Non-Performing Loans in Angola’s Banking System
Angola’s banking sector has been grappling with elevated non-performing loan (NPL) ratios for more than a decade, a legacy of the oil price collapse, currency devaluation, and weak credit risk management. System-wide NPLs currently stand at approximately 12-15%, a meaningful improvement from the peak of over 20% recorded during the 2020 economic crisis, but still well above prudential comfort levels.
NPL Trend Overview
| Year | NPL Ratio (approx.) | Key Driver |
|---|---|---|
| 2018 | 28-30% | Oil crash aftermath, kwanza devaluation |
| 2019 | 25-28% | FX liberalization shock |
| 2020 | 20-25% | COVID-19, GDP contraction |
| 2022 | 18-20% | Gradual recovery, write-offs |
| 2024 | 14-16% | Disinflation, restructuring |
| 2025 | 12-15% | Continued clean-up, economic growth |
The decline reflects a combination of aggressive loan write-offs, portfolio restructuring, and improved economic conditions. GDP growth of 4.4% in 2024 and recovering oil revenues have supported borrower repayment capacity, while the BNA has imposed stricter provisioning and classification standards.
BPC: The System’s Biggest Problem
Banco de Poupanca e Credito (BPC), Angola’s largest state-owned retail bank and fourth-largest by assets, has historically accounted for a disproportionate share of system NPLs. At its worst, BPC’s NPL ratio exceeded 50%, driven by politically directed lending, weak underwriting, and exposure to state-owned enterprises with poor repayment records.
The government has undertaken multiple recapitalization rounds for BPC, injecting billions of kwanzas in capital to maintain solvency. A restructuring plan supported by World Bank technical assistance has been underway since 2019, focusing on:
- Portfolio clean-up through bad loan transfers to a resolution vehicle
- Operational restructuring including branch closures and staff reductions
- Governance reforms to reduce political interference in lending decisions
- Technology upgrades to improve credit risk assessment
Progress has been slow but measurable. BPC’s NPL ratio has declined but remains significantly above the system average.
Sector-Level NPL Breakdown
NPLs are unevenly distributed across economic sectors:
- Construction and real estate: Highest NPL concentration, reflecting stalled projects from the pre-2014 boom
- Commerce and trade: Elevated NPLs due to FX shortages that disrupted import-dependent businesses
- Oil services: Companies dependent on Sonangol contracts experienced payment arrears
- Agriculture: High default rates due to poor infrastructure and climate variability
- Consumer lending: Relatively lower NPLs, reflecting conservative retail lending practices
Regulatory Response
The BNA has implemented several measures to address asset quality:
- IFRS 9 adoption: Mandated expected credit loss provisioning, increasing transparency around true asset quality
- Minimum provisioning requirements: Banks must provision 100% for loans overdue more than 360 days
- Concentration limits: Caps on single-borrower and related-party exposures to reduce portfolio concentration risk
- Stress testing: Annual stress-testing exercises to assess system resilience to oil price and FX shocks
Investor Implications
Declining NPLs are a precondition for banking sector credit expansion and capital market development. For investors evaluating Angolan bank equities on BODIVA, asset quality trends are the single most important variable. The trajectory is positive, but the absolute level of 12-15% remains a drag on profitability and capital adequacy ratios. Resolution of BPC’s legacy portfolio and continued economic diversification are necessary conditions for NPLs to converge toward the sub-Saharan African average of approximately 8-10%.