The losses in the financial sector were already predictable and reveal what can only be looked at in light of a completely atypical 2020 at all levels, a fact that is noted in the financial report presented this Thursday, April 15, by Absa Bank Mozambique which, despite everything, shows results that can be considered positive after such a “challenging” year.
Despite a sharp drop in profits compared to 2019, justified directly by the costs of the pandemic and the impact of credit moratorium, the bank closes the year with positive accounts and some facts to highlight: higher volume of credit granted è economy, increase in the deposit portfolio (15.4%), liquidity ratio at 42.3%, almost double the regulatory limit and credit impairment situated at 315 million meticais, representing 1.4% of the total portfolio.
According to the Managing Director of the institution, Rui Barros, “although we managed to report a 3.5% increase in revenue, to 4.7 billion meticais, the truth is that this growth in revenue was not sufficient to absorb other impacts on business performance. Therefore, the net results for 2020 were 259 million meticais, which represents a 75.5% drop compared to 2019.” The manager explains that this is a drop that is not justified by the revenue side or by the evolution of the business, but by the significant impact at the level of costs, which increased 19.7% to 4.1 billion meticais, largely explained by the measures taken to deal with the pandemic.
The cost base has expanded, in part, due to a number of measures the bank has taken, in particular the moratoria on loans totaling 207 million meticais that the bank had received
Rui Barros said that the cost base had expanded, in part, “due to a number of measures that the bank took to prevent and support employees, customers and partners within the scope of covid-19, particularly credit defaults (totaling 207 million meticais) that the bank had received, both from individuals and companies, and which remained unpaid at a later date. The moratoria concerned over 2,500 individuals from about 40 companies. In the accounts of the resources that the bank did not collect are also 30 million meticais in exemptions of commissions on financial transactions, a measure that aimed to encourage the use of electronic means and obey the physical distance imposed by the pandemic. In addition, there is also a portion relating to the costs related to the rebranding (from Barclays Bank Mozambique to Absa Bank Mozambique in November 2019 whose actions extended through the first months of 2020).
Credit Increasing and deposits expanding
Despite the significant reduction in profit, which breaks the exponential rise that the bank’s current management team had been showing year after year, Absa reports a good performance in terms of deposits that grew by 15.4%, a result that places the bank “in a comfortable liquidity position, which makes us think that it would be important at this time to make this liquidity available to the economy,” said Rui Barros, keeping the door open for a trend that became evident with the presentation of the results: an increase in lending.
In this regard, from the perspective of financing the economy, the bank recorded a performance that the management team considered “fantastic” in terms of lending, with the portfolio growing 41% compared to 2019, which raised the market share relative to lending to the economy to 8.85%, a level significantly higher than five years ago, when the bank had a market share of around 5%.
In sector terms, Absa Bank Mozambique mainly financed Trade, with a total of 5.75 billion meticais, followed by State entities with 4.4 billion meticais, Extractive Industry and Transport (both with 2.25 billion) with individuals and agriculture being the sectors with relatively less credit (2.23 billion and 1.13 billion meticais respectively).
Total assets also continued to grow and reached, at the end of 2020, 48 billion meticais (an expansion of 16.6% compared to the previous year) and the bank’s capital also expanded 3.3% to 7.7 billion meticais.
It grew in all market segments
At the retail banking level, Absa reports a 20.4% increase in the loan portfolio, a 17% increase in deposits, in addition to improved processing times in customer account opening and loan disbursements, among other advances that include digital innovation.
The bank recorded a “fantastic” lending performance, with the portfolio up 41% year-on-year in 2019, bringing market share to 8.85%, significantly higher than five years ago, which was around 5%
In relation to corporate banking, the Bank speaks of “strong increase in the credit portfolio”, at 60%; “substantial increase in the deposit portfolio”, at 23%; “strong increase in the credit portfolio in commercial banking” (52%) and “substantial increase in the deposit portfolio in commercial banking” (31%).
More links with the extractive industry
Absa also reports four memorandums of understanding that have been signed to establish medium/long-term partnerships within the natural gas industry, but focused on SMEs, within the framework of the Local Content policy.
In terms of support for communities, the focus is on four major initiatives of smaller scale, budgeted at 15 million meticais, which have benefited over 250,000 people.
In taxes, Absa contributed to the State coffers with a total of 710 million meticais, enough to maintain itself as “one of the main taxpayers of the country,” according to the Managing Director of Absa, who foresees the return to normality of the institution’s operations in 2023.
