news - 20 July 2015

Mozambique banking sector attracts the attention of major international banks

Mozambique banking sector attracts the attention of major international banks

The Mozambique banking sector, which has high growth and good business prospects arising from foreign investment in exploration of natural resources, is attracting the attention of major international banks, according to Eaglestone Securities.

After the acquisition of Banco Terra by Portugal's Montepio Geral (44.5 percent) and South Africa's Nedbank (36.6 percent), Togo's Ecobank acquired Banco ProCredit last June and attention has now focused on the Standard Chartered Bank's plans and the sale of a 49 percent stake in Moza Banco.

In a recent report on the Mozambican banking sector, Eaglestone Securities expects the sector "will remain on the radar of local and foreign investors, especially considering the huge potential offered by the natural gas and coal sectors."

Recently, French bank Société Générale acquired a stake in The Mauritius Commercial Bank Moçambique, as part of its strategy for growth in Africa, where it operates in 18 countries.

The sale of the 49 percent stake that Portugal's Novo Banco owns in Moza Banco is also underway, with various interested investors, but which will have to rely on the endorsement of Moçambique Capitais, which holds the remaining 51 percent.

The interest of the Atlas Mara investment company has already been reported. It was founded by the former chief executive of Barclays, Robert Diamond, to purchase the shares owned by Novo Banco.

According to Eaglestone, Moza Banco, along with Banco Ùnico, stands out for its "impressive growth rates" and the trend is for them to gain more market share in the future from their competitors.

Currently, there are 18 banks operating in Mozambique, but 90 percent of assets, loans and deposits are held by the six largest banks, all most all of them controlled by Portuguese and South African investors.

Last year, the profit of the six largest banks increased once again, with a "robust operating performance" than offset the increase in surcharges and taxes, said Eaglestone.

With the economy growing 7.4 percent, it added, financial services have a prominent role, with growth in operations and increased revenues.

"Overall, it can be said that the local banking sector has improved both in its efficiency and profitability in 2014 compared to the previous year," said the financial consultancy's analysts.

The asset portfolio of banks continued to expand at an accelerated rate, with assets, loans and deposits all recording growth of over 20 percent last year.

Despite a deterioration of asset quality ratios, these are comfortable levels and the level of capitalisation of most banks is considered favourable.

In terms of the six largest banks (Millennium BIM, BCI, Standard Bank, Barclays, Moza Banco and Banco Único), loans grew 27 percent, loans in local currency increased by 31 percent and deposits 20 percent. Due to good operating performance the profits of the six largest banks rose 29 percent.