ANNUAL REPORT 2017 CONTENTS Joint Message from the Chairman of the Board of Directors and the 04 Chairman of the Executive Committee Main indicators, highlights and outlook 08 Main Indicators Relevant facts for 2017 Outlook for 2018 Organizational structure, management structure and social 20 responsibilities Organizational structure and governing bodies Social responsibilityl Macroeconomic Framework 30 International Economy Framework Angolan Economy Framework Regulatory Framework Activities by segments, products and services 50 Segment characterization Large corporates Commercial network and private customers Electronic banking and distribution channels Coverage and localization Risk Management 60 Organization and Risk Management policy Risk assessment, monitoring and control Credit risk and counterpart Market risk Liquidity risk Compliance risk Operational Risk Human capital 74 Composition of human capital Recruitment and organizational support Training and development Financial analysis and proposed application of results 82 Financial Analysis Proposed application of results Financial Statements and notes 92 Financial Statements Notes to the Financial Statements Report from the External Auditor 148 Report from the Supervisory Board 152 01 Joint Message from the Chairman of the Board of Directors and the Chairman of the Executive Committee Palanca Negra 6 ANNUAL REPORT 2017 JOINT MESSAGE FROM THE CHAIRMAN OF THE BOARD OF DIRECTORS AND THE CHAIRMAN OF THE EXECUTIVE COMMITTEE Dear Customers, Shareholders, Employees and Partners, The restrictions on access to foreign currency remained and the amount of currency available to the market to cover the At the end of another year filled with challenges, we reiterate import of goods and services continued to be scarce, failing the values we have stood by throughout this mandate. We to meet demand. Even so, BNA provided +11% compared to maintained our dedication, commitment and perseverance, the supply of euros the previous year. always for the good name and operation of the institution. These constraints also provide moments of opportunity and We run the Bank based on three main pillars: excellence, organization, as it is at times of crisis that human ingenuity to do more and better, progress, to generate value with comes into its own. The present time, which is particularly stability, sustainability and proficiency; conformity, to be in adverse, has obliged banks to reanalyze their strategic and sync with ethical values and legal regulations. business plans, as well as their internal organization. The search for new sources of internal and external revenue, Internationally, 2017 was marked by an increase in cost reduction, the optimization of resource management, geopolitical tensions all over the world and by some climatic focusing mainly on Human Capital, the constant search for problems. Even so, forecasts point to slight growth in the operational excellence in order to better serve customers. world economy (3.7%) compared to the previous years, Bringing banks into line with best banking practices and resulting essentially from the growth in the emerging efficient management of the risk associated with the economies and in world trade. business will have to increasingly become a concern on the agenda of bank managers and this will be how Banco In Angola, 2017 was indelibly marked by the turning of a Keve will develop its business, in order to guarantee the page in the history of Angola where, after almost four sustainability of the institution, making it more and more decades of José Eduardo dos Santos’ presidency, a new important as a support for the national economy. President of the Republic was elected. This fact represented a new challenge politically, associated with the many This is the context Banco Keve was operating in, seeking constraints that marked the national economy throughout always to assure the economic and financial sustainability the year. of the bank and, on the other hand, to meet the needs of its Customers. The Bank maintained its focus on bringing in The national economy is still feeling the effects of the more customers and improving the quality of its funds, with significant and prolonged fall in the price of oil, with impacts an increase of AOA 494 million (+0.4%), with a guarantee of on the reduction in tax revenue for the State, although it more stability and a better future. In 2017, assets reached recently broke the barrier of $70 per barrel. There has been a value of AOA 151.007 billion compared to AOA 140.687 a continued steep fall in International Reserves, which billion the previous year (+7%). Customer Credit showed dropped to USD 13.3 billion in 2017. This value represents a growth of 6% compared to 2016, standing at a gross value of reduction to only 5 months of imports, which set challenges AOA 67.877 billion, and equity reached AOA 16.296 billion, for renewing the dynamics of the national economy, with showing growth of 14% compared to 2016. The regulatory a clear focus on diversification and on new sources for capital adequacy ratio comfortably reached 20%, which bringing foreign currency into the country. means financial stability and less vulnerability and largely complies with the 10% level required by the regulatory In this context, the projections point to slow and steady authority. growth in the national economy, of only 1.1% for 2017. However, the economy has been showing signs of adapting The Bank introduced a series of measures in order to comply to the new reality, after growth of only 0.1% in 2016. with the new credit impairment regulations, making every effort to increase the stock of “Credit provisions and Inflation in the country remained at high levels, around guarantees provided” with an increase of around 101%, 23%, exceeding the initial forecasts of the State Budget, but standing at AOA 13.697 billion, following an unusual showing an improvement compared to the levels seen the reinforcement of AOA 5.554 billion in allocations to previous year (42% inflation in 2016). provisions. Regarding the foreign currency market, the value of the In 2017, Banco Keve reinforced its presence in strategic kwanza against the dollar remained stable throughout locations, especially in Luanda City, with the opening of 2017, contrary to the depreciation seen in the previous year. two business centers, in the Camama Multicenter and in The kwanza maintained its official rate at USD/AOA 165.9, ISPEKA University. The new Private center was remodeled with the rate on the informal market reaching around USD/ and inaugurated, extending and improving the business AOA 400,0. network in order to provide more and better services to our customers. ANNUAL REPORT 2017 7 The year was marked by a series of important projects that Social responsibility is still seen as an investment in society catapulted the bank into modernization and for compliance and in the future. This was why Banco Keve carried out a with legal, procedural and operational goals. The highlight number of social actions throughout 2017, helping society clearly goes to the full adoption of the IAS/IFRS in 2017 and and the people most in need. also to projects of a regulatory nature, as is the case of the introduction of a Credit Impairment Calculation solution Before ending, we would like to leave a word of and the SIGR project regarding the New Regulatory Risk appreciation for our employees, for their commitment Package. and professionalism. To all our stakeholders, our sincerest thanks for their commitment during these troubled times We aim to lead the way in the challenges and processes and their confidence and dedication, keeping Banco Keve on associated with the banking business today, in line with the road to success. And a special word of thanks goes to regulations and industry best practices, especially with our customers for traveling this road with us and choosing regard to International Financial Reporting Standards our services and to our Shareholders for their support and (IFRS), the Basel accords and anti-money laundering and trust guiding the Bank’s future. anti-terrorist financing measures. Following a year of uncertainty, we are pleased to be able to The Bank has continued to develop the skills of our most say that Banco Keve is ready to face the new challenges of valuable resources, our employees, aimed at increasing the economy in 2018, with an unwavering focus on building their professional knowledge and standardizing practices a stronger, more transparent, more made-to-measure Bank. and behavior. We believe investment in human resources management to be core to our organization. The Bank is constantly concerned with setting and sharing its example with society, Banco Keve presenting the values, vision and beliefs we hold. The Bank Made to Your Measure Rui Eduardo Leão da Costa Campos Arlindo Ngueva Narciso Das Chagas Rangel Chairman of the Board of Directors Chairman of the Executive Committee 02 Main indicators, highlights and outlook Gnu Azul ANNUAL REPORT 2017 11 MAIN INDICATORS dec-16 dec-17 Var. dec-17 THOUSANDS OF AOA, EXCEPT PERCENTAGES Real Real Real Budget 1. Activity Net income 2.435.368 2.075.515 -15% 2.372.358 Financial intermediation margin 10.789.607 12.023.969 11% 13.652.533 Gross Income 21.073.701 17.103.278 -19% 27.145.401 Net interest income/Gross Income (Operating income) 51% 70% +20,1 p.p 50% Operating cash flow 10.259.487 5.772.934 -44% 15.644.074 2. Returns ROAE - Return on Average Equity 18,6% 13,4% -5 p.p 15,0% ROAA - Return on Average Assets 1,8% 1,4% -0,4 p.p 1,5% 3. Structure Total assets 140.627.837 151.006.775 7% 159.259.624 Total funds (Resources)* 117.488.710 119.723.891 28% 107.116.349 Loans to customers (net) 58.102.442 56.015.936 -4% 54.169.308 Equity 14.220.315 16.295.831 -87% 17.009.054 No.