2019 Annual Report & Accounts Annual Report & Accounts 2019 Annual Report & Accounts 2019 Contents Message from the Chairman of the Executive Committee 04 Key Activity Indicators 06 Banco BIC Angola Organizational Structure 10 01 Composition of the Corporate Bodies 12 Organization Chart 14 Remuneration Policy 28 Mission, Vision and Values 29 Macroeconomic Framework World Economy 34 02 Angolan Economy 39 Banco BIC’s Positioning in the Banking Sector 45 Activity Framework Key Business Lines 50 03 Distribution Network and Geographic Presence 53 Historical Milestones 54 Marketing and Communication 58 Information Technology 60 Human Resources 64 Risk Management System Risk Management 70 04 Compliance 72 Risk Management Policies and Processes 73 Internal Control 80 2 • Annual Report & Accounts 2019 Money Laundering 05 and Terrorism Financing Financial Analysis Financial Analysis 88 06 Balance Sheet 89 Statement of Profits and Losses 97 Proposal for the Appropriation of Profits 99 Financial Statements and Notes Financial Statements 102 07 Notes to the Financial Statements 106 Audit Report 194 Supervisory Board Report 196 04 • Annual Report & Accounts 2019 Message from the Chairman of the Executive Committee 2019 has been a difficult and demanding year for the Angolan economy, companies and households. The negative performance of oil contributed to the Country’s sever- al macroeconomic imbalances, which posed permanent challenges for Commercial Banking. The non-productive sector’s activity kept the contraction recorded in the previous year and it should be ex- acerbated this year. As a whole, the economy stagnated via the oil sector, which the BNA classifies as a negative performance. In this “In 2019, Banco BIC scenario, as the driving force of private businesses and the house- hold economies, the banking sector did not have the capacity to positioned its business respond, on its own, to the Country's economic development de- mands, punished by bad credit which has worsened in 2019. strategy in sustainable medium-term solutions, The IMF’s Financial Support Program has also proved to be insuf- ficient. The external alternatives did not match the expectations supporting small and medium created, notably regarding foreign investment. enterprises (SMEs) In 2019, Banco BIC positioned its business strategy in sustainable medium-term solutions, supporting small and medium enterprises (SMEs), which contribute to the reduction of imports of essential goods and on diversifying alternative projects to dependence on ” oil, generating wealth and creating jobs, especially in the Country’s rural areas. The CSP (Projeto de Apoio ao Crédito - Credit Support Project) is an example of this and a determined commitment of Banco BIC in agriculture, fisheries and livestock. 2020 will certainly be a difficult, even more demanding year with In 2019, Banco BIC joined the CSP project, in the context of the many challenges which we want to overcome with the commitment government program PRODESI, with a financing amount of AKZ 30 of all our employees and the trust of our customers. billion for financing the real economy. This year, we approved and financed 26 projects, duly classified, in the total amount of AKZ Giving sustainability to the national economy means to maintain a 33.4 billion. Banco BIC occupies one of the top positions among the solid, efficient and competitive financial system. This has been the eight Angolan banks which have joined the Credit Support Project, Banco BIC’s purpose, supported by its shareholders, to whom we replacing the ‘Angola Invests’ program. once again acknowledge the trust placed in its managers. In the banking network we have directed investment towards the strengthening and renovation of infrastructures and communica- tion technologies with a set of new services, by resorting to the Internet, facilitating access to the Bank at the most varied levels of IT. The banking core, currently supported by the Banka 3G ap- plication, which handles all BIC transactions, has made banking management more agile, executing a greater number of operations Hugo da Silva Teles simultaneously with greater speed, efficiency and security. Chief Executive Officer Banco BIC Angola • 05 Key Activity Indicators 1,740,931AKZ 2,879,911AKZ 2,084 TOTAL NET ASSETS TURNOVER EMPLOYEES PROFIT FOR THE FINANCIAL YEAR CREDIT AND CUSTOMER RESOURCES BANKING PRODUCT (million AKZ) (million AKZ) (million AKZ) 70,000 2,500 300 60,000 250 2,000 50,000 200 1,500 40,000 150 30,000 1,000 100 20,000 500 50 10,000 0 0 0 ‘15 ‘16 ‘17 ‘18 ‘19 ‘15 ‘16 ‘17 ‘18 ‘19 ‘15 ‘16 ‘17 ‘18 ‘19 Profit for the Financial Year Customer resource Credit to customers (gross) A 39% increase compared to the financial year 2018. A 33% increase in turnover compared to 2018. Evolution of the banking product influenced by the increase in the exchange profit in 2019 compared to the previous financial year. 20% 20% 17.4% STRUCTURE/ BANKING REGULATORY SOLVENCY DEFAULTED PRODUCT COSTS RATIO CREDIT Slight increase of the cost to income ratio as a result Ratio above the minimum 10% required The coverage degree of the improvement of the banking product. by the Angolan National Bank amounted to 156% 06 • Annual Report & Accounts 2019 Amounts expressed in thousands of Angolan Kwanza ∆% ∆% '19 ‘18 2019/ 2018 2019/ 2018 Total net assets 1,740,931 1,307,706 433,225 33% Turnover 2,879,911 2,164,009 715,902 33% Credit to the Economy 1,677,126 1,243,313 433,813 35% Credit to customers 771,591 526,481 245,110 47% Credit to the State 778,950 608,149 170,801 28% Off-balance 126,585 108,683 17,902 16% Customer resources 1,202,785 920,696 282,089 31% Turnover per employee 1,382 1,046 335 32% Profit from financial intermediation (Banking product) 272,728 191,040 81,688 43% Profit from financial intermediation per employee 130.87 92.38 38 42% Administrative and trading costs/ 19.6% 18.6% 0.01 -5% Profit from financial intermediation Personnel expenses/Profit from financial intermediation 12.6% 12.6% (0.00) 0% Net profit for the financial year 70,657 51,004 19,653 39% Net equity 363,719 234,000 129,719 55% Profit before tax/average net assets 5.1% 4.1% 0.01 24% Profit from financial intermediation/average net assets 17.9% 14.6% 0.03 23% Profit before tax/average equity 25.9% 22.9% 0.03 13% Regulatory solvency ratio 20.3% 23.1% (0) -12% Number of Branches 231 231 1 0% Number of employees 2,084 2,068 16 1% Number of customers (thousands) 1,566 1,524 42 3% Amounts expressed in millions of United States Dollar ∆% ∆% '19 ‘18 2019/ 2018 2019/ 2018 Total net assets 3,610 4,237 (627) -15% Turnover 5,970 7,012 (1,042) -15% Credit to the Economy 3,476 4,029 (553) -14% Credit to customers 1,599 1,706 (107) -6% Credit to the State 1,615 1,971 (356) -18% Off-balance 262 352 (90) -26% Customer resources 2,494 2,983 (489) -16% Turnover per employee 2.9 3.4 (1) -16% Profit from financial intermediation (Banking product) 566 619 (53) -9% Profit from financial intermediation per employee 0.27 0.30 (0) -9% Administrative and trading costs/ 19.6% 18.6% 0.01 -5% Profit from financial intermediation Personnel expenses/Profit from financial intermediation 12.5% 12.6% (0.00) 1% Net profit for the financial year 147 166 (19) -11% Net equity 754 758 (4) -1% Profit before tax/average net assets 4.1% 3.4% 0.01 21% Profit from financial intermediation/average net assets 14.4% 12.0% 0.02 20% Profit before tax/average equity 21.2% 25.2% (0.04) -16% Regulatory solvency ratio 20.3% 23.1% (0.03) -12% Number of Branches 232 231 1 0% Number of employees 2,084 2,068 16 1% Number of customers (thousands) 1,566 1,524 42 3% Banco BIC Angola • 07 08 • Annual Report & Accounts 2019 01 Banco BIC Angola Banco BIC Angola • 09 Organizational Structure Governance Model The Bank’s governance model is established in its Statutes and complies with the requirements of the Law on Financial Institutions (Law no. 12/2015, of the 17th of June). The Statutory Bodies, also referred to as the Governing Bodies, are the General Assembly and its Chairman, the Board of Directors, the Ex- ecutive Committee of the Board of Directors, the Supervisory Board and also the Board of the General Assembly and the External Auditor. Banco BIC was incorporated by means of Public Deed of the 22nd of April 2005, following a communication from the Angolan National Bank of the 19th of April 2005 which authorized its incorporation, and its head- quarters is located at the Banco BIC Building, located in Bairro de Talatona, Samba Municipality, in Luanda. The Bank is engaged in the activity of obtaining resources from third parties in the form of deposits or others, which it applies, together with its own resources, in granting loans, deposits at the Angolan National Bank, applications with credit institutions, acquisition of securities and other assets, for which it is duly authorized. It also provides other banking services and carries out several types of foreign currency operations. Banco BIC’s share capital is partitioned as follows: 1% 5% 5% 25% 5% 17.5% 20% 17.5% Sociedade de Participaões Financeiras, Lda. Lus Manuel Cortez dos Santos Fernando Aleixo Duarte Fernando Leondio Mendes Teles Manuel Pinheiro Fernandes Graa Santos Pereira Finisantoro Holding Limited Sebastião Bastos Lavrador Graziela Rodrigues Esteves Telesgest B.V. Diogo Ramos Barrote José Correia Teles The members of the Governing Bodies have been elected for the three-year term 2017/2020 at the Gen- eral Assembly of the 27th of April 2017.