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Annual Report 2006


Annual Report 2006

 Annual Repor t 2006

Key Figures

USD ’000 2006 2005* Change

Balance Sheet Data
Total Assets 14,055 7,763 81%
Gross Loan Portfolio 7,583 4,367 74%
Business Loan Portfolio 7,566 4,367 73%
USD < 10,000 5,163 2,723 90%
USD > 10,000 < 50,000 2,403 1,646 46%
USD > 50,000 < 150,000 – – –
USD > 150,000 – – –
Agricultural Loan Portfolio – – –
Housing Loan Portfolio – – –
Other 417 947 -56%
Allowance for Impairment on Loans -489 -156 213%
Net Loan Portfolio 7,094 4,163 70%
Liabilities to Customers 7,405 2,718 172%
Liabilities to Banks and Financial Institutions 996 – –
Shareholders’ Equity 4,987 4,914 1%

Income Statement
Operating Income 3,109 1,122 177%
Operating Expenses 3,066 1,357 126%
Operating Profit Before Tax 43 -235
Net Profit 43 -235

Key Ratios
Cost/Income Ratio 89.1% 106%
ROE 0.4% -4.9%
Capital Ratio 51.2% 83%

Operational Statistics
Number of Loans Outstanding 2,307 1,093 111%
Number of Loans Disbursed within the Year 2,839 1,365 108%
Number of Business and Agricultural Loans Outstanding 2,305 1,093 111%
Number of Deposit Accounts 23,661 11,169 112%
Number of Staff 115 49 135%
Number of Branches and Outlets 3 2 50%

* Some figures differ slightly from those in the 2005 an-

nual report as they have been adjusted to reflect new calcu-
lation methods.

Mission Statement 4

Letter from the Board of Directors 5

The Bank and its Shareholders 6

The ProCredit Group – Neighbourhood Banks for Ordinary People 8

ProCredit in Africa 10

The Year in Review 14

Management Business Review 16

Special Feature 23

Risk Management 24

Branch Network 26

Organisation, Staff and Staff Development 28

Business Ethics and Environmental Standards 29

Our Clients 30

Financial Statements 34

Contact Addresses 43
 M ission Stat e men t

Mission Statement

NovoBanco Angola is a development-oriented full-service bank. We offer excellent cus-

tomer service and a wide range of banking products. In our credit operations, we focus

on lending to very small, small and medium-sized enterprises, as we are convinced that

these businesses create the largest number of jobs and make a vital contribution to the

economies in which they operate.

Unlike other banks, our bank does not promote consumer loans. Instead we focus on

responsible banking, by building a savings culture and long-term partnerships with our


Our shareholders expect a sustainable return on investment, but are not primarily inter-

ested in short-term profit maximisation. We invest extensively in the training of our staff

in order to create an enjoyable and efficient working atmosphere, and to provide the

friendliest and most competent service possible for our customers.

Le t ter from the Board of Directors 

Letter from the Board of Directors

At NovoBanco Angola we believe in the value of consistently applying our unique approach to banking
and to customer service. We are proud that, despite growing competition in the Angolan banking sector,
we upheld our target-group focus and our commitment to responsible lending.

NovoBanco’s rapid expansion in 2006 demonstrates that the public values its innovative banking prod-
ucts and customer-oriented account services. In line with its neighbourhood banking concept, NovoBanco
launched a savings campaign aimed at children, the first of its kind in Angola. The campaign, supported
by UNDP and Chevron, was very well received.

Although still a relatively young institution, NovoBanco is increasingly recognised by national policy-
makers and international institutions as Angola’s market leader for small business finance. In 2006,
NovoBanco’s second full year of operations, the bank nearly doubled its loan portfolio and more than
doubled its deposit base. It disbursed over USD 14 million in small and very small loans to 2,850 entre-
preneurs and welcomed nearly 12,000 new depositors. We opened a branch in the province of Benguela,
the first branch outside the capital city, Luanda. NovoBanco’s presence outside Luanda is extremely
important for the country’s reconstruction and economic development.

In 2006 total assets grew by more than 80%, and we earned a small profit for the first time. We do not
take our success for granted; the bank’s dynamic development is attributable to our outstanding, hard-
working staff, our trusting and appreciative customers, and a business model that is straightforward
and unique. We are confident that we can sustain the upward trend in 2007, during which we will further
expand our business.

I would like to express my gratitude to our shareholders for their ongoing support. Without their work
on the bank’s governing bodies and their technical assistance contributions, the bank’s start-up phase
would not have been possible. I thank all employees for their untiring efforts and their consistent imple-
mentation of our corporate strategy. Finally, I would like to thank our customers for the trust they have
placed in our bank.

Members of the
Board of Directors as at
December 31, 2006:
Gabriele Heber
Gabriele Heber Stefan Wolff
Chairperson of the Board of Directors NovoBanco Jasper Snoek
Michael Callaghan
Tunde Onitiri

Members of the
Management Board as at
December 31, 2006:
Stefan Wolff
Simon Herrmann
 Annual Repor t 2006

The Bank and its Shareholders

NovoBanco was established in 2004 as a full- mercial banks or microfinance organisations.

fledged commercial bank by a strong alliance of As Angola emerges from decades of civil war,
international shareholders. We provide credit NovoBanco is playing a critical role in the coun-
and other financial services to small entre- try’s private sector development, helping to cre-
preneurs and low-income households, a target ate prosperity and a stable economic environ-
market that was not previously served by com- ment.

Shareholder Sector Headquarters Share Paid-in Capital

(as of Dec. 31, 2006) (in USD)
ProCredit Holding Investment Germany 42.86% 2,100,000
IFC Banking USA 14.29% 700,000
DOEN Investment Netherlands 14.29% 700,000
BIO Investment Belgium 14.29% 700,000
Chevron Energy Germany 14.29% 700,000

Total Capital 100% 4,900,000

ProCredit Holding AG is the FY05, IFC has committed more than USD 49
parent company of the global billion of its own funds and arranged USD 24 bil-
group of ProCredit banks located in transition lion in syndications for 3,319 companies in 140
and developing countries across three conti- developing countries. IFC’s worldwide committed
nents. It was founded as Internationale Micro portfolio as of FY05 was USD 19.3 billion for its
Investitionen AG (IMI) in 1998. The ProCredit own account and USD 5.3 billion held for parti-
group of banks aim to make a difference by pro- cipants in loan syndications.
viding banking services to people whom other
banks either do not serve at all (usually on the
grounds of cost or risk) or only serve inadequately. DOEN Foundation promotes
The holding company, working closely with Inter- a liveable world in which
nationale Projekt Consult GmbH (IPC), guides the everyone can play a part, by subsidising and
development of the ProCredit institutions, provid- financing initiatives in the field of sustainable
ing support in all key areas of banking operations development, culture and welfare. DOEN Foun-
and human resources management. The company dation receives financial contributions for this
currently has an equity base of more than from the Dutch charity lotteries: the Nationale
EUR 200 million. Its shareholders consist of a Postcode Loterij (National Postcode Lottery), the
sound mix of private and public investors. BankGiro Loterij (BankGiro Lottery) and the Spon-
sor Loterij (Sponsor Lottery).

The International Finance Corpora- DOEN Foundation supports both small and large
tion (IFC) is the private sector arm of initiatives which contribute to a more colourful
the World Bank Group and is headquartered in and liveable society, focussing particularly on
Washington, D.C. The mission of IFC is to promote initiatives that require active entrepreneurship
sustainable private sector investment in devel- and have a sustainable character. In implement-
oping and transition countries, helping to reduce ing such initiatives, the emphasis is on people’s
poverty and improve people’s lives. IFC finances ability to motivate themselves.
private sector investments in the developing
world, mobilises capital in the international DOEN Foundation was set up in 1991 by the Na-
financial markets, helps clients improve social tionale Postcode Loterij. The name DOEN (to do)
and environmental sustainability, and provides reflects what the foundation stands for: action
technical assistance and advice to governments and results; stepping in where others will not; de-
and businesses. From its founding in 1956 through termination and dedication to a liveable society.
The B a nk a nd i t s S h a r e hol de r s 

The Belgian Investment Company for Chevron Sustainable Development Com-

Developing Countries (BIO), was set up pany Ltd. (CSDC) is a wholly-owned sub-
in December 2001 as a public-private partnership sidiary of Chevron Corporation, a lead-
between the Belgian government – through the ing U.S.-based oil company. Chevron has been
Department of Development Cooperation – and operating in Angola since the 1950s and is one
the Belgian Corporation for International Invest- of the largest foreign investors in the country.
ment. BIO’s mission is to support the sustainable Founded in 2002, the CSDC is part of a wider initi-
development of the private sector in develop- ative to support the reconstruction of Angola
ing countries by providing long-term financing through community and private sector develop-
(equity, quasi-equity and long-term loans) to ment. Chevron has committed USD 25 million to-
micro, small and medium-sized enterprises wards a USD 50 million programme for Angola’s
(MSMEs). BIO’s interventions are either direct reconstruction.
or indirect (i.e. through investment funds and
financial intermediaries). To date, BIO has com-
mitments of over EUR 100 million.
 Annual Repor t 2006

The ProCredit Group – Neighbourhood Banks for Ordinary People

In the developing countries and transition econ-

omies in which the ProCredit group operates,
conventional commercial banks tend to neglect
The ProCredit group currently comprises 19 tar- small and very small businesses because they
get group-oriented banks operating in as many are thought to keep inadequate records, have
countries. We focus on developing countries and insufficient collateral and generate high admin-
transition economies in three regions: Eastern istrative costs. However, these businesses are
Europe, Latin America and Africa. The group the main engine of economic growth and of job
has 470 branches staffed by 12,600 employ- creation. Over the years, the ProCredit group and
ees. Currently, ProCredit banks disburse more IPC, which developed the lending methodology
than 60,000 loans totalling more than EUR 185 used by the ProCredit group, have gained a pro-
million every month. By the end of 2006, the found understanding of both the problems faced
number of loans outstanding had grown to more by small businesses and the opportunities avail-
than 740,000 (amounting to EUR 2.1 billion). The able to them, and have tailored the credit technol-
average loan amount outstanding is EUR 2,850 ogy to reflect the realities of their operating envi-
and the loan portfolio quality remains excellent ronment. Thanks to this credit technology, which
with a ratio of loans in arrears (>30 days) to total combines careful analysis of all credit risks with
loan portfolio of only 1.2%. Over 2006, the group’s a high degree of standardisation and efficiency,
deposit base increased from EUR 1.3 billion to the ProCredit institutions are able to reach a large
EUR 1.8 billion, with nearly one million new number of small borrowers.
accounts having been opened.
In contrast to ProCredit, other commercial banks
The ProCredit group is led by the Frankfurt-based give priority in their lending operations to corpo-
ProCredit Holding AG, founded by the consulting rate finance and consumer lending, especially the
firm IPC in 1998. The staff of ProCredit Holding latter. Consumer finance is attractive because
and IPC provide centralised support, super- it usually does not require skilled staff or much
vision and management of all the ProCredit banks. financial analysis of the client, allowing banks
ProCredit Holding is a private-public company, focused on market share to grow quickly. However,
with international shareholders that include KfW, this quest for market share can lead to irrespon-
IFC, FMO, and the DOEN Foundation. In 2006, the sible lending and overindebtedness on the part
shareholder group was joined by two new US- of the client. ProCredit never forgets that a loan
based private shareholders, TIAA-CREF and the is also a debt. We place great emphasis on the
Omidyar-Tufts Microfinance Fund. careful evaluation of a borrower’s debt capacity
and on building lasting relationships. In this way,
But what do these facts and figures mean and ProCredit is characterised by a responsible, long-
what are these shareholders trying to achieve? term attitude towards business development and
ProCredit is building a global group of neighbour- client relationships.
hood banks. But what is a neighbourhood bank?
Wherever we are, we aim to be the accessible, Furthermore, ProCredit institutions strive to fos-
trusted, socially responsible bank for the local ter a savings culture. We aim to build public con-
small businesses and the ordinary people who fidence in banks by setting new standards in cus-
live and work in the area. In our lending business, tomer service, transparency and business ethics.
we focus on very small, small and medium-sized ProCredit deposit facilities are appropriate for a
enterprises. At the same time ProCredit provides broad range of customers, especially low-income
retail banking services to “ordinary” people, with groups. We offer simple savings products with no
a focus on low-income families. In this way we minimum deposit requirement. Eighty percent of
aim to be the long-term banking partner for tar- all deposit accounts have a balance of less than
get groups which most conventional commercial EUR 100. This illustrates our target group orien-
banks neglect. By providing socially responsible tation and highlights the challenge of serving
products we aim to contribute to the economic this target group of small savers who account for
development of the countries in which we work. only 1% of our total deposit volume. In the spirit
The P r o C r e di t G r oup – N e ighbour ho od B a nk s f or O r din a r y P eop l e 

of a neighbourhood bank, ProCredit banks place our day-to-day business. Key to our success is
great emphasis on children’s savings products therefore the selection and training of the right
and education campaigns as well as on sponsor- staff. We maintain a corporate culture that har-
ing local community events. In addition to deposit nesses the creativity and entrepreneurial spirit
facilities, clients are offered a full range of stand- of our staff, while fostering their deep sense of
ard non-credit banking services. personal and social responsibility. This entails
not only intensive training in technical and man-
The shareholders of the group aim to strike the agement skills, but also a continuous exchange
right balance between their prime developmen- of personnel between our member institutions in
tal goals: reaching as many small enterprises and order to take full advantage of the opportunities
small savers as possible, and achieving commer- for staff development which are created by their
cial success. For 2006, the return on equity for membership of a truly international group.
the group as a whole, expressed in hard currency
after deduction of profit taxes, is expected to A central plank in our approach to training is the
reach 13%. This level of profitability is required group’s ProCredit Academy in Germany, which pro-
to support our rapid growth, to ensure our long- vides a three-year, part-time “ProCredit Banker”
term sustainability and to generate a reasonable training programme for its high-potential local
return for our shareholders. personnel. The programme includes intensive
technical training and also exposes participants
The neighbourhood bank concept is not limited to a very multicultural learning environment and
to our target customers and how we reach them. to subjects such as anthropology and the human-
It is also about our staff: how we work with one ities. The programme provides an opportunity for
another and how we work with our customers. The our future leaders to develop their views of the
neighbourhood bank approach requires a high world, as well as their communication and staff
degree of decentralised decision-making and management skills. The continued success of
therefore judgement and creativity from all staff, ProCredit relies on a self-confident team of people The international group
especially our branch managers. Our corporate who share a personal commitment to the target of ProCredit institutions;
values embed principles such as honest commu- group and to the neighbourhood way of doing see also
nication, transparency and professionalism into things. www.procredit-holding.com

ProCredit Bank Serbia ProCredit Bank Ukraine

ProCredit Bank ProCredit Moldova

Bosnia and Herzegovina
ProCredit Bank Romania
ProCredit Bank Kosovo
ProCredit Bank Kyrgyzstan
ProCredit Bank Albania (planned)
Mexico ProCredit Bank Macedonia ProCredit Bank Georgia
ProCredit Bank Armenia
Banco ProCredit (planned)
(planned) ProCredit Bank Bulgaria
ProCredit Bank
Banco ProCredit Sierra Leone
El Salvador
ProCredit Savings and Loans
Banco ProCredit Ghana
ProCredit Bank Democratic
Banco ProCredit Republic of Congo
(planned) NovoBanco Angola

Banco ProCredit Banco ProCredit Mozambique


Banco Los Andes

ProCredit Bolivia
10 Annual Repor t 2006
ProCredit in Afric a 11

ProCredit in Africa

After gaining years of experience in establishing Among the more subtle factors which are less
target group-oriented banks in Latin America and than conducive to the rapid spread of com-
South-Eastern Europe, ProCredit Holding decided mercial credit facilities for small and very
to establish a third area of operations in Sub- small enterprises in Africa are short-sighted
Saharan Africa. We began operating in Mozam- behaviour on the part of some donors and the
bique in 2000, and in Ghana in 2002. In 2004/05, policies of many African governments, which do
we established institutions in Angola and Congo little to promote small business. In Africa, the
(DRC), and we plan to open a ProCredit Bank in formal sector in general, and the formal small
Sierra Leone – our fifth in Africa – in 2007. business sector in particular, tends to be very
small and underdeveloped. It has had to struggle
It is already clear that it will be possible in Africa, under all the burdens resulting from these coun-
as it has been elsewhere, to set up stable, target tries’ colonial past, burdens which are all too
group-oriented financial institutions which have often reinforced, albeit unwittingly, by the stand-
extensive branch networks and are largely able ards demanded by international organisations
to mobilise their own funds from local savings today. Local authorities also like to set stringent
deposits. However, it is equally clear that doing formal requirements for small and medium-sized
so will require longer periods of time than were enterprises, leading businesses to somehow find
needed in Latin America or Eastern Europe. Some ways, sometimes informal, to get around these
of the reasons for this are obvious, others are requirements.
more subtle.

Undoubtedly, the lower average loan amount at

some of our African banks is responsible for the
slower growth of the loan portfolio in this region.
There is no lack of deposit customers, but deposit
amounts are small as well. Both sides of the bal-
ance sheet are affected by the combination of
labour-intensive processes and small individual
amounts which characterises our banks’ opera-

Infrastructure is weak and suitable premises are

scarce in Africa, particularly in the post-conflict
countries on which we focus – making branch net- All of these factors serve to perpetuate infor-
work expansion a slow and expensive process. mal structures, in many countries even within
Transport and communication costs are high. the financial sector itself. We would like to ex-
Political and economic instability also take their pand the ProCredit business model to other
toll. Plainly, in many African countries there is African countries more rapidly, but it is not al-
also a shortage of qualified individuals. Our staff ways easy. Numerous African countries have
are the key to our success in Africa as elsewhere interest-rate ceilings, especially those in the
in the ProCredit group. We have a great need for CFA zone. Microfinance, which is necessarily
loan officers and client advisers, co-ordinators, cost-intensive and expensive, must then be car-
branch managers, and qualified head office staff, ried out de facto on a subsidised, informal or
but it is hard to find suitable personnel. Further- illegal basis. This is one of the reasons why there
more, companies compete strongly for the few are a large number of NGOs issuing small loans
skilled members of the local workforce, often in Africa. Many donors subsidise these NGOs and
driving up the “price” of such individuals to unaf- their lending operations so heavily that the local
fordable levels. This means that we have to de- savings deposits which would be available are
velop and train our professional staff ourselves. never even mobilised or used, and they are thus
We are proud of the results, but we have to invest running the risk of damaging or even destroy-
a great deal of time in the training process. ing serious commercial providers of financial
12 Annual Repor t 2006

Libya Egypt

Mauritania Mali Niger

Senegal Chad Sudan

Guinea-Bissau Burkina Faso

Sierra Cote Togo Nigeria Ethiopia
Leone d’Ivoire Ghana
Central Africa
Liberia Cameroon

Equatorial Uganda Kenya

Guinea Congo
Gabon Democratic Rwanda
Republic Burundi
of Congo

Angola Malawi Mozambique



Namibia Botswana


South Africa

But we should not only talk about the “problems” demand for this type of credit in the post-conflict
in Africa. We are firmly committed to the continent. economies in which our banks typically operate
The opportunities are great, given that there is a in Africa.
thriving informal business sector in many African
countries. The demand for credit is strong and at With 788 dedicated staff members at the end of
present almost none of this demand is being met 2006 managing some 165,000 deposit accounts
by the formal financial systems; at the same time and disbursing 3,800 loans per month, we already
there is a great willingness on the part of ordinary have a good team in Africa and a strong platform
people to entrust their savings to a sound and on which we can build. In view of the experience
professional financial institution. Our potential we have gained to date and our growing capac-
development impact is very significant: in many ity to train new employees in our existing banks,
countries we are unique in providing modern, and given that a regional training academy will
transparent and reliable banking services for be set up in Africa in 2007, our next steps in the
everyone, i.e. we have no minimum deposit bal- region will be more ambitious. We look forward
ance and we provide loans to very small busi- to steadily expanding the branch network in the
nesses. Moreover, we plan to offer both housing countries in which we already work and to estab-
improvement loans and agricultural loans on lishing new ProCredit banks in several additional
an expanded scale in order to better meet the African countries.
ProCredit in Afric a 13

Name Highlights Contact

NovoBanco Founded in February 2004 Rua N’Dunduma 253

Angola (open to the public since August 2004) Luanda
3 branches Tel.: +244 222 430040
2,307 loans / USD 7.6 million in loans Fax: +244 222 430074
23,661 deposit accounts / USD 7.4 million secretariado@novobanco.ao
115 employees

ProCredit Bank Founded in 2004 Avenue des Aviateurs 4B

Congo S.A.R.L. (open to the public since August 2005) Kinshasa/Gombe
2 branches Tel.: + Tel.: +243 89 8996600
2,782 loans / USD 7.4 million in loans Fax: +49 69 25577042
16,512 deposit accounts / USD 14.8 million info@procreditbank.cd
105 employees www.procreditbank.cd

ProCredit Founded in July 2002 (initially named “Sikaman P.O. Box NT 328, New Town
Savings and Loans Company Ltd. Savings and Loans Company Ltd.”) Accra
Ghana 7 branches and 1 savings mobilisation unit Tel.: +233 21 246860/62
10,133 loans / USD 14.0 million in loans Fax: +233 21 236244
68,533 deposit accounts / USD 12.9 million info@procredit.com.gh
326 employees www.procredit.com.gh

Banco ProCredit Founded in December 2000 Av. Zedequias Manganhela Nr. 267
Mozambique 9 branches Jat IV, 6o andar D
21,293 loans / USD 13.3 million in loans Tel. +258 21 313344
64,347 deposits / USD 8.1 million Fax. + 258 21 313345
297 employees Sede@bancoprocredit.co.mz
14 Annual Repor t 2006

The Year in Review


• Western Union inbound services are

• A loan officer training course begins with 30


• After almost three years of service, Barbara

Sajet and Koen Wasmus are replaced by
Stefan Wolff, General Manager and Simon
Herrmann, Chief Operational Officer/Deputy
General Manager.
• The Central Bank conducts its first inspection
of NovoBanco.


• NovoBanco opens a branch in Benguela, its

first outside Luanda, the capital.


• A revised salary structure is approved by the

• A branch manager visits ProCredit Bank


• The legal department is established.

• 18 new loan officers are hired.


• Middle management staff members are hired

and begin training.
• Branch staff in Benguela and Luanda begin
English courses.
The Ye a r in R e v ie w 15


• To coincide with the 2006 Football World

Cup, NovoBanco organised a football cup
for schools from the branch neighbourhoods.
15 schools from Luanda and Benguela partici-
pated in the tournament.


• Western Union outbound services are

• The bank celebrates its second anniversary.
• The bank achieves its best monthly results
in lending: it disburses more than 300 loans,
amounting to more than USD 1.6 million.


• In cooperation with IFC, the bank starts an

educational programme against HIV/AIDS.


• The bank launches a children’s savings cam-

paign, “MeuPorquinho 2006”, with a press
conference broadcast countrywide.
• The 100th employee joins NovoBanco.
• The first group of NovoBanco employees take
English courses at the Regional Academy of
the ProCredit group in Ghana.


• Two staff members are selected to partici-

pate in the “ProCredit Banker” programme at
the ProCredit Academy in Fürth, Germany.
• Two internal auditors begin an exchange with
NovoBanco Mozambique.


• The “MeuPorquinho 2006” children’s savings

campaign concludes with big celebrations in
Benguela und Luanda.
16 Annual Repor t 2006

Management Business Review

Management Board
from left to right:

Stefan Wolff
General Manager

Simon Herrmann
Deputy General Manager
M anagement Business Re vie w 17

Political and Economic Environment Little was achieved in rebuilding post-war agricul-
tural and industrial production. Angola continued
2006 was characterised by continued macro- to rely heavily on imports, and a limited number
economic stability, a trend that began in 2004. of large businesses kept prices artificially high.
GDP grew by more than 15%, and inflation was
kept under control at 17%. The local currency, the A negligible percentage of the population bene-
kwanza, remained stable in relation to the US dol- fits from Angola’s substantial oil revenue. Per
lar. The Central Bank reduced inflation through capita income is USD 1,350 (2005), but An-
foreign-exchange intervention that lowered the gola still ranks among the bottom ten on many
cost of imports, rather than through greater fiscal social and developmental indicators. Only a third
discipline. This policy is effective while oil export of the population has access to clean water and
earnings remain high, but is not sustainable over adequate sanitation, life expectancy stands at 39
the long run. The overvalued exchange rate has a years, and 25% of babies die before they reach
negative impact on local non-oil productive acti- the age of 5. In 2006 illnesses such as cholera
vities, such as manufacturing and agriculture. and Marburg fever re-emerged. Angola has an
extremely high fertility rate (2006: 6.35 children
During the first ten months of 2006, interest rates born/woman), and more than 50% of the popu-
on loans, deposits and treasury bills decreased lation is under 20 years of age.
significantly. This trend did not have an impact
on banks’ earnings. Angola’s enormous agricultural potential remains
largely untapped, even though small-scale farm-
The political environment remained stable. Since ers are returning to the country’s interior, and the
the 2002 peace accord, power has been shared country no longer receives large-scale food aid.
between the ruling MPLA and its former adver- Pervasive landmines and a lack of land titles and
sary UNITA. In a landmark initiative, the govern- infrastructure slow the pace of agricultural devel-
ment began online voter registration in Novem- opment.1
ber 2006. This process will take at least one
year to complete, however, and presidential and Informal and small businesses have received
parliamentary elections will not take place until inadequate support from the government,
2008 or 2009. International experts expect the which has done little to promote their integra-
MPLA to win, and the current president, José Edu- tion into the formal economy or to ease regula-
ardo dos Santos – in power since 1979 – to retain tions and laws posing an obstacle to their devel-
power. opment. The small business sector continued to
grow, however, especially in Luanda. It is concen-
Mineral resources, mainly oil and diamonds, trated in the trade and service sectors; few small
remain Angola’s main export products. Oil out- businesses succeed in the agricultural, manufac-
put stands at 1.6 million barrels per day and is turing and low-scale industrial sectors.
expected to reach 2 million barrels per day by
2008, confirming that Angola will remain one of Barriers to small business development include:
Africa’s major oil producers. In 2005, the govern-
ment began drawing on a USD 2 billion line of • Lack of information on the number of enter-
credit from China to rebuild Angola’s public infra- prises and their characteristics
structure, and several large-scale projects were • Lack of co-ordination among institutions
completed in 2006. • Excessive regulation
• A limited supply of financial services
The construction boom continued in Luanda,
fuelled by large firms such as banks, insurance As a result, many small businesses remain infor-
companies and oil companies. The real estate mal and are marginalised from the authorities,
market was overheated, and apartment rents large competitors and the legal system. Tradition-
were among the highest in the world. al banks largely ignore this market in their lend-

Sources: Country Reports from The Economist Intelligence Unit, Unicef and the CIA World Factbook.
18 Annual Repor t 2006

ing business and establish restrictive account entrepreneurs. Total assets in the banking sector
opening requirements. Small entrepreneurs thus increased by 61% to USD 10.4 billion.
continue to lack access to formal financial servic-
es, something that NovoBanco aims to change. Although the combined loan portfolio of all
banks grew by 40%, loans still accounted for
a relatively low 40% share of their total as-
Financial Sector Developments sets. More than 80% (2005: 56%) of loans are
channelled to the private sector. Most of these
A national development bank and four new pri- loans are allocated to trade finance and con-
vate banks began operations in 2006, bringing sumer lending. Consumer loans and housing
the total number of commercial banks to 16. None loans are aggressively marketed, especially by
of the new banks is dedicated to serving small Banco Fomento Angola and Banco BIC.

Banks Branches Loans Deposits

as at Outstanding credit volume as at Deposits as at
Amounts in million USD 30 Sept 2006 30 Nov 2006 30 Nov 2005 30 Nov 2006 30 Nov 2005
Banco Africano de Investimentos 31 585 433 2,048 951
Banco Comercial Angolano 5 54 92 188 167
Banco de Comercio e Industria 26 199 145 356 266
Banco Fomento Angola 37 966 770 1,863 1,269
Banco Millenium Angola 3 80 54 114 56
Banco de Poupança e Credito 58 1,138 693 1,887 1,249
Banco Totta Angola 8 151 124 279 240
Banco Sol 30 57 47 188 126
Banco Espirito Santo Angola 10 360 338 635 339
Banco Regional do Keve 8 67 60 108 71
NovoBanco 3 8 5 7 2
Banco BIC 40 475 107 1,084 185
Banco Privado Atlântico
Banco de Negócios Internacional*
Banco VTB África*
Banco de Desenvolvimento de Angola*
Total 259 4,140 2,868 8,757 4,921

* Not yet operational

Loan Portfolio Development Number of Loans Outstanding – Breakdown by Loan Size*

Volume (in USD million) Number (in ’000)

10 3.000
9 2.700 6.3%
8 2.400
7 2.100
6 1.800
5 1.500
4 1.200 31.4%
3 900 62.3%
2 600
1 300
0 0
Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec
04 05 06

< USD 10,000 Total number outstanding < USD 1,000 USD 10,001 – USD 50,000
USD 10,001 – USD 50,000 USD 1,001 – USD 10,000 * 31 Dec 2006
M anagement Business Re vie w 19

Angola’s microfinance sector is undeveloped. A assessment procedures so that a loan decision

dedicated unit within the Central Bank was closed can be made immediately. Disbursement usually
in October 2006, and a draft microfinance regu- takes place on the following day.
lation has not been published yet. One NGO serves
very small businesses and wants to transform its Demand for loans was strong in 2006; the out-
microfinance programme into a formal institution. standing loan portfolio increased by over 70%
In 2006 NovoBanco Angola continued to be the only from USD 4.4 million to USD 7.6 million. The bank
commercial bank serving the microfinance sector. sought to increase the number and productiv-
ity of credit department staff. These efforts are
an ongoing challenge due to the tight Angolan
Lending Performance labour market and logistical and infrastructural
barriers in Luanda.
NovoBanco’s loan products are tailored to small
entrepreneurs, taking into account the environ- NovoBanco lends to a wide range of businesses,
ment in which they operate. Formal requirements from private hospitals to market vendors, and
are kept to an absolute minimum, and proce- from fishermen to mini-markets. It thereby
dures are straightforward. NovoBanco Angola spreads credit risk over different sectors and seg-
issues loans to entrepreneurs with at least one ments of the economy. Loan sizes vary, with the
year of business experience in trade, services, or majority falling between USD 1,000 and 10,000.
small-scale production. Loans are available from
USD 100 to 15,000 (and up to USD 40,000 for re- Loan portfolio quality was unsatisfactory in
peat clients with a good credit history) to finance 2006; the year ended with a portfolio at risk
increases in working capital or investments in over 30 days of 5.66%. NovoBanco consistently
fixed assets. Most loans are repayable in equal adjusted its credit methodology to manage the
monthly instalments, and maturities vary from risk associated with lending to small businesses.
six months to two years. We established a loan recovery team to manage
arrears, introduced additional credit analysis
In November 2006 NovoBanco launched the training for loan officers, reduced the geographic
“Instant Loan”, which offers between USD 100 area in which we recruit new clients, and rewarded
and 2,000 to very small entrepreneurs at vari- good repayment performance by offering simpli-
ous open markets in the Benguela region. This fied loan renewal procedures. We expect PAR to
product uses simple and straightforward credit decrease in 2007 as a result of these measures.

Business Loan Portfolio – Breakdown by Maturity Loan Portfolio Quality (arrears >30 days)

in % in % of loan portfolio
100 8
90 7
60 5
50 4
10 1
0 0
Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec
04 05 06 04 05 06

< 12 months 12 – 24 months

20 Annual Repor t 2006

Other Banking Services NovoBanco attracted many small savers who

had never entered a bank before; 2,000 savings
NovoBanco Angola offers a wide range of simple, accounts were opened in 2006 with an average
low cost banking products. We minimise docu- balance of USD 75.
mentation requirements as much as possible
to ensure that every Angolan can open a formal As a member of the national clearing house,
bank account. NovoBanco offered domestic payments as a
means for small enterprises to pay local suppli-
In 2006 total deposits increased by 170% from ers. These clients continued to consider cheques
USD 2.7 million to USD 7.40 million, of which 58% a more attractive payment method, however;
was held in local currency. The share of deposits NovoBanco issued over 4,000 cheques in 2006.
held in time deposit accounts (maturities from
1-12 months) increased from 15% in 2005 to 27% NovoBanco processed USD 5.6 million in inter-
in 2006. More than 90% of term deposits were national transfers, not including Western Union
held in kwanza, which demonstrates the increas- services. Outgoing payment services were used
ing public confidence in Angola’s local currency. by loan clients and small traders who import
goods from Dubai, Korea, China, Brazil and Por-
NovoBanco promotes its services to a wide tugal, and by Angolans sending remittances
range of clients, many of whom are considered abroad. Western Union services were introduced
un-bankable by other commercial banks. Our in early 2006 for inbound transfers. In August,
three branches undertake extensive promotions the service also offered outbound transfers. The
in their respective neighbourhoods. Traditional demand was enormous; by year-end NovoBanco
advertising, such as billboards, radio spots and had processed 2,100 inbound transfers and 2,700
newspaper ads, are not effective for communicat- outbound transfers with a combined volume of
ing with lower-income Angolans, many of whom USD 2.5 million.
have no prior experience of doing business with
a bank. The branches use direct communication
and informational activities to familiarise people
with the bank and its services. In 2006 they pro-
vided financial education in local schools and
organised a football championship and savings
campaign for children (see the special feature in
this report).

Customer Deposits Number of Customer Deposits – Breakdown by Size

Volume (in USD million) Number (in ’000)

8 32 2.9% 0.2%

7 28
6 24 12.6%

5 20
4 16
3 12
2 8 84.1%

1 4
0 0
Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec
04 05 06

Term Savings Sight Total number < USD 100 USD 1,001 – USD 10,000
USD 101 – USD 1,000 USD 10,001 – USD 50,000
M anagement Business Re vie w 21

Domestic Money Transfers International Money Transfers

Volume (in USD million) Number (in ’000) Volume (in USD million) Number (in ’000)
2,0 200 5,0 1.000
1,8 180 4,5 900
1,6 160 4,0 800
1,4 140 3,5 700
1,2 120 3,0 600
1,0 100 2,5 500
0,8 80 2,0 400
0,6 60 1,5 300
0,4 40 1,0 200
0,2 20 0,5 100
0 0 0 0
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
04 05 06 04 05 06

Incoming Outgoing Number Incoming Outgoing Number

22 M anagement Business Re vie w

Financial Results NovoBanco invested nearly USD 100,000 in inter-

national training and exchange, an amount that
NovoBanco’s balance sheet experienced strong will increase in the future.
growth, reaching a total of USD 14.1 million by
year-end. The balance sheet composition re- In 2006 NovoBanco Angola made a modest profit
mained straightforward: liabilities were largely of USD 43,012 after conservative loan loss pro-
customer deposits, while assets consisted of the visioning.
loan portfolio, financial investments and fixed
In 2006 interest income from loans replaced inter-
est income from treasury bills and foreign place- The relative economic and political stability is
ments as NovoBanco’s main source of income. expected to continue in 2007, hopefully result-
Western Union and international money transfer ing in the first general elections in over a decade.
fees were an increasingly significant source of in- Forecasts project strong economic growth (above
come. Costs were mainly operational expenses, 15%) and high-volume oil production. The great-
loan loss provisions and interest expenses. The est challenge facing Angola will be to achieve a
low share of interest-earning deposits kept the more even distribution of wealth across its popu-
latter at a modest level. Operational expenses lation, one of the poorest in the world.
were relatively high, albeit typical in the Angolan
context. In 2006 NovoBanco reinforced its reputation as a
reliable partner for businesses and private indi-
viduals. Rapid growth in the loan portfolio and
deposit base confirmed the strong demand for
our products and services. The bank opened its
first branch outside the capital and prepared
to open three more branches in 2007 – two in
Luanda and one in Benguela province.

To retain its position as the market leader in small

business lending, NovoBanco must expand its
internal capacity. In 2007 we will steadily in-
crease the number of loan officers and introduce
housing improvement loans for salary earners.
The outstanding loan portfolio is projected to be
USD 16 million by year-end.

Our branches will continue to conduct informa-

tional and educational events through close part-
nerships with local schools and other civil soci-
ety institutions.

With its attractive product portfolio and loyal

customer base, NovoBanco is in an excellent
position to expand access to financial services in
Luanda and Angola’s provinces.
M a n a g e m e n t BSupseicnieaslsF R
eae tv u
i erwe 23

Special Feature

Children’s savings campaign “MeuPorquinho 2006”

NovoBanco Angola launched its first large-scale As a central component of the campaign, the
savings campaign in 2006. The campaign targeted bank cooperated with state education authori-
children between the ages of six and ten and was ties to teach financial education in local primary
organised in cooperation with the Angola Part- schools. NovoBanco employees visited 21 state
nership Initiative, a public-private partnership schools, where they taught more than 4,000 chil-
between the UNDP and Chevron. dren about the importance of saving. The cam-
paign’s educational materials were very popular;
In Angola, which only recently emerged from children received colourful piggy banks, exercise
years of civil war, the desire for immediate con- and comic books, and savings passbooks, which
sumption is palpable. Saving for retirement or life bank cashiers update by hand upon each deposit.
insurance is a foreign concept, particularly given The branches complemented these activities
the extreme poverty in which many people live. with Saturday opening hours for children, draw-
A lower middle class is emerging among people ing competitions and theatre performances. Two
with a fixed income from an independent busi- big parties were held in Luanda and Benguela to
ness or a salaried job. But many of these indi- mark the end of the campaign.
viduals do not set aside sufficient savings to pro-
tect themselves and their families against major NovoBanco was the first bank in Angola to publicly
risks, such as death or disability. address the issue of savings. Over 700 savings ac-
counts were opened during the campaign, a major
To draw nationwide attention to the importance of success considering Angolans’ prevailing lack of
saving, NovoBanco launched a two-month cam- trust in banks. We received extremely positive feed-
paign with a press conference in October 2007. back, particularly regarding the campaign’s fun
The campaign met with unexpectedly strong and festive atmosphere. Based on this response,
public interest. It received regular coverage on we will launch a similar savings initiative in
television, on the radio and in print media. 2007, but probably with a different target group.
24 Annual Repor t 2006

Risk Management

Risk management is an integral part of NovoBanco sified. NovoBanco does not engage in trading or
Angola’s business procedures and processes. other speculative activities. All other businesses
The bank’s management is responsible for devel- are reduced to a minimum and are undertaken
oping risk management policies and procedures, only to support lending operations.
and for establishing an effective organisational
structure to implement those policies. It ensures The bank clearly communicates the importance
that risk management is embedded in the culture of internal and external transparency to all staff
of the institution’s day-to-day operations. members. Compliance with operational proce-
dures and the Code of Conduct is monitored regu-
NovoBanco Angola’s core business is lending to larly.
very small, small and medium-sized enterprises
that operate in various economic sectors and NovoBanco’s Internal Audit Department checks
locations. Simply by virtue of the bank’s target compliance with the bank’s policies and proce-
group, its assets and liabilities are highly diver- dures and reviews processes to detect potential
Risk M anagement 25

risks. Its independent status allows it to identify Credit Risk

problems and report its findings without any hin-
drance. Lending to very small, small and medium-sized
enterprises exposes the bank to credit risk.
In 2006 the bank’s senior management per- NovoBanco takes various measures to address
formed many of the duties associated with risk risks in this area. The bank employs an advanced
management. A new Risk Management Unit will credit technology to assess detailed information
be established in 2007. The Unit will prepare about the client, his/her household and his/her
periodic reports and will serve as a risk consul- business activities. Credit committees make all
tant to management. The bank will create two risk lending decisions, and the composition of credit
committees within the Risk Management Unit to committees varies according to the size and risk
identify and manage risks in a more efficient and profile of the loan. Close monitoring of clients’
transparent manner. repayment performance allows the bank to de-
tect potential problems as soon as they arise. The
diversification of the loan portfolio across many
small borrowers reduces the effects of a down-
turn in any given business sector.

NovoBanco’s management aims to reduce its

portfolio at risk (>30 days) from the high level
of 5.66% at year-end 2006 to less than 4.00%
at year-end 2007. To improve its credit risk con-
trol, NovoBanco Angola will establish a Credit
Risk Unit in early 2007. A sound risk management
approach will be crucial to achieve the bank’s
ambitious growth targets.

Liquidity Risk

Liquidity risk was managed by the Operations

Manager for most of 2006. The bank transferred
responsibility for liquidity risk to a new Finance
Manager in late 2006. By removing liquidity
management from the Operations Department,
NovoBanco clearly separated operational from
financial decision-making. In the first half of
2007, the bank will establish an Asset and Liabil-
ity Committee (ALCO). The committee will meet
monthly to examine and manage liquidity risk.

Operational Risk

Management closely monitors the bank’s opera-

tional risk. Staff strictly apply the “four-eyes”
principle to all transactions, and document all
major processes. Every new employee receives
extensive training on NovoBanco’s principles and
procedures and his or her specific responsibilities.
To ensure continued compliance, the bank offers
refresher courses at all levels on a regular basis.
26 Annual Repor t 2006

Branch Network

Finding the right locations for our branches is vegetables. Today Benguela is dependent on im-
the key to serving our target group efficiently. ports shipped from abroad and transported from
We must be close to open markets and trade cen- Luanda. Public initiatives to rebuild infrastruc-
tres and offer attractive and convenient branches ture, agriculture and the private sector are
to our retail clients. Opening branches is difficult expected to stimulate greater economic activity.
in Angola, due to a lack of ownership documents,
bureaucratic obstacles and extremely high rent. In 2007 the bank will strengthen its presence in
Luanda and the Benguela region. There is strong
At the end of March, NovoBanco Angola opened demand for our products among the 4 million in-
its third branch. Located in the city of Benguela, habitants of Luanda. This untapped market poten-
it is our first branch outside the capital. Benguela tial is not the only reason to open more branches
city is the capital of Benguela province, about there: heavy traffic and long distances are a bur-
430 km south of Luanda. The province has den on our clients and loan officers. To be closer
750,000 inhabitants, and the city has a popula- to our clients, many more branches are necessary.
tion of 200,000.
In 2007 we will open a branch in Lobito, a second
Like many Angolan cities, Benguela is small. Lit- city in Benguela province. We expect to open one
tle remains of its historic role as a trade centre or two additional branches in Luanda, bringing
for fish, coffee, sugar cane, bananas, salt and the total number to five or six by the end of 2007.

Democratic Republic of Congo

Luanda (2)

Atlantic Ocean Angola


Br anch Ne t work 27
28 O rg a nis at ion, Sta f f a nd Sta f f D e v el opmen t

Organisation, Staff and Staff Development

NovoBanco is a young, fast-growing organisa- and have little work experience. They prepare for
tion. Due to high demand for its services, the their positions through intensive in-house train-
bank faces continuous pressure to increase inter- ing courses followed by on-the-job training under
nal capacity without compromising sound insti- the supervision of experienced colleagues. At the
tutional development. Our target group-orien- department management level, we recruit expe-
tation demands a sound institutional structure, rienced candidates with relevant education and
good governance, and effective branch manage- knowledge of the local context. Competition for
ment. skilled personnel is extremely high, dominated
by a small number of companies, mainly in the
The bank significantly increased its staff in 2006 oil industry, that pay high salaries. It is still ex-
to open a third branch and to increase capacity tremely difficult to recruit qualified personnel,
at the head office. The bank expanded the audit and competition for NovoBanco’s trained staff is
department, established legal and HR depart- leading to above-average staff turnover.
ments, added two specialists each to the logis-
tics, payments, and IT departments, and restruc- NovoBanco recognises the importance of staff
tured the financial department. This expansion training and development to underpin insti-
phase will conclude in 2007 when we will set up tutional growth and development. A strong and
an operations department (credit, retail), expand committed team is essential for the bank to reach
the HR and marketing departments, hire a secu- its ambitious goals. We hold regular in-house
rity expert and create a department to oversee seminars on specific topics and institution-wide
branch network expansion. information or discussion sessions in an informal
setting. NovoBanco benefits greatly from train-
In the branches, a “credit coordinator” position ing opportunities offered by the wider ProCredit
was created to support the branch manager and network. Several staff participated in group-wide
to offer high-performing loan officers the oppor- training seminars in Frankfurt. Internal auditors
tunity to advance. Supervisory roles were estab- spent three weeks in the bank’s partner institu-
lished in retail operations to manage business tion in Mozambique, and a branch manager vis-
growth. ited ProCredit Bank Kosovo to exchange expe-
riences. Two employees from the Rocha Pinto
To prepare for three branch openings in 2007, branch attended the new ProCredit Regional
the bank hired additional personnel. Over 2,000 Academy in Accra, Ghana, to participate in an
applications were screened. Staff grew from 49 intensive eight-week English and banking course.
at the end of 2005 to 115 at the end of 2006. For In 2007 three managers will attend a three-year
its branch operations, NovoBanco recruits young programme at the ProCredit Academy. They will
people who have finished middle or high school spend 12 weeks a year in Germany.
Busine ss Et hic s a nd En v ironmen ta l Sta nda r ds 29

Business Ethics and Environmental Standards

Part of the overall mission of the ProCredit group These ProCredit values represent the backbone
is to set standards in the financial sectors in of our corporate culture and are discussed and
which we operate. We want to make a difference actively applied in our day-to-day operations.
not only in terms of the target groups we serve Moreover, they are reflected in the Code of Con-
and the quality of the financial services we pro- duct, which translates the ProCredit group’s
vide, but also with regard to business ethics. Our ethical principles into practical guidelines for all
strong corporate values play a key role in this ProCredit staff. In order to ensure that staff fully
respect. We have established six essential princi- understand all of the principles that have been
ples which guide the operations of ProCredit defined, several training sessions were conducted
institutions: during the year under review at which case stud-
ies were presented and grey areas discussed. We
• Transparency: We adhere to the principle of will continue to conduct such training sessions
providing transparent information both to our and increase their frequency in the future.
customers and the general public and to our
employees, and our conduct is straight- Another aspect of ensuring that our institution
forward and open; adheres to the highest ethical standards is our
consistent application of international best-
• A culture of open communication: We are practice methods and procedures to protect our-
open, fair and constructive in our communi- selves from being used as a vehicle for money
cation with each other, and deal with conflicts laundering or other illegal activities such as the
at work in a professional manner, working financing of terrorist activities. The important fo-
together to find solutions; cus here is to “know your customer”, and, in line
with this principle, to carry out sound reporting
• Social responsibility and tolerance: We give and comply with the applicable regulations.
our clients sound advice; their economic and
financial situation, their potential and their We also set standards regarding the impact
capacities are assessed and are translated of our lending operations on the environment.
into appropriate “products”; promoting a cul- NovoBanco Angola has implement-
ture of savings is important to us; we are com- ed an environmental management
mitted to treating all customers and em- system based on continuous as-
ployees respectfully and fairly, irrespective sessment of the loan portfolio
of their origin, colour, language, gender or according to environmental cri-
religious or political beliefs; teria, an in-depth analysis of all
economic activities which po-
• Service orientation: Every client is served in tentially involve environmental
a friendly, competent and courteous manner. risks, and the rejection of loan
Our employees are committed to providing applications from enterprises
excellent service to all customers, regardless engaged in activities which are
of their background or the size of their busi- deemed environmentally haz-
ness; ardous and appear on our
institution’s exclusion list. By
• High professional standards: Every employee incorporating environmental
takes responsibility for the quality of his/her issues into the loan approval
work and strives to do his/her job even better; process, NovoBanco Angola is also
able to raise its clients’ overall level of environ-
• A high degree of personal commitment: This mental awareness. We ensure that when loan
goes hand-in-hand with personal integrity applications are evaluated, compliance with ethi-
and honesty – traits which are required of all cal business practices is a key consideration. No
employees in all ProCredit institutions. loans are issued to enterprises or individuals if it
is suspected that they are making use of unsafe
or morally objectionable forms of labour, in parti-
cular child labour.
30 Annual Repor t 2006

Our Clients

Ricardo Wambembe,
Natural Herbs Consultant

Ricardo Wambembe, a 29-year-old entrepre-

neur, has been a NovoBanco client for two
years. He submitted his first loan application in
January 2005. Before obtaining his first loan for
USD 2,000, Mr. Wambembe ran “Ervanária Na-
tura”, a shop for natural supplements and herbal
consulting, from his home. He started the busi-
ness in 1995.

Mr. Wambembe recently obtained a third loan

for USD 6,500. He has used the loans to increase Prior to approaching NovoBanco, Mr. Wambembe
his inventory and buy new equipment for his con- had no experience with banks. He was attracted
sulting services. He opened another sales out- by NovoBanco’s focus on small entrepreneurs. He
let in Kikolo, an area of northern Luanda where now uses NovoBanco’s payment services, such
demand for his services is high. Mr. Wambembe as cheques and international money transfers,
also bought a car to help procure merchandise. to reimburse his suppliers in Brazil, Spain and
Having grown his business, Mr. Wambembe was Portugal.
able to build his own house.
Mr. Wambembe has many plans for his business.
He hopes to establish a clinic for natural therapies,
setting up a laboratory to produce his own natural
medicines. He also hopes to plant a botanical
garden for research purposes. Mr. Wambembe is
confident that, with his entrepreneurial spirit and
NovoBanco’s help, he will achieve his goals.
Our Clients 31

Pedro Rosário and

António Domingos,
Manufacturers of
Leather Sandals

In a small shop in Bairro Mabor, Pedro Rosário

manufactures beautiful leather sandals, bags
and belts, all of which he makes by hand. He
learned his profession in a training course
offered by a local NGO that helps to reintegrate
the physically handicapped into society. After
completing his training, Mr. Rosário started his
business in 2003.

In 2005 António Domingos joined the business.

The two men met each other at the training cen-
tre. Their roles in the business are clearly defined; and Domingos acquired more leather and could
Mr. Rosário is responsible for the creative side, manufacture different models to attract new cli-
and Mr. Domingos manages financial matters and ents. Most of their customers are from the local
purchases materials. neighbourhood, but some come from more re-
mote areas to purchase the handmade products.
At first, the business developed slowly since it
lacked working capital. They could only manufac- Both businessmen dream of a well-located and
ture customers’ orders after receiving an advance spacious shop where they can manufacture and
payment of 50% to acquire the necessary materi- sell their products on a larger scale. With the help
als. With a NovoBanco loan for USD 200, Rosário of employees and more modern equipment, they
hope to increase production so that clients do not
have to wait several days for their purchases. The
two men count on a long-lasting relationship with
NovoBanco to help them fulfil their plans.
32 Annual Repor t 2006

Gabriel António Chinanga,

Salt Trader

By reinvesting his profits, Mr. Chinanga grew his

working capital to more than USD 5,000. Since he
had earned a reputation as a reliable client at the
salt works, Mr. Chinanga had access to a steady
supply of salt, This was an important advantage
since salt is not always produced in the quanti-
ties desired.
Gabriel António Chinanga started a small trading
business, buying articles in Luanda and selling Prior to banking with NovoBanco, Mr. Chinanga
them in Benguela at the Caponte markets. With received four loans from Banco de Poupança
savings from this business, he opened a small e Crédito. During a visit to Luanda, he learned
shop, which he was forced to close when the about NovoBanco through the bank’s marketing
armed conflict escalated. campaigns. When NovoBanco opened a branch
in Benguela, he was one of the first clients. He
In 2003 he began selling salt. He purchased the obtained a loan in April 2006, the Benguela
product from salt works and sold it at the Baia branch’s first month of operations. He has since
Farta market. His clients were mainly women taken a second loan from NovoBanco to purchase
who produce dried fish for provinces in Angola’s salt in greater quantities.
With his growing income he was able to reno-
vate his home and build a small snack bar in his
backyard. The snack bar is almost finished; after
Mr. Chinanga buys equipment and merchandise,
it will begin operations.
Our Clients 33

Manuel Andrade,
Mini-Market Owner

loan for a higher amount and longer maturity.

With this financing, he has increased his busi-
ness volume substantially.

Mr. Andrade works at a meat trading enter-

prise and cannot always be present at the mini-
market. But he can count on the support of his
family members to run the business. His wife is
responsible for weekly purchases from different
wholesalers throughout the city.
In 1999 Manuel Andrade opened a small market
stall in Bairro Samba. He now runs a mini-market Mr. Andrade aims to enlarge the mini-market and
with the help of his wife, three daughters, son to become a wholesaler. To realise these ambi-
and niece. tious goals, he will count on the help of his family
and NovoBanco.
When Mr. Andrade wanted to increase his inven-
tory, he approached NovoBanco. He had heard
about the bank’s fast and simple credit pro-
cedures. Having no previous experience with
banks, Mr. Andrade took out his first “Micro
Express” loan in April 2006. The loan was for
USD 1,000, and he repaid it in only four instal-
ments. Mr. Andrade has since taken a second
34 Annual Repor t 2006

Financial Statements
For the year ended 31 December 2006
Fin a nci a l Stat e men t s 35
36 Annual Repor t 2006
Fin a nci a l Stat e men t s 37

Balance Sheet
As at 31 December 2006

Notes 2006 2005

in AKZ
Cash and cash equivalents with the Central Bank 5 290,533,554 104,514,5143
Deposits with foreign banks 6 43,462,508 39,333,994
Loans and advances to customers 7 569,514,524 336,258,117
Placements and securities 8 52,500,000 16,000,000
Intangible assets App A 17,519,156 20,513,287
Tangible assets App A 93,504,733 84,553,850
Accrued income and deferred costs 9 51,081,605 25,877,632
Other assets 10 10,264,070 –
Total assets 1,128,380,150 627,051,394

Equity and liabilities
Deposits 11 594,486,440 219,596,363
Other deposits 1,668,438 1,747,280
Other liabilities 18,381,124 1,320,943
Accrued costs and deferred income 12 33,470,951 7,470,335
Provision for general banking risk 22,931,872 13,799,945
Debt to banks 13 80,000,000 –
Total liabilities 750,938,825 243,934,866

Capital 14 391,058,220 391,058,220

Capital maintenance reserve 15 28,589,050 28,589,050
Accumulated losses (22,730,797) (2,248,826)
Profit / Loss for the year 3,456,724 (20,481,971)
Total equity 400,373,197 396,916,473

Total equity and liabilities 1,151,312,022 640,851,339

38 Annual Repor t 2006

Income Statement
For the year ended 31 December 2006

Notes 2006 2005

in AKZ
Interest and similar income 227,212,679 106,753,134
Interest and similar costs (26,371,368) (3,585,096)
Interest margin 200,841,311 103,168,038

Fees and commissions received 16 53,357,289 25,031,670

Results from financial operations 17 (13,548,374) (16,104,159)
Other income and interest 10,652,780 –
Fees and commissions paid (1,443,807) (677,270)
Operating banking revenue 249,859,200 111,418,279

Staff costs 18 (91,927,216) (45,136,449)

Administrative costs 19 (104,005,091) (56,492,607)
Fees, bonuses and other costs (1,925,692) (1,367,864)
Taxes and other related costs (5,481,573) (3,403,398)
Depreciation App A (19,379,975) (11,909,774)
Provisions 20 (23,682,929) (13,590,158)
Operating profit/(loss) 3,456,724 (20,481,971)

Tax – –
Profit/(loss) after tax 3,456,724 (20,481,971)
Fin a nci a l Stat e men t s 39

d) Fixed-income securities
Notes to the Financial Statements
Central Bank Securities (CBSs) and Treasury Bills (TBs) are issued
For the period ended 31 December 2006
by the Central Bank and are tradable on the Angolan money market.
All amounts in AKZ unless otherwise stated
These securities are carried at nominal value in the financial state-
1. Constitution and activity The discount, which is the difference between the nominal value and
the amount paid, is recorded as deferred revenue and then recog-
NovoBanco, S.A.R.L, is a Bank situated in Luanda and its share- nized as income on a monthly basis until maturity of the instrument
holding is made up of private shareholders, some of which are in accordance with the Central Bank’s requirements.
international financial institutions. The Bank was constituted
on 19 February 2004 and commenced its commercial activity on e) Intangible and tangible assets
20 August 2004. In accordance with Angolan accounting requirements, intangible
assets mainly comprise preliminary expenses and software.
Tangible assets are accounted for at their historical cost. During the
2. Basis of presentation year no assets were revalued.
Depreciation is calculated on the straight-line method using the
The financial statements were prepared in accordance with the depreciation rates established for fiscal purposes. These ascribe
accounting principles established in the Accounting Rules applica- useful lives of between 3 and 12 years to NovoBanco’s fixed assets
ble to Financial Institutions in Angola and other regulations estab- and these are not considered to differ materially from the actual
lished and issued by the Central Bank of Angola (Central Bank). useful lives of these assets.

f) Capital maintenance provision and reserve

3. Reporting currency Capital maintenance reserves are calculated according to Directive
01/2003 issued by the Central Bank in order to maintain the value
The Bank applies the accounting principles and policies established of the original capital at the Kwanza equivalent of its historical
by the regulations applicable to Angolan Financial Institutions. US Dollar value (See Note 13).
These regulations require the preparation of financial statements
in local currency (AKZ), within a multi-currency reporting system. g) Income tax
The bank is subject to taxation as provided for in the corporate
taxation code.
4. Accounting policies

The following are the principal accounting policies that have been 5. Cash and cash equivalents with the Central Bank
applied in the preparation of the Bank’s financial statements and,
unless specifically stated, have been consistently applied. 2006 2005
Cash 187,864,850 54,626,603
a) Recognition of costs and expenses Demand deposits with the
Central Bank 102,668,704 49,887,911
Costs and income are accounted for on the accruals basis, irrespec- 290,533,554 104,514,514
tive of when it is actually received or paid.
Demand deposits with Central Bank, at 31 December 2006, include
b) Provision for general banking risks and overdue loans and an amount of AKZ 44,114,657 (USD 549,487), which constitutes
interest the statutory reserve as required by the Central Bank.
Provisions for general banking risks were determined in conformity According to Directive 10/2003, the coefficient of the statutory
with Directive 09/98, issued by the Central Bank on 16 November, reserves in local currency must correspond to 15% of the base of
1998. The respective amount recorded under Liabilities - Provisions assessment (customer deposit accounts) and 100% of the central
for general banking risks corresponds to 4% of the loans and ad- and local government deposits registered in accounts 330000 and
vances granted by the Bank, including amounts under guarantees 330100, respectively, of which 7.5% may be maintained in treasury
issued and other receivables. In 2005, NovoBanco had provided for bills with a remaining maturity of at least 63 days. The Bank may
3% of the loans and advances to customers. This change has led to deduct from the above-mentioned reserves 20% of the average bal-
an increase of AKZ 5,732,968 in general banking risks provisions. ances of cash in local currency. The statutory reserve is calculated
on a weekly basis as required by the Central Bank.
c) Foreign currency transactions
Monetary assets and liabilities in other currencies are translated
to US dollars at the exchange rate ruling at the balance sheet date. 6. Deposits with foreign banks
Income and expenses are translated at the average exchange rate
during the year. The AKZ/USD exchange rates used in the prepara- 2006 2005
tion of the financial statements are as follows: ProCredit Bank Georgia 32,079,544 33,064,054
Deutsche Bank Trust Company
Year ended at Average exchange Closing exchange Americas 8,258,707 5,680,759
rate rate Deutsche Bank AG Frankfurt 3,124,257 589,181
31.12.06 80.36 80.28 43,462,508 39,333,994
31.12.05 87.16 80.78
NovoBanco deposits surplus US Dollars with ProCredit Bank
Georgia (CIS), which is related to the majority shareholder, when-
ever it has surplus liquidity.
40 Annual Repor t 2006

7. Loans and advances to customers At 31 December 2006 the maturity of loans and advances was as
2006 2005
Total loans 608,783,867 352,961,760 2006 2005
Provision for non-performing In local currency
loans (16,337,471) (2,903,698) Not indexed
592,446,396 350,058,062 Up to 3 months 4,993,403 512,788
From 3 to 6 months 6,217,274 2,440,429
Loans in arrears (35,487,067) (7,963,125) From 6 months to 1 year 5,571,207 3,255,737
556,559,329 342,094,937 More than 1 year – –
16,781,884 6,208,954
Up to 3 months 70,976,359 40,100,075
From 3 to 6 months 153,071,121 92,057,934
From 6 months to 1 year 289,319,385 202,731,261
More than 1 year 78,635,118 11,863,520
592,001,983 346,752,790

Total not indexed and indexed 608,783,867 352,961,760

Loans in arrears (35,487,067) (7,963,125)
573,296,800 344,998,635

Indexed loans and advances are loans granted in Kwanza but

whose value, repayments and interest are indexed to the USD
exchange rate.

Loans and advances overdue for more than 30 days at 31 Decem-

ber 2006 amounted to AKZ 35,487,067 and were distributed as

2006 2005
From 31 to 60 days 6,553,154 4,801,218
From 61 to 90 days 7,458,044 352,744
From 91 to 180 days 16,572,653 2,228,650
From 181 to 360 days 4,903,216 580,513
35,487,067 7,963,125

8. Placements and securities

2006 2005
Treasury bills 52,500,000 16,000 000

Treasury bills on hand at 31 December 2006 mature as follows:

Nominal value in AKZ Purchase price in AKZ Interest rate Purchase date Maturity date
21,500,000 20,904,020 5.70% 09-08-2006 07-02-2007
11,000,000 10,664,170 6.26% 04-10-2006 05-04-2007
20,000,000 19,327,600 6.96% 13-12-2006 13-06-2007
52,500,000 50,895,790

9. Accrued income and deferred costs

2006 2005
Income receivable 32,107,793 6,685,273
Deferred costs 18,973,812 19,192,359
Cash shortfalls – –
51,081,605 25,877,632

Deferred costs include an amount of AKZ 16,082,596 (USD 200,323)

of rent paid in advance.
Fin a nci a l Stat e men t s 41

10. Other Assets 14. Capital

Other assets include a security deposit with Western Union, As at 31 December 2006, the Bank’s share capital was the equiva-
a requirement of Western Union of its agents, of an amount of lent of AKZ 391,058,220 (USD 4,900,000), represented by 490,000
AKZ 6,021,255 (equivalent to USD 75,000). shares with a nominal amount of AKZ 798.078 each. The capital
was fully issued and paid up before commencement of operations.

11. Deposits Number of Value Capital

shares in AKZ in %
2006 2005 ProCredit Holding 210,000 167,596,380 42,858
Demand deposits International Finance
In local currency 189,508,044 71,992,730 Corporation (IFC) 70,000 55,865,460 14,286
In foreign currency 242,445,333 113,857,637 Stichting DOEN –
431,953,377 185,850,367 Postcodelotterij/
Sponsorlotterij 70,000 55,865,460 14,286
Time deposits Belgian Investment
In local currency 152,566,597 25,598,515 Company for Developing
In foreign currency 9,966,466 8,147,481 Countries (B.I.O.) 70,000 55,865,460 14,286
162,533,063 33,745,996 ChevronTexaco
Sustainable Development
Total 594,486,440 219,596,363 Ltd. 70,000 55,865,460 14,286
490,000 391,058,220 100
At 31 December 2006 the maturity analysis of time deposits in-
cluded in liabilities under the above heading was as follows:
15. Capital maintenance reserve
2006 2005
In local currency 2006 2005
Up to 3 months 20,136,687 4,140,235 Accumulated
From 3 months to 6 months 132,429,910 21,458,280 capital maintenance reserve 28,589,050 28,589,050
From 6 months to 1 year – – 28,589,050 28,589,050
152,566,597 25,598,515
The reserve for capital maintenance was established in 2004 in
In foreign currency order to maintain the value of capital at the Kwanza equivalent of
Up to 3 months 8,166,673 – USD 4,900,000. The Central Bank has ruled that when, as at the
From 3 months to 6 months 1,799,793 8,058,624 end of 2006 and 2005, the value of the US Dollar to the Angolan
From 6 months to 1 year – 88,857 Kwanza has fallen from its value at the previous year end, this
9,966,466 8,147,481 reserve has to be maintained at its historical Kwanza amount.

162,533,063 33,745,996
16. Fees and commissions received

12. Accrued expenses and deferred income The breakdown of fees and commissions received is as follows:

2006 2005 2006 2005

Accrued expenses 32,566,278 2,444,655 From exchange operations 18,143,345 8,711,386
Deferred income 904,673 5,025,682 From loan disbursement fees 26,591,806 11,146,054
Cash surplus – – Other fees and commissions
33,470,951 7,470,337 received 8,622,138 5,174,231
53,357,289 25,031,671
Deferred income includes AKZ 904,673 (USD 11,268) of deferred
discounts on treasury bills (Note 8). Included in loan disbursement fees are commissions totalling
Accrued expenses include AKZ 27,293,542 of pending Western AKZ 4,090,000 that were treated as deferred income in 2005 and
Union and SWIFT money transfers were to be written back to income over the life of the related loan. At
the request of the Banco Nacional de Angola, the central bank, this
deferred practice ceased and the amount deferred at 31 December
13. Debt to banks 2005 released to income in full in 2006.

As at December 31, 2006 the debt to banks amounted to

AKZ 80,000,000, a one year loan contracted from the local market, 17. Results from financial operations
monthly renewable for up to one year, and at a yearly interest rate
of 8% payable on a monthly basis. 2006 2005
of spot exchange position
Gains 18,593,361 29,425,643
Losses (32,141,735) (45,529,802)
(13,548,374) (16,104,159)
42 Fin a nci a l Stat e men t s

18. Staff costs 21. Tax

2006 2005 There is no tax to pay on the profit for the year as prior year losses
Salaries and wages 71,051,746 39,461,856 exceed 2006 profits. According to fiscal law in effect in Angola
Social security and (Artigo 46º of “Legislação Fiscal: Tributação do Rendimento), prior
other related costs 7,219,212 3,859,694 years’ losses can be carried forward for up to three (3) years.
Other staff costs 13,656,258 1,814,899
91,927,216 45,136,449
22. Other regulations
The number of employees as of 31 December 2006 was 115 (2005:
49). According to an exceptional authorization of the Central Bank,
NovoBanco can maintain an open exchange position of up to 50% of
the bank’s equity for a period not longer than 3 years. The amount
19. Administrative costs in foreign currency above the limit must be sold to the Central Bank.
The spot position at 31 December 2005 was:
2006 2005
Rents and leasing costs 19,511,286 13,971,912 in USD 2006 2005
Supplies from third parties 15,336,381 13,302,517 Assets
Communications 15,258,071 10,215,985 Cash and cash equivalents
Security services fees 12,311,902 6,794,082 at Central Bank 1,731,044 322,350
Travel and entertainment expenses 7,345,127 1,049,763 Current account
Advertising 6,187,286 1,674,519 in credit institutions 541,364 486,930
Repairs and maintenance 3,520,113 4,038,813 Total Assets 2,272,408 809,280
Insurance 3,145,277 3,105,451
Notary expenses 503,642 1,113,929 Equity & Liabilities
Retainer fees 42,920 522,151 Deposits (3,144,006) (1,424,590)
Other services from third parties 20,843,086 703,485 Accruals and deferrals (375,478) (1,367)
104,005,091 56,492,607 Total Liabilities (3,519,484) (1,425,957)

Spot exchange position (1,247,077) (616,677)
20. Provisions Global exchange position (1,247,077) (616,677)

2006 2005
General credit risks 23,682,929 13,590,158
Credit risks 23,682,929 13,590,158

Appendix A
Fixed assets schedules – AKZ

Fixed assets Accumulated Fixed assets

(gross) depreciation (net)
Balance Acquisitions Balance Balance Charge for Balance
as at as at as at the year as at
31 Dec 2005 31 Dec 2006 31 Dec 2005 31 Dec 2006
Preliminary expenses 5,444,408 – 5,444,408 2,570,970 1,814,803 4,385,773 1,058,635
Software 18,471,372 803,842 19,275,214 947,486 1,867,207 2,814,693 16,460,521
Intangible assets in course 115,963 -115,963 – – – – –
Total Intangible assets 24,031,743 687,879 24,719,622 3,518,456 3,682,010 7,200,466 17,519,156

Renovation of rented premises 27,969,256 13,504,712 41,473,969 2,743,314 3,733,696 6,477,010 34,996,959
Furniture and materials 16,151,711 7,019,723 23,171,434 1,748,278 2,982,056 4,730,334 18,441,100
Equipment 37,917,220 17,865,749 55,782,968 6,734,081 8,982,213 15,716,294 40,066,674
Tangible assets in course 13,741,336 -13,741,336 – – – – –
Total tangible assets 95,779,523 24,648,848 120,428,371 11,225,673 15,697,965 26,923,638 93,504,733

Total fixed assets 119,811,266 25,336,727 145,147,993 14,744,129 19,379,975 34,124,104 111,023,889

Exchange rate as of December 31, 2006: 1 USD = 80.28 AKZ

Con tac t A ddr e sse s 43

Contact Addresses

Head Office

Rua N’Dunduma 253
Tel.: (+244) 222 – 430040
Fax: (+244) 222 – 430074


N’Dunduma Branch
Rua N’Dunduma 253
Tel.: (+244) 222 – 430105
Fax: (+244) 222 – 430074

Rocha Pinto Branch

Rua da Paviterra / Rua do Parque s/n
Bairro Rocha Pinto
Tel.: (+244) 222 – 357420

Benguela Branch
Largo 1º de Maio s/n
ProCredit Bank Serbia ProCredit Bank Ukraine

ProCredit Bank ProCredit Moldova

Bosnia and Herzegovina
ProCredit Bank Romania
ProCredit Bank Kosovo
ProCredit Bank Kyrgyzstan
ProCredit Bank Albania (planned)
Mexico ProCredit Bank Macedonia ProCredit Bank Georgia
ProCredit Bank Armenia
Banco ProCredit (planned)
(planned) ProCredit Bank Bulgaria
ProCredit Bank
Banco ProCredit Sierra Leone
El Salvador
ProCredit Savings and Loans
Banco ProCredit Ghana
ProCredit Bank Democratic
Banco ProCredit Republic of Congo
(planned) NovoBanco Angola

Banco ProCredit Banco ProCredit Mozambique


Banco Los Andes

ProCredit Bolivia