Bad debts increase within Angolan banking system

15 March 2011

Luanda, Angola, 15 March – Bad debts have increased significantly in the Angolan banking system, based on recent indicators of the country’s financial system published by the National Bank of Angola, Angolan newspaper, O País reported.

After rising from 2.6 percent at the end of 2009 to 13.5 percent in March of 2010, which was related to the financial climate (in which the accumulation of debts by the State had a particular impact), this then led to a slowdown, falling in October 2010 to 7.1 percent, then returning to 10.3 percent in November 2010.

Bad debt is usually defined by the ratio between credit that has been past due for more than 180 days and total credit.

The indicator for overdue credit not covered by specific provisions on capital rose from 11.6 percent at the end of 2009 to 19.6 percent in November 2010, reaching a high in August of 22.9 percent.

The regulatory solvability ratio, which is in essence the indicator that best indicates the systemic risk of the banking sector, and which compares the compatibility of Regulatory Capital with credit risk and exchange rate risk fell, from 19.5 percent at the end of 2009 to 14.4 percent in November, 2010.

According to the standards set by the National Bank of Angola this ratio should be 10 percent or more. (macauhub)