Mozambique's largest commercial bank, the International Bank of Mozambique (BIM), has reduced the weight of bad loans from 32 per cent of the total credit portfolio in 2002, to 25 per cent at the end of June 2003, to 16 per cent now.
Presenting BIM's results for the past year at a Maputo press conference, the chairperson of the BIM board, former prime minister Mario Machungo, said that in the first six months of 2004, the bank had recovered 59.9 billion meticais (2.6 million US dollars) of overdue credit.
From the beginning of 2002 up to the end of June 2004, the bank had recovered, in cash, the equivalent of 15.6 million dollars in overdue credit.
These non-performing loans were not granted by BIM. They are the inheritance of the Commercial Bank of Mozambique (BCM), which BIM took over in 2001.
The BCM was once a state-owned bank, but, under pressure from the World Bank and the IMF it was privatised in great haste in 1996, in favour of a consortium put together by Portuguese businessman Antonio Simoes, which took a 51 per cent stake in the bank (the state keeping the remaining 49 per cent).
The new BCM management embarked on a reckless loans policy, which brought the bank to the brink of collapse in 2000. The true state of the BCM was only made public when, thanks to a merger in Portugal, the Banco Comercial de Portugal (BCP), the largest Portuguese financial institution, became the main shareholder in the BCM.
Since the BCP was also the main shareholder in BIM, a merger of the two Mozambican banks was a logical move. But when BIM took over the BCM, it also took responsibility for dealing with the bad loans. At the start of 2002, overdue credit amounted to 2,349 billion meticais (slightly more than 100 million dollars at the exchange rate of the time).
The figure has now fallen to 988 billion meticais (about 41.5 million dollars).
Machungo said that in addition to the 15.6 million dollars recovered in cash, the bank has negotiated with many companies that owed money so as to reschedule their debts. In some cases, where companies were no longer viable, or where those who had guaranteed loans were dead, the bank had no option but to write the loan off.
There were also cases of companies that had gone bankrupt, and had handed over their buildings to the bank. BIM did not yet consider these as assets: only when investors, interested in reviving such companies, were found, would the buildings be counted as part of the debt recovery. Machungo said the bank had not resorted frequently to the courts to collect debts. But it did have a team of lawyers, and had occasionally seized assets that were mortgaged to the bank to guarantee loans.
In 2002, the bank had been dangerously under-provisioned.
The total bad debt exceeded the total provisions for debt (provisions amounted to 97 per cent of the overdue credit). But today all credit is fully provided for: Machungo said provisions for bad debt were now 148 per cent of overdue loans.
He said that over the past year BIM had grown at the rate of 5,000 new accounts a month. At the end of June 2003, there were 270,000 accounts. A year later the figure was 328,000.
The money held in those accounts had risen from 13,023 billion to 14,326 billion meticais.
Credit granted by BIM, however, had only risen by one per cent, from 4,702 to 4,759 billion meticais. BIM says it would like to have lent more - but takes a rigorous approach towards loans.
When the credit is broken down by sector, it can immediately be seen that, although it is the backbone of the Mozambican economy, agriculture accounts for a declining percentage of credit. 20.3 per cent of BIM loans went to agriculture in the year ending on 30 June 2003, and only 14.6 per cent in the subsequent year.
Machungo said this fall was caused by the fact that two large agricultural clients had paid off their loans.
The sharpest increase in lending was for housing, rising from 5.2 to 14.7 per cent of the total portfolio. Machungo said there is a huge, unmet demand for loans for housing, and BIM had therefore set up a separate unit to deal with this form of credit.
He criticised the nature of the Mozambican housing market - it contains too many properties selling for such sums as 200,000 or 300,000 dollars, and nowhere near enough selling for 30,000 or 40,000 dollars, sums for which families could take out a mortgage from a bank with reasonable repayment facilities.
Machungo announced a profit from July 2003 to June 2004 of 80.7 billion meticais (3.36 million dollars). This is an increase of 550 per cent on the previous year's profit of 12.4 billion meticais.
The banks return on equity has risen from 2.7 per cent to 13.8 per cent in the same period, and the return on assets from 0.2 per cent to 1.4 per cent.
Fonte: AIM
