Peru's Credicorp net profit misses forecasts as loan provisions surge (updated)

Credicorp

09/02/2023 23:13

(New throughout, adds comments from executives and background)
       Feb 9 (Reuters) - Credicorp, one of Peru's largest
financial holding companies, on Thursday posted stable quarterly
net earnings but missed analyst expectations as provisions for
bad loans soared amid globally high interest rates.
    The group, which offers universal banking, microfinance,
insurance, pensions and investment banking services through a
number of subsidiaries, posted a fourth-quarter net profit of
1.07 billion soles ($279.1 million), up 1.1% from a year earlier
but short of the 1.26 billion soles estimated by analysts polled
by Refinitiv. 
        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)
 ((Kylie.Madry@thomsonreuters.com;))