Angolan bank Banco Angolano de Investimentos (BAI) plans to adopt a stricter loan policy after in 2013 it was forced to write off loans in the amount of US$122 million, the bank’s chief executive said Monday.
During a conference on investment in Africa organised by financial news agency Reuters, João Fonseca said that writing off the unrecoverable loans and setting aside provisions to guarantee defaulted loans had cost the bank US$225 million.
On Friday Angola’s largest bank by assets announced a 31 percent drop in profits in 2013 to US$124 million, the third consecutive year in which its profits have fallen.
“The target for this year is to increase the number of loans granted, but with stricter rules and it is also essential to recover defaulted loans,” said Fonseca, who added that loans worth US$324 million had been wiped off the bank’s loan book in the last four years.
BAI’s CEO also said that the bank’s credit portfolio had been established in a period of high economic growth, “and we are now more aware of the credit risks and are boosting the process of loan recovery, and only going through the courts as a second resort.”
Real estate and construction companies, which make up 36 percent of BAI’s credit portfolio, were significantly affected by the economic slowdown, and many of them have had difficulty paying off their loans.
“The projects take longer, cost more and demand has cooled, particularly in the highest segment,” said Fonseca, noting that another negative factor was the government’s delay in paying for projects it has awarded. (macauhub)