Credicorp reported provisions for bad loans during the quarter nearly six times higher than a year earlier, as high interest rates raised the risk of customers defaulting. Finance chief Cesar Rios said the increase in provision expenses was "expected." "As expected, provision expenses materially increased year-on-year," Rios said in a statement. "Despite current political volatility and social unrest, Peru's macro fundamentals remain solid," he added. Peru, the world's No. 2 copper producer, is among the fastest-growing economies in the region but the IMF has warned that a prolonged wave of unrest, which has left dozens dead, could dent its growth.
The protests began in early December when former
President Pedro Castillo was ousted and detained after
attempting to illegally dissolve Congress.
Chief Executive Gianfranco Ferrari said the unrest had impacted Credicorp's final quarter, though the repercussions "are yet to be fully assessed."
The group said its structural loan growth rose 11.5% year-on-year, mainly due to growth in wholesale banking and retail banking as consumption ticked upward. The company logged a return on average equity (ROAE) of 15.3% for the quarter, down from 16.4% a year earlier. Credicorp said it expects to close out 2023 with a return on equity (ROE) of around 17.5%, helped by growth in its structural loan portfolio, a thicker net interest margin and controlled cost of risk. Despite "adverse environments," Ferrari said the company was in "a position of strength" going into 2023. ($1 = 3.8413 soles) (Reporting by Kylie Madry and Aida Pelaez-Fernandez; Editing by Sarah Morland and David Gregorio)
