Moza Banco

Investees | Mozambique | Moza Banco
Moza Banco was established in June 2008. It currently has the third largest branch distribution network in Mozambique and is regarded as the only locally commercially owned bank within the country.

Arise became a shareholder of Moza Banco in 2017 and owns a 30.7% shareholding with Kuhanha (The Government Pension Fund Administrator) being the other cornerstone shareholder in the bank, with a shareholding of 64.1%.
Country Overview

Mozambique borders Tanzania, Malawi, Zambia, Zimbabwe, South Africa, and Eswatini. It has a population of an estimated 33 million, with approximately two-thirds of its population living and working in rural areas. The country enjoys ample resources in terms of arable land for agricultural production, a plentiful supply of fresh water, and a relatively stable energy supply within the urban centres. Further, it is rich in mineral resources, including the recently discovered natural offshore gas reserves. The country has strong ties to the region’s economic community (SADC), positioning it strategically, as it borders several landlocked countries that depend on Mozambique through its three deep seaports to access global markets.

According to the 2023 World Bank Mozambique Economic Update report, the medium-term economic outlook is positive, with growth expected to accelerate to 6% over 2023-2025, driven by continued recovery in services, increased LNG production, and high commodity prices.

Banking Sector Overview

The Mozambique banking sector comprises 27 credit institutions (15 commercial banks, 11 microfinance banks, and one cooperative bank). The top three systemically important banks are BCI, BIM, and Standard Bank Mozambique, collectively contributing 63.67% of total assets, 68.45% of deposits and 55.53% of credit.

The banking sector has been historically impacted by low levels of asset quality, reflected in an average NPL ratio of 10% as of December 2021. In recent years the profitability in the banking sector has been volatile for smaller banks, but the top three banks, namely BCI, BIM, and Standard Bank, reflected ROEs of 24%, 19%, and 16%, respectively, in 2021. The ROEs of the other banks in the sector have been sub-optimal and volatile, including that of Moza Banco. A recent intervention by the Central Bank saw the introduction of a significant hike in the reserve requirement ratios (from 10.5% to 28% on local deposits) for Mozambican commercial banks in 2023.

According to a recent Mozambique Central Bank report, ‘Mozambique Financial Stability Bulletin Dec 2022’, the country’s banking sector remains solid and resilient, with growth in earnings and adequate levels of capitalisation and liquidity throughout 2022.

Historical Financial Performance

Moza Banco has struggled with sub-optimal asset quality due in part to the legacy bad debt situation, but also external factors such as several cyclonic events impacting the country’s infrastructure. The banks’ total assets have increased from MZN 27.6bn in 2016 to MZN 47.7bn in 2022, with an average inflation rate for the same period being 8.26%.

Current Financial Performance

Despite legacy debt constraints, and external environmental factors impacting Mozambique, Moza Banco has seen a steady increase in performance since Arise’s investment. Recognition by the market of Moza Banco’s improving fundamentals has also aided business growth; 2022 saw a 27% increase in customers and an 8% increase in deposits, contributing to a positive ROE and ROA, both indicators which have reflected negatively for some years. Moza Banco achieved MZN 326mn PBT in 2022, a significant increase from prior years.

Development Impact

Through its CSI programme, Moza Banco supports several initiatives, ranging from health interventions to socio-educational lectures, and the promotion of female entrepreneurship in partnership with the MUVA association. The association works to support a brighter economic future for disadvantaged young women in urban Mozambique.

The bank has 198 482 mass retail customers and 14 588 small business clients, to which loans amounting to MZN 3.8bn and MZN 9.9bn were disbursed, respectively. F&A sector financing remains low at 6% of the overall loan portfolio. Whilst its F&A loan ratio is low, Moza Banco aims to be one of the most important players in the Agribusiness sector, unlocking the full potential of the export value chains, for the development of the economy.