London, 24 October 2017 -- Moody's Investors Service has today downgraded Banco Angolano de Investimentos,
S.A.'s (BAI) global long-term local currency deposit
ratings to B2 from B1, global long-term foreign currency
deposit ratings to B3 from B2 and long-term Counterparty Risk Assessment
(CR Assessment) to B2(cr) from B1(cr). The rating outlook on the
long-term deposit ratings has changed to stable from negative.
Today's rating action is principally driven by Moody's downgrade of Angola's
government bond ratings to B2 stable from B1 negative on 20 October 2017
(see press release: Moody's downgrades Angola's ratings to B2,
outlook stable; https://www.moodys.com/research/--PR_373924),
and reflects the rating agency's view that the government's weakened creditworthiness
also translates to a reduced capacity to provide support for Angolan banks
-- including BAI -- in times of stress.
Moody's has also affirmed BAI's b3 baseline credit assessment (BCA),
as the rating agency expects BAI's standalone credit profile to remain
resilient, at the current rating level, despite challenging
operating conditions, given the bank's adequate capital and liquidity
buffers.
A full list of affected ratings can be found at the end of this press
release.
RATINGS RATIONALE
AFFIRMATION OF BAI'S BCA
The primary driver for affirming BAI's b3 BCA is Moody's expectation of
resilience in the bank's standalone credit profile despite the challenging
operating environment. As of year-end 2016, the bank
maintained robust tangible common equity and net income to tangible assets
ratios of 13.6% and 3.6%, respectively,
while maintaining a stable, deposit-based funding structure.
Moody's expects that any potential deterioration in BAI's asset
quality and liquidity position to be manageable and within the tolerance
levels assumed in the bank's standalone rating, given the bank's
capital and liquidity buffers.
SUPPORT ASSUMPTIONS
WEAKER GOVERNMENT CAPACITY TO PROVIDE SUPPORT DRIVES DOWNGRADES
Although Moody's view on the willingness of the Angolan government
to provide support for BAI has not changed given the bank's systemic importance
-- holding approximately 16% market share in terms
of deposits -- the rating agency considers that the government
has a weakened financial capacity to provide such support, as implied
by the downgrade of the sovereign issuer rating to B2 stable, from
B1 negative, and the lowering of the rating ceilings for Angolan
issuers.
The bank's long-term foreign currency deposit rating has been downgraded
to B3 from B2, and is positioned at Angola's lowered B3 country
ceiling (previously B2) for foreign currency deposits, which captures
foreign currency transfer and convertibility risks. BAI's long-term
foreign currency deposit rating no longer incorporates any notches of
uplift on account of government support, down from one notch previously.
BAI's B2 long-term local currency deposit ratings now incorporate
one notch of rating uplift, down from two notches previously,
given the lower sovereign issuer rating of B2.
WHAT COULD MOVE RATINGS UP OR DOWN
In view of the strong linkages between the bank's creditworthiness
and that of the sovereign, an upgrade of Angola's sovereign
rating would put upward pressure on the bank's deposit ratings.
A demonstrated ability to contain non-performing loans while maintaining
good core profitability, capital and liquidty would put upward pressure
on BAI's BCA.
The ratings could be downgraded in the event of a further downgrade of
the sovereign itself and/or if we assess that the government's willingness
to provide support in the future will decline below our current assumptions.
The ratings could also be downgraded if we anticipate that the challenging
macro environment poses downside risks for asset quality, capital
and/or liquidty beyond what is already assumed in the ratings.
LIST OF AFFECTED RATINGS
Banco Angolano de Investimentos, S.A.
..Downgrades:
....Long-Term Counterparty Risk Assessment:
to B2(cr) from B1(cr)
....Long-Term Foreign Currency Deposit
Rating: to B3 stable from B2 negative
....Long-Term Local Currency Deposit
Rating: to B2 stable from B1 negative
..Affirmations:
....Adjusted Baseline Credit Assessment:
b3
....Baseline Credit Assessment: b3
..Outlook Actions:
....Outlook changed to Stable from Negative
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Banks published in
September 2017. Please see the Rating Methodologies page on www.moodys.com
for a copy of this methodology.
REGULATORY DISCLOSURES
For ratings issued on a program, series or category/class of debt,
this announcement provides certain regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same series
or category/class of debt or pursuant to a program for which the ratings
are derived exclusively from existing ratings in accordance with Moody's
rating practices. For ratings issued on a support provider,
this announcement provides certain regulatory disclosures in relation
to the credit rating action on the support provider and in relation to
each particular credit rating action for securities that derive their
credit ratings from the support provider's credit rating.
For provisional ratings, this announcement provides certain regulatory
disclosures in relation to the provisional rating assigned, and
in relation to a definitive rating that may be assigned subsequent to
the final issuance of the debt, in each case where the transaction
structure and terms have not changed prior to the assignment of the definitive
rating in a manner that would have affected the rating. For further
information please see the ratings tab on the issuer/entity page for the
respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this credit rating action,
and whose ratings may change as a result of this credit rating action,
the associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Items color coded in purple in this Press Release relate to unsolicited
ratings for a rated entity which is non-participating.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
Akin Majekodunmi
Vice President - Senior Analyst
Financial Institutions Group
Moody's Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454
Sean Marion
MD - Financial Institutions
Financial Institutions Group
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454
Releasing Office:
Moody's Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454
