves a more effective instrument of monetary policy, came into effect on 18 April 2016. Additionally, on 16 May 2016, BNA Instruction 04/2016, aimed at adapting the use of monetary policy instruments to the country’s current macroeconomic situation, came into force.
The abovementioned Instructions modify the mandatory reserves ratio as follows:
■■ The mandatory reserves ratio to be applied to the daily balances of the various items that make up the reserve base in local currency, excluding the Central Government, Local Governments and Municipal Governments accounts, increases from 25% to 30%. Banks may satisfy up to 20% of the requirement in Treasury Bonds held in their own portfolio or through medium and long-term funding agreements entered into with the Finance Ministry, weighted by maturity from the date of issue or disbursement, respectively, from January 2015. The level of compliance with the requirement in Treasury Bonds or through funding agreements between the Finance Ministry and commercial banks is calculated using the following weights: Bonds with a maturity of 5 years – 100% of nominal value; Bonds with a maturity of 4 years – 75% of nominal value; Bonds with a maturity of 3 years – 50% of nominal value; Bonds with a maturity of 2 years – 20% of nominal value; ■■ Disbursements of funding agreements with terms of 7 years or more – 100%; Disbursements of funding agreements with terms of between 6 years (inclusive) and 7 years (exclusive) – 75%; Disbursements of funding agreements with terms of between 4 years (inclusive) and 6 years (exclusive) – 30%; Disbursements of funding agreements with terms of between 2 years (inclusive) and 4 years (exclusive) – 10%;
■■ The mandatory reserves ratio to be applied to the daily balances of the various items that make up the reserve base in local currency, excluding the central government, local government and municipal government accounts, is maintained at 15%.
■■ The mandatory reserves ratio to be applied to the daily balances of the central government account in local currency is maintained at 75%;
■■ The mandatory reserves ratio to be applied to the local government and municipal government accounts, also in local currency, is maintained at 50%
■■ The mandatory reserves ratio to be applied to the daily balances of the central government account in foreign currency is maintained at 100% and the ratio to be applied to the local government and municipal government accounts, also in foreign currency, is likewise maintained at 100%.
■■ The reserve requirement for the calculation base in domestic and foreign currency is calculated weekly on the arithmetic mean of the balances recorded in the respective accounts, on the business days of the week;
■■ Mandatory reserves are calculated on the first business day and from the first to the last business day of the week following the week in which the balances are established.
■■ Up to 5% of the weekly arithmetic average of the daily closing balance of the Local-Currency Cash account, as per the Plan of Accounts for Financial Institutions, may be deducted from the mandatory reserves in local currency each week.
■■ Up to 80% of the assets representing the amounts of loans and advances in local currency to the agriculture, forestry, fishing, manufacturing, energy, water, food service, transport and IT sectors, all loans and advances granted under the Angola Investe programme and ADB credit lines with a term of 24 months or more may also be deducted from the reserve requirement in local currency.
106 Banco de Fomento Angola | Annual Report’16 Foreign Exchange Risk Foreign Exchange ■ ■ ■ ■ ■ follows: Bank’sThe organizational and decision-making is model as management bodies: management is guided of documents by distributed aset to various financialThe management of BFA’s foreignexchange risk whichfor aforeign exchange limit exposure is established. residual, with the exception of the positions in USD and EUR, and liabilities assets between in foreign each currency is DFI isThe responsible ensuring for that the difference currency within limits. the approved risk byassociated keeping and liability asset positions in each foreign exchange aiming exposure, to actively control the BFA aparticularly takes rigorous to approach managing its foreign currency positions or linked to an exchange rate. and liability asset the difference between positions in each in currencies the from exchange and arises between rates Foreign fluctuations Exchange risk adverse from results ■ ■ ■ ■ ■ market; andmovements transactions in the foreign exchange and international markets and the day’s important most summarizesDaily key report: information the from domestic view of the market; the limit the for foreign exchange onBFA’s position based of the ECBD, the at proposal of Directors, Board The sets the monthly foreign exchange market summary. Documentation which of the for Directors, Board includes and foreign exchange risk limits; Management Information covering Area, the key indicators Monthly risk by the produced management dossier main internal markets; foreign of the exchange domestic overview market and the Documentation the for Financial with Committee, aweekly HOW IS FOREIGN EXCHANGE RISK MANAGED? CAUSES IT? WHAT IS FOREIGN EXCHANGE RISK AND WHAT ■ ■ the management foreign of its exchange position. position in other currencies to residual levels, which simplifies BFA primarily operates in USD and EUR and keeps its view of the market. of adecision onBFA’s taken based by of the Directors, Board This foreignprevious years. exchange position the result was valuedwas USD at 381 million, asignificant over increase At 31 2016, December BFA’s foreign exchange position Foreign Exchange Risk Analysis ratio. no longer any limits set onbanks’ foreign exchange exposure the new prudentialsets limits large exposures), for there are which includes foreign exchange risk) and Notice 9/16 (which theestablishes new capital requirements market for risk, With the publication by BNA of Notice 6/16 (which Change inForeignExchangePosition(USDmillions) Purchases ofForeignExchange(USDmillions) ■ ■ 2 2 2 and proposes such actions needed. may as be and proposes of documentation and information, implements decisions FinanceThe weekly with meets portfolio own its Committee compliance with all and internal regulatory limits; of Directors’ decisions onan ongoing well basis, as as implementation andmarket oversees of analyses the Board Executive considers theThe daily Committee and weekly 2 2 2 014 015 016 014 015 016 Purchases fromcustomers WHAT WERE THE MAIN DEVELOPMENTS IN 2016? Currency acquiredfrom BNA Risk Management 107
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment Sales of Foreign Exchange (USD millions)
Sales2016 of Foreign Exchange (USD millions)
2016 2015
2015
2014
2014 Change in Foreign Exchange Position (USD millions) Sales to customers Sales to customers 2016
2015
BFA acquires foreign currency on the primary market through Aggregate Sales Sales of of Foreign Foreign Exchange Exchange by BNA by BNA BNA’s2014 foreign exchange auctions and direct placements and and Customers (USD (USD million) million) through purchases from customers. In 2016 there was sharp decrease in currency purchases, which fell 44% compared to jan-15 2015, reaching a total of USD 1,780 million. This decrease is feb-15 attributable to the decrease in foreign currency acquired from mar-15 BNA, which fell 48%, and the decline in currency purchases mar-15 from customers, which fell by USD 353 million. apr-15 apr-15 may-15 may-15 Purchases of Foreign Exchange (USD millions) jun-15 jun-15 jul-15 2016 jul-15 aug-15
aug-15sep-15 2015 sep-15oct-15
nov-15oct-15 2014 nov-15dec-15
jan-16 dec-15 Purchases from customers Currency acquired from BNA feb-16 jan-16 mar-16 feb-16 apr-16 Sales of currency by BFA fell sharply in 2016 to USD 1,384 mar-16 million. may-16 apr-16 jun-16
may-16 Sales of Foreign Exchange (USD millions) jul-16 aug-16jun-16
2016 spt-16jul-16
aug-16oct-16 2015 nov-16 spt-16 dec-16 oct-16 2014 nov-16
Foreigndec-16 Exchange Risk Analysis Sales to customers
On its Bloomberg page (BFAA), BFA quotes prices for the 2016 was marked by a very significant reduction in the main Angolan assets, whether in the foreign exchange market volume of foreign currency released to the economy by BNA, or in the interest rate market. This page is public and is used due to the sharp decline in oil revenues and the priority given to inform our customers of the quoted prices of the different to preserving Angola’s net international reserves. assets. Of particular interest are the quotations for the spot Aggregate Sales of Foreign Exchange by BNA and Customers (USD million) foreign exchange market and the forward foreign exchange market.
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dec-16 BFA, of rate interest risk main are: the two types Interest rate risk fluctuations from results rates. In in interest Risk Rate Interest ■ ■ the set limitthe set in relation capital. to regulatory DFI isThe responsible ensuring for that this risk is kept within maturity than of more one year. valuation of the Bank’s of securities portfolio with aresidual of the impact of aparallel shift in the yield onthe curve controlling rate interest risk, which the aggregate is the sum Interest rate risk in the is securities managed by portfolio withinsheet limit the set in relation capital. to regulatory rate keepinginterest for risk onthe balance the aggregate and liabilities onBFA’s balance sheet. DFI is The responsible of thecurve different currencies onthe valuation of the assets This is the sum of the impact of aparallel shift in the yield controlling rate interest risk onthe balance aggregate sheet. Interest rate risk onthe balance is sheet managed by Manual by the issued DFI. rateinterest risk in down set are the Limits and Procedures rulesThe financial for management and the limits set for limits.set and the rates valueinterest of the within securities portfolio BFAbase, to and in shocks movements exposure its manages In to order reduce the variability of revenue and capital its ■ ■ fluctuations in marketrates. interest by thecaused sensitivity of the securities in to the portfolio Interest rate risk in the securities which portfolio, is gap. repricing valuation and liabilities of balance assets sheet and the the impact that changes in have onthe rates interest Interest rate risk onthe balance sheet, which from results WHAT IS INTEREST RATE RISK AND WHAT CAUSES IT? HOW IS INTEREST RATE RISK MANAGED? management bodies, namely: bodies, management of documentsby that aset distributed are to various BFA’s financial managementrate of risk interest is supported ■ ■ ■ ■ ■ ■ ■ follows: Bank’sThe organizational and decision-making is model as ■ ■ ■ ■ ■ ■ ■ indicators and risk limits; by the Management Information covering Area the key Monthly risk management dossier: adocument produced international markets; ofretrospective weekly the summary main national and Documentation the for Finance with Committee, a market and the public debt market); andmovements transactions (in particular in the money and international markets and the day’s important most summarizesDaily key report: information the from domestic and proposes such actions needed. may as be and proposes of documentation and information, implements decisions FinanceThe weekly with meets portfolio own its Committee compliance with all and internal regulatory limits; of Directors’ decisions onan ongoing well basis, as as implementation andmarket oversees of analyses the Board Executive considers theThe daily Committee and weekly limits loans for and and deposits; rates interest transactions with Angolan sovereign risk, counterparty Executive the and key takes Committee decisions on its from considers proposals of Directors Board The debt market. monthly summaries of the money market and the public Documentation which of the for Directors, Board includes Risk Management 109
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment Interest Rate Risk Analysis Institutions must provide BNA with information about the increases or decreases in interest rates that the most adverse Scenarios used to calculate the adverse impact of interest scenario entails for their balance sheets. rate shocks. Financial institutions must assess their exposure to interest rate risk in the banking book continuously and for periods of ADVERSE IMPACT ON THE BALANCE SHEET one business day, reporting to BNA whenever the scenario Rates Shock analysis indicates the possibility of a reduction in their AOA 3,0% economic value equal to 20% or more of their regulatory
EUR 1,0% capital.
GBP 1,0%
IKZ 1,0%
USD 1,0%
ADVERSE IMPACT ON THE SECURITIES PORTFOLIO Rates Shock
USD Spread 2,5%
AOA Rate 3,0%
IKZ Rate 2,5%
USD Rate 1,0%
On 22 June 2016, BNA published Notice 8/16, which establishes the requirements to be met by financial institutions from January 2016 in relation to the assessment of interest rate risk in the banking book.
Financial institutions will have to submit to BNA detailed information about their interest rate risk exposure in the banking book, assuming an instantaneous 2% increase or decrease in interest rates as a result of an equivalent parallel movement of the yield curve, estimating the impact on the present value of cash flows and net interest income.
110 Banco de Fomento Angola | Annual Report’16 appropriateness of theappropriateness internal control taking system, into efficiency and the effectiveness, assesses A&I Department (A&I). of is Conduct the responsibility of the Audit and Inspection compliance withAssessing internal regulations and the Code byapproved of the Directors. Board subject to the BFA of Conduct, which Code has been andmanagement the bodies Bank’s also employees are affecting banking activity. of the Bank’s members The consisting of BNA regulations and the main legal provisions intranetThrough its BFA also publishes regulations, external provisionsregulatory in incorporated are internal regulations. organization’s internal and that ensures needs new legal or Organization and Training which Department, monitors the known throughout the organization is the responsibility of the thematic Producing area. rules and making these them to their nature, in ahierarchy of rules by and grouped are regulations numbered, are dated and organized, according inassigned relation to operational risk management. These to followed be operational procedures and the authorities intranet, of to internal aset regulations that the specify BFA has given via the all corporate employees access, its ofemployees in their the performance duties. inappropriate from or events, external from or behaviour by inadequate and people failed systems or internal processes, training to identify and mitigate possible risks arising from risk management structure and of investing in employee of havingrecognizes the importance an adequate operational irreparable damage to abank’s reputation. BFA therefore Inappropriate management of operational risk to lead can eventsexternal and is inherent in any activity. from or and people failed systems or internal processes, Operational risk is the resulting risk of loss inadequate from WHAT IS OPERATIONAL RISK AND WHAT CAUSES IT? Risk Operational HOW IS OPERATIONAL RISK MANAGED? making levels give rise to recommendations and corrective the at various operational and decision- control processes detected in errors or the Any deficiencies, weaknesses areas. control activities out in to carried be the different business organizes auditA&I its through work an annual schedule of out bycarried the auditor external the for purpose. engaged analyzed. This analysis is supplemented by thematic audits with applicable law in relation is also to audited each process in relation to emerging risks andprocesses their compliance management. of the appropriateness various The control the rules disseminated are to and known by employees and the rules governing their activities and the to extent which aimed determining at their and compliance effectiveness with subject are units to and periodic central analyses services principles of internal audit. activities The of the commercial withaccordance internationally recognized and accepted independently acts A&I of the units that it audits and in continuously.mitigate operational risk assessed are internal to designed control function. control The processes by the Bank and has received special attention the from risk and activities is inherent managed in various processes Operational customers. of its and theBank’s assets assets toas ensure the and safeguard integrity of and the security account the with risks associated the various activities, so BFA published also has the it institutional on website. parties, to all interested accessible To ofConduct Code make its employees. new available ofConduct to all BFA Code its makes contexts, business ethical guidance decision making for manual in that provides ofhaving objectiveRealizing and reference aclear the importance satisfaction. employee and management risk prudent efficiency, operational in of also but only the organization’s terms not for reputation benefits it brings as ofany organization, success and development the for is acritical ethical ofall factor conduct The employees CONDUCT OF CODE Risk Management 111
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment measures aimed at mitigating the likelihood of occurrence of individual actions and decisions, processes or rules and the the identified risks. These audit actions may be performed necessary corrective measures to mitigate operational risks. onsite or offsite and vary in depth and complexity:ser presenciais e/ou à distância, com diferentes graus de At the end of each quarter, A&I submits an operational risk incidência e complexidade: map, which shows all the inspections, classified by nature and possible losses. ■■ Comprehensive thematic audits: Assessments carried out on commercial units, central services or processes; Additionally, A&I monitors the use of the provisions recorded to cover general risks and the amount of the losses in respect ■■ Limited audits: Assessments of certain processes or of newly identified general risks, calculating the details for activities in a particular unit or area to determine the each risk class, so as to ensure greater control and accuracy effectiveness and efficiency of the control system currently in managing the general risks to which BFA is exposed and in place and the extent to which it complies with the effective provisioning for those risks. This semi-annual report relevant internal regulations, as well as the extent to which is subsequently submitted for approval and validation by the those internal rules reflect applicable external laws and Audit and Internal Control Committee. regulations; Apart from the reports already mentioned, A&I also prepares ■■ Offsite audits: Control process aimed at assessing a detailed annual report on its internal control activities, compliance with and knowledge of the Bank’s rules which is analyzed by the Board of Directors, the Audit and concerning various activities carried out in the Bank. This Internal Control Committee and the Executive Committee and assessment is processed through analysis of documents is an integral part of the Internal Control Report. and computer records, without the physical presence of the A&I teams; WHAT WERE THE MAIN DEVELOPMENTS IN 2016?
■■ Incident audits: Analysis of a set of files with information Faced with growing competition in the financial market, specified by A&I in respect of transactions carried out the combined, among other factors, with technological innovation previous day, aimed essentially at mitigating fraud risks and the increasingly complex, global nature of transactions, and, at the same time, monitoring compliance with internal financial institutions are increasingly exposed to operational regulations. risks. In 2016, building on the efforts started in 2012, BFA continued to reinforce the control practices aimed As regards the Inspection Function, A&I conducts at mitigating operational risks, while at the same time investigations based on resolutions of the Bank’s decision- developing its ability to identify such risks. making bodies to analyze evidence of fraud and irregularities, identifying their origins, weaknesses, risks and implications In 2016, the A&I team performed 332 audits, including and submitting recommendations aimed at making the onsite audits in 178 bodies, with 69 comprehensive audits existing control system more effective and more robust. and 109 limited audits. These audits entailed direct contact with 100% of the Bank’s commercial area, insofar Reports from Inspection are analyzed at meetings of the as the commercial units that were not subject to either a ECBD, which deliberates on the events reported and A&I’s comprehensive or a limited audit were monitored through conclusions regarding responsibility, remedial action and offsite audits. Internal control of the commercial network possible disciplinary or legal consequences and also on A&I’s reached coverage of 100%, with 154 offsite audits. recommendations regarding the weaknesses detected in
112 Banco de Fomento Angola | Annual Report’16 operate uninterruptedlyoperate 6:30 from to 20:00. uphad to scaled to and as be working its extended, so hours also area The andmethods. of the new workflows success membership. This involvement decisive was in ensuring the updating,customer data debit issuance and card BFA Net includingBank made processes, to account work opening, Validation involved Process The was Area in the changes the Validation Process the of Area Growth Bank effective and operational more risk control. which translates into Corporates, efficiency for the greater entered into with Individuals and 57% with of contracts platform, representing 75% of the total number of contracts digitized were than contracts more 635,000 through of this allowingdocuments, areduction of operational risk. In 2016 which now, legally wherever by digital possible, supported are platform allows BFA to review and dematerialize processes, its Within of the the eMudar@BFA scope project, the front-end Documents of Digitization Z OPTIMI ALERT Code ofConduct. Code comply, in is not line, or with the principlesBank’s in the defined not with that does internal behaviour or regulations non-compliance or material fraud averting effectively aimed at audits are These risk events. operational ofsuspected that indicate the occurrence ofcriteria aset meets atransaction when ofaudit is triggered type This processes. operational the various covering alerts computerized to 2016, audits in out Throughout response continued A&I to carry ATION
Archive EMIS. at deposited in the commercial to the Image Central network In addition, BFA sending of the images BFA started cheques operational risk. asubstantial Thischeques. provides new system reduction in in security thegreater analysis of cleared and processing thatcheques and allows system switched to aproprietary BFA clearing for abandoned it the used contingency process provide their with customers part. cheques took clearing (CCS), system in which all the Angolan banks that In 2016 major changes also there to some were the cheque New Clearing Cheque Subsystem (CCS) emphasis on the commercial areas. the commercial on emphasis with an assimilated involved by all in the process, the areas fully already were of2016, the end By processes the new policies. ofthe insurance the and status premium payments over control by acquiring or auto and loans greater personal by obtaining either for lending additional transactions, security with allowed the risk associated the to Bank This reduce project customers. loan home for already it was as auto loan, or apersonal out took who customers for obligatory ofthis lifeWithin made project, was insurance the scope The main advantages of this project were as follows: as were ofthis project mainThe advantages products. insurance auto loan, home and to the personal directly.insurance limited Initially, were products ofthese sales to sell life, home the aim auto comprehensive ofstarting and with Seguros, Universal with company the insurance agreement half of2016, ofthe second At BFA the start into entered an IMPLEMENTATION THE OF INSURANCE PROJECT ■ ■ ■ ■ and premium collection were now controlled by the Bank. controlled premiumand now collection were policy issuance as maintenance and process, policy issuance ofthe insurance control operational greater theFor Bank, monthly paid in could be insurance now home comprehensive oflifewhich in and auto insurance insurance, the case in offlexibility terms premiums, paying in the insurance to to go convenience aninsurer. need no greater was Also, available were in (the place one Bank),products there so quality, given theFor customer, that all service improved the
instalments; Risk Management 113
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment Security Enhancement and Risk Mitigation Complaints Handling – Efficiency and Quality in Service Provision In 2016 the migration of applications to the new Data Processing Centre (DPC) at EMIS continued, offering total In 2012, the Bank created the Organization and Training redundancy for all BFA’s systems, including the central system Department, a complaints handling area, in response to the and support applications. new rules under BNA Notice 2/11. At the end of 2014, when the BFA Customer Support line (923 120 120) came into The new DPC is a major step forward in security and risk service, this complaints handling area was transferred to the mitigation for the Bank’s IT systems. These systems are Bank’s Marketing Department, giving rise to a new Customer maintained in a high-availability environment through clustering Support area (DMK SAC). This area is divided into two teams: of applications and services, and through system replication where clustering is not possible. This high-availability system ■■ DMK SAC Complaints – A team devoted exclusively to undergoes frequent testing and validation. complaints handling; and
In addition, the DPC includes a security perimeter and latest- ■■ DMK SAC BackOffice – A team that functions as a first line generation telecommunications, in line with best practices, of support to the BFA Customer Support line and, whenever giving BFA availability and security rates that meet market necessary, coordinates interactions with other areas of the requirements. Bank aimed at clarifying doubts about products and services and analyzing suggestions and continuous improvement With a view to reducing the risk of IT system and infrastructure processes. failure and the threat this would pose to business continuity, BFA has adopted the following initiatives to reinforce its Customer complaints are an important indicator for detecting security policies: non-compliance and operational risk incidents. Complaints are received, processed and monitored in accordance with internal ■■ Improvement of the communications network in terms of regulations. capacity and redundancy; Efficient and diligent handling of customer complaints is an ■■ Updating of applications and operating systems; effective tool of operational risk management.
■■ Improvement of protection (firewalling) and In 2016 a total of 1,830 complaints were received, which telecommunications (networking) equipment in the DPC; represents a decrease of 449 compared to 2015, thanks to continuous improvement of the services provided. ■■ Strengthening of the defence mechanisms against cyber- attacks; The average response time was 27 days (compared with 34 days in 2015) and 74% of the complaints were dealt with in ■■ Review of operational procedures and processing control. less than two weeks.
General IT control procedures are reviewed annually by an outside audit firm hired for that purpose, with the aim of identifying vulnerabilities and areas that need reinforcement.
114 Banco de Fomento Angola | Annual Report’16 The functionsThe of the follows: as Compliance are Department of non-compliance, money laundering and financing. terrorist to mitigate and procedures actively the risks creating processes sinceever then developing has been compliance policies and in created ComplianceThe was July Department 2012 and Management Internal inStrengthening of Risk and Risk Control Detection activities. one of the they mainas represent pillars guiding the Bank’s risks vital are tools the for management of reputational risk, Effective detection, management and mitigation of compliance entered into andcontracts customers. with partners business and bodies, laws and regulations, oversight and supervisory the banking itself, business given that banking is by governed Compliance risk is inherent in any banking organization and in impact onthe institution’s capital. or results ethical or established practices principles will have an adverse of rules, laws, regulations, of conduct,breaches codes Compliance risk is the risk that possible infringements or financingpoliciesterrorist anti- and laundering anti-money of application and compliance ensure to internal regulatory the of Adaptation structure control Compliance Risk ■ ■ ■ ■ ■ ■ ■ ■ financing matters; authorities in all anti-money laundering and anti-terrorist Acting aliaison as BFA between and the supervisory and financing terrorist to the relevant authorities; Reporting transactions that may involve money laundering financing;terrorist tocontrol prevent system and money combat laundering and Managing and monitoring the implementation of an internal anti-terrorist financing policies; Monitoring compliance with anti-money laundering and HOW IS COMPLIANCE RISK MANAGED? WHAT IS COMPLIANCE RISK AND WHAT CAUSES IT?
■ ■ corporate customers. corporate withUS Person, specific characteristics for individual and holder to forms identify not the whether or customer is a New fields created were in accountthe opening accountand network I. Commercial editing of account holder changes details. affect: These account for changes made to opening were the procedures and the list of first FATCA-compliant institutions. For this purpose, ablebe join and to so identify US whoare Persons customers In July 2014, BFA in made changes to to systems order its institutions. obligations and implementation of FATCA in Angolan financial August 2016, which compliance imposes with international tax by approved Presidential was 162/16 IGA The Decree of 29 information onto authorities. the US tax the year, authority each Angolan this tax that so it pass can customers’ financial and onthese liabilitiesassets report to that is toUS say, Persons, US citizens and to residents, or financial institutions to are who undertake identify customers the United Under this States. Angolan in agreement, short, government signed an intergovernmental (IGA) with agreement In 2015, to ensure compliance with FATCA, the Angolan States. United (USStates Persons), in relation to income obtained outside the (individuals and companies) subject to in taxation the United federal lawStates aimed preventing at evasion by entities tax ForeignThe Account Tax Compliance (FATCA) Act is aUnited FATCA With Compliance Legislation thethat Bank’s affect activities. withinawareness the organization of any regulations external this responsible fieldas body the analyzingfor and building BFA’s also plays role in an important Department Legal ■ ■ Monitoring the Foreign Account Tax Compliance (FATCA). Act financing matters; received by BFA onanti-money laundering and anti-terrorist Centralizing, examining and managing any communications Risk Management 115
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment II. Compliance Department ■■ Make the Compliance Department responsible for pre- and post-transaction control of cash withdrawals and deposits Where a customer has indicia of US status, the Compliance in all currencies by any customer above a certain amount; Department receives an automatic alert, containing the and details of the process. This alert triggers steps to reclassify the customer, while the account is frozen until the due ■■ Give the Compliance Department the task of verifying diligence process has been completed and the customer has compliance with the anti-money laundering and been properly classified. anti-terrorist financing procedures adopted by the Bank.
Internal anti-money laundering and anti-terrorist financing WHAT WERE THE MAIN DEVELOPMENTS IN 2016? policies and procedures In order to comply with the know-your-customer and enhanced Within the scope of the anti-money laundering and anti- due diligence duties and avoid any involvement in money terrorist financing policies, promulgated in Law 34/11 and laundering or terrorist financing, BFA carried out the following BNA Notice 22/2012, the Bank has developed mechanisms activities during 2016: to ensure compliance with regulations, notably through: I. Extension of enhanced customer due diligence ■■ Publication of a Service Order, setting out internal anti-money laundering and anti-terrorist financing policies The due diligence performed on high-risk entities at the which: time of customer acceptance and account opening and updating was reinforced, so as to ensure tighter control over ■■ Clarify concepts and introduce procedures that will allow the validation of the legitimacy of customer instructions and closer, stricter control of the Bank’s economic activities facilitate identification of atypical transactions that could and minimize the risk that the Bank is used for money be indicative of money laundering or other crimes. Internal laundering or terrorist financing purposes; and procedures and regulations aimed at improving the processes for controlling and mitigating the risk of money laundering, ■■ Help the Bank fully comply with its obligations under terrorist financing and other crimes were created and applicable laws and regulations and so protect the Bank’s updated. reputation through the prevention and detection of suspicious transactions; Taking the provisions of BNA Notice 2/13 on internal control into account, the organizational structure of the Compliance ■■ Define processes and procedures for customer Department was modified to give the Compliance Director identification through automatic screening of the database greater autonomy and independence and broader reporting of new and existing customers against international responsibilities. sanctions lists, refusing to open accounts for entities that appear in the lists or whenever the Bank considers In the context of the efforts to upgrade, amend and create it appropriate, with a particular focus on the opening of internal account opening procedures and rules in relation to accounts by non-governmental and not-for-profit entities, money laundering, important procedures were created for non-bank financial institutions, designated non-financial the identification of politically exposed persons and ultimate activities and professions, politically exposed persons beneficial owners. and high risk persons, for whom enhanced due diligence is mandatory at account opening and for account An important change is the requirement to obtain an opinion maintenance and modification, and for whom a favourable from the Compliance and Legal Departments before opening opinion from the Compliance Department is required; or modifying accounts held by NGOs and not-for-profit
116 Banco de Fomento Angola | Annual Report’16 compliance that could result in money laundering. of non- focusingcourse, cases on refresher specific more general inemployees: one more content and the other a consisting modules, which all for of two mandatory were In 2016, BFA also implemented an eLearning programme, total of 523 employees. During the year, 20training nearly given were to a sessions of money launderingand repression and financing. terrorist of their obligations and duties in relation to the prevention Bank’s employees acomprehensive knowledge and awareness training, BFA’s 2016 Training Plan to designed give was the In linecourses. with BNA Notice 34/11 22/12 and Law on through specific anti-money launderingresources training of investing in the skills human of and its competences compliance regards As training, BFA continued strategy its financing III. Training in prevention laundering the money of and terrorist specialist. Employees trained were in the of the use tool by aSWIFT analysed by Compliance. inresults the transaction being blocked, that so it be can sanctions lists and automatically which an alert, generates tool identifiesThe includedanyparties in international lists. allowing real-time screening against international sanctions alltool tracks involved the parties in any transaction, SWIFT inhad been the into testing came phase, full operation. This In 2016, the screening tool for transactions, which SWIFT II. Screening SWIFT of transactions financialactivities professions. and entities, financial non-bank institutions and designated non- follows: of 2016,course BFA’s AMLTF improved was as programme adopted taken and were steps to implement the them. Over were projects aresult specific of thisAs self-assessment, which submitted was to BNA in June. AMLTFits risks and risk mitigation policies and procedures, questionnaire AMLTF onits self-assessment and programme laundering and financing terrorist (AMLTF), BFA filled out the In compliance with Directive01/DRO/DSI/15 onmoney terrorist financing and laundering Anti-money – IV. questionnaire Self-assessment ■ ■ ■ ■ ■ ■ score. This willscore. model into come in operation 2017. nationality, and outputs a nature, and services, products of residence, country notably profession, segment, most input large number as takes of variables, including avery according customers classify to their AMLTF risk. This model to developed that used was model be can risk assessment of the AMLTF risk ofAssessment the Bank’s a customers: for politicallyfor and entities. persons exposed Account opening, modification and maintenance procedures Recording and monitoring of ultimate beneficial owners; Risk Management 117
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment
05 FINANCIAL REVIEW
Financial Review 120 Proposed Allocation of Earnings 131 Financial Review1
Asset Growth and Increased Profitability The volume of customer funds in local currency continued to grow as a share of total funds, gaining 2.2 percentage points and continuing to exceed customer funds in foreign currency. Assets Customer Funds AOA 1,312,880 million AOA 1,079,702 million Net operating revenue rose significantly (up 42.7% compared to 2015), driven by increases in net interest and non-interest + 6,8% + 6,1% income, most notably income from investments and trading Compared to 2015 Compared to 2015 income.
The value of BFA’s total loan portfolio declined 1.6% compared to 2015. This decline was driven in particular by Net Operating Revenue Total Loans the decrease in guarantees and letters of credit, which fell AOA 99,572 million AOA 288,201 million nearly 32.9%, or AOA 18,944.9 million (USD 192.7 million). + 42,7% - 1,6% Because of the increase in deposits and loans, the loan- Compared to 2015 Compared to 2015 to-deposit ratio increased very slightly in 2016, ending the year at 21.8%, some 0.1 percentage points higher than the Regulatory Solvency previous year. Net Profit Ratio AOA 61,912 million Net profit increased in 2016, reaching AOA 61,912.1 million 31,7% (USD 377.2 million), up 63.5% compared to 2015. + 63,5% + 7,4 pp Compared to 2015 The regulatory solvency ratio, calculated in accordance with Compared to 2015 BNA Notice 5/07 and Instruction 3/11, reached 31.7%, comfortably above the required minimum of 10%.
Once again, BFA recorded a positive financial performance, with overall asset growth of 6.8%, to reach AOA 1,312,879.6 million (USD 7,913.5 million).
On the liabilities side, customer funds grew significantly in 2016, with customer deposits increasing by 6.1% year-on- year, from AOA 1,017,159.6 million to AOA 1,079,702 million at the end of 2016. The devaluation of the local currency against the USD resulted in a decline in USD terms, from USD 7,517 million in 2015 to USD 6,508 million in 2016.
3 Given the tight links between the Angolan market and the US dollar, the financial review is presented in both currencies: AOA and USD. It should be noted nonetheless that due to the significant devaluation of the local currency, at times an increase in the absolute value of an item can mean the AOA figure goes up at the same time as the USD figure declines. In such cases, it is seen that the devaluation of the local currency against the USD outweighed the rise in the heading denominated in local currency. The opposite can also hold.
120 Banco de Fomento Angola | Annual Report’16 to customers and offer products and services that meet and services products andto offer customers to funds, raise thanks to cross-sell to increasing its efforts in BFA’s the currency local growth demonstrates capacity 2015,from due to the devaluation This of the kwanza. USD 1,008.9 decreased deposits million, adecline of 13.4% million to compared 2015, again of 6.1%. In USD terms, account 82.2% for of liabilities AOA and increased 62,542.3 explained mainly by the rise in which customer deposits, onthe liabilities growth The side of the balance is sheet in BFA category (45.3%), asset largest an of for increase mainly by the higher volume of investment securities, the 2016.and December in 2015, As driven this was growth of million AOA 83,300.4 growth 2015 December between BFA’s by 6.8% in increased 2016, net total assets reflecting A Sound, Highly Liquid Balance Sheet Netassets fixed Banks and Cash Net Assets Other assets Total investments Total Assets BFA’ Shareholders’ equity and equivalents and equity Shareholders’ Funds from credit institutions Funds credit from Liabilities Equity and Equivalents and Equity commitments and risks for Provisions Customer deposits Customer Other liabilities Other Investment securities Investment to customers advances and Loans institutions to credit advances and Loans s BALANCE SHEET FROM 2014 TO 2016 1 073 056,4 1 073 056,4 929 382,2 929 839 835,1 359 804,1 359 552,4 250 229 478,5 229 189 279,4 189 04487,3 4 4 10 18 440,7 18 25 501,2 25 31 393,1 31 3 673,7 3 4 120,1 4 2014 AOA 10 431,9 10 10 431,9 10 2 435,8 2 1 840,1 1 2 230,9 2 8 164,6 8 9 035,1 9 1 015,8 1 3 497,93 305,2 179,3 247,9 40,1 35,7 USD
1 229 579,2 1 229 579,2 1 017 159,6 306 869,8 135 005,8 220 796,0 842 189,6 126 455,5 486 387,8 60 463,4 20 056,4 81 822,1 4 133,4 2015 1,044.1 million in 2016. end of 2016. in Measured USD, this item 11.7% grew to USD to 2015, reaching atotal of AOA 173,221.1 million the at Shareholders’ equity and equivalents up were 37% compared of service. customer relationship and continuously improving the quality strengthening andcustomers’ expectations the needs, total assets. share of BFA’s balance sheet, accounting 18% nearly for of 235,310.9 million, and continue asignificant to represent to compared 2015, increased to customers advances to AOA tocompared 2015, AOA or 10,316 million. and Loans and which banks, is Cash by 3.4% increased the assets AOA 108,938.6 million. component of largest second The 8,6 AOA 3 594,5 9 086,8 9 086,8 6 223,9 1 631,7 2 267,8 7 517,0 446,8 934,5 148,2 604,7 997,7 30,5 USD 0,1 1 079 702,0 1 312 879,6 1 312 879,6 595 326,4 937 849,0 317 185,8 235 310,9 173 221,1 107 211,7 55 270,0 21 073,3 36 771,5 4 675,6 2016 10,9 AOA 3 588,4 6 508,0 5 653,0 1 044,1 1 418,4 7 913,5 7 7 913,5 1 911,9 646,2 333,1 221,6 127,0 28,2 USD 0,1
Financial Review -39,2% -32,5% -20,6% 22,4% 27,0% 37,0% 11,4% 13,1% 6,8% 6,8% 6,6% 3,4% Amounts in Millions Amounts 6,1% 5,1% AOA Δ% 15-16 Δ% -44,9% -35,2% -50,4% -14,3% -12,9% -12,9% -13,4% -15,7% -13,1% 11,7% -0,2% -9,2% -7,7% 3,6% USD 121
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment An analysis of the structure of BFA’s balance sheet in Increase in relative weight of local currency Treasury Bonds December 2016 shows a high level of liquidity, sufficient to finance the assets almost in their entirety, through a The total volume of securities held by the Bank increased combination of customer deposits and shareholders’ equity. by nearly AOA 108,938.6 million in 2016, which represents growth of 22.4% compared to 2015. Structure of BFA’s balance sheet in December 2016
Funds from Credit Institutions 0,00% One of the factors contributing to this result was the Other Assets 4,41% Equity and Equivalents 13,19% increase in the volume of Treasury Bills and Treasury Bonds Other Liabilities 4,57% in the trading book, which was up AOA 261,664.2 million, Investment Securities representing growth of 350% compared to 2015. In USD, 45,35% the growth was slightly lower, around 267%, resulting in an increase of USD 1,475.4 million. Treasury Bonds linked to Customer the USD contributed to the growth of BFA’s held-to-maturity Loans and Advances Deposits 82,24% to Customers 17,92% portfolio, with an increase of AOA 22,211 million. Treasury Loans and Advances in Bonds in local currency fell 43% compared to the previous Credit Institutions 8,17% year, with a decrease of AOA 77,942.1 million. Treasury Cash and Banks Bonds in foreign currency also fell 24% with respect to 2015, 24,16% recording a decrease of AOA 21,908.4 million (USD 257 Assets Liabilities million). and Equity
SECURITIES PORTFOLIO Amounts in Millions
2014 2015 2016 Δ 15-16 AOA USD AOA USD AOA USD AOA USD
Trading Portfolio 26 664,6 259,2 74 888,2 553,4 336 586,4 2 028,8 349% 267%
Treasury Bills and Treasury Bonds 26 570,9 258,3 74 742,3 552,4 336 406,5 2 027,7 350% 267%
Others 93,7 0,9 145,8 1,1 179,9 1,1 23% 1%
Portfolio of Securities Held to Maturity 333 139,5 3 238,7 411 499,7 3 041,0 258 740,1 1 559,6 -37% -49%
Treasury Bills 57 940,3 563,3 75 120,1 555,1 0,0 0,0 -100% -100%
Treasury Bonds (USD) 51 850,4 504,1 91 686,7 677,6 69 778,2 420,6 -24% -38%
Treasury Bonds (indexed to USD) 66 823,1 649,6 63 993,6 472,9 86 204,6 519,6 35% 10%
Tresury Bonds (AOA) 156 525,7 1 521,7 180 699,3 1 335,4 102 757,2 619,4 -43% -54%
Total 359 804,1 3 497,9 486 387,8 3 594,5 595 326,4 3 588,4 22% 0%
In 2016, as seen in previous years, BFA chose to favour investment in local currency securities, which at the end of the year accounted for 73.8% of the securities portfolio.
122 Banco de Fomento Angola | Annual Report’16 In to 2015, contrast lending in currency local by approximately increased 7.9% AOA or 10,533.5 million. Securities portfoliostructureinDecember2016 1.1 Loans and Advances to Customers 1.1 Advances and Loans 1. Total Loans LOANS AND ADVANCES TO CUSTOMERS 1.3 Loans Signature Interest and 1.2 Loans Default 3. Loans Net of Provisions of Net 3. Loans Risk Loan General For 2.2 For default Loans and Interest and default Loans For 2.1Provisions Specific 2. Total loan loss provisions Total2. loss loan Of which: Default Loans and Interest and which: Loans Default Of Total Provision Coverage Default Loans (% Total Loans Default Loans) Quality 4. Loan 23,5% 14,4% 18,6% 43,5% Loans in Local Currency in Local Loans Loans in Foreign Currency in Foreign Loans Central BankBonds Treasury Bonds(USD) 2 Treasury Bonds(AOA) 014 0,0% 30,8% 18,9% 13,2% 37,2% 2 015 0,0% (linked toUSD) Treasury Bonds Treasury Bills 300 306,5 165 539,5 231 245,3 229 478,5 65 705,7 10 853,2 61 079,5 4 560,6 1 104,8 9 748,4 136,0% 7 981,7 3 421,1 56,5% 11,7% 14,5% 17,3% 2 3,3% 2014 016 AOA 0,0%
1 609,3 2 248,1 2 230,9 136,0% 2 919,5 638,8 593,8 105,5 3,3% USD 44,3 94,8 33,3 10,7 77,6 292 980,2 220 796,0 224 671,7 132 721,9 57 598,2 14 586,0 15 688,1 91 949,7 10 710,3 5 813,3 146,5% 1 102,1 4 897,0 2015 4,6% activity, mainly in the public sector. works million). This decline is due to the weakening of economic year, of AOA 18,944.9 adecrease million (USD 192.7 of credit,letters which fell 32.9% to compared the previous driven was mainlydecrease by the decline in and guarantees of approximatelya decrease 1.6% to compared 2015. This AOA 4,778.8 million (USD 428 million) in 2016, representing totalThe volume fell to of loans customers and advances by to Customers and Advances Loans of as aProportion Loans Currency Local AOA
1 660,4 2 165,2 146,5% 1 631,7 980,8 679,5 425,7 115,9 107,8 4,6% 36,2 43,0 79,2 USD 8,1 143 255,4 288 201,4 235 310,9 237 911,6 94 656,2 38 653,4 11 636,4 14 591,6 14 237,1 3 094,3 8 542,1 125,4% 354,5 4,7% 2016 AOA 1 434,0 1 418,4 125,4% 1 737,2 863,5 233,0 570,6 4,7% 85,8 88,0 18,6 70,1 51,5 USD 2,1 +0,1 p.p. -21,1 p.p
-36,8% -32,9% 67,8% - Financial Review 46,9% -2,4% -1,6% -7,0% 5,9% 8,6% 2,9% 6,6% 7,9% AOA Amounts in Millions Amounts Δ% 15-16 Δ% +0,1 p.p. -21,1 p.p -48,5% -45,3% -73,8% -20,4% -12,0% -16,0% -13,6% -19,8% -24,1% -11,4% -13,1% 19,9% USD 123
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment Loan Portfolio Structure This increase in past-due loans, combined with the slight decrease in the total volume of the loan portfolio, pushed 13,4% the ratio of loans more than 30 days past due to total 20,3% 19,7% 4,0% loans (excluding guarantees and letters of credit) up by 0.1 2,7% 3,7% percentage points, ending the year at 4.7%. 21,9% 32,8% 31,4% The ratio of coverage of past-due loans and interest by total provisions (both general and specific) fell 21 percentage 55,1% points compared to 2015, reaching 125.4% at the end of 45,3% 49,7% 2016.
Loans and advances to credit institutions 2014 2015 2016
Guarantees and letters of credit Loans and overdue interest In 2016, as in 2015, Loans and advances to national credit Loans in foreign currency Loans in local currency institutions fell sharply, by around 49.5%, to a total of AOA 15,457.8 million (USD 93.2 million), representing only 14.4% In 2016, as in 2015, though still insignificant as a proportion of the Bank’s total loans and advances to credit institutions. of the Bank’s total loans, past-due loans increased in Similarly, loans and advances to foreign credit institutions absolute terms by AOA 926.2 million (or 0.38 percentage decreased by AOA 12,640.8 million, down 12.1%. In USD, points as a proportion of total loans), mainly as a result of this item decreased by USD 218.4 million. worsening default rates and the devaluation of the local currency against the USD.
LOANS AND ADVANCES TO CREDIT INSTITUTIONS Amounts in Millions
2014 2015 2016 Δ% 15-16 AOA USD AOA USD AOA USD AOA USD
Loans and Advances to Credit 250 552,4 2 435,8 135 005,8 997,7 107 211,7 646,2 -20,6% -35,2% Institutions
In Angola 155 489,4 1 511,6 30 611,1 226,2 15 457,8 93,2 -49,5% -58,8%
Abroad 95 063,1 924,2 104 394,7 771,5 91 753,9 553,1 -12,1% -28,3%
Total 250 552,4 2 435,8 135 005,8 997,7 107 211,7 646,2 -20,6% -35,2%
Composition of loans and advances to credit institutions Customer Funds
2016 Customer funds grew 6.1% with respect to 2015 to reach AOA 1,079,702 million in 2016. In USD terms, however, customer funds declined 13.4% to a total of USD 6,508 2015 million as a result of the increase in the value of the US currency against the kwanza.
2014
In Angola Abroad
124 Banco de Fomento Angola | Annual Report’16 currency asizeable showed deposits to increase, 64.7%, awhole, as of local customer deposits apercentage As Angolan economy. currency is the result of the gradual de-dollarization of the of the trendreversal in the distribution by of term deposits and a22.7% in foreign decrease This currency deposits. 2016 a10.8% there was in increase currency local deposits Looking the at structure of demand by currency, deposits in Customer depositsbyproductandcurrency Foreign Currency Foreign Currency Currency Local Term Deposits Local Currency Local Total Demand Deposits Demand DEVELOPMENT OF CUSTOMERS RESOURCES 2 2 2 014 016 015 Local currency Foreign currency Loan-to-deposit ratio 24,7%
Loan-to-deposit ratio Loans to customers 229.478,5 929 382,2 146 330,5 452 900,0 476 482,2 211 882,5 330 151,8 241 017,5 929.382,2 2014 AOA 4 402,9 4 632,2 3 209,6 2 343,1 1 422,6 9 035,1 2 059,9 21,7% USD 220.796,0 Customer funds
1.017.159,6 1 017 159,6 456 000,1 598 026,0 142 025,9 179 422,9 239 710,7 419 133,7 2015 outweigh customer deposits in customer deposits outweigh foreign currency. than points2.2 more in percentage 2015, thus continuing to currency up deposits 13.2% in when measured kwanzas. million, with currency local up deposits 7.9% and foreign In 2016, by AOA nearly increased term 45,699.2 deposits AOA 2 2 2 21,8% 014 015 016 Demand deposits 1 326,0 1 049,6 3 369,9 1 771,5 3 097,5
235.310,9 4 419,5 7 517,0 AOA million USD
1.079.702,0 1 079 702,0 464 832,9 271 243,2 505 031,6 193 589,7 109 837,4 614 869,1 2016 AOA Term deposits 6 508,0 1 635,0 3 044,1 3 706,2 1 166,9 2 801,8 662,1 USD
Financial Review -22,7% 13,2% 10,8% 10,9% 2,8% 7,9% 6,1% Amounts in Millions in Millions Amounts AOA Δ% 15-16 Δ% -36,9% -12,0% -13,4% -16,1% -9,7% -9,5% -7,7% 125 USD
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment Customer deposits by product and currency
2016 2016
2015 2015
2014 2014
Local currency Foreign currency Demand deposits Term deposits
Loan-to-deposit ratio AOA million In 2016 the loan-to-deposit ratio increased slightly, to 21.8%. This 0.1 percentage point increase is attributable to the fact that the increase in loans net of provisions (+6.6%) was slightly greater than the growth in customer deposits
1.079.702,0 (6.1%). 1.017.159,6
24,7% 929.382,2 21,7% 21,8% Income Statement and Increased Profitability
BFA’s net profit for 2016 was AOA 61,912.1 million (USD 377.2 million), marking an increase of 63.5% compared to the net profit for 2015 measured in kwanzas and an increase
235.310,9 of 20.9% in US dollar terms. 229.478,5 220.796,0
Loans to customers Customer funds Loan-to-deposit ratio
OPERATING STATEMENT Amounts in Millions
2014 2015 2016 Δ% 15-16 AOA USD AOA USD AOA USD AOA USD
1. Net interest income [NII]=[I-C] 30 728,8 311,6 41 022,1 340,6 66 945,3 4 07,2 63,2% 19,5%
2. Net non-interest income [NNII] 23 190,4 235,4 28 747,5 234,2 32 626,3 200,4 13,5% -14,4%
3. Operating Revenue [OR]=[NII+NNII] 53 919,3 547,0 69 769,6 574,8 99 571,6 607,6 42,7% 5,7%
4. Administrative expenses [AE] 16 939,6 171,9 21 422,8 176,7 31 313,0 190,7 46,2% 7,9%
5. Operating cash flow [OR-AE] 36 979,6 375,1 48 346,9 398,1 68 258,6 417,0 41,2% 4,7%
Extraordinary profit/(loss) 6. 67,4 0,7 413,6 2,9 120,9 0,7 -70,8% -74,7% [XP/L]=[G-L]
Operating profit/(loss) 7. 37 047,1 375,8 48 760,5 401,0 68 379,5 417,7 40,2% 4,2% [OP/L]=[ORB-AE+XP/L]
Provisions and depreciation and 8. 5 423,2 54,6 7 236,4 58,9 6 023,8 37,2 -16,8% -36,8% amortization expense [PDA]
9. Profit before tax [PBT]=[OP/L-PDA] 31 623,8 321,1 41 524,1 342,0 62 355,7 380,5 50,2% 11,2%
Net profit/(loss) for the year 10. -172,3 -0,8 -3 657,8 -29,9 -443,6 -3,2 - 87,9% -89,2% [NP/L]=[PBT-IT]
11. Resultado do Exercício [RE]=[RA-IL] 31 796,1 322,0 37 866,3 312,1 61 912,1 377,2 63,5% 20,9%
12. Cash flow for the year [CF]=[RE+PA] 37 219,3 376,6 45 102,7 371,0 67 935,9 414,4 50,6% 11,7%
I - Income from financial instruments (assets) C - Cost of financial instruments (liabilities) G - Other operating gains L - Other operating losses
The operating statement shows that both net interest income Administrative expenses are paid mainly in foreign currency and net non-interest income grew in 2016, producing a and so, because of the devaluation of the local currency, grew 42.7% increase in operating revenue, which reached AOA significantly when measured in AOA, rising 46.2% over the 99,571.6 million (USD 607.6 million). previous year. However, the increase was only 7.9% when measured in the currency in which the expenses were paid.
126 Banco de Fomento Angola | Annual Report’16 interest income. interest previous year, largely due to the excellent of net performance 2016for up was 63.5% in currency local to compared the by 16.8%. profit decreased the Despite in increase expenses, provisions and depreciation and expense amortization In to 2015, contrast in 2016 the for amount recorded previous year.previous 66.6 million) in 2016, to compared the an of increase 63.2% BFA’s net income interest AOA grew 25,923.2 million (USD In 2016 the Bank’s return onequity (ROE) to increased 38.1%, 6.1 points higher percentage than the previous year. Multiplier (ATA/Avg.Eq.) Multiplier (ROA) profit/(loss) Net Net profit/(loss) attributable to shareholders (ROE) shareholders to attributable profit/(loss) Net Corporate income tax income Corporate tax before Profit Extraordinary profit/loss expense depreciation/amortization and Provisions income other and commission Fee, ROA an ROE ROA an EARNINGS OF BREAKDOWN Operating prfofit/loss expenses Administrative revenue operating Net financialtrading from Income income interest Net [Assets] Financial Instruments from Income SHARP INCREASE IN NET INTEREST INCOME –VOLUME EFFECT AND PRICE EFFECT Net Interest Income [Liabilities] financial of instruments Costs 13 684,4 30 728,8 44 413,3 2014 AOA 450,3 138,6 311,6 USD 56 366,6 15 344,5 41 022,1 2015 AOA profit by AOA 443.6 by AOA profit million (USD 3.2 million). 87.9%Tax decreased expense in 2016, reducing BFA’s net 49.1% to compared the previous year. accounting 92.2% for of finance whichincome, was up Treasuryfrom Bills, Treasury Bonds and loans, together is attributable mainly growth The to the rise in income, mainly 469,3 340,6 128,7 USD 34,8% 3,3% 0,0% 0,0% 0,9% 1,8% 3,9% 0,6% 3,4% 3,4% 5,7% 1,6% 2014 10,3 84 020,8 66 945,3 17 075,5 2016 AOA 104,0 407,2 511,2 USD 32,0% 0,2% 4,2% 0,0% 3,2% 0,9% 1,8% 6,0% 3,5% 3,7% 0,7% 1,4% 2015 9,9 27 654,2 25 923,2 In % of average total assets total average %of In 1 731,0
Financial Review AOA Amounts in Millions Amounts Δ 15-16 Δ 38,1% 2,2% 0,3% 0,0% 0,0% 6,8% 1,2% 0,9% 4,4% 4,4% 4,7% 4,6% 2016 -24,6 8,5 USD 66,6 41,9 127
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment Interest expense on customer deposits increased to AOA BREAKDOWN OF CHANGE Amounts in 16,560.8 million (USD 100.9 million). Despite the increase IN NET INTEREST INCOME millions in interest expense, interest income was sufficient to allow Volume Effect Rate Effect Δ BFA to report net interest income of AOA 66,945.3 million Activos Remunerados 4 638,0 23 016,2 27 654,2 (USD 407.2 million) in 2016. Passivos Remunerados 418,4 1 938,0 2 356,4 Δ Margem Financeira 4 219,7 21 078,2 25 297,8 A breakdown of the change in BFA’s net interest income by business volume (volume effect) and spread (price effect) shows a considerable positive volume effect, mostly from the Growth of Net Non-Interest Income growth of the Bank’s securities portfolio, particularly loans and Treasury Bills. As in previous years, income from loans In 2016 BFA’s net non-interest income grew at a rate amply exceeded the cost of customer funds. of nearly 13.5%, 10.5 percentage points below the rate observed in 2015, reaching a total of AOA 32,626.3 million (USD 200.4 million). This change is due to an increase in trading income and net fee and commission income, which grew 10.6% and 50.26%, respectively, compared to 2015. At the same time, other net income fell 10.1% to AOA 6,238.4. Overall, as a percentage of total net operating revenue, net non-interest income decreased compared to 2015, from 41.2% to 32.8%.
NET NON-INTEREST INCOME Amounts In millions
2014 2015 2016 Δ% 15-16 AOA USD AOA USD AOA USD AOA USD
Trading income 14 570,6 147,9 16 070,0 131,1 17 774,9 110,0 10,6% -16,0%
Net fee and commission income 5 823,3 59,1 5 735,5 46,7 8 613,0 52,4 50,2% 12,2%
Other net income 2 796,6 28,4 6 941,9 56,5 6 238,4 38,1 -10,1% -32,7%
Net Non-Interest Income 23 190,4 235,4 28 747,5 234,2 32 626,3 200,4 13,5% -14,4%
The largest component of net non-interest income thus Net fee and commission income rose 50.2% in 2016 continues to be trading income, which, despite having shed compared to 2015, to a total of AOA 8,613 million (USD 52.4 1.4 percentage points in relative weight with respect to million). This increase, combined with the increase in trading the previous year, accounted for nearly 54.5% of total net income, resulted in a 13.5% increase in net interest income. non-interest income, having risen from AOA 16,070 million to AOA 17,774.9 million in 2016, an increase of 10.6%. In USD Other net income, totalling AOA 6,238.4 million (USD 38.1 terms, trading income declined by 16.0%, dropping from million), fell 5 points as a percentage of total net non-interest USD 131.1 million to USD 110 million, due to the devaluation income, to 19.1%. of the local currency against the US dollar.
128 Banco de Fomento Angola | Annual Report’16 23.190,4 to offset the increases in operating expenses, so that so BFA’s in the operating increases expenses, to offset However, in net operating the growth revenue sufficient was other itemsaspercentagesontheleftaxis. Note: Netnon-interestincomeinAOAmillionsontherightaxis, Composition andTrendofNetNon-InterestIncome Operating Expenses (IV =I+II+III) Expenses Operating (III) expenses general Other Amortizations (V) Amortizations (II) services and supplies Third-party Staff costs (I) costs Staff OPERATING EXPENSES OPERATING Cost recovery (VII) recovery Cost =IV+V) (VI expenses Operating Cost-to-income ratio Cost-to-income Extraordinary profit/loss (VI-V-VII) expenses Administrative income Net feeandcommission Other netincome 12,1% 62,8% 25,1% 2 014 28.747,5 24,1% 55,9% 20,0% 2 015 Trading income Net non-interest 32.626,3 19 585,0 17 766,6 16 939,6 7 689,2 8 590,0 1 818,4 1 487,3 36,3% 826,9 2014 67,4 AOA 19,1% 54,5% 26,4% 2 016 36,3% 180,3 198,7 171,9 18,5 78,1 15,1 87,2 USD 8,4 0,7 25 043,8 22 878,9 21 422,8 11 112,8 2 243,4 1 456,1 2 164,9 9 522,7 35,9% 413,6 2015 AOA compared tocompared 44.4% in 2015. which accounted 47% for in 2016, of operating expenses of this costs, Most due in was to increase the staff increases in 2016, only 5.6% higher. the went figure from USD 206.6 million to USD 218.2 million 43.1%. In USD, however, this pronounced, not as rise as was million to AOA 35,829.6 million the for year, an of increase in going with AOA, AOA from operating 25,043.8 expenses currency, asignificant recorded in 2016was rise measured as foreign currency. Thus, owing to the devaluation of the local denominated are of operatingA considerable expenses in part ratio Cost-to-income same as the as previoussame year. ratio remainedcost-to-income unchanged 35.9%, at the 35,9% 188,7 206,6 176,7 18,4 78,7 12,0 91,6 17,9 USD 2,9 16 854,1 35 829,6 33 457,9 31 313,0 11 517,8 5 086,0 2 144,9 2 371,7 35,9% 120,9 2016 AOA 35,9% 203,7 218,2 102,7 190,7 30,8 70,2 14,5 13,1 USD 0,7 126,7% -70,8%
46,2% 46,2% 21,0% 43,1% 51,7% 47,3% Financial Review 9,6% AOA 0,0 Δ% 15-16 Δ% Amounts in millions Amounts -10,8% -19,3% -74,7% 67,6% 12,1% 8,0% 5,6% 7,9% 9,1% USD 129 0,0
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment Operating Expenses AOA million
2.371,7
5.086,0 Operating Expenses AOA million Framework of Financial Stability and Soundness 2.164,9 2.371,7 At 31 December 2016 total 2.243,4shareholders’ equity reached 1.818,4 11.517,8 5.086,0 AOA 173,221.11.487,3 million, some9.522,7 AOA 46,765.6 million, or 37%, 36,3% 35,9% 35,9% higher than one year earlier. In USD, this item was up 109.6 2.164,9 million compared7.689,2 to 2015, totalling USD 1,044.1 million in 2.243,4 11.517,8 1.818,4 2016. 11.112,8 16.854,1 1.487,3 9.522,7 8.590,0 36,3% 35,9% 35,9%
7.689,2 2014 2015 2016
11.112,8 16.854,1 8.590,0 Staff costs Third-party supplies and services Other general expenses Depreciation and amortization
2014 2015 2016 Cost-To-Income
Staff costs Third-party supplies and services Note: Operating expenses in AOA millions on the left axis, the other Other general expenses Depreciation and amortization items as percentages on the right axis. Cost-To-Income
Note: Operating expenses in AOA millions on the left axis, the other SHAREHOLDERS’items as percentages on the EQUITY right axis. AND EQUIVALENTS Amounts in millions
2014 2015 2016 Δ% 15-16 AOA USD AOA USD AOA USD AOA USD Share Capital 3 522,0 34,2 3 522,0 26,0 3 522,0 21,2 0,0% -18,4% Funds 0,0 0,0 0,0 0,0 0,0 0,0 - - Reserves 69 169,2 659,6 85 067,2 596,4 107 787,0 645,7 26,7% 8,3% Retained Earnings 0,0 0,0 0,0 0,0 0,0 0,0 - - Net Profit for the Year 31 796,1 322,0 37 866,3 312,1 61 912,1 377,2 63,5% 20,9% Total 104 487,3 1 015,8 126 455,5 934,5 173 221,1 1,044,1 37,0% 11,7%
Following the trend of previous years, in 2016 total capital The regulatory solvency ratio, calculated in accordance with rose 38.8% to AOA 173,487.6 million (USD 1,045.7 million). BNA Notice 5/07 and Instruction 3/11, reached 31.7%, This growth was driven mostly by the increase in core capital, comfortably above the required minimum of 10%. which rose 39% compared to the previous year.
CAPITAL ADEQUACY RATIO Amounts in millions
2014 2015 2016 AOA USD AOA USD AOA USD Weighed assets 370 070,2 3 597,7 425 762,5 3 597,7 426 983,9 2 573,7 Core Capital 102 503,0 996,5 124 373,1 996,5 172 860,7 1 041,9 Supplementary capital 627,5 6,1 626,9 6,1 626,9 3,8 Total Capital 103 130,4 1 002,6 125 000,0 1 002,6 173 487,6 1 045,7 Regulatory capital adequacy ratio 24,0% 24,0% 24,3% 24,3% 31,7% 31,7%
130 Banco de Fomento Angola | Annual Report’16 Profit Appropriation Proposal Appropriation Profit The Board of Directors Board The To dividends: that of net is, profit, AOA 24,685,156,976.96. 40% • that of net is, profit, AOA 60% 37,027,735,465.45; To unrestricted reserves: • and 2016, appropriationfor profit proposal in the amount of AOA 61,712,892,442.41: with of the Directors Board the following presents Executive ofThe of the Directors Committee Board
Financial Review 131
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment
06 FINANCIAL STATEMENTS
Financial Statements 134 Notes to the Financial Statements 138 Audit Report 210 Report and Opinion of the Supervisory Board 212 Financial Statements BALANCE SHEEETS AS AT DECEMBER 31, 2016 & 2015 (Pro forma) AND AS AT JANUARY 1, 2015 (Pro forma)
Amounts expressed in thousands of kwanzas 2016 Gross Depreciation & Net 31-12-2015 01-01-2015 Notes assets impairment assets (Pro forma) (Pro forma) ASSETS
Cash & balances at central banks 5 279 154 585 - 279 154 585 255 828 259 182 074 860
Balances with other credit institutions 6 38 031 194 - 38 031 194 51 041 519 7 204 529
Investments with central banks and other credit 7 107 211 728 - 107 211 728 135 005 832 250 552 444 institutions
Financial assets at fair value through profit or loss 8 337 941 949 - 337 941 949 77 987 418 26 807 378
Investments held to maturity 9 258 740 073 - 258 740 073 411 499 655 333 139 476
Loans & advances to Customers 10 249 547 970 (14 237 099) 235 310 871 220 795 955 229 478 527
Non-current assets held for sale 11 73 307 - 73 307 59 791 266 929
Investments in affiliates, associates and joint 12 499 558 - 499 558 467 365 381 593 ventures
Other tangible assets 13 35 475 643 (16 211 174) 19 264 469 19 050 144 17 707 592
Intangible assets 13 2 905 587 (1 596 323) 1 309 264 538 918 351 531
Current tax assets 14 17 645 - 17 645 1 918 7 618
Deferred tax assets 14 1 178 276 - 1 178 276 749 027 568 266
Other assets 15 34 146 648 - 34 146 648 56 553 392 24 515 643
Total Assets 1 344 924 163 (32 044 596) 1 312 879 567 1 229 579 193 1 073 056 386
31-12-2015 01-01-2015 Notes 31/12/16 (Pro forma) (Pro forma) LIABILITIES & EQUITY
Amounts owed to central banks and other credit institutions 16 3 445 569 4 814 604 3 193 968
Customer funds & other borrowings 17 1 079 750 294 1 017 159 626 933 049 477
Financial liabilities at fair value through profit or loss 8 1 510 796 3 798 920 284 231
Provisions 18 4 675 642 4 133 428 4 120 068
Current tax liabilities 14 4 352 579 4 545 506 838 147
Other liabilities 19 46 122 822 68 671 633 27 083 228
Total Liabilities 1 139 857 702 1 103 123 717 968 569 119
Share capital 20 3 972 713 3 972 713 3 972 713
Revaluation reserves 20 1 253 828 1 253 828 1 253 828
Other reserves and retained earnings 20 106 082 432 83 362 678 67 464 629
Net profit for the period 20 61 712 892 37 866 257 31 796 097
Total Equity 173 021 865 126 455 476 104 487 267
Total Liabilities & Equity 1 312 879 567 1 229 579 193 1 073 056 386
134 Banco de Fomento Angola | Annual Report’16 STATEMENTS OF INCOME AND OF OTHER COMPREHENSIVE INCOME FOR THE PERIODS ENDED DECEMBER 31, 2016 & 2015 (Pro forma)
Amounts expressed in thousands of kwanzas
31-12-2015 Repor t Notes 31/12/16 (Pro forma) Interest & similar income 21 84 244 857 57 187 655 Interest & similar costs 21 17 028 353 15 344 455 Net Interest Income 67 216 504 41 843 200 Services & commissions income 22 10 784 367 7 076 479 Costs of services and commissions 22 2 173 659 1 340 940 Profit/(loss) on financial assets & liabilities at fair value through profit or loss 8 4 356 487 3 844 376 Economic Currency results 23 17 774 092 16 070 041 Environmen t Profit/(loss) on the sale of other assets 24 7 610 13 135 Other operating income 25 (1 277 844) 2 174 562 Income of the banking business 96 687 557 69 680 853 Staff costs 26 16 929 401 11 933 871 Third-party supplies & services 27 11 651 174 9 522 651 Depreciation & amortisation for the period 13 2 371 695 2 164 885 Provisions net of cancellations 18 889 544 (51 972) Impairment of loans & advances to Customers net of reversals & recoveries 18 2 773 572 4 587 350 PROFIT/(LOSS) BEFORE TAX FINANCIAL ON CONTINUING OPERATIONS 62 072 171 41 524 068 Taxes on profits Current 14 (788 528) (3 838 572) Deferred 14 429 249 180 761 NET PROFIT/(LOSS) FOR THE PERIOD 61 712 892 37 866 257 PROFIT/(LOSS) RECOGNISED DIRECTLY IN EQUITY - - COMPREHENSIVE INCOME FOR THE PERIOD 61 712 892 37 866 257
Average number of common shares issued 1 305 561 1 305 561 BFA Basic earnings per share (in Kwanzas) 47 269 29 004
STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED 31 DECEMBER 2016 AND 2015 (Pro forma)
Amounts expressed in thousands of kwanzas Share capital monetary Other reserves Share revaluation Revaluation Legal and retained Profit/(loss) Notes capital reserve reserves reserve earnings for the year Total Balance at 31 December 3 521 996 450 717 1 253 828 5 161 890 62 302 739 31 796 097 104 487 267 2014
2014 profit appropriation
Transfers to reserves 21 - - - - 15 898 049 (15 898 049) - and funds
Dividend distribution 21 - - - - - (15 898 048) (15 898 048)
Net profit for the year 21 - - - - - 37 866 257 37 866 257 Risk Management
Balance at 31 December 3 521 996 450 717 1 253 828 5 161 890 78 200 788 37 866 257 126 455 476 2015
2015 profit appropriation
Transfers to reserves 21 - - - - 22 719 754 (22 719 754) - and funds Financial Revie w Dividend distribution 21 - - - - - (15 146 503) (15 146 503)
Net profit for the year 21 - - - - - 61 712 892 61 712 892
Balance at 31 December 3 521 996 450 717 1 253 828 5 161 890 100 920 542 61 712 892 173 021 865 2016 and Notes Financial Statements Annexe s
Financial Statements and Notes 135 STATEMENTS OF CASH FLOWS FOR THE PERIODS ENDED DECEMBER 31, 2016 & 2015 (Pro forma)
Amounts expressed in thousands of kwanzas
2016 2015 CASH FLOW FROM OPERATING ACTIVITIES
Interest, commissions and other similar income received 94 652 901 68 302 118
Interest, commissions and other similar income paid (21 028 643) (19 361 049)
Cash paid to employees and suppliers (27 389 003) (18 706 732)
Payments and contributions to pension funds and other benefits (540 417) (9 881)
Recovery of loans written off from assets 390 469 253 037
Other income 7 816 457 7 960 660
Cash flows before changes in operating assets and liabilities 53 901 764 38 438 153
Increases/Decreases in operating assets:
Investments with central banks and other credit institutions 53 717 428 151 921 271
Financial assets at fair value through profit or loss (225 666 636) (32 218 888)
Investments held to maturity 165 022 989 (45 453 225)
Loans & advances to Customers 7 391 125 34 441 776
Non-current assets held for sale - 207 139
Other Assets 23 110 766 (30 801 896)
Net flow from operating assets 23 575 672 78 096 177
Increases/Decreases in operating liabilities:
Amounts owed to central banks and other credit institutions 2 312 2 092
Customer funds & other borrowings (21 723 972) (37 129 924)
Other liabilities (39 309 434) 28 015 076
Net flow from operating liabilities (61 031 094) (9 112 756)
Net cash from operating activities before income taxes 16 446 342 107 421 574
Income taxes paid (8 099 741) (2 097 746)
Net cash flow from operating activities 8 346 601 105 323 828
CASH FLOW FROM INVESTING ACTIVITIES:
Acquisitions of other tangible assets, net of disposals (2 159 050) (3 258 526)
Acquisitions of intangible assets, net of disposals (1 197 316) (436 298)
Acquisitions of interests in affiliates, associates and joint ventures, net of disposals 36 243 23 721
Net cash flow from investing activities (3 320 123) (3 671 103)
CASH FLOW FROM FINANCING ACTIVITIES
Dividend distribution (13 732 703) (11 508 088)
Net cash flow from financing activities (13 732 703) (11 508 089)
Change of cash & cash equivalents (8 706 225) 90 144 637
Cash & cash equivalents at the beginning of the period 306 869 778 189 279 389
Currency fluctuation effects on cash & cash equivalents 19 022 226 27 445 752
Cash & cash equivalents at the end of the period 317 185 779 306 869 778
136 Banco de Fomento Angola | Annual Report’16 07 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2016 & 2015 (Amounts expressed in thousands of kwanzas – MAOA, unless stated otherwise)
1. INTRODUCTION
Banco de Foment Angola, SA (hereinafter also the “Bank” or The Bank is engaged in taking funds from third parties in the “BFA”) was incorporated by public deed on August 26, 2002, form of deposits or otherwise, which it applies, along with its as a result of the transformation of the Angolan branch of own funds in granting loans, in deposits at the National Bank Banco BPI, SA, into a bank under local law. of Angola (BNA), in investments with credit institutions, in the acquisition of securities or other assets for which it is duly As indicated in Note 20, on December 31, 2016, BFA’s authorised. It also provides other banking services and carries majority shareholder was Banco BPI, SA (BPI Group). The out various types of transactions in foreign currency, for the main balances and transactions with companies of the BPI purpose of which, as at December 31, 2016, it has a national Group are disclosed in Note 29. network of 166 branches, 7 service points, 9 investment centres and 16 corporate centres.
2. PRINCIPLES OF DISCLOSURE AND SUMMARY OF THE MAIN ACCOUNTING POLICIES
2.1. PRINCIPLES OF DISCLOSURE period ended December 31, 2016. The transition to the IAS/ IFRS did not give rise to adjustments in equity on January The Bank’s financial statements were prepared on the 1, 2015, and in equity and net income of the Bank on assumption of continuity of operations, and in accordance December 31, 2015 (Note 4). with international accounting standards/international financial reporting standards (“IAS/IFRS”), pursuant to notice nº The Bank’s financial statements as at December 31, 20136 6/2016, of June 22 of the National Bank of Angola, issued by & 2015, are expressed in Kwanzas, assets and liabilities in the International Accounting Standards Board (“IASB”) and other currencies having been translated into the domestic interpretations issued by the International Financial Reporting currency on the basis of the average indicative rate published Interpretation Committee (“IFRIC”). by the National Bank of Angolan on those dates. The kwanza (AOA) exchange rates against the United States dollar (USD) The Bank adopted the international financial reporting and the euro (EUR) as at December 31, 2016 & 2015 were standards for the first time on December 31, 2016, as follows: considering for the purpose the terms of IFRS 1 – First- time adoption of international financial reporting standards, 2016 2015 which were applied retrospectively for all periods presented. The transition date was January 1, 2015, The Bank having 1 USD 165,903 135,315 prepared its opening balance sheet as at that date. 1 EUR 185,379 147,8 32
The Bank altered the 2015 financial statements, prepared and approved in accordance with the accounting principles The financial statements for the period ended December 31, enshrined in the Accounting Plan of Financial Institutions 2016, were approved by the Bank’s Board of Directors on (“CONTIF”), in accordance with Instruction nº 9/2007, of April 26, 2017. September 19, issued by the National Bank of Angola, so that they are comparable with the financial statements for the
138 Banco de Fomento Angola | Annual Report’16 2.2. ACCOUNTING POLICIES ii) Overdue loans & interest Repor t Capital, interest and other amounts dues but not collected, a) Accrual accounting less the interest reversed, are carried under this heading. Income and costs are recognised in the light of the life of the These amounts are recorded by default class, reckoned operations in accordance with the accounting principle, and from the date of commencement of the default. National are recorded as and when generated and not at the time of Bank of Angola Instruction nº 9/2015, of June 4 provides their receipt or payment. that interest overdue by more than 90 days must be Economic
cancelled. In accordance with the established policy, the Environmen t b) Transactions in foreign currency Bank writes off interest overdue for more than 60 days Transactions in foreign currency are recorded in accordance and recognises no further interest from that date until the with the principles of the multi-currency system, where Customer remedies the situation. each transaction is recorded according to the currency of denomination. Assets and liabilities expressed in foreign Within the scope of the regular review of loan operations, currency are translated to kwanzas at the average exchange including overdue loans, the BFA reclassifies non- rate published by the National Bank of Angola on the performing loans to outstanding on the basis of an reporting date. Costs and income relating to realised or analysis of the economic prospects of collectability, taking potential exchange differences are recognised in the income particular account of the existence of guarantees, of the statement for the period in which they occur. assets of the borrowers or guarantors and the existence of operations whose risk the BFA equates to State risk. Forward currency position The forward currency position is the net balance of forward Annually, Bank writes off from assets loans overdue by transactions pending settlement. All contracts in respect more than 12 months through the use of impairment of these transactions are revalued at the prevailing market losses when they amount to 100% of the value of loans BFA forward rates. considered not recoverable. Additionally, these loans continue to be carried under an off-balance sheet heading Any difference between the value in Kwanzas at the forward for a minimum term of ten years. rates applied and the values in at the contracted rates is recorded under “Foreign exchange results” under assets iii) Recognition of income or liabilities, with a contra-entry under income or costs, Interest and restructuring commissions associated respectively. with loan operations are accrued over the life of the transactions, with the corresponding entry in the income c) Financial instruments – Loans and other receivables statement for the period, irrespective of when they are Are financial assets with fixed or determinable payments that collected or paid. Other commissions and other costs are not listed on an active market. This category includes and income associated with credit transactions are loans and advances to Customers, investments with credit recognised in the profit and loss items at the time they institutions and other receivables. On initial recognition, these are charged. As of this date it has not been possible to assets are recorded at fair value, plus other costs and income implement computer systems that allow the calculation directly attributable to the origination of the operation. of commissions associated with loan operations using the Subsequently, these assets are carried at their amortised effective-rate method. Risk Management cost. Liabilities for guarantees and sureties are recorded in off- i) Loans & Advances balance sheet accounts at the amount at risk, while the flows Loans and advances are financial assets and are recorded of interest, commissions and other income are recorded in the at the contracted amounts when originated by the Bank or income statement over the life of the transactions.
at the amounts paid when acquired from other entities. Financial Revie w
and Notes Financial Statements Annexe s
Financial Statements and Notes 139 d) Losses of the loan portfolio for impairment from the knowledge of the Customers and the historical conduct The Bank carries out half-yearly analyses of impairment of the of the portfolio in terms of default and recovery levels. “Loans & advances to Customers” headings. For the purpose, the loan portfolio is segmented as follows: With regard to assets analysed individually in respect of which signs of impairment are identified, the Bank estimates their ■■ Individuals: recoverable amount. The impairment corresponds to the • Credit cards; difference between carrying amount of these loans and the • General consumption; estimated realisable value, where the latter is less than the • Motor loans; former. • Mortgage loans; • Overdrafts. For assets analysed collectively, future cash flows expected to be received are estimated based on historical information ■■ Companies: of the behaviour of assets of similar characteristics, and they • Less significant company exposures; are subsequently discounted at the effective interest rate of • Significant company exposures; the operations. Within the scope of the model developed by • Public sector; and the Bank, transaction classification criteria were identified for • Unsecured loans. the segments defined above, as were conditions representing different levels of risk to be considered for impairment The impairment analysis methodology adopted by the Bank determination purposes, which are described below: identifies, in a first phase, loans with signs of impairment. This identification is carried out individually for financial ■■ Definition of the period required for the loss event, in assets for which it is considered that the aggregate amount operations that are in good standing at the time of analysis, of the exposure is individually significant, and collectively to be perceived by the Bank, which was estimated at twelve for homogeneous groups of assets of insignificant individual months; amount. The following care considered within the scope of the individual analysis: ■■ Classification of the operations according to the delay period identified, particularly operations with no signs of ■■ In the individuals segment: (i) all Customers whose impairment (in normal situation), operations with signs exposure exceeds mAOA 165,903; (ii) all Customers who of impairment (with overdue instalments) and operations are in an irregular situation (over 30 days past due) with in default. Operations are considered in default when the more than mAOA 1,659 of loans in arrears and having a delay exceeds 90 days; total exposure exceeding mAOA 41,476 ; and ■■ Determination of default probabilities, which are a function ■■ In the corporates segment, all Customers with exposure of not only of the current position of the portfolio, but also of more than mAOA 41,476. Also analysed are all Customers its past behaviour; and (regardless of segment) with restructured or reclassified operations or are in the recovery area. ■■ Determination of estimated recovery amounts after entering into default, which includes the costs to be incurred in the The rest of the portfolio is analysed on a collective basis. recovery process.
IAS 39 identifies some events that are regarded as indicators The change in the calculated impairment amounts of the existence of impairment of financial assets carried at (difference between the carrying amount of the asset and amortised cost, in particular, breach of the conditions of the its estimated recovery amount) is recorded in costs for the contract (as shown, for example, by delays in the payment of period under “Impairment loans & advances Customers net contractual instalments), restructuring or loans or financial of reversals and recoveries”. Recoveries of principal and difficulties of the debtor. These indicators are considered by the interest previously written off from assets, occurring in the Bank within the scope of this analysis, as are others that result period are recorded under “Other operating income” (Note 25).
140 Banco de Fomento Angola | Annual Report’16 e) Financial Instruments - Securities Portfolio currency update is reflected under “Net Interest Income – Repor t Based on the nature of the securities and their intended purpose Interest & Similar Income – Of securities”. at the time they were acquired, these are classified into the following categories: held to maturity, at fair values through Treasury bonds issued in local currency and indexed to the profit or loss and available for sale. Consumer Price Index are subject to update of the par value of the security in accordance with the change of the said index. Investments held to maturity Therefore, the result of the said currency update of the par value Economic
of the security and of the accrued interest is reflected in the Environmen t This category comprises securities for which the Bank has the income statement for the period in which it occurs, under “Net intention and the financial capacity to hold the investment until Interest Income - Interest & similar income - On securities” its maturity. Financial assets at fair value through profit or loss Securities classified as held to maturity are stated at their acquisition cost, plus income earned over their maturity periods Securities acquired for the purpose of being actively and (including the accrual of interest and premium/discount, with frequently traded are considered to be financial assets at fair a corresponding entry in the income statement). The Bank value through profit or loss. recognises any profit or loss determined on the maturity date as the difference between the amount received on that date and Securities carried at fair value through profit or loss are the respective carrying amount. initially are initially recognised at acquisition cost, including the costs directly attributable to the acquisition of the asset. As at December 31, 2016 & 2015, the Bank’s entire portfolio Subsequently, they are carried at their fair value, while any of held-to-maturity securities consisted of debt issued by the income or cost resulting from the valuation is taken to the
Angolan State. income statement for the period. BFA
Treasury Bills are issued at a discount and recorded at In the case of debt securities, the carrying amount includes the acquisition cost. The difference between this and the par value, amount of accrued interest. which is the Bank’s remuneration, is recognised in the accounts as income over the period between the purchase date and the As at December 31, 2016 & 2015, this portfolio mainly maturity date of the securities, under “Income receivable”. comprised debt securities issued by the Angolan government and by the National Bank of Angola. Treasury Bonds acquired at a discount are recorded at acquisition cost. The difference between the cost of acquisition Available-for-sale financial assets and the par value of these securities, which is the discount at the time of purchase, is accrued over the term to maturity under Securities that are likely to be traded and do not fall under any “Income receivable”. Interest accruing on these securities is of the other categories are classified as available-for-sale. also recorded under “Income receivable”. They are initially stated at acquisition cost and subsequently Treasury Bonds issued in domestic currency indexed to the of carried at fair value. Any changes in fair value are recognised in the US dollar exchange rate are subject to currency updating. equity under, and the corresponding gains or losses are taken to Risk Management The result of the currency update is reflected in the income the income statement upon final sale of the asset. statement for the period in which it occurs. The result of the currency update of the par value of the security is reflected During the periods ended December 31 2016 & 2015, the Bank under “Foreign exchange results”, while the result of the had no securities classified in this category. Financial Revie w and Notes Financial Statements Annexe s
Financial Statements and Notes 141 Market value and the amount of interest is accrued under the same heading. The methodology used by the Bank to determine the market value (fair value) of securities is as follows: f) Derivative financial instruments As part of its business the Bank may carry out transactions in i) Average trading price on the calculation date or, when this derivative financial instruments, managing its own positions is not available, the average trading price on the preceding based on expectations of market trends or to meet the needs of business day; its Customers. ii) Probable net realizable value obtained by an internal All derivative instruments are recorded at market value and valuation technique or model; any changes in value are recognised in the income statement. Derivatives are also recorded in off-balance sheet accounts at iii) Price of a comparable financial instrument, taking into their notional value. account at least the payment and maturity terms, the credit risk and the currency or index; and Derivative financial instruments are classified according to their purpose, that is, as either hedging derivatives or speculative and iv) Price defined by the National Bank of Angola. arbitrage derivatives, in keeping with their purpose.
Securities that do not have a price quoted on an active g) Investments in affiliates, associates and joint ventures market based on regular trades and securities that have An associate is an entity over which the investor has short maturities are carried at acquisition cost, on the significant influence. understanding that this is the best approximation to their market value. In this way, Treasury Bills and Treasury Bonds Associate companies are entities in which the Bank has issued by the Angolan Government are carried in the balance significant influence but not control over its financial and sheet of the BFA as their acquisition cost since the Bank operating policies. It is assumed that the Bank has significant believes that this is the best approximation to their market influence when it holds more than 20% of the voting rights. value, since they are not quoted on an active market with If the Bank directly or indirectly holds less than 20% of the regular transactions. voting rights, it is assumed that it does not have significant influence, unless such influence can be clearly demonstrated. Sale of securities with repurchase agreements A substantial or majority ownership interest by another investor does not necessarily preclude an entity from having The securities ceded with repurchase agreement continue to significant influence. be carried in the Bank’s securities portfolio, under liabilities. When these securities are sold with interest in advance, the Investments in affiliates and associates are accounted for difference between the repurchase price and the selling price in the Bank’s financial statements at cost less impairment is recorded under the same heading, with the specification losses. “Costs payable”. h) Equity monetary-updating reserve Purchase of securities with resale agreements Pursuant to National Bank of Angola Notice nº 2/2009, of May 8, on monetary updating, financial institutions shall, in Securities purchased under resale agreements are not carried case of inflation, consider on a monthly basis the effects of in the securities portfolio. The funds delivered paid are changes in the purchasing power of the domestic currency, recorded, on the settlement date, under the asset heading on the basis of application of the Consumer Price Index to “Investments in Central Banks and other credit institutions – the balances of share capital, results and retained earnings. Third-party securities purchased under resale agreements”, The financial statements of an entity whose working currency is the currency of a hyperinflationary economy shall be
142 Banco de Fomento Angola | Annual Report’16 expressed in terms of the measuring unit current at the in case of inflation, restate their fixed assets every month in Repor t reporting date. Hyperinflation is indicated by characteristics accordance with the consumer price index. of the economic environment of a country which include, but are not limited to, the following situations: The amount resulting from the monetary updating shall be credited to a profit or loss account, offsetting the gross value i) The general population prefers to keep its wealth in non- and accumulated depreciation headings of the fixed assets. monetary assets or in a relatively stable foreign currency. Economic
Amounts of local currency held are immediately invested to The Bank has not revalued its fixed assets since 2008, as the Environmen t maintain purchasing power; Angolan economy ceased to be considered hyperinflationary. ii) The general population regards monetary amounts in terms An amount equivalent to 30% of the increase of depreciation of stable foreign currency. Prices may be quoted in that and amortisation resulting from the revaluations performed is currency; not accepted as a cost for tax purposes. iii) Credit sales and purchases take place at prices that Depreciation is calculated on a straight-line basis at the compensate for the expected loss of purchasing power maximum rates allowed for tax purposes, in conformity with during the life of the credit, even if the period is short; the Industrial Tax Code (Código do Imposto Industrial), based on estimated years of useful life: iv) Interest rates, wages and prices are linked to a price
index; and Years of useful life
Property in use (Buildings) 50 v) The cumulative inflation rate over three years approaches, Leasehold improvements 10 or exceeds, 100%. BFA Equipment:
The amount resulting from the monetary update must be Furniture and fixtures 10 charged to the “Gain/(loss) on monetary revaluation” account Computer equipment 3 in the income statement, with a corresponding increase in the Interior installations 10 components of equity, except for “Share capital”, where the Transport equipment 3 increase must be classified in a specific reserve (“Revaluation Machinery and tools 6 and 7 reserve”), which can only be used for subsequent share capital increases. j) Non-current assets held for sale The Bank has not revalued its share capital, reserves or The heading “Non-current assets held for sale” records retained earnings since 2004, as the Angolan economy ceased assets received as payment in kind in the wake of recovery of to be considered hyperinflationary. non-performing loans, it intended for subsequent disposal. i) Intangible and tangible fixed assets The value of assets received as payment in kind is carried Intangible fixed assets, which mainly comprise software, are at the amount indicated in their valuation, with an offsetting recorded at acquisition cost and are amortised on a straight- entry against the amount of the loan recovered and of the Risk Management line basis over three years. respective specific provisions set aside.
Tangible fixed assets are carried at acquisition cost, although When the outstanding debt is greater than its carrying amount they may be revalued under applicable legal provisions. (net of provisions), the difference is recorded as income for the period, up to the amount determined in the valuation
As provided by National Bank of Angola Notice nº 2/2009 of of the assets. When the value of the assets is less than the Financial Revie w May 8, on monetary revaluation, financial institutions shall, carrying amount, the difference is recognised as a cost for the year. and Notes Financial Statements Annexe s
Financial Statements and Notes 143 k) Employee benefits the investments made (net of any taxes) was added to the Short-term benefits are reflected under “Staff costs” (Note amount of the contributions. 26) in the period to which they relate, in accordance with the principle of accrual accounting. In 2013, with reference to the last day of the year, the Bank set up the “BFA Pension Plan” to cover these liabilities. BFA employees are covered by Law 07/04 of October 15, The provisions previously set aside were used as the initial governing Angola’s Social Security system, which determines contribution to the BFA Pension Plan (Note 18). The amounts the grant of retirement pensions to all Angolan employees corresponding to the vested rights in the Complementary registered with Social Security. The amount of these pensions Pension Plan were transferred to the current pension plan is calculated on the basis of a table proportional to the and converted into contributions of the participant. The BFA number of years of work, applied to the average gross monthly contributions to the BFA Pension Fund consist of a fixed salaries received during the periods immediately prior to the percentage of 10% of the salary liable to deductions for date on which the employee stops working. Under Decree Angolan Social Security, applied to fourteen salary payments. 38/08 of June 9, the contributions rates to this system are The income earned on the investments made (net of any set at 8% for the employer and 3% for employees. taxes) was added to the amount of the contributions.
Under Article 262 of Law 2/00 of February 11 (General l) Corporation tax Labour Act), BFA has set aside provisions to cover liabilities Total income taxes include recorded in profit or loss includes in the matter of “Retirement Compensation”, which are current taxes and deferred taxes. determined by multiplying 25% of the base monthly salary earned at the date on which the employee reaches the legal Current tax retirement age by the number of years of seniority at that date. The total amount of these liabilities is determined by Current tax is calculated based on taxable income for the actuaries using the Projected Unit Credit method for liabilities year, which differs from the accounting income due to for past services. adjustments made to the taxable amount because certain costs or income or expense are irrelevant for tax purposes On September 15, 2015, Law 7/15 of June 15 (New or will be taken into consideration only in other accounting General Labour Act) came into force, which repealed Law periods. 2/00 of February 11. The New General Labour Act makes no reference to the need to set aside provisions to cover Deferred tax liabilities relating to “Retirement Compensation”. However, and despite the repeal of Law 2/00 of February 11, BFA Deferred taxes reflect the impact on tax recoverable/ continues to record provisions to cover liability in the matter payable in future periods as a result of deductible or taxable of “Retirement Compensation” under the terms stated above. temporary differences between the carrying amounts of assets and liabilities and their tax base, used in the Additionally, the Bank granted its locally recruited employees determination of the taxable profit. or their families the right to cash benefits by way of old- age, disability and surviving-relative pensions. In this way, As a rule, deferred tax liabilities are recognised for all by resolution of the Board of Directors, effective as from taxable temporary differences. Deferred tax assets are January 1, 2005, the Bank set up a Complementary Pension only recognised to the extent it is probable that future Plan consisting of a defined-contributions plan. This plan taxable profits will be available to allow use of the was initially set up with part of the balance of the Provision deductible temporary differences or tax-loss carry forwards. for Contingent Retirement Pension Liabilities, with BFA’s Additionally, deferred tax assets are not recognised where contribution consisting of a percentage of 10% of the base their recoverability may be called into question due to other salary liable to deductions for the Angolan Social Security, circumstances, including issues regarding the interpretation applied to fourteen salary payments. The income earned on of tax laws.
144 Banco de Fomento Angola | Annual Report’16 Industrial Tax On August 1, 2013, the National bank of Angola started to Repor t automate the withholding by BFA of the Capital gains Tax at The Bank is subject to Industrial Tax, and, for taxation source, as provided in Presidential Legislative Decree 5/11 purposes it is considered a Group A taxpayer, subject to a of December 30. tax rate of 30%. On January 1, 2015, the new Industrial Tax Code came into force, enacted by Law 19/2014 of October After January 1, 2015, the CGT no longer has the nature 22, which stipulated the Industrial Tax rate of 30%. of payment on account of the Industrial Tax, their income Economic
excluded from taxation under the Industrial Tax. Environmen t The new Industrial Tax Code provides that the income subject to Capital Gains Tax (“CGT”) is deducted in Property Tax determining the taxable profit of Industrial Tax purposes, and the CGT does not constitute a cost deductible for tax Urban Property Tax is levied at the rate of 0.5% on the purpose. carrying amount of owner-occupied properties intended for the normal course of business of the Bank, where their value Yields of Treasury Bonds and Treasury Bills issued by is greater than mAOA 5,000. the Angolan State after January 1, 2013, are subject to Capital Gains Tax at the rate of 10% (5% in the case of Other taxes debt securities admitted to trading on a regulated market having a maturity equal to or greater than three years) and The Bank is also subject to indirect taxes, namely, customs to Industrial Tax: (i) in the case of capital gains or losses duties, stamp duty, consumption tax and other taxes. (including any currency revaluations of the principal); and (ii) on recognition of the discount in relation to securities m) Provisions and contingencies acquired or issued at a discount. Income subject to CGT is A provision is set aside where there is present (legal or not- BFA excluded from Industrial Tax. formalised) obligation resulting from past events in respect of which there will be a probable outflow of funds that can be Capital Gains Tax (CGT) determined reliably. The amount of the provision corresponds to the best estimate of the amount to be disbursed to settle Presidential Legislative Decree 2/2014, of October 20 the liability on the reporting date. enacted the new CGT Code, which entered into force as from November 19, 2014. If the future expenditure of resources is not probable, it is a contingent liability, which will be disclosed in accordance with The CGT is generally levied on income from the Bank’s the requirements of IAS 37 - “Provisions, contingent liabilities financial investments. The rate varies between 5% (in the and contingent assets”. case of interest received on public debt securities admitted to trading on a regulated market and have a maturity of equal to or greater than three years) and 10%. The foregoing notwithstanding, as regards income from public debt securities, according to the understanding of the tax authorities and of the National Bank of Angola (National Risk Management Bank of Angola dated September 26, 2013), only income from securities issued on or after January 1, 2013, is subject to this tax. Financial Revie w and Notes Financial Statements Annexe s
Financial Statements and Notes 145 2.3. ADOPTION OF NEW STANDARDS (IAS/IFRS) OR REVIEW OF STANDARDS ALREADY ISSUED
The following standards, interpretations, amendments and revisions with mandatory application in future financial periods have not been adopted by the Bank in the preparation of its financial statements as at December 31, 2016:
Standard Interpretation
This standard is part of the draft revision of IAS 39 and sets new requirements for IFRS 9 - Financial instruments the classification and measurement of financial assets and liabilities, impairment- (2009) and subsequent amendments calculation methodology and the application of hedge-accounting rules.
This standard introduces a structure for the recognition of revenue based on principles and on a model to be applied to all contracts concluded with IFRS 15 - Revenue from contracts Customers, replacing standards IAS 18 - Revenue, IAS 11 - Construction with Customers Contracts; IFRIC 13 - Customer loyalty programs; IFRIC 15 - Agreements for the Construction of Real Estate; IFRIC 18 - Transfers of Assets from Customers and SIC 31 - Revenue - Direct barter transactions involving advertising services.
This standard establish the reporting requirements, by entities adopting for the IFRS 14 - Regulated assets first time the IFRS applicable to regulated assets.
This standard introduces the principles of recognition and measurement of leases, replacing IAS 17 - Leases. The standard defines a single lease-contracts accounting model that results in the recognition by the lessee of assets and liabilities for all lease contracts, except for leases with a period of less than IFRS 16 - Leases 12 months or for leases that relate to assets of little value. Lessors will continue to classify leases as either between operational or financial, while IFRS 16 will not involve substantial changes to such entities when compared to what is defined in IAS 17.
Amendments to IFRS 10 - These amendments eliminate an existing conflict between those standards, Consolidated financial statements related to the sale or contribution of assets between the investor and the associate and IAS 28 - Investments in or between the investor and the joint venture. associates and joint ventures
Amendments to IAS 12 – Income These amendments clarify the conditions for recognition and measurement of tax Taxes assets resulting from unrealised losses.
Amendments to IAS 7 - Statement These amendments introduce additional disclosures related to the cash flows of of cash flows financing activities.
Amendments to IFRS 15 - Revenue These amendments introduce a number of clarifications to the standard in order from contracts with Customers to eliminate the possibility of different interpretations of several topics.
These amendments introduce a number of clarifications in the standard relating to: (i) the record of share-based payments that are settled in cash; (ii) the record Amendments to IFRS 2 - Share-based of changes in share-based payment transactions (from settled in cash to settled payments with equity instruments); (iii) the classification of transactions with compensated settlement characteristics.
146 Banco de Fomento Angola | Annual Report’16 Standard Interpretation Repor t
Amendments to IFRS 4 - Insurance These amendments provide guidance on the application of IFRS 4 together with contracts the IFRS 9.
These amendments clarify that the change of classification to or from investment Amendments to IFRS 40 - Investment property should only be made where there is evidence of a change of use of the properties asset. Economic Environmen t These improvements involve clarification of several aspects related to: IFRS 1 - First time adoption of international financial reporting standards: eliminates some short-term exemptions; IFRS 12 - Disclosure of interests in other entities: clarifies Improvements to international the scope of the standard as for its application to interests classified as held for financial reporting standards sale or held for distribution under IFRS 5; IAS 28 - Investments in associates and (2014-2016 cycle) joint ventures: introduces clarifications on the measurement at fair value through profit or loss of investments in associates or joint ventures held by venture-capital companies or investment funds.
This interpretation establishes the date of initial recognition of the advance or of IFRIC 22 - Foreign currency the deferred income as the date of transaction for determining the exchange rate transactions and advances for the recognition of the revenue.
The Bank has not yet begun a process of evaluating the potential effects of these standards. However, given the nature of its business, it can be expected that IFRS 9 and IFRS 15 standards will have a relevant impact on the Bank’s financial BFA statements.
3. PRINCIPAL ACCOUNTING ESTIMATES AND UNCERTAINTIES ASSOCIATED WITH APPLICATION OF THE ACCOUNTING POLICIES
Preparation of the financial statements requires the Impairment losses for loans preparation estimates and the adoption of assumptions by the Bank’s Board of Directors. These estimates result from The determination of impairment losses for loans is carried the analysis of the best information available on the date of out in keeping with the criteria described in Note 2.2. d). their registration. Consequently, the future amounts actually The estimates made by the Bank with regard to the risk of realised may differ from the recorded amount of the estimates, realisation of the loan portfolio result from the application of particularly in the following areas: assumptions determined on the basis of historical analysis, particularly with regard to the segmentation of the portfolio, Industrial Tax the probabilities of default, rates, periods and recovery costs, as well as of the assessment of the available information Risk Management On December 31, 2016 & 2015, the Industrial Tax was regarding the debtor. determined based on the tax legislation in force for taxpayers classified for tax purposes in Group A. Different interpretations Should the Bank use different criteria and assumptions in of tax legislation may influence the amount of Industrial Tax. determining the impairment losses for loans, the amounts Consequently, the amounts recorded, which result from the determined would differ from those currently reflected in the best understanding of the Bank’s management bodies, may be financial statements. However, the Bank believes that the Financial Revie w subject to changes on the basis of different interpretations by current methodology adequately reflects losses associated the tax authorities. with these assets. and Notes Financial Statements Annexe s
Financial Statements and Notes 147 4. TRANSITION IMPACTS OF THE INTRODUCTION OF THE INTERNATIONAL FINANCIAL REPORTING STANDARDS
The entry into force of the IAS/IFRS under the terms of The International Financial Reporting Standards were first National Bank of Angola Notice nº 6/2016, of June 22, on adopted on December 31, 2016, considering for this purpose January 1, 2016, required the introduction of adjustments and the terms of IFRS 1 for the determination of the transition reclassifications to the 2015 financial statements prepared adjustments, as at January 1, 2015. and approved in accordance with the accounting principles enshrined in the CONTIF, to make them comparable with the In preparing the financial statements, as at January 1, 2015, financial statements for the period ended December 31, 2016. the Bank adopted the IFRS retrospectively, opting for some
Reclassifications between CONTIF and IAS/IFRS in the financial statements as at January 1 and December 31, 2015, are as follows: montantes expressos em milhares de kwanzas
December 31, 2015 January 1, 2015
Transition CONTIF Transition CONTIF Balance Sheet IFRS Balance Sheet CONTIF Reclassifications adjustments IAS/IFRS Reclassifications adjustments IAS/IFRS
Cash and banks Cash and funds available at central banks 306 869 778 51 041 519 - 255 828 259 189 279 389 7 204 529 - 182 074 860
Cash available at other credit institutions - (51 041 519) - 51 041 519 - (7 204 529) - 7 204 529
Short-term investments Short-term investments in central banks and other credit institutions 135 005 832 - - 135 005 832 250 552 444 - - 250 552 444
Transferable securities – Held for trading 74 888 156 26 664 645 Financial assets at fair value through profit or loss - - 77 987 418 - - 26 807 378 Derivative financial instruments 3 099 262 142 733
Transferable securities – Held to maturity Held-to-maturity investments 411 499 655 - - 411 499 655 333 139 476 - - 333 139 476
Loans and advances Loans and advances to Customers 220 795 955 - - 220 795 955 229 478 527 - - 229 478 527
Non-current assets held for sale - (59 791) - 59 791 - (266 929) - 266 929
Financial investments Investments in subsidiaries, associates and joint ventures 467 365 - - 467 365 381 593 - - 381 593
Tangible fixed assets Other tangible assets 19 050 144 - - 19 050 144 17 707 592 - - 17 707 592
Intangible assets Intangible assets 538 918 - - 538 918 351 531 - - 351 531
Current tax assets - (1 918) - 1 918 - (7 618) - 7 618
Deferred tax assets - (749 027) - 749 027 - (568 266) - 568 266
Other assets 4 079 643 3 009 491 Other assets 810 736 - 56 553 392 842 813 - 24 515 643 Foreign exchange transactions 53 284 485 22 348 965
Total assets Total assets 1 229 579 193 - - 1 229 579 193 1 073 056 386 - - 1 073 056 386
Short-term borrowings 8 572 6 480 Funds of central banks and other credit institutions - - 4 814 604 - - 3 193 968 Liabilities in the payments system 4 806 032 3 187 488
Deposits Customer funds and other borrowings 1 017 159 626 - - 1 017 159 626 933 049 477 - - 933 049 477
Derivative financial instruments Financial liabilities at fair value through profit or loss 3 798 920 - - 3 798 920 284 231 - - 284 231
Provisions for contingent liabilities Provisions 4 133 428 - - 4 133 428 4 120 068 - - 4 120 068
Other liabilities Current tax liabilities 17 301 530 12 756 024 - 4 545 506 5 769 286 4 931 139 - 838 147
Foreign exchange transactions Other liabilities 55 915 609 (12 756 024) - 68 671 633 22 152 089 (4 931 139) - 27 083 228
Total liabilities Total liabilities 1 103 123 717 - - 1 103 123 717 968 569 119 - - 968 569 119
Share capital Share capital 3 521 996 (450 717) - 3 972 713 3 521 996 (450 717) - 3 972 713
Share capital revaluation reserve 450 717 450 717 - - 450 717 450 717 - -
Unrealized gains/(losses) Revaluation reserves 1 253 828 - - 1 253 828 1 253 828 - - 1 253 828
Reserves and funds Other reserves and profit or loss carried forward 83 362 678 - - 83 362 678 67 464 629 - - 67 464 629
Net profit/(loss) for the period Net profit/(loss) for the period 37 866 257 - - 37 866 257 31 796 097 - - 31 796 097
Total equity Total equity 126 455 476 - - 126 455 476 104 487 267 - - 104 487 267
Total liabilities and equity Total liabilities and equity 1 229 579 193 - - 1 229 579 193 1 073 056 386 - - 1 073 056 386
148 Banco de Fomento Angola | Annual Report’16 of the exceptions allowed by “IFRS 1 - First time adoption of until January 1, 2015, in accordance with the accounting Repor t international financial reporting standards”: principles enshrined in the CONTIF were not restated in the balance sheet; i) Derecognition of financial assets and liabilities; BFA applied the derecognition requirements of standard “IAS ii) Valuation of the tangible fixed assets The Bank considered 39 - Financial Instruments: Recognition and measurement, as cost of the tangible fixed assets as at January 1, 2015, with the exception of certain provisions relating to hedge the carrying amount determined in accordance with the Economic
accounting” only for operations carried out as from the accounting policies previously applied. Environmen t transition date. Thus, assets and liabilities derecognised up
montantes expressos em milhares de kwanzas Amounts in thousands of Angolan kwanzas – mAOA December 31, 2015 January 1, 2015
Transition CONTIF Transition CONTIF Balance Sheet IFRS Balance Sheet CONTIF Reclassifications adjustments IAS/IFRS Reclassifications adjustments IAS/IFRS
Cash and banks Cash and funds available at central banks 306 869 778 51 041 519 - 255 828 259 189 279 389 7 204 529 - 182 074 860
Cash available at other credit institutions - (51 041 519) - 51 041 519 - (7 204 529) - 7 204 529
Short-term investments Short-term investments in central banks and other credit institutions 135 005 832 - - 135 005 832 250 552 444 - - 250 552 444
Transferable securities – Held for trading 74 888 156 26 664 645 Financial assets at fair value through profit or loss - - 77 987 418 - - 26 807 378 Derivative financial instruments 3 099 262 142 733
Transferable securities – Held to maturity Held-to-maturity investments 411 499 655 - - 411 499 655 333 139 476 - - 333 139 476
Loans and advances Loans and advances to Customers 220 795 955 - - 220 795 955 229 478 527 - - 229 478 527
Non-current assets held for sale - (59 791) - 59 791 - (266 929) - 266 929 BFA
Financial investments Investments in subsidiaries, associates and joint ventures 467 365 - - 467 365 381 593 - - 381 593
Tangible fixed assets Other tangible assets 19 050 144 - - 19 050 144 17 707 592 - - 17 707 592
Intangible assets Intangible assets 538 918 - - 538 918 351 531 - - 351 531
Current tax assets - (1 918) - 1 918 - (7 618) - 7 618
Deferred tax assets - (749 027) - 749 027 - (568 266) - 568 266
Other assets 4 079 643 3 009 491 Other assets 810 736 - 56 553 392 842 813 - 24 515 643 Foreign exchange transactions 53 284 485 22 348 965
Total assets Total assets 1 229 579 193 - - 1 229 579 193 1 073 056 386 - - 1 073 056 386
Short-term borrowings 8 572 6 480 Funds of central banks and other credit institutions - - 4 814 604 - - 3 193 968 Liabilities in the payments system 4 806 032 3 187 488
Deposits Customer funds and other borrowings 1 017 159 626 - - 1 017 159 626 933 049 477 - - 933 049 477
Derivative financial instruments Financial liabilities at fair value through profit or loss 3 798 920 - - 3 798 920 284 231 - - 284 231
Provisions for contingent liabilities Provisions 4 133 428 - - 4 133 428 4 120 068 - - 4 120 068
Other liabilities Current tax liabilities 17 301 530 12 756 024 - 4 545 506 5 769 286 4 931 139 - 838 147
Foreign exchange transactions Other liabilities 55 915 609 (12 756 024) - 68 671 633 22 152 089 (4 931 139) - 27 083 228 Risk Management
Total liabilities Total liabilities 1 103 123 717 - - 1 103 123 717 968 569 119 - - 968 569 119
Share capital Share capital 3 521 996 (450 717) - 3 972 713 3 521 996 (450 717) - 3 972 713
Share capital revaluation reserve 450 717 450 717 - - 450 717 450 717 - -
Unrealized gains/(losses) Revaluation reserves 1 253 828 - - 1 253 828 1 253 828 - - 1 253 828
Reserves and funds Other reserves and profit or loss carried forward 83 362 678 - - 83 362 678 67 464 629 - - 67 464 629 Financial Revie w
Net profit/(loss) for the period Net profit/(loss) for the period 37 866 257 - - 37 866 257 31 796 097 - - 31 796 097
Total equity Total equity 126 455 476 - - 126 455 476 104 487 267 - - 104 487 267
Total liabilities and equity Total liabilities and equity 1 229 579 193 - - 1 229 579 193 1 073 056 386 - - 1 073 056 386 and Notes Financial Statements Annexe s
Financial Statements and Notes 149 - - - - 51 972 13 135 180 761 IAS/IFRS 2 174 562 2 174 7 076 479 7 076 3 844 376 16 070 041 070 16 37 866 257 37 (9 522 651) 522 (9 57 187 655 187 57 27 837 653 837 27 41 843 200 41 (3 838 572) (4 587 350) (4 (2 885) 164 (1 340(1 940) (11 933(11 871) (28 156 785) 156 (28 (15 344 455) (15 ------821 058 821 058 Transition Transition (821 058) (821 058) adjustments ------December 2015 31, 413 639 386 815 (13 135) 373 680 (61 785) Amounts in thousands of Angolan kwanzas – mAOA (373 680) 1 456 090 (2 181 624) 181 (2 Reclassifications - 51 972 CONTIF 413 639 (61 785) 2 561 377 2 561 5 735 5395 735 3 844 376 1 456 090 28 211 333 211 28 16 070 041 070 16 (3 657 811) 657 (3 41 022 142 022 41 (2 181 624) 181 (2 37 866 257 37 (9 522 651) 522 (9 56 366 597 (4 587 350) (4 (2 885) 164 (11 112 813) (27 709 407) 709 (27 (15 344 455) (15 Tax on profitTax – Deferred FOR PERIOD THE NET PROFIT/(LOSS) PROFIT/(LOSS) BEFORE TAXES FROM BEFORE CONTINUING PROFIT/(LOSS) OPERATIONS on profitTax – Current Other reserves and retained earnings/(losses carried forward) Charges for services and fee and commission expense Income from services and fee and commission income Gain/(loss) from financial assets at fair liabilities and throughvalue profit or loss Foreign exchange gain/(loss) Gross income income Gross Staff costs Third-party supplies and services IFRS Income Statement Income IFRS Interest income income and similar Interest expense expense and similar Gain/(loss) on disposal of other assets Net interest income/(expense) interest Net Other operating income/(expenses) Provisions net of cancellations Impairment losses on Customer loans net of reversals and recoveries Depreciation and amortization for the period PROFIT/(LOSS) BEFORE TAXES FROM BEFORE CONTINUING PROFIT/(LOSS) OPERATIONS Charges on current profit Non-operating profit/(loss) Income from provision of financial services income and adjustments value fair Trading Foreign exchange gains/(losses) Gross income income Gross Staff costs Third-party supplies Non-income-related taxes CONTIF Income Statement Income CONTIF Income frominstruments financial - Assets Costinstruments of financial - Liabilities Net interest income/(expense) Other operating income/(expenses) Cost recovery Provisions for other assets and contingent liabilities Provisions for doubtful loans and guarantees provided Depreciation and amortization Penalties imposed by the regulatory authorities
150 Banco de Fomento Angola | Annual Report’16 It is the understanding of the Bank’s Board of Directors that full in the Bank’s equity. Therefore, no transition adjustments Repor t adoption of the international accounting standards / international impacting on the Bank’s equity were recorded on the transition financial reporting standards did not produce material effects date.
5. CASH & BALANCES AT CENTRAL BANKS Economic
The breakdown of this heading is as follows: Environmen t
2016 2015 Cash in Hand Local notes and coins 17 875 060 21 309 607 Foreign currency notes and coins: In United States dollars 5 194 959 16 570 261 In other currencies 356 185 1 171 290 23 426 204 39 051 158 Cash in the Central Bank: Sight deposits at Banco Nacional de Angola: In local currency 217 282 075 191 214 834 In United States dollars 38 446 306 25 562 267 279 154 585 255 828 259
The sight deposits at the National Bank of Angola in following assets are eligible, with their respective weightings: domestic and foreign currency are held in order to comply (i) balance of foreign-currency deposit account domiciled at with applicable mandatory reserve requirements and earn no the National Bank of Angola (20%); (ii) Treasury bonds in BFA interest. foreign currency belonging to the portfolio of the Bank itself issued as from January 2015 (80%). Instruction nº 04/2016 As at December 31, 2016, mandatory reserves are currently altered the eligibility of the assets to comply with reserves in determined under the provisions of Instruction nº 02/2016 domestic currency, the following assets being eligible, with of April 11 and of Instruction º 04/2016 of May 13, and are their respective weightings: (i) balance of domestic-currency constituted in domestic and foreign currency respectively, in deposit account domiciled at the National Bank of Angola keeping with the corresponding denomination of the liabilities (80%); (ii) Treasury bonds in belonging to the portfolio of the that constitute the basis of their incidence, which must be Bank itself issued as from January 2015 and the total amount maintained throughout the entire period to which they relate. in respect of financing contracts entered into with the Finance Ministry (20%). As at December 31, 2016, the mandatory reserve requirement is calculated by applying a rate of 30% to the arithmetic As at December 31, 2016, the mandatory reserve requirement average of eligible liabilities in domestic currency, and a is calculated by applying a rate of 25% to the arithmetic 15% rate to the arithmetic average of eligible liabilities average of eligible liabilities in domestic currency, and a denominated in foreign currency. 15% rate to the arithmetic average of eligible liabilities denominated in foreign currency. Risk Management Instruction nº 02/2016 provides that to comply with mandatory reserves requirements in foreign currency the Financial Revie w and Notes Financial Statements Annexe s
Financial Statements and Notes 151 6. BALANCES WITH OTHER CREDIT INSTITUTIONS
The breakdown of this heading is as follows:
2016 2015 Balances with credit institutions abroad Demand deposits 38 031 194 50 678 631 Cheques pending collection – in the country 0 362 888 38 031 194 51 041 519
7. INVESTMENTS WITH CENTRAL BANKS AND OTHER CREDIT INSTITUTIONS
The breakdown of this heading is as follows:
Foreign currency Local currency 2016 2015 2016 2015 LOANS AND ADVANCES TO CREDIT INSTITUTIONS: Loans and advances to credit institutions abroad: Banco BPI, S.A. In United States dollars 150 000 000 455 000 000 24 885 450 61 568 325 In Euros 298 000 000 - 55 242 942 - Deutsche Bank AG In United States dollars 20 001 259 16 361 707 3 318 269 2 213 984 La Caixa In United States dollars 50 000 000 300 000 000 8 295 150 40 594 500 91 741 811 104 376 809 Loans and advances to credit institutions in Angola: Other credit institutions in Angola: In Kwanzas 10 635 400 000 10 635 400 000 10 635 400 10 635 400 In United States dollars 20 816 736 73 976 736 3 453 559 10 010 161 14 088 959 20 645 561 Income receivable 1 380 958 945 447 107 211 728 125 967 817 REVERSE REPURCHASE AGREEMENTS: Banco Nacional de Angola In Kwanzas - 9 000 000 Income receivable - 38 015 - 9 038 015 107 211 728 135 005 832
As at December 31, 2016 & 2015, investments at central banks and other credit institutions had residual maturities of less than three months.
As at December 31, 2016 & 2015, investments at credit institutions earned interest at the following average annual rates:
2016 2015 In United States dollars 1,12% 0,66% In Euros 0% n.a. In Kwanzas 15,81% 10,71%
As at December 31, 2015, third-party securities purchase transactions with resale agreement had residual maturity terms lower than three months and earn interest at an annual average rate of 6.73% (in kwanzas).
152 Banco de Fomento Angola | Annual Report’16 8. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
The breakdown of financial assets at fair value through profit or As at December 31, 2016 & 2015, the breakdown of “Derivative Repor t loss is as follows: transactions – Currency Forwards” is as follows:
2016 2015 2016 2015 Debt securities: Derivative transactions:
Treasury bills 293 454 262 54 416 004 Income receivable from derivative financial 220 568 441 731
Treasury bonds 42 952 230 20 326 331 instruments Economic Environmen t
336 406 492 74 742 335 Gain on revaluation of derivative financial 1.135.023 2.657.531 Derivative operations - Currency instruments 1 355 591 3 099 262 Forwards 1.355.591 3.099.262- Equity securities: Costs payable for derivative Shares - Visa Inc. - Class C (1.510.796) (3.798.920) 179 866 145 821 financial instruments (Series I)
337 941 949 77 987 418 (155.205) (699.658)
As at December 31, 2016 & 2015, the Bank held Treasury Bills During the periods ended December 31, 2016 & 2015, the and Treasury Bonds issued by the Angolan government (risk changes in value of debt securities carried at fair value through level A) for trading on the secondary market with other banks profit or loss and the capital gains realised by the Bank as a or with its Customers. Treasury Bills and Treasury Bonds issued result of transactions of these securities are recorded under by the Angolan Government are carried at their acquisition cost, “Results of financial assets and liabilities measured at fair value plus accrued interest and amortisation of the premiums and through profit or loss” of the income statement. BFA discounts on the acquisition, since it is believed that this is the best approximation to their market value, since they are not As at December 31, 2016, derivative financial instruments quoted on an active market with regular transactions. consist of twenty-eight currency forward contracts with non- financial companies maturing between January and March 2017. As at December 31, 2016 & 2015, the carrying amount of As at December 31, 2015, derivative financial instruments securities carried at fair value through profit or loss includes consisted of twenty-five currency forward contracts with non- accrued interest in the sum of mAOA 16,960,342 and mAOA financial companies maturing between January and March 1,738,501, respectively. 2016.
As at December 31, 2016 & 2015, the portfolio of equity securities carried at fair value through profit or loss relates to 13,896 Class C (Series I) shares in Visa Inc. These securities are valued in accordance with their price listed on an active market. Risk Management Financial Revie w and Notes Financial Statements Annexe s
Financial Statements and Notes 153 9. INVESTMENTS HELD TO MATURITY rate rate 7.73% 7.52% 7.4 3% 6.26% 4.84% 6.32% 4.50% 0.00% interest interest interest Average Average Average ------Impairment Impairment - amount amount Carrying Carrying 75,120,110 91,665,421 64,014,854 43,252,851 411,499,655 258,740,073 102,757,219 112,730,003 180,699,270 - - 725,915 959,705 earned earned 550,859 Interest Interest Interest 2,413,734 2,882,715 2,882,715 4,099,354 1,268,592 1,063,264 - earned earned 827,586 827,586 823,726 579,432 984,744 532,929 532,929 Discount Discount 1,066,714 7,683,383 7,683,383 2,469,872 5,338,124 Premium/ Premium/ - Cost of Cost of 69,781,986 69,781,986 62,227,563 42,122,560 90,406,577 acquisition acquisition 399,716,918 100,421,913 177,30 0,792 110,843,013 253,387,486 - 2016 2015 76,146,960 76,146,960 91,303,796 63,637,442 63,637,442 Face value Face value 42,922,293 111,943,049 412,008,998 412,008,998 103,198,000 103,198,000 258,063,342 258,063,342 180,920,800 AKZ AKZ AKZ AKZ AKZ AKZ USD USD Currency Currency Angola Angola Angola Angola Angola Angola Angola Angola Country Country A A A A A A A A Risk level Risk level Not indexed Indexed exchange the dollar to US rate Not indexed Indexed exchange the dollar to US rate Treasury Bonds foreign in currency Treasury Bonds local in currency: Treasury Bonds local in currency: DEBT SECURITIES Treasury Bills DEBT SECURITIES Treasury Bills Treasury Bonds foreign in currency The breakdown of this heading is as follows: is heading this The breakdown of
154 Banco de Fomento Angola | Annual Report’16 10. LOANS & ADVANCES TO CUSTOMERS
The breakdown of this heading is as follows: Repor t
2016 2015 Lending to domestic borrowers: Overdrafts on sight deposits: In local currency 836 876 1 572 184 In foreign currency 516 574 937 663 1 353 449 2 509 847 Other loans: Economic In local currency 77 928 194 78 956 583 Environmen t In foreign currency 23 524 231 23 123 696 101 452 425 102 080 279 Loans: In local currency 60 756 205 50 599 957 In foreign currency 69 647 410 66 312 751 130 403 616 116 912 708
Lending to foreign borrowers 39 478 20 933 Total performing loans 233 248 968 221 523 767 Overdue loans and interest: Principal and interest 11 636 413 10 710 250 Total loans and advances 244 885 381 232 234 017 Income receivable from loans and advances 4 662 589 3 147 908 249 547 970 235 381 925
Provision for doubtful loans (14 237 099) (14 585 970) 235 310 871 220 795 955 BFA
As at December 31, 2013, loans and advances to Customers earned interest at an average annual rate of 13.52% for loans in domestic currency and 6.6% for loans in foreign currency (10.89% in domestic currency and 6.44% in foreign currency as at December 31, 2015). Risk Management Financial Revie w and Notes Financial Statements Annexe s
Financial Statements and Notes 155 - - 5 377 7 148 2 039 24 673 88 061 310 378 145 310 253 153 529 779 298 838 153 723 173 463 206 226 336 388 5 807 120 9 246 668 7 945 976 4 573 256 5 807 120 9 246 668 Overdue loans Overdue loans 285 Impairment 2016 Impairment 9 817 Impairment 2015 Impairment 8 240 1 549 42 655 18 682 67 664 45 800 76 487 107 811 807 796 354 536 1 151 024 5 735 519 1 102 145 2 470 253 4 990 431 1 618 560 1 607 139 8 778 850 9 880 995 5 344 967 Performing loans Performing loans 24 059 69 703 67 328 15 388 89 610 310 663 298 953 230 210 253 121 346 205 354 536 1 337 575 1 449 862 1 102 145 1 813 365 1 792 023 (Note 18) (Note 18) 10 416 229 15 688 115 14 591 635 14 585 970 14 237 099 10 308 775 Total impairment impairment Total Total impairment impairment Total ------235 1 375 1 203 28 476 12 568 2 374 277 2 374 277 1 380 383 1 380 383 1 366 440 Of which Of which 2 344 363 restructured restructured - - 6 210 4 107 8 665 35 473 414 384 664 746 113 421 620 929 221 625 506 304 357 732 224 496 238 279 199 994 9 784 169 8 946 129 11 636 413 11 636 413 10 710 250 10 710 250 Overdue loans Overdue loans Exposure 2016 Exposure 2015 ------4 715 52 624 91 238 179 930 123 022 192 566 4 711 119 4 435 236 2 308 616 2 308 616 1 940 404 4 706 404 Of which Of which restructured restructured 319 709 150 746 706 592 1 140 195 1 318 082 3 108 773 3 499 480 1 865 054 24 510 569 62 491 023 30 273 647 57 598 250 23 282 420 59 280 696 32 639 360 38 653 396 237 911 557 224 671 675 113 164 299 282 269 925 276 564 953 104 832 587 Performing loans Performing loans 677 441 264 167 675 854 3 721 105 1 869 161 3 308 766 1 146 406 1 353 558 63 111 951 23 506 916 33 343 510 57 598 250 24 748 848 59 787 000 30 688 031 38 653 396 113 778 713 249 547 970 292 980 175 235 381 925 288 201 366 Total exposure Total exposure 122 948 468 Total exposure Total exposure Segment Segment Exposure of assets and liabilities Exposure of assets and liabilities Documentary credits and guarantees given (Note 28) Corporates - significant exposures significant - Corporates Public sector Home loans Home Corporates - less significant exposures General consumer finance Auto loans Overdrafts Credit cards Credit cards General consumer finance Auto loans loans Home Overdrafts Corporates - less significant exposures Corporates - significant exposures significant - Corporates Public sector Documentary credits and guarantees given (Note 28) The breakdown of the loan portfolio loan as the The breakdown of follows: is
156 Banco de Fomento Angola | Annual Report’16 - - Repor t 4 773 7 066 11 768 11 768 24 338 87 168 87 168 310 378 310 378 551 936 961 603 298 953 953 298 156 367 367 156 185 020 335 901 335 901 due > 90 7 598 713 713 7 598 1 118 083 1 118 5 108 362 5 108 1 489 523 7 309 837 7 598 713 713 7 598 10 362 363 10 362 363 10 362 363 10 362 363 Crédito em Overdue loans >90 days past>90 Dias de atraso incumprimento - - - - 241 185 422 220 902 5 720 5 609 5 17 219 14 976 17 154 17 154 28 734 20 802 177 132 132 177 221 298 221 298 959 238 1 027 256 1 027 256 1 027 256 1 027 256 past due 30-90 days entre a 90 30 Dias de atraso Impairment 2016 Impairment Impairment 2015 Impairment Economic Environmen t - 285 8 138 1 538 4 583 12 051 12 051 64 710 Performing loans 42 569 91 145 145 91 28 035 347 238 882 949 656 721 656 721 due 303 041 303 041 354 536 < 30 3 202 016 3 202 016 2 147 154 2 147 154 1 102 145 145 1 102 6 765 959 959 6 765 7 868 104 7 868 104 2 847 480 2 847 480 5 023 282 Crédito cumprimento em Dias de atraso <30 days past 24 059 24 059 69 703 67 328 15 388 89 610 89 610 310 663 310 663 total 298 953 953 298 Total 253 121 253 121 230 209 354 536 346 205 1 337 576 1 337 576 1 449 862 1 102 145 145 1 102 1 813 365 1 813 365 1 792 023 1 792 (Note 18) (Nota 18) Imparidade impairment impairment 10 416 229 10 416 229 14 591 635 14 591 635 15 688 115 688 115 15 14 585 970 585 970 14 14 237 099 14 237 099 10 308 775 10 - - 8 079 8 079 8 132 11 803 11 803 29 353 353 29 989 146 620 756 106 101 106 101 258 359 350 061 350 061 244 846 due > 90 2 032 967 1 250 890 1 727 746 746 1 727 9 352 129 9 352 129 1 897 607 1 897 607 14 773 591 591 773 14 13 505 724 13 505 724 13 505 724 13 505 724 20 155 842 155 20 20 155 842 155 20 Crédito em Overdue loans >90 days past>90 Dias de atraso incumprimento - - 172 852 8 724 4 379 4 379 7 335 1 233 7 328 7 328 77 900 249 223 182 113 286 652 652 286 299 214 299 214 409 514 409 514 142 539 142 1 980 617 1 980 617 1 980 617 1 980 617 1 231 249 1 231 249 1 481 696 1 481 2 409 506 2 409 506 past due 30-90 days BFA entre a 90 30 Dias de atraso Exposure 2016 Exposure 2015 666 922 150 737 150 737 145 266 145 1 315 481 1 315 1 129 841 1 129 841 2 971 910 2 971 910 1 853 694 3 333 718 3 333 718 Subtotal Sub-total 62 491 024 62 491 024 29 412 233 29 412 57 752 799 31 829 238 21 479 957 957 479 21 97 523 429 523 97 57 598 250 57 22 437 455 38 653 396 212 816 577 577 816 212 270 414 827 827 414 270 272 715 025 272 715 025 234 061 629 234 061 629 112 384 502 112 384 502 - - - 44 783 308 2 051 2 051 2 936 5 467 3 058 6 403 Performing loans 17 992 17 992 Performing loans 43 551 (7 970) 17 992 17 992 63 580 580 63 162 370 493 255 37 378 714 95 889 357 889 357 95 57 752 799 95 889 357 889 357 95 Com indícios With evidence - <30 days past due Dias de atraso dias < 30 101 715 150 429 663 986 1 323 451 451 1 323 2 969 859 1 129 058 1 850 636 2 840 463 21 317 587 317 21 62 491 024 62 491 024 60 144 715 715 60 144 31 823 771 31 823 771 22 431 052 57 598 250 38 653 396 29 348 653 174 525 470 470 525 174 116 927 220 927 116 272 697 033 272 697 033 112 384 458 234 043 637 Sem indícios Sem Without evidence Without 264 167 264 167 675 854 Total 677 441 441 677 Total 3 308 766 1 146 406 exposure 3 721 105 105 3 721 1 869 161 1 869 161 1 353 558 63 111 951 63 111 951 exposure 33 343 510 33 343 510 24 748 848 24 748 848 38 653 396 23 506 916 23 506 916 57 598 250 57 59 787 000 787 59 30 688 031 249 547 970 249 547 970 288 201 366 288 201 366 122 948 468 113 778 713 713 778 113 292 980 175 175 980 292 235 381 925 925 381 235 Risk Management Total exposure Total exposure Segment Segment Financial Revie w Exposure of assets and ilities liab Exposure of assets and ilities liab and Notes Corporates - less significant exposures exposures significant - Corporates Overdrafts Public sector Home loans Home Documentary credits and guarantees given (Note 28) Auto loans Credit cards General consumer finance General consumer finance Credit cards Auto loans Home loans Home Corporates - less significant exposures Overdrafts exposures significant - Corporates Documentary credits and guarantees given (Note 28) Public sector Financial Statements Annexe s
Financial Statements and Notes 157 9 387 8 554 7 096 9 792 9 792 11 101 101 11 89 610 89 610 53 472 53 472 51 765 765 51 24 68324 166 240 166 102 056 102 354 536 recognized Impairment Impairment recognized Impairment Impairment 14 181 181 14 29 617 29 617 14 703 703 14 264 167 167 264 Amount 103 233 103 102 433102 Overdrafts Amount 2 141 355 2 141 5 144 7835 144 2 464 285 12 013 434 013 12 38 653 396 653 38 16 889 53916 2 876 2 876 1 891 1 891 2 255 2 255 2 006 11 356 11 20 38420 No. of 8 41 transactions 29 44 231 109 No. of Documentary credits and guarantees given transactions 15 971 971 15 11 427 427 11 78 437 78 51 409 51 - - - 1 813 365 365 1 813 1 656 121 1 656 121 recognized Impairment Impairment 19 310 663 310 644 310 recognized Impairment Impairment 467 414 467 414 Amount 1 101 181 181 1 101 1 372 118 118 1 372 1 226 264 Home loans 20 581 871 871 20 581 24 748 848 748 24 13 52 85 56 - 1 738 1 738 1 532 Amount Public sector No. of 2 505 778 4 893 863 63 111 951 20 370 03320 370 35 34235 277 transactions 2016 - 2 3 1 697 10 16 7 819 7 819 3 073 3 073 4 527 4 527 7 943 24 059 059 24 No. of transactions recognized Impairment Impairment 69 98069 2016 307 924 924 307 245 520 245 139 000139 383 982 Amount Auto loans 1 146 406 1 146 381 709 709 381 628 877 628 877 recognized Impairment Impairment 1 794 913 1 794 913 6 387 091 6 387 091 1 223 639 10 416 229 17 153 246 422 250 1 088 No. of transactions Amount 7 503 311 7 503 311 17 060 165 060 165 17 29 124 645 29 124 28 783 393 40 866 564 122 948 468 122 174 050 174 317 505 317 244 021 244 021 256 243 256 243 345 756 1 337 575 575 1 337 recognized Impairment Impairment Corporates - significant exposures significant - Corporates 43 83 111 106 120 463 No. of transactions Amount 1 142 416 416 1 142 3 556 313 3 556 313 1 348 215 1 348 215 33 343 510 34333 510 10 368 713 368 713 10 16 927 853 927 16 General consumer finance 63 419 63 419 17 509 17 52 05452 46 823 50 405 230 210 7 614 7 614 3 816 3 816 9 308 1 804 10 081 081 10 recognized 32 623 623 32 Impairment Impairment No. of transactions 458 640 3 021 3 021 4 437 6 832 15 388 765 785 765 442 541 442 541 689 122 292 300 Amount 1 119 018 018 1 119 3 308 766 3 308 recognized Impairment Impairment 45 801 45 801 23 907 22 968 693 250 374 250 374 675 854 332 804 Corporates - less significant exposures significant less - Corporates Amount 3 557 3 557 2 369 2 369 5 785 No. of Credit cards Credit 17 051 051 17 29 455 455 29 transactions 364 5 847 5 847 6 298 2 288 3 482 18 279 Total No. of transactions Total 2013 2012 and earlier 2012 2014 2016 2015 Segment 2016 2012 and earlier 2012 2013 2014 2015 Segment
There follows the detail of the loan portfolio loan the segment of year by were operations by granted: the and detail the There follows
158 Banco de Fomento Angola | Annual Report’16 6 977 6 977 5 469 6 495 6 495 17 158 158 17 26 23826 89 145 89 145 42 65442 346 205 290 363 532 514 532 514 431 337 337 431 recognized Impairment Impairment 1 102 145 1 102 recognized Impairment Impairment Repor t 35 510 510 35 27 520 27 14 080 14 721 924 924 721 145 231 231 145 677 441 Amount 455 100 455 100 802 423 Overdrafts 2 988 304 Amount 57 598 250 598 57 34 457 135 34 135 457 18 628 46418 921 825 1 937 1 937 1 529 16 317 317 16 21 529 5 No. of 16 91 49 312 473 transactions No. of Documentary credits and guarantees given transactions 81 736 736 81 29 722 29 722 37 84637 32 84432 - - - - Economic Environmen t 1 792 023 1 792 1 609 875 1 609 875 recognized Impairment Impairment 298 953 298 953 recognized Impairment Impairment Amount 1 172 110 110 1 172 1 270 272 272 1 270 1 108 0041 108 2 396 487 1 Home loans 23 506 916 17 560 04317 52 85 56 - 136 1 494 1 494 1 823 1 2 034 221 Amount 20 278 314 314 20 278 37 474 464 474 37 59 787 000 787 59 Public sector No. of transactions 2015 - 3 1 1 11 16 2 887 12 974 974 12 21 748 748 21 69 703 16 532 16 15 562 15 No. of transactions recognized Impairment Impairment 57 185 185 57 2015 764 677 677 764 560 745 560 745 427 708 427 391 403 391 432 120 Amount Auto loans 1 810 376 376 1 810 1 869 161 1 869 1 883 311 1 883 311 2 183 156 2 183 156 3 667 255 3 667 255 10 308 775 308 10 recognized Impairment Impairment BFA 173 276 275 239 387 1 350 No. of transactions Amount 11 480 212 480 212 11 25 559 281 281 559 25 30 527 061 061 30 527 30 778 85930 778 15 433 30015 113 778113 713 40 421 40 421 329 477 329 477 287 084287 306 286 486 594 1 449 862 70 69 recognized Impairment Impairment 152 137 633 205 Corporates - significant exposures significant - Corporates No. of transactions Amount 1 116 492 492 1 116 1 197 104 104 1 197 8 170 060 8 170 3 755 738 3 755 30 68830 031 16 44816 637 35 527 527 35 37 396 37 39 952 952 39 53 726 53 726 86 520 253 121 General consumer finance 1 912 1 912 3 572 3 572 7 100 7 100 8 937 8 937 10 785 10 32 306 recognized Impairment Impairment No. of transactions 2 873 2 873 4 877 4 877 478 447 232 333232 328 445328 11 747 747 11 17 941 941 17 67 328 29 890 1 216 814 814 1 216 3 721 105 3 721 1 465 066 Amount recognized Impairment Impairment Risk Management 317 355 58 850 83 644 1 957 1 957 1 835 387 772 387 772 259 332 259 563 960 19 031 14 567 14 Corporates - less significant exposures significant less - Corporates Amount 1 353 558 1 353 No. of Credit cards Credit transactions 5 349 5 349 2 087 2 996 6 806 11 479 479 11 28 717 Total Financial Revie w No. of transactions Total and Notes Financial Statements Segment 2015 2011 and earlier 2011 2014 Segment 2013 2012 2015 2014 2011 and earlier 2011 2012 2013
Annexe s
Financial Statements and Notes 159 27 914 89 610 16 748 27 531 531 27 89 583 318 796 319 710 433 210 449 958 449 958 Impairment Impairment Impairment Impairment 1 695 249 249 1 695 1 722 780 1 722 Overdrafts Total communications 1 704 Total Total Total 30 591 Transport, storage and and storage Transport, exposure Extractive industries Extractive 264 167 262 463 332 195 exposure 2 042 399 exposure Hotels and restaurants and Hotels exposure 2 612 414 2 612 2 581 8232 581 10 762 341 341 762 10 12 804 740 12 4 794 965 5 127 160 160 5 127 224 - 2 210 1 986 986 1 1 255 14 755 738 824 305 068 363 101 306 323 377 856 377 Impairment 1 074 541 541 1 074 354 536 536 354 354 536 1 813 365 1 813 Impairment Impairment Impairment Impairment - Total 22 411 fisheries Education Home loans exposure Total Total Total 1 351 316 Total Health and social welfare 1 373 727 1 373 guarantees given guarantees 71 680 680 71 608 458 458 608 680 138 331 853 853 331 exposure exposure exposure exposure Agriculture, forestry and and forestry Agriculture, 1 699 931 931 1 699 Documentary credits and - 23 048 917 23 048 917 14 896 767 14 38 653 396 38 653 396 653 38 24 748 848 748 24 15 228 620 620 228 15 - - 731 270 731 270 782 3 388 3 388 Impairment 23 277 34 948 34 24 059 310 663 310 663 2 4 103 246 4 103 4 138 194 4 138 Impairment Impairment Impairment Impairment Total - exposure 172 3 064 895 Auto loans 784 3 064 897 Production and distribution of electricity, gas and water Construction Public sectorPublic social security Total Total Total Total exposure exposure exposure exposure 1 145 622 1 145 5 877 5435 877 1 146 406 1 146 Government, defence and 63 111 779 63 111 51 365 451 63 111 951 60 943 111 57 242 994 242 57 60 943 111 60 943 111 1 940 075 1 382 486 3 322 561 3 322 Impairment 272 1 795 2 067 2 067 62 179 61 834 723 016 614 559 Individuals 2 246 2092 246 1 337 575 1 337 2 308 0432 308 10 354 05010 10 416 229 Impairment Impairment Impairment Impairment Total exposure 6 861 414 414 6 861 58 116 799 58 116 64 978 213 64 978 exposures Total Total Total Total sporting activities 20 947 179 786 786 179 200 733 200 733 Corporates significant - exposure exposure exposure exposure Wholesale and retail tradeWholesale retail and Recreational, cultural and and cultural Recreational, 4 008 954 2 333 500 General consumer finance 31 010 010 10 750 133 750 10 33 34333 510 10 206 723 10 14 759 087 759 14 10 148 112 741 745 496 487 122 948 468 122 506 635 506 Impairment 202 2 636 15 186 186 15 15 388 68 293 70 929 83 663 48 084 146 547 162 712 230 210 210 796 796 210 Total Impairment Impairment Impairment Impairment 439 636 exposure Other service companies 13 815 098 815 13 14 254 734 14 exposures Credit cards Credit Total Total Total 2 640 2 734 Total 3 168 Banks insurance and 673 120 120 673 675 854 609 465 provided by companies exposure exposure exposure exposure 115 747 118 915 3 308 766 3 308 2 699 301 301 2 699 6 833 184 6 830 544 Corporates - less significant significant less - Corporates 2 253 386 14 304 136 304 136 14 12 050 12 750 Real estate rental and services Impairment Total Total Total Total Total Processing industries Processing 159 552 552 159 exposure 13 793 478 793 13 13 63313 926 Total By sector: 2016 By sector: 2016 By segment: 2016 By segment: 2016 By sector: 2016 Collective impairment Individual impairmentIndividual Individual impairmentIndividual Collective impairment Collective impairment Individual impairmentIndividual Collective impairment Individual impairmentIndividual Individual impairmentIndividual Collective impairment The detail of the amount of gross exposure of loans and the impairment amount recorded for the exposures, analysed individually and collectively by segment and sector of activity, is segment by sector and activity, of collectively and recorded exposures, amount for the individually analysed gross of impairment amount the the of exposure and loans of The detail as follows:
160 Banco de Fomento Angola | Annual Report’16 Repor t 1 673 4 236 5 287 3 700 293 378 340 918 297 614 499 433 501 106 346 205 Impairment Impairment Impairment Impairment 1 456 741 1 456 741 1 460 441 Overdrafts Total communications Total Total Total 55 467 164 795 795 164 Transport, storage and and storage Transport, exposure 501 211 164 376 176 230 Extractive industries Extractive 677 441 441 677 Hotels and restaurants and Hotels exposure exposure exposure 2 951 252 2 951 3 807 492 21 507 568 507 21 3 006 719 3 971 868 3 971 21 342 773 21 Economic Environmen t 1 728 17 170 15 442 3 388 32 910 59 552 62 940 613 122 435 837 747 468 15 860 860 15 Impairment 1 178 901 1 178 1 792 023 023 1 792 Impairment Impairment Impairment Impairment 1 086 285 1 102 145 1 102 Total fisheries 52 033 Education Home loans exposure 1 171 414 414 1 171 Total Total Total Total Health and social welfare 1 223 447 1 223 guarantees given guarantees 157 004 106 464 106 713 168 606 704 exposure exposure exposure exposure Agriculture, forestry and and forestry Agriculture, 3 056 974 3 056 974 Documentary credits and 1 567 554 54 541 276 276 54 541 21 939 362 939 21 12 253 88312 12 410 887 410 12 23 506 916 23 506 916 57 598 250 598 57 891 - - 403 631 404 522 436 9 482 Impairment 15 692 69 703 16 128 69 703 703 69 298 953 953 298 298 953 3 863 643 3 873 125 3 873 Impairment Impairment Impairment Impairment 5 258 Total - - exposure 2 759 293 2 759 2 764 551 2 764 Auto loans Production and distribution of electricity, gas and water Construction Public sectorPublic social security Total Total Total Total 16 576 exposure exposure exposure exposure 1 869 161 1 869 161 3 097 705 1 869 161 161 1 869 Government, defence and 58 975 725 725 58 975 59 787 000 787 59 57 82957 402 60 927 107 60 927 58 992 301 58 992 59 787 000 787 59 BFA 2 745 082 2 745 1 099 542 3 844 624 Impairment 1 936 11 146 28 601 54 550 13 082 397 255 Individuals 2 870 572 572 2 870 1 052 6071 052 2 925 122 2 925 1 449 862 10 280 174 280 174 10 Impairment Impairment Impairment Impairment 10 308 775 308 10 Total exposure 9 066 406 55 768 315 315 55 768 64 834 721 exposures Total Total Total Total sporting activities 41 556 998 574 574 998 373 025 414 581 Corporates significant - exposure exposure exposure exposure Recreational, cultural and and cultural Recreational, Wholesale and retail tradeWholesale retail and 1 724 8641 724 2 826 303 5 342 General consumer finance 18 170 819 819 170 18 27 861 728 861 27 19 169 393 169 19 30 688 031 68830 031 112 053 849 112 113 778113 713 473 540 478 882 Impairment 8 753 753 8 1 869 869 1 1 280 13 704 10 622 67 328 328 67 66 048 131 133 121 988 352 786 786 352 253 121 366 490 366 Total 166 251 Impairment Impairment Impairment Impairment exposure Other service companies 13 615 622 615 13 13 781 873 781 13 exposures Credit cards Credit Total Total Total Total 1 869 12 90412 2 841 Banks insurance and 670 549 670 458 164 provided by companies exposure exposure exposure exposure 3 721 105 3 721 9 121 369 9 121 2 801 431 2 801 1 353 558 558 1 353 2 799 5622 799 944 659 3 050 556 8 663 205 947 500 1 340 654 Corporates - less significant significant less - Corporates Real estate rental and services Impairment Total Total Total Total Risk Management Total 90 104 Processing industries Processing exposure 17 339 191 339 17 17 249 087 249 17 Total Financial Revie w By sector: 2015 By sector: 2015 By segment: 2015 By sector: 2015 By segment: 2015 Individual impairmentIndividual Individual impairmentIndividual Individual impairmentIndividual Collective impairment Collective impairment Collective impairment Collective impairment Individual impairmentIndividual Individual impairmentIndividual Collective impairment and Notes Financial Statements Annexe s
Financial Statements and Notes 161 Loans and advances granted by BFA were all granted to companies and individuals resident in Angola.
The detail of the restructured loan portfolio by restructuring measure applied is as follows:
2016 Performing loans Overdue loans Total No. of No. of No. of 2016 transactions Exposure Impairment transactions Exposure Impairment transactions Exposure Impairment
New lending 23 1 996 863 266 563 14 2 367 985 2 258 254 37 4 364 848 2 524 817
Loan extensions 2 311 753 41 038 3 6 292 5 294 5 318 045 46 332
Total 25 2 308 616 307 601 17 2 374 277 2 263 548 42 4 682 893 2 571 149
2015 Performing loans Overdue loans Total No. of No. of No. of 2015 transactions Exposure Impairment transactions Exposure Impairment transactions Exposure Impairment
New lending 22 4 225 231 1 679 525 13 1 376 316 1 097 380 35 5 601 547 2 776 905
Loan extensions 1 485 888 7 395 1 4 067 68 2 489 955 7 463
Total 23 4 711 119 1 686 920 14 1 380 383 1 097 448 37 6 091 502 2 784 368
Inward and outward movements in the restructured-loan portfolio were as follows:
2016 2015
Opening balance of the restructured loan portfolio (gross of impairment) 6 091 502 5 382 813
Loans restructured during the period 305 874 885 335
Settlement of restructured loans (partial or total) (1 714 483) (176 646)
Closing balance of the restructured loans portfolio (gross of impairment) 4 682 893 6 091 502
162 Banco de Fomento Angola | Annual Report’16 ------Repor t Amount Amount 412 711 711 412 127 774 774 127 255 151 151 255 214 503 214 243 128 128 243 882 365 529 928 900 830 ------5 3 Other collateral Other collateral 14 12 20 56 373 303 Number Number ------Housing Housing Economic Environmen t 729 973 973 729 Amount Amount 2 610 335 2 610 4 467 452 7 400 647 3 565 630 24 795 139 139 795 24 25 239 366 239 25 30 971 104 971 30 37 837 438 ------1 15 26 54 117 Real estate property estate Real Real estate property estate Real 1 101 1 247 1 316 1 245 properties properties properties properties Number of Number of - - - - 219 231 126 930 286 031 031 286 Amount Amount 1 275 567 1 275 8 813 762 8 813 1 020 886 5 124 272 272 5 124 5 150 431 431 5 150 4 521 394 4 521 2 858 521 2 858 521 3 520 430 15 289 931 289 15 - - - 2 4 7 4 1 2 6 2 5 Other collateral Other collateral 14 16 31 32 Number Number 2016 2015 131 292 109 626 194 754 152 646 722 383 Amount Amount 1 170 856 1 170 4 376 272 272 4 376 5 010 823 5 010 1 515 358 1 515 4 736 025 025 4 736 4 484 491 4 484 491 1 736 3981 736 BFA 13 779 074 074 779 13 24 154 961 154 24 25 203 624 203 25 11 238 587 11 1 2 3 3 2 2 6 7 1 1 3 2 5 7 Construction and real estate development estate real and Construction Construction and real estate development estate real and Construction 20 25 Real estate property estate Real Real estate property estate Real properties properties properties properties Number of Number of - - - 785 368 Amount Amount 1 795 319 319 1 795 1 400 919 1 400 919 3 555 801 5 001 2225 001 1 754 465 8 417 086 8 417 3 954 920 1 549 850 8 260 200 11 035 817 035 817 11 23 147 343 23 147 24 363 624 - - - 1 7 2 Other collateral Other collateral 16 10 21 37 12 30 143 140 186 233 Number Number Companies Companies 2 573 416 416 2 573 1 727 472 9 104 079 079 9 104 6 694 552 2 480 401 1 533 964 5 204 543 Amount Amount 18 993 651 993 651 18 17 439 188 17 13 293 189 11 887 738 11 26 481 281 70 94670 593 53 946 129 122 979 124 118 510 889 510 118 3 3 2 9 9 16 10 71 12 70 33 96 34 80 208 240 Real estate property estate Real Real estate property estate Real Risk Management properties properties properties properties Number of Number of Total Total Financial Revie w 2016 2015 and Notes >= 2000 mAOA and < 5000 mAOA mAOA 5.000 >= >= 1000 mAOA and < 2000 mAOA >= 500 mAOA and < 1000 mAOA >= mAOA and 100 < 500 mAOA >= 50 mAOA mAOA and < 100 < 50 mAOA < 50 mAOA >= 5.000 mAOA 5.000 >= >= 2000 mAOA and < 5000 mAOA >= 1000 mAOA and < 2000 mAOA >= 50 mAOA mAOA and < 100 >= mAOA and 100 < 500 mAOA >= 500 mAOA and < 1000 mAOA The detail of the fair value of the collateral underlying the loan portfolio in the companies, construction and real-estate development and residential segments real-estate as and follows: is construction companies, residential the portfolio and loan the in development underlying collateral the of value fair the of The detail Financial Statements Annexe s
Financial Statements and Notes 163 The structure of the funding-collateral ratio of the construction and real-estate development and residential segments is as follows:
2016 Number of Number de Other Performing Overdue properties collateral loans loans Impairment Companies Without collateral - 32 264 029 3 216 551 4 147 248 < 50% 64 30 970 923 6 225 3 124 436 > = 50% and < 75% 2 12 366 349 1 048 511 53 944 > = 75% and < 100% - 29 7 482 061 27 485 123 016 > = 100% 142 162 24 161 405 3 069 114 527 801 Construction and real estate development Without collateral - - 17 030 026 1 602 465 2 157 589 < 50% 6 2 353 200 - 564 670 > = 50% and < 75% - - - - 85 134 > = 75% and < 100% 1 8 9 260 576 - 13 535 > = 100% 13 22 5 992 949 1 411 632 1 002 198 Housing Without collateral - - 1 995 080 28 723 161 035 < 50% 91 28 22 653 720 952 955 > = 50% and < 75% 8 2 123 037 - 2 692 > = 75% and < 100% 20 12 560 182 17 235 12 277 > = 100% 1 126 331 18 879 181 141 986 486 458 1 473 638 119 461 651 10 570 647 13 414 988
2015 Number of Number de Other Performing Overdue properties collateral loans loans Impairment Companies Without collateral - - 39 449 280 3 037 199 3 526 505 < 50% 100 50 3 837 546 4 480 981 3 111 144 > = 50% and < 75% 1 22 1 652 479 5 49 031 > = 75% and < 100% 5 26 4 541 230 - 123 016 > = 100% 134 90 17 583 763 711 525 139 Construction and real estate development Without collateral - - 20 470 453 833 280 1 845 645 < 50% 7 4 2 299 226 1 295 537 525 600 > = 50% and < 75% - 3 63 909 - 1 909 > = 75% and < 100% 1 6 4 131 103 - 13 535 > = 100% 17 15 6 485 208 - 982 389 Housing Without collateral - - 1 414 918 33 368 161 035 < 50% 181 1 2 520 477 163 859 952 955 > = 50% and < 75% 9 - 89 784 55 2 692 > = 75% and < 100% 24 - 409 431 43 12 277 > = 100% 1 102 20 15 985 493 5 486 458 1 581 237 120 934 300 9 845 043 12 319 330
164 Banco de Fomento Angola | Annual Report’16 Repor t 675 854 Total Total 264 167 677 442677 1 869 161 1 146 405 1 146 1 353 559 3 721 105 3 721 3 308 766 33 343 511 63 111 951 30 688 032 23 506 916 24 748 848 748 24 57 598 250 59 787 000 787 59 38 653 396 113 778 710 778 113 249 547 970 292 980 175 980 292 235 381 925 381 235 288 201 366 288 201 122 948122 468 - - 498 9 672 6 649 12 586 12 23 934 18 958 58 499 576 705 947 701 585 780 780 585 155 559 559 155 329 139 329 139 135 865 135 Risk Risk 2 310 570 570 2 310 8 828 978 8 828 4 333 586 4 352 5444 352 8 828 4808 828 1 359 4021 359 6 650 005 class G class G Economic Environmen t - - - 189 1 740 6 070 9 153 9 153 51 277 51 26 753 753 26 24 48924 39 06439 567 617 148 591 591 148 620 756 620 756 221 450 221 506 306 Risk Risk 3 216 357 357 3 216 4 617 063 4 617 4 617 063 4 617 6 751 237 237 6 751 7 573 9867 573 7 573 9867 573 class F class F - - - - 2 787 7 236 5 553 553 5 12 173 173 12 23 163 23 163 14 434 97 00397 57 88657 231 976 136 697 588 711 588 711 370 095 370 Risk Risk 4 141 148 148 4 141 1 526 018 018 1 526 4 769 905 4 769 4 769 905 4 769 2 430 541 2 444 975 class E class E - - - 2016 2015 618 150 3 949 9 380 2 735 2 029 3 542 75 637 29 181 29 181 34 856 394 743 681 926 681 926 140 041 041 140 189 390 189 434 270 Risk Risk 2 111 783 1 473 188 1 473 2 109 048 2 109 class D class D - BFA 5 557 1 499 4 229 4 100 82 812 242 203 323 435 288 605 Risk Risk 1 316 700 1 316 2 520 913 2 520 913 1 834 410 1 834 410 1 526 6621 526 3 149 918 3 149 3 145 818 3 145 2 585 502 class C class C 21 482 149 48221 149 26 041 821 821 041 26 84 836 801 21 532 183 21 139 912 515 161 444 698 161 - - - - - 28 474 85 412 68 977 664 101 150 430 Risk Risk 2 411 694 2 411 1 742 451 451 1 742 1 129 4401 129 1 896 8401 896 class B class B 30 022 491 30 022 491 76 853 76 261 22 493 180 31 892 962 892 31 36 551 642 36 551 29 996 122 169 992169 026 133 440133 384 - - - - 11 4 076 4 076 43 005 772 149 149 772 296 131 296 131 532 570 532 570 Risk Risk 1 617 807 1 617 3 401 377 377 3 401 2 082 722 6 048 252 class A class A 31 747 644 747 31 74 786 045 786 74 62 462 721 46262 721 96 40396 758 57 754 032 57 80 834 297 98 48698 480 12 55812 280 Total Total Risk Management Exposure of assets and liabilities Exposure of assets and liabilities Financial Revie w Documentary credits and guarantees given Documentary credits and guarantees given Public sector General consumer finance General consumer finance Corporates - significant exposures significant - Corporates Auto loans loans Home Overdrafts Credit cards Corporates - less significant exposures Credit cards Segment Segment Public sector Corporates - significant exposures significant - Corporates Auto loans loans Home Overdrafts Corporates - less significant exposures and Notes The distribution of the loan portfolio measured by internal-risk degrees portfolio loan the of measured as internal-risk follows: is by The distribution are in above table the in provided levels risk the 2016, As at December regulations. BNA 31, the by determined purposes uses levels rating Bank risk the the internal For for prudential-ratio applicable still (Instruction the methodology on provisions for aside setting 9/2015 nº Instruction of Angola Bank National of classification the accordance with of loans. classification and the grant on 3/2012 Notice of Angola Bank National of classification the accordance with are in levels risk BFA’s 2015, Aspurposes). at December 31, Financial Statements Annexe s
Financial Statements and Notes 165 The risk factors associated with the impairment by segment model are as follows:
Impairment 2016 – Probability of default (%) Impairment 2015 - Probability of default (%)
< 30 days < 30 days Between 30 Loss given < 30 days < 30 days With Between 30 Loss given Segmento Without With and Without and evidence evidence 90 days default (%) evidence evidence 90 days default (%) Credit cards 5% 32% 55% 83% 3% 72% 53% 100% General consumer finance 4% 48% 53% 30% 3% 40% 45% 27% Auto loans 1% 47% 55% 16% 2% 47% 56% 21% Home loans 3% 80% n.d. 14% 3% 75% 79% 13% Overdrafts 28% 46% 54% 65% 32% 57% 69% 80% Corporates - less significant 6% 28% n.d. 46% 4% 4% n.d. 42% exposures Corporates - significant 17% 52% 70% 54% 11% 43% 42% 72% exposures
As at December 31, 2016 & 2015, the ten largest debtors accounted for 47.43% and 37.63% respectively of the total loan portfolio (excluding guarantees and documentary credits).
Movement under impairment losses for loans and for the “Unsecured Loans” segment in 2016 and 2015 is provided in Note 18.
During 2016, the Bank wrote off loans classified as Level G risk in the amount of mAOA 5,642,092 (Note 18), having used doubtful-debt provisions of the same amount. During 2015, the Bank wrote off loans in the amount of mAOA 1,072,725 (Note 18), having used doubtful-debt provisions set aside of the same amount.
During 2016 & 2015, recoveries of loans and interest previously cancelled written off from assets totalled mAOA 390,469 and mAOA 253,037, respectively, in 2013 and 2012 (Note 25).
11. NON-CURRENT ASSETS HELD FOR SALE
The breakdown of this heading as at December 31, 2016 & 2015, is as follows:
2016 2015
Assets not for own use
Buildings 73.307 59.791
73.307 59.791
166 Banco de Fomento Angola | Annual Report’16 12. INVESTMENTS IN AFFILIATES, ASSOCIATES AND JOINT VENTURES
The detail of investments in affiliates, associates and joint ventures, as at December 31, 2016 & 2015, is as follows: Repor t
2016 Ano de Número de % de Custo País aquisição acções participação aquisição HOLDINGS IN ASSOCIATES AND EQUIVALENT COMPANIES:
SOFHA – Sociedade de Fomento Habitacional Angola 2008 n.a 50% 375
Shareholdings in other companies: Economic Environmen t EMIS – Empresa Interbancária de Serviços: Angola 2001 59,150 6.50%
Equity holding 59 150
Quasi-capital loans 383 347
Shareholder loans 18 581 Interest on shareholder loans and 37 768 quasi-capital loans 498 846
IMC – Instituto do Mercado de Capitais Angola 2004 400 2% 337
Total financial fixed assets 499 558
2015 Ano de Número de % de Custo País aquisição acções participação aquisição HOLDINGS IN ASSOCIATES AND EQUIVALENT COMPANIES:
SOFHA – Sociedade de Fomento Habitacional Angola 2008 n.a 50% 375 BFA Shareholdings in other companies:
EMIS – Empresa Interbancária de Serviços: Angola 2001 59 150 6.50%
Equity holding 59 150
Quasi-capital loans 313 985
Shareholder loans 15 155 Interest on shareholder loans and 37 768 quasi-capital loans 426 058
Bolsa de Valores e Derivativos de Angola Angola 2006 3 000 2% 40 595
IMC – Instituto do Mercado de Capitais Angola 2004 400 2% 337
Total financial fixed assets 467 365
As at December 31, 2016 % 2015, BFA held an equity During 2007, the Bank provided quasi-capital loans of USD interest of 6.50% in EMIS – Empresa Interbancária de 250,500, pursuant to the resolution approved at the general Serviços, SARL, (EMIS), and also provided loan capital to this meeting of EMIS on November 16, 2007, which since January entity during 2004 and 2003, which earn no interest and 1, 2008, earn half-yearly interest at the Libor rate plus a Risk Management have no defined repayment term. EMIS was incorporated in spread of 3% and have no specified repayment term. Angola doe the purpose of management of electronic-payment means and supplementary services. By resolution of the EMIS extraordinary general meeting on January 16, 2009, a share capital increase of USD 3,526,500 The Bank’s holding in EMIS (including quasi-capital loans was approved, to be paid in by the shareholders, in proportion and loan capital) is valued at acquisition cost less impairment to their existing holdings, by December 16, 2010. In 2010, the Financial Revie w losses, set aside used in previous periods. Bank made the total payment of USD 108,000. and Notes Financial Statements Annexe s
Financial Statements and Notes 167 At the general meeting held on July 16, 2010, the The share capital increase was paid in by the shareholders shareholders of EMIS resolved to increase the quasi-capital during 2012, with BFA contributing mAOA 53,099. Interest- loans by USD 2,000,000, to which BFA’s contribution would bearing quasi-capital loans were likewise made by the be USD 117,647. In keeping with that resolution, these quasi- shareholders during 2012, BFA’s contribution amounting capital loans bear no interest. to mAOA 193,189. In accordance with the EMIS general meeting resolutions, these loans earn interest at Banco At the general meeting on 9 December 2011, EMIS’s Nacional de Angola’s benchmark rate. shareholders resolved to increase the company’s share capital by the equivalent in kwanzas of USD 4,800,000 and to At the general meeting held on July 16, 2013, the increase interest-bearing quasi-capital loans by the equivalent shareholders of EMIS resolved to increase the non-interest- in kwanzas of USD 7,800,000. It was also resolved at the bearing quasi-capital loans by USD 1,400,000, to which General Meeting that the share capital be denominated in BFA’s contribution would be USD 73,684. kwanzas and to terminate the parity between shareholders, so that the respective holdings would take into account the The above companies distributed no dividends in 2016 and extent to which each shareholder uses EMIS’s services. 2015.
168 Banco de Fomento Angola | Annual Report’16 13. OTHER TANGIBLE ASSETS AND INTANGIBLE ASSETS ------Repor t 538 918 538 918 702 492 492 702 538 918 822 425 822 425 assets assets Net total Net total 3 389 736 1 309 264 1 309 264 3 502 968 14 957 916 916 957 14 14 939 076 076 939 14 20 573 733 20 573 19 050 144 19 19 589 062 19 19 264 469 19 - - (29) (29) (93 923) 923) (93 (93 923) 923) (93 (101 571) (101 571) (973 830) (973 & amort.& & amort.& (6 411 318) 318) 411 (6 (7 053 411) (7 053 411) (9 157 763) 763) 157 (9 (1 169 353) 169 (1 (7 855 131) (7 855 131) (1 596 323) (1 (1 400(1 800) (16 211 174) 211 (16 (14 266(14 449) Accum. depr. depr. Accum. Accum. depr. depr. Accum. (17 807 497) 807 (17 (15 435 802) 435 (15 Economic Environmen t 29 29 Balances at 31-12-2016 Balances at 31-12-2015 93 923 93 923 101 571 571 101 101 571 571 101 702 492 492 702 822 425 822 425 1 512 748 748 1 512 1 708 271 2 710 064 2 710 2 905 587 33 316 593 33 316 38 381 230 38 381 11 244 867 11 12 660 731 66012 731 21 369 234 369 21 35 475 643 475 35 35 024 864 024 35 21 992 48721 Gross assets Gross Gross assets Gross ------year year (248 911) (248 911) (426 970) (426 970) (721 183) 183) (721 (642 093) 093) (642 Depr. & Depr. Depr. & Depr. (1 915 974) (1 194 791) 791) 194 (1 (2 371 695) (2 371 (2 164 885) 164 (2 (1 944(1 725) (1 302 632) (1 amort. for the amort. for the ------(11 979) (15 723) (17 880) (321 352) (997 368) (339 232) (339 232) (997 368) (969 666) (969 disposals disposals Write-offs, Write-offs, and others and others ------2016 2015 641 520 364 452 (641 520) (364 452) Transfers Transfers ------BFA 417 057 057 417 276 681 681 276 436 298 436 298 484 385 1 197 316 316 1 197 1 197 316 1 197 1 737 216 216 1 737 4 692 192 3 695 598 3 695 1 507 329 2 498 2822 498 4 255 8944 255 2 331 5082 331 Additions Additions ------351 531 351 531 538 918 538 918 702 492 492 702 538 918 942 678 942 678 assets assets 3 089 177 3 089 177 3 389 736 Net total Net total 14 957 916 916 957 14 17 707 592 707 17 13 675 737 737 675 13 18 059 123 059 18 19 050 144 19 19 589 062 19 - - (29) (29) (93 923) 923) (93 (93 923) 923) (93 (101 571) (101 571) (724 919) (973 830) (973 (920 442) & amort.& & amort.& (6 411 318) 318) 411 (6 (1 169 353) 169 (1 (7 855 131) (7 855 131) (5 690 135) 690 135) (5 (6 660(6 340) (12 350 475) (12 Accum. depr. depr. Accum. Accum. depr. depr. Accum. (13 270 917) 270 (13 (14 266(14 449) (15 435 802) 435 (15 29 29 Balances at 31-12-2014 Balances at 31-12-2015 93 923 93 923 101 571 571 101 101 571 571 101 702 492 492 702 942 678 942 678 9 749 517 517 9 749 1 512 748 748 1 512 1 271 973 1 271 1 708 271 1 076 450 1 076 33 316 593 33 316 19 365 872 365 872 19 11 244 867 11 31 330 040 330 31 21 369 234 369 21 35 024 864 024 35 30 058 067 Gross assets Gross Gross assets Gross Risk Management Financial Revie w Organization and expansion costs Furniture, tools,Furniture, fixtures and equipment Other tangible assets Property operations used in Fixed assets progress in Intangible assets softwareComputer Property-lease premiums Furniture, tools,Furniture, fixtures and equipment Other tangible assets Property operations used in Other intangibles Fixed assets progress in Intangible assets softwareComputer Organization and expansion costs Property-lease premiums Other intangibles and Notes Movements under these headings during 2016 and 2015 are as follows: 2015 and 2016 theseMovements during under headings work branches on new construction of premises of payments suppliers and to assets Fixed acquisition progress the to in relates basically & 2015, 2016 As at December 31, years. be opened to coming over the scheduled Financial Statements Annexe s
Financial Statements and Notes 169 14. CURRENT AND DEFERRED TAX ASSETS AND LIABILITIES
As at December 31, 2016 & 2015, the balances of current In 2016 and 2015 the corporate income tax expense tax assets and liabilities are as follows: recognised in the income statement and the tax burden, measured as the ratio of the provision for taxation to the profit for the year before that provision, are summarised in 2016 2015 the following table: Current tax assets 17 645 1 918 2016 2015 Current tax liabilities: Current tax liabilities
Industrial tax 2 218 081 3 644 282 Industrial tax 2 218 081 3 644 282 Deferred tax assets On capital gains 1 751 124 653 568 Recording and reversal of temporary (429 249) (180 761) differences On dependent-labour income 281 831 203 090 Adjustment of estimates for previous years Taxation relating to remuneration 56 306 44 566 Industrial tax (1 429 553) 194 289 Total tax recorded in the income 359 279 3 657 810 Special levy on banking transactions 45 237 - statement Profit before tax 62 072 171 41 524 068 4 352 579 4 545 506 Tax burden 0,58% 8,81%
During 2016, “Adjustment of the previous periods’ estimate exchange gains on Treasury Bonds until December 31, 2012; – Industrial Tax” is in respect of: (i) income of mAOA and (ii) a cost of mAOA 517,047 in respect of the additional 1,946,600 in respect of the 2015 Industrial Tax estimate Industrial Tax assessment for 2013 and respective fines. for the fact that the Bank had considered as taxable foreign
The reconciliation between the nominal tax rate and the tax burden for the periods ended December 31, 2016 & 2015, is as follows:
2016 2015 Tax Tax rate Amount rate Amount Net income before tax 62 072 171 41 524 068 Tax calculated according to nominal tax rate 30,00% 18 621 651 30,00% 12 457 220 Tax relief benefits on income from public debt securities -29,18% (18 114 221) -23,06% (9 575 508) Other permanent differences 0,04% 26 614 0,06% 24 961 Tax on Invested Capital (IAC) On untaxed income 2,02% 1 254 788 1,34% 556 849 Adjustment to previous year’s estimate -2,30% (1 429 553) 0,47% 194 288 Corporate income tax 0,58% 359 279 8,81% 3 657 810
INDUSTRIAL TAX mAOA 749,027, respectively, resulting from temporary differences in the taxation of provisions for contingent liabilities. As explained in Note 2.2 j), the Bank is subject to Industrial Tax The Board of Directors believes that the conditions for the applicable at the rate of 30% in 2016 and 2015. recognition of these deferred tax assets are met, particularly as regards the future evolution of the taxable income of the DEFERRED TAXES Bank allowing their deduction. These deferred tax assets were calculated on the basis of the tax rates laid down for the period As at December 31, 2016 & 2015, the Bank has recognized in which the asset is expected to be realised. deferred tax assets in the amounts of mAOA 409,966 and
170 Banco de Fomento Angola | Annual Report’16 The movement in deferred tax assets in the periods ended December 31, 2016 & 2015, is as follows: Repor t
Balances Balances at 31-12-2015 Charges Uses/reversals at 31-12-2016 Provisions temporarily not allowed as a deductible expense: Provisions for banking risks and retirement benefits 749 027 429 249 - 1 178 276
Balances Balances at 31-12-2014 Charges Uses/reversals at 31-12-2015 Economic Provisions temporarily not allowed as a deductible expense: Environmen t Provisions for banking risks and retirement benefits 568 266 180 761 - 749 027
The tax authorities may review the Bank’s tax situation during The Bank’s Board of Directors believes that any additional a period of five years and those reviews may give rise to assessments that could arise from such reviews will have no corrections to taxable income due to differing interpretations material impact on the financial statements. of tax legislation.
15. OTHER ASSETS
The breakdown of this heading as at December 31, 2016 & 2015, is as follows:
2016 2015
Currency transactions BFA Forward currency transactions 26 982 819 52 166 773 Foreign currency purchase and sale 2 031 134 1 117 712 29 013 953 53 284 485 Other amounts relating to taxes Other taxes receivable 606 145 477 306 606 145 477 306 Other amounts of a civil nature Receivable for provision of services - - Sundry debtors: Public Administrative Sector 2 939 975 896 195 Private sector – companies 2 - Private sector – employees 25 308 19 832 Private sector – individuals 8 382 24 169 Acquisitions in progress (9 785) 342 724 Other debtors 628 678 623 001 3 592 560 1 905 921 Other amounts of an administrative or commercial nature Advances on salaries - -
Prepaid expenses: Risk Management Rents and leasing 268 639 238 726 Insurance 128 367 27 255 Other 214 899 195 044 611 905 461 025 Office materials 218 275 137 527 Other prepayments Financial Revie w Cash shortages 3 609 2 177 Forward currency transactions 94 917 280 517 Other 5 284 4 434 103 810 287 128
Assets not for own use and Notes
34 146 648 56 553 392 Financial Statements Annexe s
Financial Statements and Notes 171 The breakdown of Currency transactions is as follows:
2016 2015 Assets / Liabilities / Assets / Liabilities / Income Expenses Net Income Expenses Net Foreign exchange transactions:
Purchase and sale of foreign currency 2 031 134 ( 1 903 857 ) 127 277 1 117 712 (1 091 423) 26 289
Forward currency transactions 26 982 819 ( 28 121 897 ) ( 1 139 078 ) 52 166 773 ( 54 824 186 ) ( 2 657 413 )
29 013 953 ( 30 025 754 ) ( 1 011 801 ) 53 284 485 ( 55 915 609 ) ( 2 631 124 )
As at December 31, 2016 & 2015, “Other amounts of a fiscal As at December 31, 2016 & 2015, the “Other Amounts of a nature – Other taxes receivable in the amounts of mAOA Civil Nature - Sundry debtors: Public administrative sector” 606,145 and mAOA 477.306 , respectively, relate to the tax includes mAOA 2,939,975 and mAOA 896,195, respectively, obligation of prepayment of the 2016 and 2015 industrial relating to commissions receivable from General Tax Authority tax, also respectively, or 2% do the Bank’s Operating income ( “AGT”) as remuneration for revenue-collection services during the first half of 2015 and of 2014. These amounts provided by the Bank. were settled by the Bank at the beginning of the second half of 2016 and of 2015 respectively.
16. FUNDS OF CENTRAL BANKS AND OTHER CREDIT INSTITUTIONS
The breakdown of this heading as at December 31, 2016 & 2015, is as follows:
2016 2015 Interbank money market transactions:
Funds of credit institutions in Angola – Loans (AOA) 10 884 8 572
Interest - -
10 884 8 572
Funds of other entities:
Certified cheques 1 728 640 1 800 581
Funds tied to letters of credit 1 685 719 2 988 570
Cheques for clearing and other bills - -
Other 20 325 16 881
3 434 684 4 806 032
3 445 568 4 814 604
As at December 31, 2016 & 2015, transactions recorded “Funds tied to letters of credit” refers to sums deposited under “Transactions on the interbank money market – by Customers and earmarked for settlement of import Amounts owed to Credit institutions in Angola - Borrowings transactions, for the purpose of opening the respective (AOA)” have a residual maturity term of less than three documentary credits. months.
172 Banco de Fomento Angola | Annual Report’16 17. CUSTOMER FUNDS & OTHER BORROWINGS
The breakdown of this heading is as follows: Repor t
2016 2015 Sight deposits of residents:
In local currency 366 326 302 350 210 430
In foreign currency 107 061 276 139 830 913
473 387 578 490 041 343 Economic Sight deposits of non-residents Environmen t
In local currency 13 974 193 10 524 721
In foreign currency 2 825 345 2 194 131
16 799 538 12 718 852
Interest on sight deposits 1 372 4 166
Captive funds for requisition of foreign exchange 124 728 910 95 261 592
Total sight deposits 614 917 398 598 025 953
Term deposits of residents:
In local currency 191 026 324 177 226 210
In foreign currency 263 880 636 233 631 620
454 906 960 410 857 830
Term deposits of non-residents 6 245 943 5 240 691
Interest on term deposits 3 679 993 3 035 152
Total term deposits 464 832 896 419 133 673 BFA Total deposits 1 079 750 294 1 017 159 626
As at December 31 2016 & 2015, the balance of As at December 31, 2016 & 2015 the structure of demand “Customers’ blocked funds” relates to the blocked balance and term deposits by type of Customer was as follows: in Customers’ sight deposit accounts because of requests for the provision of foreign currency that requires authorisation by 2016 2015 the National Bank of Angola. Demand deposits Public sector - government 2 899 663 2 725 622 As at December 31, 2016 & 2015, the structure of Customer Public sector - corporate 5 965 688 4 638 891 term deposits by remaining term to maturity is as follows: Companies 426 167 627 417 712 969 Individuals 179 884 420 172 948 471 2016 2015 614 917 398 598 025 953 Up to three months 216 611 989 167 641 092 Term deposits From 3 to 6 months 137 058 386 147 901 165 Public sector – government 480 692 415 277 From 6 months to one year 111 162 521 103 591 416 Public sector – corporate 3 239 253 3 410 060 464 832 896 419 133 673 Companies 235 252 627 198 006 358 Risk Management Individuals 225 860 324 217 301 978 As at December 31, 2016, term deposits in domestic and 464 832 896 419 133 673 foreign currency earned interest at the average annual rates of 5.41% and 2.51%, respectively (4.67% and 2.66% respectively as at December 31, 2015). Financial Revie w As at December 31, 2016 & 2015, sight deposits earned no interest, except for specific foreign-currency denominated sight deposits defined according to the guidelines provided by
the Bank’s Board of Directors. and Notes Financial Statements Annexe s
Financial Statements and Notes 173 18. PROVISIONS 493 701 236 613 302 954 354 536 2 678 595 2 300 969 1 102 145 4 675 642 4 133 428 1 339 557 14 585 970 18 912 741 14 237 099 Balances at Balances at 31-12-2016 31-12-2015 18 719 398 ------124 497 (124 497) (124 497) 1 125 476 (1 125 476) (1 125 476) Transfers Transfers 5 514 2 966 520 116 119 128 556 467 121 858 377 867 890 945 209 654 1 394 173 1 198 456 2 416 798 1 022 625 2 089 401 others others Exchange Exchange differences and differences and - - - - (49 306) (142 490) (162 816) (305 306) (684 534) (733 840) (1 072 725) (5 642 092) (5 947 398) (1 806 565) Charge-offs Charge-offs ------2016 2015 (536 159) (536 159) (1 126 610) (2 985 232) (1 126 610) (3 521 391) reversals reversals Decreases Decreases Write-backs and Write-backs and ------32 724 32 724 32 724 60 827 60 827 60 827 (Note 26) (Note 26) Staff costs costs Staff Staff costs costs Staff ------Increases Increases 484 187 889 544 484 187 889 544 7 572 582 3 900 182 4 789 726 8 056 769 Charges Charges for the year for the year 493 701 236 613 200 923 1 102 145 9 748 392 4 133 428 1 104 784 4 120 068 1 793 808 2 300 969 1 020 553 18 719 398 14 585 970 13 868 460 Balances at Balances at 31-12-2014 31-12-2015 Of an administrative or commercial nature In relation company to In or law the Bylaws Retirement benefitsRetirement In relation company to In or law the Bylaws Of an administrative or commercial nature Retirement benefitsRetirement General banking risks Guarantees provided (Note 10) Sponsored retirement and survival benefitfunds Loan impairment (Note 10) Loan impairment (Note 10) General banking risks Guarantees provided (Note 10) Sponsored retirement and survival benefitfunds During 2016 and 2015 the movement under provisions was as follows: provisions under movement the 2015 and 2016 During
174 Banco de Fomento Angola | Annual Report’16 As at December 2016 & 2015, “Provisions of a social or years of seniority at that date (Note 2.2. k)). The total amount Repor t statutory nature” refers to the Social Fund, the purpose of of these liabilities is determined by actuaries using the which is to provide financial support for initiatives in the areas Projected Unit Credit method for liabilities for past services. of education, health and social solidarity. The Fund was set up with monthly contributions through the allocation of 5% of As mentioned in Note 2.2. k), in 2013, with reference to the the net profit of the previous year, calculated in United States last day of the year, the Bank set up the “BFA Pension Fund” dollars, over a five-year period. This provision was set aside to cover the old-age, disability and surviving-relative pensions Economic between 2005 and 2009, inclusive. that the Bank granted to its Angolan employees enrolled in Environmen t Social Security, having used the provisions previously set As at December 31, 2016 & 2015, “Provisions of an aside as the initial contribution to BFA Pension Fund (defined- administrative and marketing nature” consists primarily of contribution plan). In accordance to the Fund’s constitution provisions set aside to cover fraud, litigation in progress and contract, BFA will make an annual contribution of 10% of other liabilities, and represents the Bank’s best estimate the salaries subject to Social Security discounts, applied to of the costs it is likely to bear in the future in respect of fourteen salaries. The return on investments made, net of those liabilities. Additionally, a provision is recorded under any taxes, is added to the amount of the contributions. The this heading as at December 31, 2016, amounting to total amount of the initial contribution made by the Bank to mAOA 244,672 for possible contingencies related to the the BFA Pension Plan was mAOA 3,098,194, which included cancellation of certified cheques not paid to the payee (aged mAOA 44,797 of advances on future contributions, which more than 5 years). was used in the first half-year of 2014. In 2016 and 2015, the Bank’s contribution to the BFA Pension Fund amounted to As at December 31, 2016 & 2015, the balance of mAOA 923,557 and mAOA 520,009, respectively (Note 26). “Retirement benefits” is to cover the Bank’s liabilities in the matter of “Retirement benefits”. Liabilities in respect of The BFA Pension Plan is managed by Fenix – Sociedade BFA “Retirement benefits” are determined by multiplying 25% Gestora de Fundos de Pensões, SA. The Bank acts as of the base monthly salary earned at the date on which the depositary of the Fund. employee reaches the legal retirement age by the number of Risk Management Financial Revie w and Notes Financial Statements Annexe s
Financial Statements and Notes 175 19. OTHER LIABILITIES
The breakdown of this heading is as follows: As at December 31, 2016, “Dividend charge” includes the dividends distributed by the Bank to its shareholder Banco 2016 2015 BPI, SA, in respect of 2015 (Note 20). On January 4, 2017, Currency transactions BFA settled this amount. Forward currency transactions 1 903 857 1 091 423 Foreign currency purchase and As at December 31, 2015, “Dividend charge” includes the 28 121 897 54 824 185 sale dividends distributed by the Bank to its shareholder Banco 30 025 754 55 915 608 BPI, SA, in respect of 2014 not yet paid. In August 2015, Liabilities of a corporate or BFA received National Bank of Angola authorisation for the statutory nature transfer of 50% of these dividends, which was done in 2015. Dividend costs 6 796 498 4 390 265 On December 23, 2016, BFA settled the remaining 50%. 6 796 498 4 390 265 Tax payable – withheld from third parties As at December 31, 2016 & 2015, “Other administrative and On income 672 923 157 310 marketing costs payable – Other”, includes mAOA 147,096 Other 114 901 97 544 and mAOA 896,832, respectively, concerning amounts 787 824 254 854 blocked in Customers’ accounts that await compensation for Liabilities of a civil nature 1 742 129 1 547 479 bank-transfer request. These amounts were offset on January 3, 2017, January 4, 2016, respectively. Other liabilities of an administrative or commercial nature
Staff –salaries and other remuneration Holiday pay and holiday 1 609 977 1 272 642 subsidy Performance bonus 248 855 208 501 Other staff costs 501 969 201 542 2 360 801 1 682 685 Other administrative or commercial costs payable
Borrowing transactions 526 639 127 843 pending settlement Monthly instalments 1 491 557 1 802 794 Movements at POS terminals 2 028 474 1 753 328 pending settlement
Payment orders received – 7 889 6 134 pending settlement
Western Union Service (7 629) (7 689) movements Visa acquiring (1 236) (2 335) Other 364 122 1 200 667 4 409 816 4 880 742 46 122 822 68 671 633
176 Banco de Fomento Angola | Annual Report’16 20. EQUITY
SHARE CAPITAL As at December 31, 2016 & 2015, the revaluation reserves Repor t relate to the fixed asset revaluation reserve. The Bank was incorporated with a share capital of mAOA 1,305,561 (equivalent to €30,188,657 at the exchange rate Up to and including December 31, 2007, in accordance with on June 30, 2002), represented by 1,305,561 registered applicable legislation, the Bank revalued its tangible fixed shares each of a par value of one thousand kwanzas, assets by applying coefficients that reflected the monthly subscribed and paid up by incorporation of all the assets and change in the official euro exchange rate to the gross carrying Economic liabilities, including real estate assets or rights of any nature, amounts of tangible fixed assets and associated accumulated Environmen t as well as all the rights and obligations of the former Branch. depreciation, expressed in kwanzas in the Bank’s accounting records at the end of the preceding month. As from 2008, At the end of 2004, 2003 and 2002, the Bank increased the Bank no longer revalued its tangible fixed assets (Note its share capital by mAOA 537,672, mAOA 1,224,333 and 2.2. i)). mAOA 454,430, respectively, by incorporating the special equity-maintenance reserve set up to maintain the equivalent The revaluation reserves can only be used to absorb value in kwanzas of the initial foreign-currency capital accumulated losses or to increase share capital. contribution. OTHER RESERVES AND RETAINED EARNINGS The Bank has not updated is share capital since 2005, as the Angola is no longer considered a hyperinflationary economy. The breakdown of these headings is as follows:
As a result, as at December 31, 2016 & 2015, the Bank’s 2016 2015 share capital amounted to mAOA 3,521,996. As at December Reserves & funds 31, 2016 & 2015, the share-capital update monetary reserve BFA (Note 2.2. h)) amounted to mAOA 450,717. Legal reserve 5 161 890 5 161 890 Other reserves 100 920 542 78 200 788 The shareholder structure of the Bank as at December 31, 106 082 432 83 362 678 2016 & 2015 is as follows:
By unanimous resolution of the general meeting of April 29, 2016 2015 Number of Number of 2016, it was decided to distribute 40% of the net profit for shares % shares % the previous year (mAOA 37,866,257) to the shareholders as Banco BPI, S.A. 653 822 50,08% 653 822 50,08% dividends, the remainder being allocated to “Other reserves”.
Unitel, S.A. 651 475 49,90% 651 475 49,90% By unanimous resolution of the general meeting of April 29, Other BPI Group 264 0,02% 264 0,02% entities 2015, it was decided to distribute 50% of the net profit for
1 305 561 100% 1 305 561 100% the previous year (mAOA 31,796,097) to the shareholders as dividends, the remainder being allocated to “Other reserves”.
REVALUATION RESERVES Under current law, the Bank shall set aside a legal reserve Risk Management fund until such time as it equals its share capital. For the Revaluation reserves correspond to pending results (net purpose, at least 20% of the previous year’s net profit is of applicable tax charges) that are likely to arise from annually transferred to this reserve. This reserve can only be transactions and other events and circumstances that are not used to cover accumulated losses, when other reserves set recorded immediately in the income statement for the period aside have been used up. when recognised by the Bank. Financial Revie w and Notes Financial Statements Annexe s
Financial Statements and Notes 177 EARNINGS AND DIVIDEND PER SHARE 2016 2015 Earnings per share 47,27 29,00
The earnings per share and dividend paid in 2016 and 2015 Dividend per share paid in the 11,60 12,18 out of the previous year’s profits were as follows: year
21. NET INTEREST INCOME
During the periods ended December 31, 2016 & 2015, the breakdown of these headings is as follows:
2016 2015
INTEREST & SIMILAR INCOME
From short-term investments:
Term deposits at credit institutions abroad 449 143 265 037
Term deposits at credit institutions in Angola 2 067 281 2 706 864
Other 10 306 9 223
Income from purchases of securities with repurchase agreement 760 694 862 004
3 287 424 3 843 128
From securities:
From held-for-trading securities:
Treasury Bills 27 807 418 2 070 921
Central Bank Bonds -
Treasury Bonds in local currency 2 217 133 1 517 886
From held-to-maturity securities:
Treasury Bills 1 026 810 5 407 162
Treasury Bonds in local currency indexed to foreign currency and in foreign currency 10 278 013 7 884 405
Treasury Bonds in local currency 12 506 068 13 931 452
53 835 442 30 811 826
From derivative financial instruments In speculation and arbitrage:
From loans granted 3 295 984 1 288 699
Companies and Public Administration:
Loans 11 338 029 10 438 131
Current account facility 4 411 773 3 359 112
Overdrafts 181 600 371 167
Other loans 16 957 17 454
Individuals:
Home loans 1 256 031 1 024 966
Consumer loans 3 468 588 3 133 172
Other purposes 1 726 065 1 694 841
Overdue interest 1 426 964 1 205 159
Total interest & similar income 84 244 857 57 187 655
178 Banco de Fomento Angola | Annual Report’16 2016 2015
INTEREST & SIMILAR COSTS Repor t Of deposits: Sight deposits 408 741 491 077 Term deposits 16 104 913 13 702 955 16 513 654 14 194 032 Of short-term borrowings: Interbank money market transactions 15 090 25 442 Economic Environmen t Repurchase transactions - - 15 090 25 442 Of derivative financial instruments: Forwards 499 609 1 124 981 499 609 1 124 981 17 028 353 15 344 455 67 216 504 41 843 200
22. SERVICES AND COMMISSION INCOME
During the periods ended December 31, 2016 & 2015, the breakdown of this heading is as follows:
2016 2015
Income from provision of services BFA Fees on payment orders issued 2 096 903 1 134 133 Fees on guarantees and sureties provided 451 298 541 382 Fees on import documentary credits opened 205 658 625 357 Other commissions 8 030 508 4 775 607 10 784 367 7 076 479 - - Fees and custody costs Commissions (2 173 659) (1 340 939) (2 173 659) (1 340 939) - 1 8 610 708 5 735 540
The amount carried under “Other commissions” is primarily in respect of commission income associated with credit card- transactions and Multicaixa transactions. Risk Management 23. RFOREIGN EXCHANGE GAINS/(LOSSES)
During the periods ended December 31, 2016 & 2015, the breakdown of this heading is as follows:
2016 2015
Exchange gains on assets and liabilities denominated in foreign currency 9 374 416 6 843 461 Financial Revie w
Foreign currency purchase and sale transactions 8 399 676 9 226 580
17 774 092 16 070 041 and Notes Financial Statements Annexe s
Financial Statements and Notes 179 24. GAINS/(LOSSES) ON THE SALE OF OTHER ASSETS
During the periods ended December 31, 2016 & 2015, the breakdown of this heading is as follows:
2016 2015
Gains/(losses) on the sale of other assets
Gains on disposal of tangible assets 8 568 14 032
Losses on disposal of tangible assets (958) (899)
7 610 13 133
25. OTHER OPERATING INCOME
During the periods ended December 31, 2016 & 2015, the breakdown of this heading is as follows:
2016 2015
Other operating income
Non-income-related taxes and levies (5 120 673) (2 181 624)
Penalties imposed by regulatory authorities (3 163) (61 785)
Recovery of administrative and commercial costs 2 141 477 2 308 340
Other operating income/(expense) 1 704 515 2 109 631
(1 277 844) 2 174 562
In 2016 and 2015 “Other operating results – Non-income- During 2016 & 2015, “Oher operating results – Other, related taxes and levies” primarily relates to capital gains tax includes income from loan recoveries and interest previously (Note 2.2. l). cancelled or written off from assets in the amounts of mAOA 390,469 and mAOA 253,037, respectively (Note 10). In 2016 and 2015 “Oher operating results – Recovery of administrative and commercial costs primarily relates to: (i) reimbursement of communication and dispatch costs borne by the Bank, notably in payment-orders operations; and (ii) card income through national transfers and cash advances.
180 Banco de Fomento Angola | Annual Report’16 26. STAFF COSTS
During the periods ended December 31, 2016 & 2015, the breakdown of this heading is as follows: Repor t
2016 2015
Members of Management and Supervisory Bodies
Monthly remuneration 147 916 119 766
Additional remuneration 126 335 79 005
Mandatory social charges 4 390 3 087 Economic Optional social charges 1 454 1 748 Environmen t
280 095 203 606
Employees
Monthly remuneration 7 968 468 5 639 032
Additional remuneration 6 542 334 4 791 709
Mandatory social charges 484 330 350 897
Optional social charges 622 163 370 729
15 617 295 11 152 367
Pension plan costs (Note 14)
Supplementary pension plan 923 557 520 009
Retirement benefits 60 827 32 724
Other 47 627 25 165
16 929 401 11 933 871 BFA
27. THIRD-PARTY SUPPLIES & SERVICES
During the periods ended December 31, 2016 & 2015, the breakdown of this heading is as follows:
2016 2015
Audits, consultancy and other specialised technical services 3 567 521 3 182 681
Security, maintenance and repairs 1 515 067 1 074 149
Publications, advertising and direct mail 1 291 159 1 067 942
Rents 1 222 885 920 461
Transport, travel and accommodation 1 140 827 860 877
Water and electricity 917 376 576 116
Communications 687 559 941 996
Office materials 597 647 397 411 Risk Management Other third-party supplies 482 426 222 475
Insurance 228 707 278 543
11 651 174 9 522 651 Financial Revie w and Notes Financial Statements Annexe s
Financial Statements and Notes 181 28. OFF-BALANCE SHEET ITEMS
The breakdown of these headings is as follows:
2016 2015
Liabilities to third parties:
Guarantees provided 28 210 552 30 829 443
Commitments to third parties
Documentary credits opened 10 442 844 26 768 807
38 653 396 57 598 250
Liabilities for services provided:
Services provided by the institution
Securities custody 356 828 471 181 787 018
Clearing of foreign cheques drawn on foreign banks 395 748 359 365
Documentary remittances 18 559 818 13 528 415
375 784 037 195 674 798
As at December 31, 2016 & 2015, “Documentary credits 1,102,145 to cover the credit risk assumed in granting opened” includes open documentary credits secured by guarantees and issuing documentary credits, respectively deposits blocked at the Bank in the amount of mAOA (Notes 10 and 18). 1,685,719 and mAOA 2,871,571, respectively. As at December 31, 2016 & 2015, “Securities custody” As at December 31, 2016 & 2015, the Bank had set primarily refers to Customer securities entrusted to the Bank aside impairment provisions of mAOA 354,536 and mAOA for safe custody.
29. RELATED PARTIES
In accordance with IAS 24, entities related to the Bank are ■■ key management personnel of the Bank, considering for this considered to be: purpose the executive and non-executive members of the Board of Directors and Companies in which the members of ■■ those in which the Bank directly or indirectly has significant the Board of Directors have significant influence. influence over their management and financial policy – Associate companies and joint ventures and Pension Fund;
■■ entities directly or indirectly having significant influence over the management and financial policy of the Bank - Shareholders; and
182 Banco de Fomento Angola | Annual Report’16 As at December 31, 2016, the Bank’s main balances and transactions with related parties are as follows: Repor t
BFA shareholders Companies in Members of which Board the Board of members hold BPI Unitel Directors of significant BFA Pension Group Group BFA influence Fund Total Cash and banks
Cash available on demand from credit 28 745 669 - - - - 28 745 669 Economic institutions Environmen t
Short-term investments: Other loans and advances to credit 80 128 392 - - - - 80 128 392 institutions Loans granted - - 172 931 2 032 312 - 2 205 243 Customer deposits: Sight deposits - ( 9 462 870) (27 064) (674 412) (72 970) (10 237 316) Term deposits - ( 62 894 340) (515 360 (60 683) (264 695) (63 735 078) Other funds (6 796 498) - - - (6 796 498) Interest income and similar income 405 662 n.a. n.a. n.a. - 405 662 Interest expense and similar expense - n.a. n.a. n.a. (211 277) ( 211 277) Fee and commission expense and other costs (308 365) n.a. n.a. n.a. (923 557) (1 231 922) Securities used as deposit - (27 093 048) (55 893 - (7 053 922) (34 202 863) Documentary letters of credit ------Bank guarantees ------BFA
As at December 31, 2015, the Bank’s main balances and transactions with related parties are as follows:
BFA shareholders Companies in Members of which Board the Board of members hold BPI Unitel Directors of significant BFA Pension Group Group BFA influence Fund Total Cash and banks Cash available on demand from credit 24 847 265 - - - - 24 847 265 institutions Short-term investments: Other loans and advances to credit 102 179 923 - - - - 102 179 923 institutions Loans granted - - 145 550 1 657 609 - 1 803 159 Customer deposits: Sight deposits - (4 877 463) (44 232) (1 265 628) (1 581) (6 188 904) Term deposits - (48 629 192) (406 790) (69 654) (249 641) (49 355 277) Other funds (4 390 275) - - - (4 390 275)
Interest income and similar income 238 662 n.a. n.a. n.a. - 238 662 Risk Management Interest expense and similar expense - n.a. n.a. n.a. (204 618) (204 618 Fee and commission expense and other costs (335 716) n.a. n.a. n.a. (520 009) (855 725) Securities used as deposit - (21 606 450) (91 176) - (5 493 325) (27 190 951) Documentary letters of credit ------Bank guarantees ------n.a.: information not available Financial Revie w
The information reported as at December 31, 2016 & 2015, does not include the costs and income with the Unitel Group, with the members of the BFA Board of Directors and with Companies where the latter have significant influence. and Notes Financial Statements Annexe s
Financial Statements and Notes 183 30. BALANCE BY CURRENCY
The balances as at December 31, 2016 & 2015, by currency are shown below:
31-12-2016 31-12-2015 Local Foreign Local Foreign currency currency Total currency currency Total Cash and funds available at central banks 235,157,135 43,997,450 279,154,585 212,524,441 43,303,818 255,828,259
Cash available at other credit institutions - 38,031,194 38,031,194 362,888 50,678,631 51,041,519 Short-term investments at central banks and 10,635,400 96,576,328 107,211,728 20,600,260 114,405,572 135,005,832 other credit institutions Financial assets at fair value through profit 294,776,253 43,165,696 337,941,949 57,505,149 20,482,269 77,987,418 or loss Held-to-maturity investments 102,757,219 155,982,854 258,740,073 255,819,380 155,680,275 411,499,655
Loans and advances to Customers 134,557,8 07 100,753,064 235,310,871 123,423,365 97,372,59 0 220,795,955
Non-current assets held for sale - 73,307 73,307 - 59,791 59,791 Investments in subsidiaries, associates 97,6 31 401,927 499,558 104,778 362,587 4 67,365 and joint ventures Other tangible assets 19,264,469 - 19,264,469 19,050,144 - 19,050,144
Intangible assets 1,309,264 - 1,309,264 538,918 - 538,918
Current tax assets 17,6 45 - 17,6 45 1,918 - 1,918
Deferred tax assets 1,178,276 - 1,178,276 749,027 - 749,027
Other assets 27,251,6 85 6,894,963 34,146,648 54,751,526 1,801,866 56,553,392
Total assets 827,002,784 485,876,783 1,312,879,567 745,431,794 484,147,399 1,229,579,193 Funds of central banks and other credit 1,759,850 1,685,719 3,445,569 1,826,034 2,988,570 4,814,604 institutions Customer funds and other borrowings 698,510,509 381,239,785 1,079,750,294 635,403,828 381,755,798 1,017,159,626 Financial liabilities at fair value through profit 22,846 1,4 87,950 1,510,796 2,745 3,796,175 3,798,920 or loss Provisions 1,642,511 3,033,131 4,675,642 733,773 3,399,655 4,133,428
Current tax liabilities 4,352,579 - 4,352,579 4,545,506 - 4,545,506
Other liabilities 12,692,238 33,430,584 46,122,822 10,741,004 57,930,629 68,671,633
Total liabilities 718,980,533 420,877,169 1,139,857,702 653,252,890 449,870,827 1,103,123,717
Net assets 108,022,251 64,999,614 173,021,865 92,178,904 34,276,572 126,455,476
Shareholders’ equity 173,021,865 - 173,021,865 126,455,476 - 126,455,476
In the above table, the securities in kwanzas indexed to US However, in accordance with articles 4(2) of National Bank of dollars, held by the Bank, are presented in the “Foreign Angola Notice nº 3/2012 , financial institutions , in collecting currency” column, with the following composition: (i) the instalments of loans granted, must accept funds in the “Financial assets at fair value through profit or loss” in the accounts of their Customers in any currency, regardless of the amounts of mAOA 42,952,229 and mAOA 20,326,331 currency contracted. This requirement only applies to loan as at December 31, 2016 & 2015, respectively; and (ii) transaction contracted after the entry into force of the notice “Investments held to maturity”, in the amounts of mAOA in question. It should be said that the Bank’s Customers have 43,252,851 and mAOA 64,014,854 at December 31, 2016 generally paid the instalments of principal and interest of & 2015, respectively. loans denominated in US dollars in the equivalent amount in kwanzas on the settlement date, under the option provided Loans and advances to Customers granted by the Bank and for in BNA Notice nº 3/2012. denominated in foreign currency, including US dollars, are detailed in the above table in the “Foreign Currency” column.
184 Banco de Fomento Angola | Annual Report’16 31. RISK MANAGEMENT
31.1 CREDIT RISK ■■ The existence of guarantees with sovereign risk or immediate Repor t liquidity impacts on the calculation of the overall exposure. Credit risk is the risk of default by the counterparties with which the Bank has open positions in financial instruments Risk Classification as the creditor. In accordance with BFA’s General Lending Regulations, the granting of loans by the Bank is based on the The Bank classifies loan operations by increasing order of following basic principles: risk, in keeping with the following classes: Economic Environmen t Loan applications Level A: Minimum risk
Applications for loans or guarantees submitted to BFA for Level B: Very low risk approval: Level C: Low risk ■■ Are adequately detailed in a Term Sheet containing all the essential and additional information required for the Level D: Moderate risk formalisation of the operation; Level E: High risk ■■ Comply with the relevant product specifications; Level F: Very high risk ■■ Accompanied by a duly substantiated analysis of the credit risk; and Level G: Maximum risk
■■ Contain the signatures of the applicants. The individual classification of the exposure considers the BFA characteristics and risks of the operation and of the borrower, Credit-risk analysis and is initially classified on the basis of the following criteria adopted by the Bank: Credit risk analysis takes into account the Bank’s total exposure to the Customer or group to which the Customer Level A: operations that are: belongs, in accordance with applicable legislation. The exposures relating to the same Customer or economic i) assumed by the Angolan State, encompassing their central group are classified on the basis of those that constitute administrations and provincial administrations; the greatest risk. This practice is only applicable when the Customer or economic group have at least one exposure ii) assumed by central administrations, central banks overdue by more than 30 days and when the Customer’s of countries included in group 1 (defined in National consolidated risk position is greater than 10% of the Bank of Angola Instruction nº 1/2015, of January 14, ), consolidated risk position of the economic group. international organizations, multilateral development banks and international organisations; At present, taking into account the National Bank of Angola’s regulations: iii) fully secured by cash deposits or certificates of deposit Risk Management constituted or issued by the lending institution or ■■ The liabilities of an individual Customer include all the institutions in a controlling or group with the lending Customer’s current and potential liabilities to the Bank, institution having their registered office in Angola or a whether contracted or committed, in respect of financing and country included in group 1, multilateral development guarantees (the Bank’s total exposure to the Customer); banks and international organisations, provided that the
exposure and the deposit or certificate are denominated in Financial Revie w ■■ The liabilities of a group of Customers include all the the same currency; liabilities of the individual Customers in the group to the Bank (the Bank’s total exposure to the group); and and Notes Financial Statements Annexe s
Financial Statements and Notes 185 iv) fully secured by cash deposits or certificates of deposit v) fully secured by securities or bonds issued by the Angolan made or issued by the lending institution or by a branch State or by the National Bank of Angola. of the lending institution, not covered by the preceding paragraph, provided that the exposure and the deposit or Nível B: restantes créditos. certificate are denominated in the same currency; and
Classification of exposures is reviewed whenever there are changes in the signs of impairment in late payments, in the charges and in the characteristics of the exposures, noting that:
Risk Level B C D E F G
Time past due Up to 30 days or From 30 to 60 days From 60 to 90 days From 90 to 150 days From 150 to 180 days More than 180 days Without evidence de Impairment
The risk is maintained at “Level A: Minimum risk” even in a belonging to the same group as Customers who are in such a circumstance of delay in payments. situation. The following are considered material incidents:
Within the scope of the regular review of loan operations, ■■ Payments of principal or interest to a financial institution including overdue loans, the BFA reclassifies non-performing more than 45 days past due; loans to outstanding on the basis of an analysis of the economic prospects of collectability, taking particular account ■■ Improper use of cards or payment systems for which the of the existence of guarantees, of the assets of the borrowers person or entity is responsible; and or guarantors and the existence of operations whose risk the BFA equates to State risk. ■■ Pending legal actions against that person or entity that may have a potential adverse impact on its economic or financial Association of Guarantees situation.
For loans to individuals or small enterprises with maturity of Exceptions to these rules may only be approved by the more than 36 months, in the absence of financial collateral, Executive Committee of the Board of Directors or by the BFA will as a general rule require the presentation of real- Board of Directors of BFA. estate collateral. Restructuring Loan transactions are secured by guarantees considered adequate to the borrower’s risk, nature and term of the In principle, BFA only formalises restructuring of current transaction, which are duly substantiated in terms of loans after evaluation of the Customer’s ability to comply with sufficiency and liquidity. the new plan, if the following criteria are observed:
Property collateral is appraised before the loan approval ■■ New (more liquid or more valuable) collateral is provided for decision is taken. Exceptions to this rule (with the decision the new loan; conditional on a subsequent appraisal) imply that the loan will only be disbursed after the Bank obtains the appraisal of the ■■ All outstanding ordinary and default interest is paid (if the collateral. loan is in default); and
Exclusions due to incidents ■■ A significant partial payment of the outstanding principal (current or overdue) is made. The Bank does not lend to Customers who have a record of material incidents in the past 12 months, or to companies
186 Banco de Fomento Angola | Annual Report’16 Exceptionally, where none of the above conditions is met, Restructuring negotiations are conducted in accordance with Repor t BFA may allow a restructuring of debts of individuals if, in the the principles stated above. previous six months, the debtor has made monthly deposits of an amount at least equal to the monthly instalment This team is responsible for managing the relationship established for the restructured loan. with the Customer, with a view to recouping the loan, with recourse to court action if necessary. Loans restructured for the Customer’s financial difficulties are Economic generally typified in the general credit regulation and comply Impairments Environmen t with the specific rules of the regulator in this matter. BFA has implemented an impairment-loss calculation model Restructured loans are flagged to indicate risk deterioration for the loan portfolio in accordance with the requirements of and are monitored periodically for compliance with the International Accounting Standard 39. established plan, and are only deflagged when certain conditions of regularity in compliance with the plan have been The first use of this model and its results were determined met. as at June 30, 2013. Since that reference date monthly calculations have been carried out. The half-year results are Renegotiated loans are kept at a risk level at least as high approved by the Bank’s Board of Directors. as the one they were classified at in the month next before the renegotiation. A loan is only reclassified to a lower risk Securities level if there are regular, substantial principal repayments or payment of overdue and default interest, or if the quality and The BFA securities portfolio has due regard for the high credit value of additional collateral posted for the renegotiated loan quality of the issuers. As at December 31, 2016 & 2015, so warrants. it was made up entirely of securities issued by the Angolan BFA State and the National Bank of Angola. Monitoring of overdue loans
Overdue loans are monitored by the commercial teams, as a rule when they are overdue by up to 60 days, in turn monitored by a specialised team. For loans overdue by more than 60 days, management of the relationship is transferred to that specialised team, whose mission is to co-operate n loan recovery measures, and it take over the restructuring negotiations and proposals. This team is responsible for monitoring cases under its management. Risk Management Financial Revie w and Notes Financial Statements Annexe s
Financial Statements and Notes 187 As at December 31, 2016 & 2015, the breakdown of the maximum credit-risk exposure is as follows:
2016 2015 Gross Net Gross Net book book book book value Impairment value value Impairment value On-balance-sheet funds
Cash and funds available at central banks 279 154 585 - 279 154 585 255 828 259 - 255 828 259
Funds available at other credit institutions 38 031 194 - 38 031 194 51 041 519 - 51 041 519
Short-term investments at central banks and 107 211 728 - 107 211 728 135 005 832 - 135 005 832 other credit institutions
Financial assets at fair value through profit or 337 941 949 - 337 941 949 77 987 418 - 77 987 418 loss
Held-to-maturity investments 258 740 073 - 258 740 073 411 499 655 - 411 499 655
Loans and advances to Customers 249 547 970 14 237 099 235 310 871 235 381 925 14 585 970 220 795 955
1 270 627 1 166 744 14 237 099 1 256 390 400 14 585 970 1 152 158 638 499 608
Off-balance-sheet funds
Guarantees given and documentary credits 38 653 396 354 536 38 298 860 57 598 250 1 102 145 56 496 105 opened
Total 1 309 280 895 14 591 635 1 294 689 260 1 224 342 858 15 688 115 1 208 654 743
188 Banco de Fomento Angola | Annual Report’16 The financial assets credit quality is as follows as at December 31, 2016 &2015: Repor t
2016 Source Rating Gross Net of rating grade exposure Impairment exposure Cash and funds available at central banks External rating B+ to B- 255 728 381 - 255 728 381
Unrated N/D 23 426 204 - 23 426 204
279 154 585 - 279 154 585 Economic Environmen t Funds available at other credit institutions External rating A+ to A- 768 380 - 768 380
BBB+ to BBB- 3 334 381 - 3 334 381
BB+ to BB- 33 097 755 - 33 097 755
Unrated N/D 830 678 - 830 678
38 031 194 - 38 031 194
Short-term investments at central banks and other External rating A+ to A- 3 318 269 - 3 318 269 credit institutions
BBB+ to BBB- 8 295 150 - 8 295 150
BB+ to BB- 80 128 392 - 80 128 392
Unrated N/D 15 469 917 - 15 469 917
107 211 728 - 107 211 728
Financial assets at fair value through profit or loss External rating B+ to B- 336 406 492 - 336 406 492
Unrated N/D 1 535 457 - 1 535 457 BFA 337 941 949 - 337 941 949
Held-to-maturity investments External rating B+ to B- 258 740 073 - 258 740 073
Loans and advances to Customers - On-balance- Internal rating Class A 96 403 758 - 96 403 758 sheet
Class B 133 440 384 (1 305 954) 132 134 430
Class C 3 145 818 (149 571) 2 996 247
Class D 681 926 (121 888) 560 038
Class E 2 430 541 (683 115) 1 747 426
Class F 4 617 063 (3 148 091) 1 468 972
Class G 8 828 480 (8 828 480) -
249 547 970 (14 237 099) 235 310 871
Loans and advances to Customers – Off-balance- Internal rating Class A 2 082 722 - 2 082 722 sheet
Class B 36 551 642 (349 504) 36 202 138
Class C 4 100 (204) 3 896 Risk Management Class E 14 434 (4 330) 10 104
Class G 498 (498) -
38 653 396 (354 536) 38 298 860
Total 1 309 280 895 (14 591 635) 1 294 689 260 Financial Revie w and Notes Financial Statements Annexe s
Financial Statements and Notes 189 2015 Source Rating Gross Net of rating grade exposure Impairment exposure Cash and funds available at central banks External rating B+ to B- 216 777 101 - 216 777 101
Unrated N/D 39 051 158 - 39 051 158
255 828 259 - 255 828 259
Funds available at other credit institutions External rating A+ to A- 25 304 921 - 25 304 921
BBB+ to BBB- 51 853 - 51 853
BB+ to BB- 24 795 257 - 24 795 257
Unrated N/D 889 488 - 889 488
51 041 519 - 51 041 519
Short-term investments at central banks and other External rating A+ to A- 2 213 984 - 2 213 984 credit institutions
BBB+ to BBB- 40 594 500 - 40 594 500
BB+ to BB- 48 713 400 - 48 713 400
Unrated N/D 43 483 948 - 43 483 948
135 005 832 - 135 005 832
Financial assets at fair value through profit or loss External rating B+ to B- 74 742 335 - 74 742 335
Unrated N/D 3 245 083 - 3 245 083
77 987 418 - 77 987 418
Held-to-maturity investments External rating B+ to B- 411 499 655 - 411 499 655
Loans and advances to Customers - On-balance- Internal rating A 74 786 045 (111) 74 785 934 sheet
B 1 896 840 (33 905) 1 862 935
C 139 912 515 (4 143 809) 135 768 706
D 2 109 048 (210 264) 1 898 784
E 4 769 905 (1 297 623) 3 472 282
F 7 573 986 (4 570 828) 3 003 158
G 4 333 586 (4 329 430) 4 156
235 381 925 (4 585 970) 220 795 955
Loans and advances to Customers – Off-balance- Internal rating A 6 048 252 - 6 048 252 sheet
B 15 488 620 (92 839) 15 395 781
C 36 039 690 (990 075) 35 049 615
D 2 730 (273) 2 457
G 18 958 (18 958) -
57 598 250 (1 102 145) 56 496 105
Total 1 224 342 858 ( 15 688 115) 1 208 654 743
190 Banco de Fomento Angola | Annual Report’16 As at December 31, 2016 & 2015, the detail of the geographic concentration of the risk exposure is as follows: Repor t
2016 Other countries Angola in Africa Europe Other Total Assets
Cash and funds available at central banks 279 154 585 - - - 279 154 585
Funds available at other credit institutions - 334 155 36 933 400 763 639 38 031 194 Economic Environmen t Short-term investments at central banks and other 15 469 917 - 91 741 811 - 107 211 728 credit institutions
Financial assets at fair value through profit or loss 337 941 949 - - - 337 941 949
Held-to-maturity investments 258 740 073 - - - 258 740 073
Loans and advances to Customers 235 310 871 - - - 235 310 871
Total 1 126 617 395 334 155 128 675 211 763 639 1 256 390 400
2015 Other countries Angola in Africa Europe Other Total Assets
Cash and funds available at central banks 255 828 259 - - - 255 828 259
Funds available at other credit institutions - 647 714 48 754 937 1 638 868 51 041 519
Short-term investments at central banks and other
30 629 023 - 104 376 809 - 135 005 832 BFA credit institutions
Financial assets at fair value through profit or loss 77 987 418 - - - 77 987 418
Held-to-maturity investments 411 499 655 - - - 411 499 655
Loans and advances to Customers 220 795 955 - - - 220 795 955
Total 996 740 310 647 714 153 131 746 1 638 868 1 152 158 638 Risk Management Financial Revie w and Notes Financial Statements Annexe s
Financial Statements and Notes 191 1% 1% 1% 1% 4% 7% 7% 3% 2% 2% 0% 0% 9% 16% 24% 13% 45% 12% exposure Impairment/ Total Impairment/ Total - Imparidade 2 210 2 067 70 929 319 711 118 915 210 797 731 270 171 620 510 023 377 857 377 306 323 449 958 1 337 576 1 337 1 813 365 1 813 3 322 561 3 322 4 138 190 4 138 1 722 780 1 722 2 308 044 Value 11 269 074 269 11 14 591 635 591 14 1% 1% 4% 5% 5% 5% 5% 5% 0% 2% 9% 2% 2% 0% 0% 21% 12% 20% weight Relative 200 734 680 138 680 2 612 414 2 612 2016 5 127 160 5 127 1 373 728 1 373 3 064 897 6 833 184 6 885 856 6 Total 13 793 478 793 13 14 59314 579 64 978 213 64 978 14 759 087 759 14 57 242 995 242 57 15 228 620 15 12 80412 740 14 304 133 14 24 748 848 748 24 60 604 266 33 343 509 exposure 288 201 366 288 201 223 223 153 ------498 14 339 14 339 78 778 29 659 769 119 176 900 431 546 5 728 285 5 728 1 462 100 5 155 6435 155 6 446 009 given 38 653 396 653 38 18 360 520 18 38 639 057 Guarantees Guarantees - 10 98 57 691 77 276 127 714 715 936 625 975 464 940 664 745 199 696 238 279 146 403 892 622 892 304 634 3 014 098 3 014 1 049 427 1 546 197 2 560 099 11 636 413 636 11 10 586 98610 Overdue 200 636 259 461 479 944 6 725 114 6 725 1 373 718 1 373 7 972 672 1 907 661 1 579 842 6 102 9006 102 4 822 526 14 734 021 14 24 510 569 510 24 60 604 266 13 814 896 814 13 63 914 447 63 914 32 678 764 678 32 13 539 30213 10 736 888 736 10 35 86835 377 237 911 557 911 237 173 997 110 997 173 Performing Loans and advances to Customers Total Transport, storage and communications Individuals Consumer Health and social action Housing Central government Agriculture, livestock, and forestry hunting Production and distribution of electricity, gas and water Processing industries Other purposes Education Extractive industries Other service companies Construction Hotels and restaurants Other collective, social and personal services Wholesale and retail trade Companies Real estate and rental activities and services provided by companies Financial activities The sectorial concentration of loans and advances to Customers as at December 31, 2016 & 2015 is as follows: is & 2015 2016 advances and Customers loans of to as concentration at DecemberThe sectorial 31,
192 Banco de Fomento Angola | Annual Report’16 Repor t 1% 4% 4% 6% 3% 6% 5% 6% 7% 7% 3% 8% 9% 0% 0% 17% 15% 15% exposure Impairment/ Total Impairment/ Total - Imparidade 17 170 13 082 10 621 62 940 495 011 297 614 501 106 602 740 997 499 997 468 748 404 522 366 488 Economic 2 925 122 2 925 3 823 126 1 449 861 1 792 023 1 792 3 844 624 1 460 442 Environmen t Value 15 688 115 11 843 491 11 1% 1% 1% 1% 4% 4% 6% 5% 7% 7% 0% 3% 8% 0% 0% 21% 10% 20% weight Relative 414 574 713 168 9 121 370 9 121 2015 2 764 551 2 764 2 801 431 2 801 3 971 868 3 971 3 006 720 1 223 448 Total 17 339 191 17 57 752 471 752 57 12 410 887 410 12 10 639 774 10 19 169 394 169 19 705 021 15 60 107 927 23 506 916 21 507 569 21 64 834 721 30 688 031 exposure 292 980 175 980 292 228 145 454 228 145 - - - - - 406 44 518 411 623 114 638 114 638 975 896 295 554 350 566 8 124 691 8 124 5 370 699 5 370 3 890 201 2 505 229 given 57 598 250 598 57 10 165 838 165 10 57 48357 612 25 34825 391 BFA Guarantees Guarantees - 558 1 717 8 959 3 322 1 869 360 594 414 384 196 341 421 227 224 496 691 063 425 532 237 905 732 990 3 477 813 3 477 2 128 818 2 128 1 060 107 9 650 143 1 382 662 10 710 250 Overdue 368 339 709 440 294 333 294 8 918 016 8 918 8 574 463 8 574 2 020 103 1 779 696 1 779 9 959 069 9 959 1 222 890 3 733 963 8 788 968 57 752 471 752 57 11 638 670 11 10 103 909 11 801 380 801 11 63 976 659 30 273 647 30 273 23 282 420 33 449 898 161 011 699 011 161 224 675 671 Performing Loans and advances to Customers Total Risk Management Financial Revie w Individuals Consumer Extractive industries Transport, storage and communications Education Processing industries Production and distribution of electricity, gas and water Health and social action Housing Other purposes Construction Wholesale and retail trade Other service companies Hotels and restaurants Financial activities Agriculture, livestock, and forestry hunting Companies Real estate and rental activities and services provided by companies Central government Other collective, social and personal services and Notes Financial Statements Annexe s
Financial Statements and Notes 193 172 034 536 985 Total Total 8 724 718 8 724 4 917 994 4 917 3 851 957 3 851 1 247 689 1 247 4 700 727 1 528 787 1 528 3 670 305 3 670 5 380 744 7 005 879 8 069 967 14 759 131 759 14 12 277 257 277 12 15 075 846 075 15 10 058 40410 - - - - 2 323 2 323 150 539 150 539 2 121 374 2 121 2 110 800 2 110 2 110 800 2 110 4 132 397 4 132 2 021 597 2 021 1 208 207 3 329 581 1 208 207 5 years 5 years More than More than - - 184 3 918 710 411 311 245 710 595 315 163 111 858 112 042 1 754 124 1 754 2 701 258 2 701 4 553 670 4 451 4644 451 1 750 2061 750 3 843 259 From 1 From 1 to 5 years to 5 years - - 94 626 66 900 110 150 161 526 414 929 230 715 188 441 370 783 603 370 603 120 565 309 006 303 883 1 983 260 1 888 634 2016 2015 to 1 year to 1 year Time past due Time past due From 3 monthsFrom From 3 monthsFrom - 172 4 182 17 654 83 078 72 460 78 896 32 062 54 806 617 729 187 364 242 342 242 955 520 664 563 585 667 1 142 8841 142 to 3 months to 3 months From 1 monthFrom From 1 monthFrom 756 836 1 328 4 043 1 483 37 816 67 074 41 796 27 775 27 29 103 19 556 64 639 38 652 18 800 60 400 102 196 Up toUp 1 month Up toUp 1 month 670 817 170 379 532 942 7 374 125 7 374 6 334 974 3 692 251 4 118 943 4 118 5 168 690 5 168 2 472 344 2 472 3 393 057 3 393 1 775 6331 775 1 248 289 3 720 6333 720 1 092 233 3 448 126 4 784 484 overdue loans overdue loans associated with associated with Performing loans Performing loans Total Total Net exposure Net With collectively assessed impairment Overdue loans and interest exposureNet Impairment Impairment With assessed individually impairment Overdue loans and interest Loans and advances to Customers Loans without impairment With assessed individually impairment Overdue loans and interest Impairment Loans and advances to Customers Loans without impairment Net exposure Net Net exposureNet With collectively assessed impairment Overdue loans and interest Impairment As at December 31, 2016 & 2015, the breakdown of loans and advances and Customers loans breakdown of to as the follows: is & 2015, 2016 As at December 31,
194 Banco de Fomento Angola | Annual Report’16 The composition of overdue loans without impairment as at December 31, 2016 & 2015 is as follows: Repor t
2016 Days past due Performing loans Loans between Loans between Loans more associated with Loans up to 30 30 and 90 days 90 and 180 days than 180 days overdue loans days past due past due past due past due Total Overdue loans and interest Economic
Without individually assessed impairment 110 773 949 - - - 111 722 Environmen t
Without collectively assessed impairment 59 606 534 172 - - 60 312
Total 170 379 1 483 172 - - 172 034
2015 Days past due Performing loans Loans between Loans between Loans more associated with Loans up to 30 30 and 90 days 90 and 180 days than 180 days overdue loans days past due past due past due past due Total Overdue loans and interest
Without individually assessed impairment 386 158 2 896 - - - 389 054
Without collectively assessed impairment 146 784 1 147 - - - 147 931
Total 532 942 4 043 - - - 536 985 BFA
The composition of overdue loans with impairment as at December 31, 2016 & 2015 is as follows:
2016 Days past due Performing loans Loans between Loans between Loans more associated with Loans up to 30 30 and 90 days 90 and 180 days than 180 days overdue loans days past due past due past due past due Total Overdue loans and interest
Without individually assessed impairment 3 720 633 29 103 1 142 884 1 565 711 8 300 800 14 759 131
Without collectively assessed impairment 4 784 484 38 652 72 460 134 245 350 903 5 380 744
Total 8 505 117 67 755 1 215 344 1 699 956 8 651 703 20 139 875
2015 Days past due Performing loans Loans between Loans between Loans more associated with Loans up to 30 30 and 90 days 90 and 180 days than 180 days overdue loans days past due past due past due past due Total Risk Management Overdue loans and interest
Without individually assessed impairment 5 168 690 102 196 617 729 330 450 8 856 781 15 075 846
Without collectively assessed impairment 4 118 943 19 556 83 078 95 167 601 250 4 917 994
Total 9 287 633 121 752 700 807 425 617 9 458 031 19 993 840 Financial Revie w and Notes Financial Statements Annexe s
Financial Statements and Notes 195 As at December 31, 2016 & 2015, the structure of restructured loans and advances is as follows:
2016 Loans
Outstanding Past due Total Impairment Corporates 1 993 028 2 372 839 4 365 867 2 489 343
Individuals:
Consumer 192 566 1 203 193 769 41 547
Home 123 022 235 123 257 40 259
315 588 1 438 317 026 81 806
Total 2 308 616 2 374 277 4 682 893 2 571 149
2015 Loans
Outstanding Past due Total Impairment Corporates 4 531 189 1 379 008 5 910 197 2 780 520
Individuals:
Consumer 179 930 1 375 181 305 3 848
Total 4 711 119 1 380 383 6 091 502 2 784 368
31.2 LIQUIDITY RISK
The liquidity risk corresponds to the risk that the Bank may find Within the Bank’s internal policies with regard to exposure it difficult to obtain the financial resources it needs to meet its to the liquidity risk, the oversight and monitoring of the commitments. The liquidity risk may, for example, consist of the established principles and limits are ensured by the Financial inability to sell a financial instrument quickly for its fair value. and International Department (DFI).
196 Banco de Fomento Angola | Annual Report’16 Repor t Total 38 031 194 38 031 1 510 796 1 510 3 445 568 107 601 481 601 107 334 500 216 280 960 160 449 945 292 284 044 766 1 097 3091 097 946 1 495 804 387 1 495 393 753 649 753 393 393 538 077 1 102 266 310 266 1 102 ------393 753 649 753 393 Indeterminate Economic ------Environmen t 920 153 years 74 521 735 521 74 93 685 308 More than 5 169 127 196 127 169 169 127 196 127 169 393 753 649 753 393 ------years Between 3 89 103 421 89 103 22 104 881 22 104 years and 5 22 120 43022 120 133 328 732 133 328 732 224 626 453 626 224 ------years year and 3 Between 1 75 862 617 75 100 558100 537 29 639 223 206 060206 377 91 297 721 297 91 206 060206 377 - - - - 843 767 year 43 141 927 52 120 720 30 622 144 Between 6 255 012 143 012 255 338 598 774 598 338 43 927 141 43 927 294 671 633 294 671 (114 762 656) months and 1 BFA - - - - 2016 Between 3 22 713 221 22 713 32 172 087 172 32 69 765 933 765 69 24 50924 227 149 160 468 160 149 117 154 681 154 117 32 005 787 32 and 6 months (409 434(409 289) 117 154 681 154 117 - - - Residual contractual term contractual Residual 1 320 819 3 288 084 Between 1 12 34012 941 216 560 402 216 217 881 221 50 388 568 43 336 888 109 354 481 354 109 (441 440 076) (441 and 3 months (108 526 740) 526 (108 - - - - 189 977 189 month Up toUp 1 8 376 558 8 376 71 183 005 183 71 40 707 60540 707 22 098 842 (34 160 862) 160 (34 105 343 867 105 105 153 890 153 105 (332 913 336) 913 (332 - - - - - Due 3 445 568 614 298 260 614 38 031 194 38 031 617 743 828 743 617 318 991 354 991 318 280 960 160 (298 752 474) 752 (298 (298 752 474) 752 (298 Risk Management Total assets Total Liquidity gap Total liabilities Accumulated liquidity gap Financial Revie w Liabilities of centralFunds banks and other credit institutions Customer funds and other borrowings at through value fair profit liabilities Financial loss or Loans and advances Customers to Held-to-maturity investments Assets Cash at central and funds available banks at other available credit institutions Funds Financial assetsFinancial at through value fair profit loss or Short-term investments at central banks and other credit institutions and Notes As at December 31, 2016 & 2015, the detail of the wholes of the contractual cash flows is as follows: cash flows contractual wholesfollows: is the of as the of detail the & 2015, 2016 As at December 31, Financial Statements Annexe s
Financial Statements and Notes 197 Total 51 041 519 97 707 055 4 814 604 4 814 3 798 9203 798 135 212 622 212 135 473 442 522 473 257 482 959 302 653 024 1 028 705 628 1 028 705 1 317 539 701 539 1 317 280 220 549 220 280 280 220 549 220 280 1 037 319 152 319 1 037 ------280 220 549 220 280 Indeterminate ------years 86 253 520 More than 5 200 166 461 200 166 113 912 941 912 113 200 166 461 200 166 280 220 549 220 280 ------years 9 543 941 87 622 634 622 87 Between 3 87 622 634 622 87 years and 5 80 054 088 45 232 00345 232 32 84632 690 ------years year and 3 Between 1 18 242 190 242 18 66 441 58866 441 153 604153 588 238 288 366 238 288 366 (7 568 546) - - - - - year 15 051 703 051 15 85 495 165 85 495 85 127 182 85 127 31 889 873 31 46 573 593 Between 6 132 068 758 132 46 573 593 46 573 (245 856 912) (245 months and 1 - - - - - 2015 Between 3 17 520 322 17 26 168 150 168 26 57 232 566 232 57 100 921 038 921 100 127 118 077 118 127 (331 352(331 077) and 6 months 127 118 077 118 127 (26 197 039) (26 197 - - - Residual contractual term contractual Residual 2 557 765 2 557 84 537 587 84 537 Between 1 10 661 237 661 10 27 373 501 373 27 14 00014 257 132 879 363 879 132 32 50232 592 (50 899 541) (50 135 437 128 437 135 (305 155 038) 155 (305 and 3 months - - - month Up toUp 1 1 241 155 1 241 1 327 570 1 327 39 894 337 39 25 875 384 875 25 995 06016 125 516 042 516 125 124 274 887 274 124 165 410 379 (254 255 497) 121 212 365 - - - - - Due 4 814 604 4 814 51 041 519 597 859 708 602 674 312 674 602 308 524 478 257 482 959 (294 149 834) 149 (294 834) 149 (294 Total assets Total Liquidity gap Total liabilities Accumulated liquidity gap Liabilities of centralFunds banks and other credit institutions at through value fair profit liabilities Financial loss or Assets Cash at central and funds available banks Customer funds and other borrowings Funds available at other available credit institutions Funds Held-to-maturity investments Loans and advances Customers to Short-term investments at central banks and other credit institutions Financial assetsFinancial at through value fair profit loss or
198 Banco de Fomento Angola | Annual Report’16 Repor t Total 38 031 194 38 031 1 510 796 1 510 3 445 569 107 211 728 211 107 235 310 871 235 310 258 740 073 258 740 337 941 949 941 337 279 154 585 154 279 1 079 750 294 750 1 079 171 683 741 171 683 741 171 1 084 659 706 1 256 390 400 390 1 256 ------171 683 741 171 Indeterminate Economic ------Environmen t 535 170 years 80 033 914 62 709 258 709 62 More than 5 143 278 342 278 143 171 683 741 171 143 278 342 278 143 ------years 99 186 492 99 186 Between 3 99 186 492 99 186 19 126 434 126 19 years and 5 28 405 399 28 16 855 345 16 63 204 713 ------years 94 818 705 94 818 year and 3 Between 1 40 700 381 22 852 532 158 371 618 371 158 158 371 618 371 158 (70 781 093) 781 (70 - - - - 829 515 year 11 624 433 624 11 Between 6 866 626 49 42 489 397 239 861 715 861 239 177 780 901 177 42 489 397 197 372 318 (229 152 711) 152 (229 months and 1 BFA - - - - 2016 Between 3 21 362 720 21 22 685 475 31 434 46931 55 081 40355 081 130 564 067 130 117 128 324 128 117 13 435 743 435 13 (426 525 029) 525 (426 and 6 months 117 128 324 128 117 - - - Repricing dates / Maturity date 1 320 819 3 295 430 98 896 268 896 98 Between 1 41 616 025 616 41 10 733 613 10 204 556 617 43 251 200 43 251 205 877 436 and 3 months (439 960 772) (439 (106 981 168) - - - - 189 977 189 month Up toUp 1 7 651 097 7 651 42 08042 713 68 866 253 19 134 443 134 19 101 467 673 101 101 277 696 277 101 (32 601 420) 601 (32 (332 979 604) 979 (332 - - - - 179 866 Due 3 445 569 614 298 260 614 38 031 194 38 031 617 743 829 743 617 317 365 645 365 317 279 154 585 154 279 (300 378 184) 378 (300 184) 378 (300 Risk Management Total assets Total Liquidity gap Total liabilities Accumulated liquidity gap Financial Revie w Assets Cash at central and funds available banks Funds available at other available credit institutions Funds Short-term investments at central banks and other credit institutions Loans and advances Customers to Financial assetsFinancial at through value fair profit or loss Held-to-maturity investments Liabilities of centralFunds banks and other credit institutions Financial liabilities at through value fair profit liabilities Financial loss or Customer funds and other borrowings and Notes The composition of contractual cash flows relating to capital as at December 31, 2016 & 2015, is as follows: follows: is as & 2015, 2016 31, as at to Decembercapital cash flows contractual of relating The composition Financial Statements Annexe s
Financial Statements and Notes 199 Total 51 041 519 77 987 418 4 814 604 4 814 3 798 9203 798 411 499 655 499 411 1 017 159 626 159 1 017 255 828 259 220 955 795 135 005135 832 1 152 158 638 158 1 152 1 025 773 150 773 1 025 126 385 488 126 126 385 488 126 ------126 385 488 126 Indeterminate ------years 98 755 413 98 755 60 791 132 60 791 More than 5 159 546 545 159 159 546 545 159 126 385 488 126 ------years 6 848 992 58 379 855 58 379 Between 3 25 467 714 25 58 379 855 58 379 26 06326 149 years and 5 (33 161 057) 161 (33 ------years year and 3 Between 1 39 171 139 39 171 13 142 998 142 13 136 043136 803 188 357 940 357 188 188 357 940 357 188 (91 540 912) - - - - - year 9 777 333 57 835 424 57 16 402 795 16 Between 6 48 233 154 79 88879 450 106 068 578 106 48 154 233 (279 898 852) 898 (279 months and 1 - - - - - 2015 91 256 857 256 91 Between 3 15 635 726 15 21 693 039 693 21 53 928 092 122 052 621 052 122 (337 734 276) 734 (337 and 6 months 122 052 621 052 122 (30 795 764) 795 (30 - - - 9 510 312 2 557 765 2 557 78 145 449 145 78 Datas de refixação / Data de maturidade Between 1 25 141 745 141 25 128 178 554 178 128 12 849 38412 130 736 319 130 (52 590 870) 590 (52 30 644 008 (306 938 512) and 3 months - - - 448 122 156 156 122 month Up toUp 1 1 241 155 1 241 1 237 491 1 237 41 311 072 15 25715 421 24 736 456 736 24 122 076 744 076 122 120 835120 589 163 387 816 (254 347 642) 347 (254 - - - - 145 820 Due 4 814 604 4 814 51 041 519 597 859 708 602 674 312 674 602 307 015 598 015 307 255 828 259 (295 658 714) 658 (295 (295 658 714) 658 (295 Total assets Total Liquidity gap Total liabilities Accumulated liquidity gap Assets Cash at central and funds available banks Funds available at other available credit institutions Funds Liabilities of centralFunds banks and other credit institutions Loans and advances Customers to Short-term investments at central banks and other credit institutions assetsFinancial at through value fair profit or loss Customer funds and other borrowings Held-to-maturity investments at through value fair profit liabilities Financial loss or
200 Banco de Fomento Angola | Annual Report’16 31.3 MARKET RISK Interest-rate Risk Repor t
Market risk is the possible fluctuation of the fair value or of The interest rate risk is the risk of the fair value or of the cash future cash flows associated with a financial instrument due to flows associated with a particular financial instrument changing changes in market prices. Market risk includes the interest-rate as a result of a change in market interest rates. risk and the exchange-rate risk. Additionally, BFA also monitors the interest-rate risk and spread Economic
of the securities portfolio with a maturity of more than one year. Environmen t
As at December 31, 2016 & 2015, the detail of financial instruments for exposure to the interest-rate risk is as follows:
2016
Exposure to Not subject to interest rate Fixed rate Variable rate risk Derivatives Total Assets Cash and balances with central banks - 255 728 381 23 426 204 - 279 154 585 Balances with other credit institutions - 38 031 194 - - 38 031 194 Short-term investments at central banks and other credit institutions 93 122 769 14 088 959 - - 107 211 728 Financial assets at fair value through profit or loss 336 406 492 - 1 535 457 - 337 941 949 Held-to-maturity investments 146 010 070 112 730 003 - - 258 740 073 Loans and advances to Customers 215 096 595 20 214 276 - 235 310 871 790 635 926 440 792 813 24 961 661 - 1 256 390 400 Liabilities
Funds of central banks and other credit institutions - - 3 445 569 - 3 445 569 BFA Customer funds and other borrowings 464 832 896 614 917 398 - - 1 079 750 294 Financial liabilities at fair value through profit or loss - - 1 510 796 - 1 510 796 Total 464 832 896 614 917 398 4 956 365 - 1 084 706 659
2015
Exposure to Not subject to interest rate Fixed rate Variable rate risk Derivatives Total Assets Cash and balances with central banks - 216 777 101 39 051 158 - 255 828 259 Balances with other credit institutions - 50 678 631 362 888 - 51 041 519 Short-term investments at central banks and other credit institutions 114 360 270 20 645 562 - - 135 005 832 Financial assets at fair value through profit or loss 74 742 335 - 3 245 083 - 77 987 418 Held-to-maturity investments 319 834 234 91 665 421 - - 411 499 655 Loans and advances to Customers 201 170 389 19 625 566 - 220 795 955 710 107 228 399 392 281 42 659 129 - 1 152 158 638 Liabilities Funds of central banks and other credit institutions - - 4 814 604 - 4 814 604 Risk Management Customer funds and other borrowings 419 133 673 598 025 953 - - 1 017 159 626 Financial liabilities at fair value through profit or loss - - 3 798 920 - 3 798 920 Total 419 133 673 598 025 953 8 613 524 - 1 025 773 150 Financial Revie w and Notes Financial Statements Annexe s
Financial Statements and Notes 201 Total Total 74 742 335 38 031 194 38 031 50 678 631 50 678 107 211 728 211 107 216 777 101 216 235 310 871 235 310 411 499 655 499 411 258 740 073 258 740 255 728 381 728 255 220 955 795 135 005135 832 336 406 492 1 017 159 626 159 1 017 1 231 428 739 428 1 231 1 079 750 294 750 1 079 1 109 499 509 499 1 109 ------Indeterminate Indeterminate ------535 170 years years 60 791 132 60 791 62 709 258 709 62 79 36479 367 60 660 333 121 451 465 451 121 More than 5 More than 5 142 608 795 142 ------years years 6 848 989 25 467 714 25 51 932 227 932 51 99 556 330 19 126 434 126 19 16 855 345 16 84 248 930 63 348 777 Between 3 Between 3 years and 5 years and 5 ------34 361 165 34 361 94 818 705 94 818 13 142 998 142 13 39 628 425 22 852 532 and 3 years and 3 years 157 299 662 157 183 547 966 547 183 136 043136 803 Between 1 year Between 1 year - - - - - 829 515 year year 9 682 052 9 777 333 45 031 757 031 45 14 797 649 797 14 99 347 835 99 347 42 489 397 49 626 866 626 49 79 88879 450 Between 6 Between 6 243 034 931 243 177 780 901 177 months and 1 months and 1 - - - - - 2016 2015 3 177 004 3 177 18 136 217 78 798 135 798 78 6 months 6 6 months 6 21 693 039 693 21 22 685 475 31 434 46931 55 081 40355 081 53 928 092 117 128 324 128 117 125 254125 018 127 337 564 337 127 Repricing dates / Maturity date Repricing dates / Maturity date Between 3 and Between 3 and - - - - 3 295 430 1 986 958 41 616 025 616 41 68 561 412 68 561 42 113 896 113 42 10 659 59610 3 months 3 3 months 3 97 68497 947 23 081 06223 081 12 849 38412 30 644 008 128 178 554 178 128 204 556 617 204 556 Between 1 and Between 1 and - 198 914 Due Due 9 375 8409 375 18 916 156 38 031 194 38 031 58 996 216 50 678 631 50 678 42 08042 713 24 736 456 736 24 216 777 101 216 715 575 956 575 715 718 695 297 695 718 473 543 766 473 255 728 381 728 255 364 132 284 364 132 122 156 448 156 122 Loans and advances Customers to Liabilities Customer funds and other borrowings Assets Cash and balances central with banks Balances other with credit institutions Short-term investments at central banks and other credit institutions Financial assetsFinancial at through value fair profit or loss Held-to-maturity investments Assets Cash and balances central with banks Balances other with credit institutions Short-term investments at central banks and other credit institutions Held-to-maturity investments Loans and advances Customers to Financial assetsFinancial at through value fair profit or loss Liabilities Customer funds and other borrowings The detail of financial instruments exposed to the interest-rate risk in the light of the maturity or repricing date as at December 31, 2016 & 2015, is as follows: is as & 2015, 2016 31, as at date December maturity or repricing the of light the in instrumentsinterest-rate exposedrisk the to financial of The detail
202 Banco de Fomento Angola | Annual Report’16 As at December 31, 2016 & 2015, the sensitivity analysis of the results generated by financial instruments to changes in interest Repor t rates is detailed as follows:
2016 Changes in interest rates -200 bp -100 bp -50 bp 50 bp 100 bp 200 bp Interest income and similar income (18 753 383) (9 376 692) (4 688 346) 4 688 346 9 376 692 18 753 383 Economic
Interest expense and similar expense 9 296 658 4 648 329 2 324 164 (2 324 164) (4 648 329) (9 296 658) Environmen t
Total (9 456 725) (4 728 363) (2 364 180) 2 364 182 4 728 363 9 456 725
2015 Changes in interest rates -200 bp -100 bp -50 bp 50 bp 100 bp 200 bp Interest income and similar income (16 915 117) (8 457 559) (4 228 779) 4 228 779 8 457 559 16 915 117
Interest expense and similar expense 8 382 673 4 191 337 2 095 668 (2 095 668) (4 191 337) (8 382 673)
Total (8 532 444) (4 266 222) (2 133 111) 2 133 111 4 266 222 8 532 444
Exchange-Rate Risk The Bank’s securities portfolio is split between securities denominated in domestic currency and in foreign currency, Market risk is the possible fluctuation of the fair value or of having regard to the overall structure of its balance sheet, so as future cash flows associated with a financial instrument due to to avoid the exchange-rate risk. BFA changes in market prices. Risk Management Financial Revie w and Notes Financial Statements Annexe s
Financial Statements and Notes 203 As at December 31, 2016 & 2015, the detail of financial instruments by currency is as follows:
2016 Other Kwanzas US dollars Euros currencies Total Assets Cash and balances with central banks 235 157 135 43 641 265 230 796 125 389 279 154 585 Balances with other credit institutions - 15 059 996 21 249 764 1 721 434 38 031 194 Short-term investments at central banks and other credit institutions 10 635 400 39 952 428 56 623 900 - 107 211 728 Financial assets at fair value through profit or loss 294 776 253 43 165 696 - - 337 941 949 Held-to-maturity investments 102 757 219 155 982 854 - - 258 740 073 Loans and advances to Customers 134 557 807 100 729 673 23 391 - 235 310 871 777 883 814 398 531 912 78 127 851 1 846 823 1 256 390 400 Liabilities Funds of central banks and other credit institutions 1 759 849 888 754 796 966 - 3 445 569 Customer funds and other borrowings 698 510 509 338 428 887 41 124 757 1 686 141 1 079 750 294 Financial liabilities at fair value through profit or loss 22 846 1 264 098 223 852 - 1 510 796 700 293 204 340 581 739 42 145 575 1 686 141 1 084 706 659 77 590 610 57 950 173 35 982 276 160 682 171 683 741
2015 Other Kwanzas US dollars Euros currencies Total Assets Cash and balances with central banks 212 524 441 42 132 528 883 389 287 901 255 828 259 Balances with other credit institutions 362 888 29 236 207 20 030 998 1 411 426 51 041 519 Short-term investments at central banks and other credit institutions 20 600 260 114 405 572 - - 135 005 832 Financial assets at fair value through profit or loss 57 505 149 20 482 269 - - 77 987 418 Held-to-maturity investments 255 819 380 155 680 275 - - 411 499 655 Loans and advances to Customers 123 423 365 96 962 511 406 546 3 533 220 795 955 670 235 483 458 899 362 21 320 933 1 702 860 1 152 158 638 Liabilities Funds of central banks and other credit institutions 1 826 034 2 547 040 441 530 - 4 814 604 Customer funds and other borrowings 635 436 166 359 181 121 21 284 371 1 257 968 1 017 159 626 Financial liabilities at fair value through profit or loss 2 745 3 792 725 3 450 - 3 798 920 637 264 945 365 520 886 21 729 351 1 257 968 1 025 773 150 32 970 538 93 378 476 (408 418) 444 892 126 385 488
The sensitivity analysis of the asset value of the financial instruments to changes in exchange rates, as at December 31, 2016 & 2015, is detailed as follows:
2016 -20% -10% -5% 5% 10% 20% US dollars (6 344 858) (3 167 429) (1 583 715) 1 583 175 3 167 429 6 334 858 Euros (6 242 591) (3 121 296) (1 560 648) 1 560 648 3 121 296 6 242 591 Other currencies (62 785) (31 393) (15 696) 15 696 31 393 62 785 Total (12 640 235) (6 320 118) (3 160 059) 3 160 059 6 320 118 12 640 235
2015 -20% -10% -5% 5% 10% 20% US dollars (6 911 438) (1 727 859) (1 727 859) 1 727 859 1 727 859 6 911 438 Euros (43 844) (21 922) (10 961) 10 961 21 922 43 844 Other currencies (89 952) (44 976) (22 488) 22 488 44 976 89 952 Total (7 045 234) (3 522 617) (1 761 308) 1 761 308 3 522 617 7 045 234
204 Banco de Fomento Angola | Annual Report’16 31.4 FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES Repor t
As at December 31, 2016 & 2015, the carrying amount of the financial instruments is as follows:
2016 Carried at fair Carried at Net carrying value amortized cost Impairment value Assets Economic Cash and balances with central banks - 279 154 585 - 279 154 585 Environmen t Balances with other credit institutions - 38 031 194 - 38 031 194 Short-term investments at central banks and other credit institutions - 107 211 728 - 107 211 728 Financial assets at fair value through profit or loss 337 941 949 - - 337 941 949 Held-to-maturity investments - 258 740 073 - 258 740 073 Loans and advances to Customers - 249 547 970 14 237 099 235 310 871 337 941 949 932 685 550 14 237 099 1 256 390 400 Passivos - Recursos de bancos centrais e de outras instituições de crédito - 3 445 569 - 3 445 569 Recursos de Clientes e outros empréstimos - 1 079 750 294 - 1 079 750 294 Passivos financeiros ao justo valor através de resultados 1 510 796 - - 1 510 796 1 510 796 1 083 195 863 - 1 084 706 659
2015 Carried at fair Carried at Net carrying value amortized cost Impairment value Assets
Cash and balances with central banks - 255 828 259 - 255 828 259 BFA Balances with other credit institutions - 51 041 519 - 51 041 519 Short-term investments at central banks and other credit institutions - 135 005 832 - 135 005 832 Financial assets at fair value through profit or loss 77 987 418 - - 77 987 418 Held-to-maturity investments - 411 499 655 - 411 499 655 Loans and advances to Customers - 235 381 925 14 585 970 220 795 955 77 987 418 1 088 757 190 14 585 970 1 152 158 638 Passivos - Recursos de bancos centrais e de outras instituições de crédito - 4 814 604 - 4 814 604 Recursos de Clientes e outros empréstimos - 1 017 159 626 - 1 017 159 626 Passivos financeiros ao justo valor através de resultados 3 798 920 - - 3 798 920 3 798 920 1 021 974 230 - 1 025 773 150 Risk Management Financial Revie w and Notes Financial Statements Annexe s
Financial Statements and Notes 205 As at December 31, 2016 & 2015, the fair value of the Bank’s financial instruments is as follows:
2016 Fair value of financial instruments
Recorded Net carrying Recorded at amortized amount at fair value cost Total Difference Assets Cash and balances with central banks 279 154 585 - 279 154 585 279 154 585 - Balances with other credit institutions 38 031 194 - 38 031 194 38 031 194 - Short-term investments at central banks and other credit 107 211 728 - 107 211 728 107 211 728 - institutions Financial assets at fair value through profit or loss 337 941 949 337 941 949 - 337 941 949 - Held-to-maturity investments 258 740 073 - 258 740 073 258 740 073 - Loans and advances to Customers 235 310 871 - 184 754 460 184 754 460 (50 556 411) 1 256 390 400 337 941 949 867 892 040 1 205 833 989 (50 556 411) Liabilities Funds of central banks and other credit institutions 3 445 569 - 3 445 569 3 445 569 - Customer funds and other borrowings 1 079 750 294 - 1 079 750 294 1 079 750 294 - Financial liabilities at fair value through profit or loss 1 510 796 1 510 796 - 1 510 796 - 1 084 706 659 1 510 796 1 083 195 863 1 084 706 659 -
2015 Fair value of financial instruments
Recorded Net carrying Recorded at amortized amount at fair value cost Total Difference Assets Cash and balances with central banks 255 828 259 - 255 828 259 255 828 259 - Balances with other credit institutions 51 041 519 - 51 041 519 51 041 519 - Short-term investments at central banks and other credit 135 005 832 - 135 005 832 135 005 832 - institutions Financial assets at fair value through profit or loss 77 987 418 77 987 418 - 77 987 418 - Held-to-maturity investments 411 499 655 - 411 499 655 411 499 655 - Loans and advances to Customers 220 795 955 - 194 426 494 194 426 494 (26 369 461) 1 152 158 638 77 987 418 1 047 801 759 1 125 789 177 (26 369 461) Liabilities Funds of central banks and other credit institutions 4 814 604 - 4 814 604 4 814 604 - Customer funds and other borrowings 1 017 159 626 - 1 017 159 626 1 017 159 626 - Financial liabilities at fair value through profit or loss 3 798 920 3 798 920 - 3 798 920 - 1 025 773 150 3 798 920 1 021 974 230 1 025 773 150 -
Where possible, the fair value of the financial shall be estimated a) Financial instruments carried in the balance sheet at fair prices listed on an active market. A market is considered value: active, and therefore liquid, when it is accessed by equally- knowledgeable counterparties, where transactions are carried The Treasury Bills and Treasury Bonds issued by the out on a regular basis. Almost all of the Bank’s financial Angolan State and held by the Bank for trading on a the instruments of the Bank is not listed in active markets. secondary market with other banks or with its Customers, carried under Financial assets at fair value through In view of the lack of prices listed in active markets, the profit or loss are recognised at amortised cost, since the valuation of financial instruments is undertaken as follows: understanding is that this reflects the best approach to their market value, since no price is listed in an active market with regular transactions.
206 Banco de Fomento Angola | Annual Report’16 “Derivative operations – currency forwards” are values ■■ For Treasury Bonds issued by the Angolan State and carried Repor t on the basis of generally accepted methods, in particular under investments held to maturity, it was considered that based on the current value of future cash flows, based on the carrying amount was a reliable approximation of their fair the interest-rate curve at the time of calculation. value, on the grounds that it reflects the best approximation to their market value, since they are not listed on an active Interest rates for specific cash-flow periods are determined market with regular transactions; using interpolation methods.
■■ Economic For loans and advances to Customers the average annual Environmen t b) Financial instruments carried in the balance sheet at interest rates applied by the Bank in the closing months amortised cost: of 2016 and 2015, respectively, were used for operations if similar characteristics, having deducted the amount of For financial instruments carried in the balance sheet at accumulated impairment losses; and amortised cost, the Bank determines the fair value using valuation techniques. ■■ With regard to Customer deposits, since they are essentially short-term operations, it was considered that the carrying The valuation techniques used are based on the conditions amount was a reasonable approximation of their fair value; applicable to similar operations on reporting date, in particular, the value of their discounted cash flows based It should be noted that the fair value presented does on interest rates considered most appropriate, that is: not correspond to the realisable value of these financial instruments in a scenario of sale or liquidation, and it was no ■■ With regard to balances of financial instruments payable determined for such a purpose. within one year, it was considered that the carrying amount
was a reasonable approximation of their fair value; BFA
As at December 31, 2016 & 2015, the detail by valuation methodology of the fair value of financial instruments carried in the balance sheet at fair value is as follows:
2016 Level 1, price Level 2, Level 3, quotation in active observable other valuation market market data techniques Total Assets Financial assets at fair value through profit or loss 179 866 1 355 591 336 406 492 337 941 949 Liabilities Financial liabilities at fair value through profit or loss - 1 510 796 - 1 510 796
2015 Level 1, price Level 2, Level 3, quotation in active observable other valuation market market data techniques Total Assets Financial assets at fair value through profit or loss 145 821 3 099 262 74 742 335 77 987 418 Risk Management Liabilities Financial liabilities at fair value through profit or loss - 3 798 920 - 3 798 920
As at December 31, 2016 & 2015, financial instruments observable market data (such as interest-rate or exchange-rate presented in Level 1 of the hierarchy provided for in standard curves), and financial instruments presented in Level 3 are
IFRS 13 are listed shares, financial instruments presented Treasury Bills and Treasury Bonds issued by the Angolan State. Financial Revie w in Level 2 are to derivative financial instruments whose value is determined based on internal models that mainly use and Notes Financial Statements Annexe s
Financial Statements and Notes 207 32. OTHER MATTERS
Acquisition by purchase by Unitel, SA, from Banco BPI, SA, BNA set as a condition that the three operations mentioned of 26,111 shares in BFA representing 2% of the BFA share above are indivisible, that is, it is assumed that they must capital occur simultaneously, or nearly simultaneously, or it is not possible for any reason ensure the simultaneity, the operation On October 7, 2016, Unitel, SA (Unitel) concluded with referred to in (ii) must precede the operations listed under (i) Banco BPI, SA (BPI) an agreement for the purchase of 2% and (iii). of the BFA share capital, implementation of which entailed an increase of the percentage of Unitel’s holding in BFA from On January 5, 2017, in execution of the purchase and sale of 49.9% to 51.9%. On the same date a new shareholders’ shares agreement concluded in 2016, the sale by Banco BPI agreement was also signed relating to BFA. to Unitel took place of said holding representing 2% of the BFA share capital. Finalisation of this operation was subject to the following conditions precedent:
■■ Authorisation of the National Bank of Angola (BNA) of the increase the qualifying holding already held by Unitel in BFA and authorisation of the capital operations necessary for the payment to Banco BPI and of the transfer to Portugal of the agreed price of 28 million euros;
■■ BNA authorisation for the alteration of BFA’s bylaws; and
■■ Approval of the operation by the General Meeting of Banco BPI.
On December 12, 2016, the National Bank of Angola announced that it was not opposed to the performance of the following acts: i) Partial amendment of the BFA bylaws; ii) Increased of the qualifying holding of Unitel in the BFA share capital through the acquisition of from Banco BPI of 26,611 common shares representing 2% of the share capital; iii) Indirect acquisition of the qualifying holding representing 48.10% of the BFA share capital, following the settlement of the general and mandatory public-acquisition offering issued by Caixabank on the whole of the shares representing the Banco BPI share capital.representing the Banco BPI share capital.totalidade de acções representativas do capital social do Banco BPI.
208 Banco de Fomento Angola | Annual Report’16 This page intentionally left blank. Repor t Economic Environmen t BFA Risk Management Financial Revie w and Notes Financial Statements Annexe s
Financial Statements and Notes 209 Audit Report
Deloitte & Touche – Auditores, Lda Edifício Escom Rua Marechal Brós Tito, 33/41 – 7º Luanda Angola Tel: +(244) 222 679 600 Fax: +(244) 222 679 690 www.deloitte.co.ao
INDEPENDENT AUDITOR’S REPORT (Amounts stated in thousands of Angolan Kwanzas - mAOA)
Dear Shareholders, Banco de Fomento Angola, S.A.
Introduction
1. We have audited the accompanying financial statements of Banco de Fomento Angola, S.A. (henceforth the “Bank”), which comprise the balance sheet as at 31 December 2016 showing a total of 1.312.879.567 mAOA, equity of 173.021.865 mAOA, and a net profit of 61.712.892 mAOA, income statement and other comprehensive income, equity changes and cash flows for the year then ended and the accompanying Annex.
Board of Director’s Responsibility for the Financial Statements
2. The Bank’s Board of Directors is responsible for correctly drawing up and submitting these financial statements in accordance with International Financial Reporting Standards (IFRS) and to ensure a level of internal control to enable the preparation of the Bank’s financial statements that are free of material misstatement resulting from fraud or error.
Auditor’s Responsibility
3. The Auditor’s responsibility is to express an independent opinion on these financial statements based on our team audit. We conducted the audit in accordance with the Technical Standards of the Association of Accountants and Chartered Management Accountants of Angola (Ordem dos Contabilistas e Peritos Contabilistas de Angola). Those standards require that we fulfil ethical demands and plan and perform the audit so as to be reasonably assured that the financial statements are free of material misstatement.
4. An audit encompasses the performance of procedures that will produce audit evidence concerning the amounts and disclosures of the financial statements. The elected procedures depend on the auditor’s acuity, including the risk assessment of material misstatement in the financial statements due to fraud or error. In making those risk assessments, the auditor regards the measures of internal control significant to the Bank’s preparation and submission of the financial statements aiming to design suitable auditing procedures under the circumstances, but not for the purpose of voicing an opinion on BFA’s internal control effectiveness. An audit also comprises the assessment of: compliance with accounting policies used, reasonableness of accounting estimates made by the Board of Directors as well as the assessment of the financial statements overall presentation.
“Deloitte” refers to Deloitte Touche Tohmatsu Limited, a private limited liability company of the United Kingdom (DTTL), or to one or more entities within its member firms network and respective related entities. DTTL and each DTTL member firm are legally separate and independent entities, which cannot obligate each other. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. Visit www.deloitte. com/pt/ about to find out more about our global member firms network.
Type: Limited Company | Corporate Taxpayer Number: 5401022670 | Luanda Commercial Registry Number: 106-97 | Share Capital: 1.620.000 AOA| Head Office: Edifício Escom, Rua Marechal Bróz Tito, 33/41 – 7º, Ingombotas, Luanda | Office in Talatona: Condomínio Cidade Financeira, Via S8, Bloco 4 – 5º, Talatona, Luanda
210 Banco de Fomento Angola | Annual Report’16 Repor t
Page 2 of 2 Economic Environmen t
5. We view the audit evidence obtained as sufficient and appropriate in order to serve as a feasible base for our audit opinion.
Opinion
6. In the auditor’s opinion, the financial statements mentioned in paragraph 1 present fairly in all material aspects, the financial situation of Banco de Fomento Angola, S.A. As of 3 December 2016, and of its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS).
Emphasis on Matter
7. As disclosed in Note 4 of the financial statements Annex, in 2016 BFA began using the International Financial Reporting
Standards (IFRS), following the release of Banco Nacional de Angola’s Notice no.6/2016 of 16 May. During the transition BFA process from the previous accounting standards (CONTIF-Chart of Accounts for Financial Institutions) to IFRS, the Bank followed the procedures provided by International Financial Reporting Standard 1 – First-time Adoption of International Financial Reporting Standards. The switch-over transition date was reported on 1 January 2015. Therefore, the financial information corresponding to that date and to FY2015, previously submitted in accordance with CONTIF, was translated to IFRS for comparison purposes. On the basis of the analyses performed, BFA’s Board of Directors found that equity had not been affected by any material misstatement issues as a result of the transition process to IFRS and no adjustments were therefore made with an impact on equity. Disclosures relating to the effects of IFRS transition process are presented in Note 4.
Our opinion has not changed regarding this subject matter.
Luanda, 3 May 2017 Risk Management
Deloitte & Touche - Auditores, Lda. Represented by Maria Augusta Cardador Francisco OCPCA member no.20120079 Financial Revie w and Notes Financial Statements Annexe s
Annexes 211 Supervisory Board Report and Opinion
Supervisory Board Report and Opinion
Dear Shareholders, Banco de Fomento Angola, S.A.
1. Pursuant to the law and in accordance with the instructions given to us, in compliance with Article 22(1) of the Articles of Association, we submit herewith the report on the audit performed by our team, as well as our opinion on the annual report and the financial statements submitted by the Board of Directors of Banco de Fomento Angola, S.A. (the Bank) for the year ended 31 December 2016.
2. Over the course of the year, we monitored, with the frequency and to the extent we deemed appropriate, the progress of the Bank’s activity, the proper state of the accounting records and compliance with the legal and statutory regulations in force. We also obtained the information and clarifications we requested from the Board of Directors and the Bank’s various business areas and departments.
3. We have analysed and agree with the content of the Auditors Report issued by Deloitte & Touche - Auditores, Lda, which is reproduced here in full.
4. Within the scope of our duties, we examined the balance sheet at 31 December 2016, the income statement and other comprehensive income, equity changes and cash flows for the year then ended, as well as the notes thereto, including the accounting policies and valuation criteria used.
5. In addition, we reviewed the 2016 Annual Report drawn up by the Board of Directors and the proposal for the appropriation of profits included therein.
212 Banco de Fomento Angola | Annual Report’16 Repor t
6. In view of the foregoing and based on the work performed, we are of the opinion that the General Meeting should:
a. Approve the Annual Report for the year ended 31 December 2016, Economic
b. Approve the financial statements for that year, and Environmen t
c. Approve the Proposal for the Appropriation of Profits.
7. Finally, we would like to thank the Board of Directors and the Bank’s various business areas and departments for their cooperation.
Luanda, 3 May 2017
Supervisory Board BFA
Amílcar Safeca Chairman
Susana Trigo Cabral Member Risk Management
Henrique Manuel Camões Serra Member Financial Revie w and Notes Financial Statements Annexe s
Annexes 213
08 ANNEXES BFA Contacts Glossary 220 216
Annexes Financial Statements Financial Review Risk Management BFA Economic Report and Notes Environment Glossary
■■ Assets – Property and rights held by an organization that ■■ Cash flow for the year – Net profit for the year, plus have economic value and can be converted into cash. depreciation and amortization expense and provisions. It represents the company’s capacity to generate funds for ■■ Real estate assets – Rights in real property for commercial, investment without having to borrow. residential or industrial use. ■■ Operating cash flow – Net operating revenue, less ■■ Depreciation/amortization – Reduction in the carrying administrative expenses. amount of a company’s fixed assets to reflect their use or wear and tear, or the decrease in their useful life. ■■ Cost-to-income ratio – A financial measure that shows a company’s costs as a percentage of its income. ■■ ATM (cash machine) – Device through which authorized users (generally holders of valid financial cards in a given ■■ Commodities – Goods that can be bought and sold, such as system) can access financial and other services, including farm products and natural resources. In international trade, cash withdrawals. the term is used to refer to raw materials and primary agricultural products. ■■ Investments in securities – Investments in fixed income assets issued by the National Treasury to finance the ■■ Deposit – Funds placed with a bank. national public debt. ■■ Term deposit – Funds placed in a bank account for a ■■ Capital account – Shows the balance of Angolan assets specified period (one month, three months, six months, one owned by foreign investors and foreign assets owned by year), earning interest at an agreed rate. Angolan investors. ■■ EMIS – Angolan company which, together with the banks, ■■ Trade balance – The difference between the value of the provides a range of services related to the use of bank goods and services a country exports and those it imports. cards. It manages the shared ATM and POS terminal network. ■■ Current account balance – The sum of the balance of trade and financial flows, especially interest paid to the foreign ■■ eMudar@BFA – A system implemented by BFA, consisting holders of debt issued by the country and dividends paid to of a front-end application for branches, Corporate Centres foreign investors. and Investment Centres that introduces mechanisms based on standardized workflow methodologies for ■■ Balance of payments – Reflects the total payments made processing various branch activities, so that they can be and income received by residents of a country to or from dematerialized, making them more efficient and mitigating the rest of the world. It is divided into the current account the level of operational risk. and the capital account. ■■ EMV – A standard for cards with computer chips that ■■ Balance sheet – Accounting statement that summarizes generate a unique transaction code for each transaction to a company’s assets (fixed assets, receivables, cash) and prevent fraud. liabilities (capital, debts). ■■ Euribor – Euro Interbank Offered Rate. The Euribor rate ■■ Treasury Bills (TBills) – Short-term public debt security is calculated daily based on the average interest rates at issued by the Treasury, with a maturity of less than one which 57 representative eurozone banks offer to lend funds year. Treasury Bills are issued at a discount and redeemed to one another. at their face value at maturity. ■■ MT940 statement – Standard statement, developed by ■■ Shareholders’ equity/Own funds – Funds that belong to the SWIFT and used internationally to electronically report daily company itself, as opposed to borrowed funds. bank account entries and end-of-day balances.
216 Banco de Fomento Angola | Relatório e Contas 2016 ■■ MT101 – Standard SWIFT message containing a request ■■ Interest-bearing liabilities – Liabilities such as bank Repor t for transfer of funds between bank accounts, which may borrowings and corporate bonds on which interest must be even be in different countries. paid.
■■ H2H (host to host) – A channel that allows bank ■■ Monetary policy – Set of measures taken to control the Customers, through the internet and mobile banking service supply of currency and credit and thus also the interest provided by their bank, to access the bill payments service rate in an economy. The central bank is responsible for Economic
available in the Multicaixa ATM network. implementing the country’s monetary policy. Environmen t
■■ Inflation – Average increase in the level of prices, generally ■■ Net operating revenue – Total revenue received by a expressed in percent. financial institution: fee and commission income, interest income, trading income, income from interbank lending. ■■ Financial institution – A company whose corporate purpose is to enter into financial contracts and which therefore is ■■ Gross domestic product (GDP) – Sum of all the goods and subject to prudential regulation and supervision. services produced in a country in a given period, generally one year. ■■ Financial instruments – Investment instruments including securities, derivatives and money market instruments. ■■ Finance income – Interest received from loans granted, calculated using the asset interest rate. ■■ Financial asset – Contractual right to receive cash or another financial asset (securities, accounts receivable) ■■ Overdue loans ratio – Ratio of Customer loans with overdue from another entity. principal or interest payments to total loans. BFA
■■ Financial liability – Contractual obligation to deliver cash or ■■ Regulatory Capital Adequacy Ratio (RCAR) – The ratio of another financial asset to another entity. regulatory capital (RC) to risk-weighted assets.
■■ Net Non-Interest Income – Sum of net fee and commission ■■ Loan-to-Deposit ratio: Ratio of total Customer loans less income, net trading income and other income. loan loss provisions (carrying value) to Customer deposits.
■■ Net Interest Income – Difference between the interest ■■ Rediscount – A monetary control instrument whereby the earned on loans and advances granted (calculated using Central Bank grants loans to commercial banks at above the asset interest rate) and the interest paid to savers on market rates. the amounts deposited with the bank (calculated using the liability interest rate). ■■ Return on assets (ROA) – An indicator of how profitable a company is relative to its total assets, calculated by ■■ Operating margin – Operating profit divided by total dividing net profit by total assets net of accumulated income, multiplied by one hundred. It measures a depreciation and amortization. It measures the percentage company’s operating profitability over a given period. profit generated by each monetary unit of assets. Risk Management ■■ Interbank money market – Market in which banks lend to ■■ Return on equity (ROE) – A measure of a company’s and borrow from one another to meet their needs. efficiency in generating profit from net assets (shareholders’ equity), i.e., the percentage profit generated ■■ Treasury Bonds (Tbonds) – Public debt securities issued by shareholders’ equity. by the Treasury which pay interest (coupons) at regular
intervals and are redeemed at their face value. ■■ Spread – The difference between the price offered by Financial Revie w buyers and the price asked by sellers in response to supply ■■ Liabilities – An entity’s total debts and obligations to pay. and demand in financial markets. The opposite of assets. and Notes Financial Statements Annexe s
Annexes 217 ■■ SPTR – Angolan real-time payments system, operated, ■■ Write-off – Reduction to zero of the carrying amount of administered and owned by Banco Nacional de Angola a overdue loan that is considered uncollectible. The write-off is done by recording an allowance for uncollectible ■■ STC - Credit Transfer Subsystem. accounts and so has no impact on the income statement.
■■ Stress test – A procedure for testing the performance of an ■■ Yield – The main indicator in the real estate investment investment portfolio in different scenarios. Stress testing market. It should be understood as a measure of the risk of is used to estimate portfolio performance in exceptional future returns: the higher the yield, the higher the price, the situations. greater the associated risk and the greater the opportunities of future returns. ■■ SWIFT – Society for Worldwide Interbank Financial Telecommunication, a provider of secure financial messaging services for banks. Its services are used in the foreign exchange, money and securities markets for confirmation and payment messages.
■■ Financial inclusion rate – Rate of use of financial services by the population of a country.
■■ Intervention rate – The rate of exchange at which a country’s national bank must buy or sell its own currency in order to return it to the same value it had before.
■■ Benchmark rates – Interest rates set by central banks to serve as the basis for commercial interest rates in an economy.
■■ Interest rate – Price a borrower must pay to the owner of borrowed capital for the use of that capital for a specified period, expressed in percent.
■■ Main refinancing rate – Minimum rate of interest on liquidity-providing operations, carried out through weekly auctions, for a term of two weeks.
■■ TLTRO (Targeted long-term refinancing operations) – Operations that provide long-term funding to credit institutions.
■■ POS terminal (Point-of-sale terminal) – An electronic device used to process card payments in retail and other establishments.
■■ NPV (net present value) – Discounted value of the expected future cash flows of a transaction.
■■ Way4 – EMIS card management platform.
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Annexes 219 BFA Contacts
HEAD OFFICE INVESTMENT CENTRES
HEAD OFFICE SOLAR DE ALVALADE Rua Amílcar Cabral, n.º 58 Rua Emílio Mbidi, Bairro Alvalade Maianga Maianga Luanda Luanda Telephone: (+244) 222 638 900 Telephone: (+244) 222 696 487 Fax: (+244) 222 638 948 Fax: (+244) 222 696 442
BAIXA TALATONA Rua Sequeira Lukoki Rua Centro de Convenções S8 Ingombota Bairro Talatona, Casa dos Frescos Luanda Belas Telephone: (+244) 222 336 285 Luanda Fax: (+244) 222 332 242 Telephone: (+244) 926 920 352 Fax: (+244) 222 696 442
MAJOR KANHANGULO LOBITO CAPONTE Rua Major Kanhangulo Av. Salvador Correia, 98/103 Ingombota Zona Industrial da Caponte, Luanda Benguela Rua Amílcar Cabral, n.º 58 Telephone: (+244) 222 394 456 Telephone: (+244) 272 226 242 Maianga – Luanda Fax: (+244) 222 393 145 Fax: (+244) 272 226 756 Telefone: (+244) 222 638 900
Website: SERPA PINTO BENGUELA CASSANGE www.bfa.ao Largo Serpa Pinto n.º 233, Rua Comandante Cassange R/C Ingombota Benguela Homebanking: Luanda Telephone: (+244) 272 230 190 www.bfanet.ao Telephone: (+244) 222 392 094 Fax: (+244) 272 230 196 Fax: (+244) 222 393 195 www.bfanetempresas.ao
BFA Customer Support: (+244) 923 120 120
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220 Banco de Fomento Angola | Relatório e Contas 2016
CORPORTE CENTRES Repor t
HEAD OFFICE VIANA POLO INDUSTRIAL CENTRO DAS GRANDES EMPRESAS Rua Amílcar Cabral, n.º 58 Estrada de Catete – Polo Rua Amílcar Cabral, n.º 58 Maianga Industrial KM 23 Maianga Luanda Luanda Luanda Telephone: (+244) 222 638 900 Telephone: (+244) 222 696 487 Telephone: (+244) 222 638 900 Fax: (+244) 222 638 948 Fax: (+244) 222 696 488 Economic Environmen t
LUBANGO VIANA ESTALAGEM CABINDA – DEOLINDA RODRIGUES Av. 4 de Fevereiro, Laureanos, Estalagem do Leão Rua Comendador Henriques Serrano, Lubango Estrada Principal de Viana Bairro Deolinda Rodrigues Huíla Luanda Cabinda Telephone: (+244) 261 225 689 Telephone: (+244) 931 964 715 Telephone: (+244) 231 220 309 Fax: (+244) 261 224 973 Fax: (+244) 222 291 083 Fax: (+244) 231 220 382
LOBITO CAPONTE MAJOR KANHANGULO BENGUELA CASSANGE Av. Salvador Correia, Rua Major Kanhangulo, Rua Comandante Cassange Zona Industrial da Caponte,1.º Andar N.º 93 / 103 Benguela Zona Industrial da Canata Ingombotas Telephone: (+244) 272 236 605 Benguela Luanda Fax: (+244) 272 236 606
Telephone: (+244) 272 226 240 Telephone: (+244) 222 394 022 BFA Fax: (+244) 272 226 238 Fax: (+244) 222 393 839
SANTA BÁRBARA TALATONA OIL & GAS OPERATORS Av.ª Marginal 2, Rua do SIAC, Bairro Talatona Rua Amílcar Cabral, n.º 58 Ingombotas Talatona Maianga Luanda Luanda Luanda Telephone: (+244) 222 696 419 Telephone: (+244) 926 920 351 Telephone: (+244) 222 638 986 Fax: (+244) 222 696 420 Fax: (+244) 222 447 041 Fax: (+244) 222 638 970
MORRO BENTO CACUACO OIL & GAS VENDORS Rua 21 de Janeiro, Morro Bento Estrada Directa de Cacuaco, Rua Amílcar Cabral, n.º 58 Luanda Largo da Igreja, Cacuaco Maianga Telephone: (+244) 935 545 499 Luanda Luanda Fax: (+244) 222 696 493 Telephone: (+244) 934 275 511 Telephone: (+244) 222 696 430 Fax: (+244) 222 511 413 Fax: (+244) 222 638 970 Risk Management
RAINHA GINGA Rua Rainha Ginga, n.º 34 1ª andar Luanda Financial Revie w Telephone: (+244) 222 392 952 Fax: (+244) 222 392 734 and Notes Financial Statements Annexe s
Annexes 221