The headquarters of BFA in Luanda, capital of Angola. Photos Provided to China Daily

One bank remains ahead of the curve over increasing competition in key sector

The executive president of Banco de Fomento de Angola (BFA), Emidio Pinheiro, always maintained that matching good planning, strategic analysis, and proper banking practices to boost economic growth, along with the need for more investments, and the formalization of the Angolan economy, would reap outstanding rewards. The steady growth rate of the bank is proving him correct.

When driving through the business district of Luanda, the capital of Angola, one can comprehend that in recent years Angola has enjoyed one of the most bullish economies in Africa. Between 2002 and 2010, the economy experienced the biggest annual average GDP growth rate in the world at over 11 percent. Yet less than two decades earlier, Angola suffered from the grips of a political and financial crises due to a civil war. The uncertainty came to an end with the arrival of political stability in 2002.

What followed took global financial observers by surprise. Growth, along with domestic and foreign investments flowed in, and banks began to flourish. Although it has taken at least 10 years to witness a fully functioning and competitive banking sector, growth has on occasion been "off-the-charts" due to a strong need for better banking products.

Pinheiro said that, "private sector investments and diversification are impossible without banks and financial services Banks are at the disposal of entrepreneurs and investors to support entrepreneurial initiatives."

When investors were looking for support from banking products they sought BFA, a bank with the resources and ability to assume risks and take a leading role in the new-found growth of the country.

Pinheiro leads the three-fold growth strategy of BFA. The bank has taken advantage of continuing on with the 'formalization' of the national economy that led to more Angolans opening up bank accounts and more companies conducting financial operations through formal channels. The bank also takes advantage of overall growth in the Angolan economy to increase the wealth of its clients. Finally, the bank has maintained a macro view of the market. BFA divides operations between retail banking, commercial banking, and private banking for high net worth individuals. The business units are expected to grow substantially.

Pinheiro said, "I believe we will see growth in all areas. That is why we are present in so many different segments, and in the end we are a balanced and diversified business model."

As of March 2011, BFA was the leading private bank in Angola with more than 800,000 clients and over $6.7 billion in deposits. Under the leadership of Pinheiro, the number of branches has grown from 34 in 2005 to over 140 in 2011. Aggressive growth in building branch networks has contributed to better banking services nationwide.

Efforts paid off

This is no small feat in a country that had suffered much for many years. The efforts are now paying dividends. However, Pinheiro does not believe that expanding the branch network is sufficient. He has been pushing for more modern and globalized approaches and services that include Internet banking, which is becoming widely popular in the country.

According to Pinheiro, the positive evolution of the banking sector mirrors changing attitudes in the country. Since arriving in Angola in 2005, he points to better and more diversified products in stores, more sophisticated business practices and a substantial improvement in the country's infrastructure. He has made it his business to keep BFA in step with these developments to stay ahead of competitors.

With 120 retail branches, six investment centers and 13 corporate centers coupled with almost half a million debit card users and more than 8,000 credit card accounts, BFA is ahead of the game. However, the banking sector may be the most competitive business sector in Angola and there are more than 20 banking institutions that compete for the same market.

The philosophy of BFA is broader than merely competing for existing clients. Through a social fund, BFA has given priority to projects that impact the community. While remaining philanthropic, its social fund helps Angola and more economic growth means a wider client base.

"With the social fund we look at the impact we made, along with the sustainability of the project," said Pinheiro. "We are not interested in making one-shot initiatives that will not stand the test of time." With this long-term view BFA could remain a strong partner for growth in Angola for many years to come.

Asked about a prediction of the International Monetary Fund that Angola may return to a double digit growth rate in 2012 after the difficult years of 2009 and 2010, Pinheiro said, "2011 and 2012 may become two years of high economic growth," he said the "main macroeconomic indicators and stability are back in place," and high prices in the international oil markets could boost the economy and development.

Nevertheless, Pinheiro believes in keeping his feet on the ground. He is optimistic about the future of Angola, but he would not make the mistake of claiming the nation has no problems at all. But he added that Angola "is an interesting destination worth considering for investments."

Impact in Angola

China has captured an increasing corporate presence in the country and Pinheiro insisted this is good for business, since Chinese firms are raising more capital for domestic financial institutions. "I believe that Chinese investments in Angola are good for the development of the economy," he said that BFA "is in a good position to deal with Chinese companies."

To capitalize on growing interests in Angola, BFA has already set up a strategic agreement with the Macao branch of the Bank of China. Pinheiro pointed out that BFA intends to establish stronger ties with the Chinese business community as part of the top agenda of the bank.

But Chinese investors when they first arrived to Angola had often described the language barrier as an impediment to future growth and investments. Accordingly, BFA has hired Chinese-speaking professionals.

Pinheiro stresses that there is greater interest in Angola from the business community of Macao. The bank is broadening economic relations with other Portuguese-speaking economies as well.

The lengthy presence and proven track record of BFA in Angola has positioned the bank to a prime position to deal with investors and attract international clients interested in doing business in the country. The African nation may still be considered a new frontier for those who have yet to set foot in the nation, but with its profound know-how, BFA is more than ready to guide the way.

(China Daily 02/29/2012 page26)