LUANDA, Oct 23 (Reuters) - Angola's banking sector is set to post a second consecutive profit slump in 2013 hit by lower rates and surging bad loans, global audit firm KPMG said on Wednesday, adding that the banks must diversify their products and client base to boost income.
Angola, Africa's No.2 oil producer after Nigeria, has posted rapid growth since the end of a civil war in 2002, attracting foreign players such as Africa's top lender Standard Bank and Portugal's BES and Banco BPI.
London-listed Standard Chartered is set to join them soon.
Still, after years healthy profits, several large players' bottom lines were hit hard by bad loans and lower interest rates last year, KPMG said in a study on the sector.
Total net profit slumped around 31 percent in 2012, with the outlook for this year appearing even more grim.
"2013 will certainly be a bad year, from what we have been seeing in terms of the trend in results," Vitor Ribeirinho, Partner and Head of Audit and Financial Services for KPMG in Angola, said during the presentation of the study.
Bad loans soared 84 percent to 167 billion kwanzas (around $1.7 billion) in 2012 from 89 billion kwanzas (around $919 million) in 2010, the study showed.
Industry sources have told Reuters that banks are being more stringent on credit requests and raising provisions for bad loans.
"The banks have only one solution. It has to be diversification," Ribeirinho said.
He said banks must offer services such as insurance, investment funds and public debt, from which they can earn commissions and service fees. The target client base must be a middle class that is emerging as Angola's economy grows rapidly.
With assets growing 14 percent last year and deposits 8 percent, Ribeirinho said there is room for growth in a country where only 23 percent of the population holds bank accounts.
"Appetite from abroad is clear. We receive regular requests for information about banks in Angola, but I don't think there is room for many more licences," he added. "What may happen is smaller banks enter partnerships with foreign investors." (Reporting by Shrikesh Laxmidas; editing by David Dolan)