news - 24 November 2014

Exponential increase in assets continues in Mozambique’s banking sector

The six largest banks in Mozambique, after increasing their assets by more than 25 percent in 2012, last year continued on double-digit growth, together with an increase in profits, according to a report by Eaglestone Securities .

Six of the largest banks - Millennium bim, BCI, Standard Bank, Moza Banco, Banco Único and Barclays - posted an increase of 19 percent in net assets to nearly US$8.5 billion in 2013, according to the report.

The increase comes on the heels of other double-digit growth - 28.6 percent in 2012 and 10.9 percent in 2011 - and is accompanied by improvements in the ratios of loans to deposits (+5.4 percent) and interest on assets (3.9 percent) and profits (+13 percent to US$174 million).

According to Eaglestone, the improvement, "is based on stronger operating performance" than in 2012.

With Mozambique receiving record levels of foreign investment, mainly directed towards exploration and extraction of mineral resources such as natural gas and coal, the Mozambican financial sector is one that has the best growth prospects.

The Economist Intelligence Unit (EIU) reported that Mozambique's GDP is expected to grow 7.3 percent this year and 7.8 percent in 2015, driven by coal mining and investment in transport infrastructure, but also by strong growth in telecommunications, industry and financial services.

From 2016, construction of infrastructure for natural gas will be the "engine" of economic growth.

According to the Eaglestone Securities, "significant" growth of the Mozambican financial system in recent years also reflects "the local authorities' aim to increase people's access to financial services," which has led to a strong increase in the number and types of financial entities in the market .

The level of access to banking services is currently 20 percent of the population, less than half the average of sub-Saharan Africa, but the target is to reach 35 percent by 2022.

However, the size of the banking sector is still considered "modest," with total assets of US$10 billion in 2013, less than any of the three largest banks in Angola.

Currently, the two banks with most assets in Mozambique are Portuguese-owned: Millennium bim (US$2.93 billion) and BCI-Fomento (US$2.76 billion).

These are followed by the Standard Bank (US$1.4 billion), Barclays Bank (US$572 million) and Moza Banco (US$493.7 million), part-owned by Portugal's Novo Banco, which inherited the healthy assets of Portugal's BES, and which is now up for sale.