Bad Debts at 27% Make Angola's Biggest Bank Wary of Giving Loans

(Bloomberg) -- Angola’s biggest bank is struggling to recoup loans from businesses as cases get tied up in courts, hindering the provision of new credit.

Banco Angolano de Investimentos SA has 70 pending lawsuits to recover funds from clients who are taking advantage of weaknesses in the legal system and not repaying their debts, Chief Executive Officer Luis Lelis said in an interview in the capital, Luanda.

“Angolan banks are not the culprits for not giving loans,” he said. Rather, the high rate of unpaid debts has “increased the banks’ aversion” to granting credit, with lenders demanding higher guarantees and more collateral before approving facilities, Lelis said.

Bad loans are crippling the banking sector of Africa’s second-biggest oil producer after a sharp drop in crude prices in mid-2014 triggered a three-year economic slump. Non-performing loans as a percentage of total credit stood at 27 percent in November compared with an average 10 percent from 2013 to 2016, according to Fitch Solutions.

BAI’s own rate of loans not being reimbursed is at 16 percent, the CEO said.

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