Mozambique 2013 | FINANCE | REVIEW: BANKING

Central bank attempts to encourage local banks to improve rates on lending are being played against the background of a financial system still looking to increase national network presence.

Mozambique's banking industry remains at the start of what could be a booming sector in years to come. The low level of market penetration, especially on the retail side, is one area that the banks are seeking to improve, rolling out branch networks in regional capitals and providing education about financial services to potential clients. However, with large development projects moving ahead, the banks will also have to work out how active they can be in corporate and infrastructure financing for mega projects that have financing needs well above the total assets of the sector as a whole.

The local finance sector features some 18 mainstream banks, eight micro banks, and seven credit cooperatives. The main regulator of the sector is the Bank of Mozambique, which also operates as the country's central bank. The Bank of Mozambique is keeping a sharp eye on the sector, encouraging banks to follow the declining trend of its standard lending facility, which fell from 16.5% to 9.5% over 2012, in the interest rates they offered on commercial loans. The central bank is also looking to encourage more liquidity in the local market, and may introduce new regulations controlling the amount of deposits the banks may hold in instruments abroad.


Millennium bim is Mozambique's largest bank, and is a stalwart of the system. The bank's main shareholders include Portugal's Millennium BCP (66.69%), the Mozambican state (17.12%), the National Social Security Institute (INSS) (4.95%), and Empresa de Seguros Moçambique (4.15%), while the remaining 7.09% is in the hands of other institutional and individual shareholders. Millennium bim has a strong presence in the retail market through its 151 branches, 385 ATMs, and 4,088 POS devices in operation. Over 2012, the bank announced it had increased customer numbers by some 15% to 1.2 million, while deposits responded in kind by growing some 16.3%. As well, credit issued grew by 11% over the year, according to the bank. Millennium bim has a reported market share of around 35% for the sector. The bank managed to improve its ranking among Africa's top 100 banks by shareholder equity from 77 to 67, according to African Business magazine, being the only institution from Mozambique featured on the list.

In 2011, the bank increased its shareholder equity by $109 million to $406 million. The last available audited financials show total assets of MZN60.89 billion ($2.27 billion at YE2011), a return on average equity (ROAE) of 38.8%, and a return on average assets (ROAA) of 6.0%. The impressive ROE was underpinned by a growth in net income of 79% for the period. The bank reported a non-performing loans over 90 days level of 1.5% in 2011, though in 2012 that level had crept up to 2%, according to unaudited financials. Although growth on the retail side remains a priority, with CEO Mario Machungo providing a target of 166 branches in the near future, he also underlined to TBY that, “We will have to focus more on the corporate side." Another sector he saw as interesting was prestige banking, in order to serve high-net-worth (HNW) individuals.

BCI, also known as Banco Comercial e de Investimentos, is now challenging Millennium bim for top place in the banking market, occupying a 30% market share in 2012, up from 22% in 2007 according to its CEO Ibraimo Ibraimo. The bank reported some 563,000 customers for 2012. The bank has been aggressive in its branch opening strategy, increasing numbers from 41 in 2007 to over 130 by end-2012. According to its audited 2011 annual report, the bank had total assets of MZN50.84 billion ($1.90 billion), an ROE of 30.24%, and an ROAA of 1.92%. It also reported an NPL level of 1.13%, down some 0.43 percentage points over the year. Although individual numbers were not provided, BCI had a 35.81% market share in ATM terminals, and 38.25% for POS terminals at the end of 2011, making it arguably the largest in the market in terms of this metric.

The bank's largest shareholder is Portugal's Caixa Geral de Depósitos (51%), a state-owned bank. BPI Group, Portugal's third largest privately owned investment group, has a 30% share in BCI, while Mozambique's INSITEC Group has a 18.12% stake in the bank, with the remaining shares held by individual shareholders. The bank has taken an active role in agricultural development, joining in with USAID and other foreign NGOs to launch projects in rural areas. However, as CEO Ibraimo sees it, “the government should create a development bank to play this role."


Standard Bank's local operations are generally considered the third largest by assets and market share in Mozambique's banking industry. Priding itself as being the number one bank on the African continent, Standard is looking to increase its presence in both retail and project financing. In early 2013, state mining company Empresa Moçambicana de Exploraçao Mineira (EME) and Standard Bank Mozambique entered into an agreement to provide consulting and financial intermediate services for new mining operations in the country. According to its 2011 audited financials, Standard Bank in Mozambique had total assets of MZN34.71 billion ($1.30 billion), recorded an ROA of 3.7% and ROE of 22.8%, while the NPL level stayed at a cool 1.0%.

Absa Group, a South African registered subsidiary of Barclays Bank PLC, has a 98.1% shareholding in Barclays Bank Mozambique's operations after it purchased and rebranded Banco Austral in 2002. The bank had some 317,000 customers as of the end of 2012, along with 58 branches and some 92 ATMs across the country. The bank has been particularly active in facilitating project finance as well as interacting with its fellow banks under the Absa Group to create a regional African banking titan. Barclays Bank Mozambique's financials are consolidated under those of the Absa Group. However, in the 2012 annual report for Absa, Mozambique was noted alongside Tanzania as the two main sources of future growth in what was otherwise a slow year for the group. The Chairwoman of the bank, Luísa Diogo, noted to TBY that although the corporate sector remained a focus for the bank, “Retail has always been and continues to be a fundamental component of our service and product offering." The bank is seeking to increase its branch numbers from the current 58 across the country.


Going forward, the government and the banking sector will need to place more of an emphasis on retail and SME operations in order to help spread the use of financial tools to the population at large. As João Figueiredo, Chairman and CEO of Banco Único put it, “Between 12% and 15% of the population is banked; it is a very small market with huge growth potential." With around 80% of the population involved in agriculture, the role that finance could play in encouraging small-scale farmers to boost their activities will remain a tempting target.