Annual Report 2018 Sumbe Salt Flat at Gabela. Kwanza Sul Province Approval by the Board of Directors ............................................................... 4 Management Report 2018 ............................................................................... 7 Growth of BCA ..................................................................................................11 Key indicators ......................................................................................................16 Governance and Management Structure .................................................18 Corporate Governance Statement ..............................................................21 Macroeconomic View .......................................................................................26 Distribution Channels ................................................................................44 Financial Statements ..................................................................................46 Balance Sheet ............................................................................................. 48 Income Statement ...................................................................................... 49 Statement of Comprehensive Income .................................................. 50 Statement of Changes in Shareholder’s Equity ................................... 51 Statement of Cash Flows .......................................................................... 52 Notes to Financial Statements ................................................................. 53 Report and Opinion of the Fiscal Council ............................................. 183 Independent Auditor’s Report .............................................................. 184 Fisherman in his Mokoro (canoe) at Cuando river. Moxico Province The members of the Board of “Banco Comercial Angolano, S.A.” are responsible for the preparation, integrity and objectivity of the financial statements and other information contained in this report. To satisfy this responsibility the Bank has put in place systems of internal accounting and administrative control, to ensure that its assets are safeguarded and that transactions are executed and recorded in accordance with the rules and procedures adopted. The audited financial statements for the year ended on the 31st of December 2018, presented herewith were approved by the Board of Directors and are signed on its behalf by: Francisco da Silva Cristovão Mateus Filipe Martins Chairman Chief Executive Officer Luanda, 23 April 2019 5 M’bridge Falls at Cuimba, M’Banza-Kongo. Zaire Province The year 2018, was marked by the beginning capital that lies the key to the differentiation of of the recovery from the adverse effects on the our brand. In this context, training actions were national economy in the years 2016 and 2017, carried out, such as in international accounting and due to the depressed price of crude oil. The financial reporting standards, in particular IFRS 9, economy diversification programme has started, Value Added Tax (VAT), anti-money laundering and but the weight of crude oil in the State’s budget terrorism financing is still predominant, not withstanding the fact that revenues continue to fall due to the reduction In addition to human resources training, with the of daily production, (in compliance with OPEC frequency of various training courses, we have decisions). already been administering to all our staff members In terms of the priorities, the following tasks were in terms of customer centric training courses, we concluded in 2018: focus attention on client needs in order to: • The implementation of Notice No. 02/2018, 1. Improve service delivery to our clients; which establishes the minimum share capital of 2. Transfer of know-how to front end staff; and comercial banks at AKZ 7.50 billion; 3. Improve the perception of clients with regards • The adoption of policies and procedures to the BCA brand. ensure compliance with the requirements of the Other tasks remaining at the top of our agenda are: Foreign Account Tax Compliance Act (FATCA); • The full implementation of policies, procedures, • Recapitalisation of the bank; regulations, operational and IT systems to • Continuing efforts in order to find a long-term ensure full compliance with Anti Money solution for the bank’s head office building; Laundering and Combating of Financial • migrating to a new core banking system, whose Terrorism (AML/CFT) best practice. conclusion is scheduled for the end of 2019; • Implementation of VAT; In the operational field, the following issues are • Consolidation and enhancement of our digital permanently in our agenda: banking solutions. • the increase and diversification of customers In terms of corporate social responsibility, significant base; attention is being given to solve social problems • the acquiring of stable and profitable deposits; directly affecting the workers and their families, and and the society in general, with emphasis on social, • the decrease of loan risk concentration, as a result health, and sporting initiatives. We will seek to of the Bank loan portfolio diversification. enlarge our action to the community affected by our work. Our network currently comprises 40 branches located in 13 of the country’s 18 provinces. We The bank’s vision continues to be “An universal intend to capture a customer base of more than bank in Angola focusing mainly on corporate and 100,000 over the next 3 years, of which we expect institutional banking yet maintaining a close eye on 80 to 90% to hold debit cards, and at least 60% the prospects offered by the retail segment”. to have access to electronic channels, such as the The bank’s mission continues to be to “Create Internet and SMS banking. The development of value for our stakeholders by providing world class new products and new lines of business is also one banking services to our clients through maintaining of our goals. excellent relationships with all those who contribute to the bank’s growth; consolidating the banks In the field of Human Resources, as service providers, image, reputation and prestige and ultimately by it is in the efficiency and qualification of our human increasing our market share”. 8 Financial Indicators Proposal for the appropriation of the 2018 profits Assets In accordance with the Angolan financial Institutions In 2018, the bank registered a 40% increase of its laws, we propose that the after tax profit, amounting assets, compared to the previous year, due to a to AKZ 8.081.511 thousand be appropriated as 68% increase in shareholders’ equity and a 29% follows: increase in liabilities. The major impacts occured 1. AKZ 1.860.948 thousand to be distributed; and in “ Balances at other Credit Institutions “, whose growth was more than twice the amount of the 2. The remaining net income profit to be allocated same item in 2017; “ Cash and Balances at Central to accumulated reserves. Banks (95%); “Financial Assets at Fair Value through Other Comprehensive Income” (56%); and “Other Assets” (89%), among others. Liabilities The 29% increase, registered in total liabilities, derives from the growth of “Demand Deposits” (24%); of “Term deposits (36%); of “Other Liabilities” Francisco da Silva Cristóvão Chairman (79%); and “Income taxes” (31%). Equity Shareholders’ Equity increased by 68%, as a result of the Net Profit for the Year growth. Income statement The net income of 2018 grew more than three times the 2017´s. This increase derives from the growth of the results of financial operations in more than Mateus Filipe Martins Chief Executive Officer four times the 2017´s; The exponential growth of the results of financial operations contributed significantly to the increase of the non interest margin by more than 2017´s double; the Net Interest Margin (NIM) increased by 10%. The above mentionned facts, diluted the expected effect of the increase in the “Operating Costs” (25%). 9 View of Baixa de Kassanje at Tala Mungongo. Malanje Province. Customers 55.000 50.000 45.000 40.000 35.000 30.000 25.000 20.000 49.546 44.564 43.778 47.703 15.000 40.010 36.231 36.166 10.000 30.809 26.810 5.000 2010 2011 2012 2013 2014 2015 2016 2017 2018 Employees 275 250 225 200 175 150 125 269 267 265 253 252 248 243 238 100 222 75 50 25 2010 2011 2012 2013 2014 2015 2016 2017 2018 12 Equity (AKZ’000) 21.000.000 20.000.000 19.000.000 18.000.000 17.000.000 16.000.000 15.000.000 14.000.000 13.000.000 12.000.000 11.000.000 10.000.000 9.000.000 8.000.000 201 7.000.000 6.000.000 5.000.000 0 13 4.000.000 33111 110 3.000.000 100322 2.000.000 232 1.000.000 1 220 2010 2011 2012 2013 201 201 201 201 201 Branches 45 40 35 30 25 20 3 0 1 15 31 30 10 2 2 23 5 1 2010 2011 2012 2013 201 201 201 201 201 13 Customers Assets (AKZ’000) 40.000.000 35.000.000 30.000.000 25.000.000 20.000.000 15.000.000 10.000.000 3101 31 3023 5.000.000 22110 232 30 23211 22330 102 2010 2011 2012 2013 201 201 201 201 201 Net Profit (AKZ’000) 8.500.000 8.000.000 7.500.000 7.000.000 6.500.000 6.000.000 5.500.000 5.000.000 4.500.000 4.000.000 3.500.000 313 3.000.000 0111 2.500.000 2.000.000 1313 11 1.500.000 1.000.000 032 01 3 31 0 500.000 2010 2011 2012 2013 201 201 201 201 201 14 Loans (AKZ’000) 12.500.000 12.000.000 11.500.000 11.000.000 10.500.000 10.000.000 9.500.000 9.000.000 8.500.000 8.000.000 7.500.000 7.000.000 6.500.000 6.000.000 5.500.000 123 5.000.000 1111 4.500.000 10102 4.000.000 3.500.000 8.859.695 3.000.000 2.500.000 1 2.000.000 2 1.500.000 3011 12 03 1.000.000 500.000