Fitch: Large Peruvian Banks Face Headwinds

Fitch Ratings has published a peer review of Peru's five largest private banks comprising approximately 89% of Peru's banking system assets at year-end 2015 (YE15). The five banks have a universal bank profile -- largely concentrated in Peru -- and assets between USD39.8 billion and USD3.3 billion at year-end 2015.

The Peruvian banks have maintained strong and healthy profitability. Revenues are well diversified and have shown resilience in the face of current economic conditions, while operating expenses -- which saw periodic surges due to network expansion -- have grown in line with asset growth. Profitability is expected to decline but should continue to compare well among peers. Balance sheets for the Peruvian banks are generally well diversified between corporate and retail lending. Within retail portfolios, a gradual re-balancing in terms of products occurred in the past few years with a renewed focus on low-risk mortgages.

Financial regulation in Peru is among the strongest in the region and has meeting Basel III standards since 2012. Minimum capital requirements were raised, including buffers for obligor, industry or geographic concentration, interest rate risk in the banking book and risk appetite. A countercyclical reserve buffer rule is in place and had been triggered ever since rolling GDP growth slowed in 2014. Peruvian banks have been reporting liquidity coverage ratios (LCR) since 2013 and will have to comply with 100% of the target during 2017.

Regulators are working on a net stable funding ratio (NSFR) and new rules to improve the quality of capital and tighten requirements for equity-like subordinated debt, although the latter will require modifications of the banking law.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Global Bank Rating Criteria' (March 2015).

Peer Review: Large Peruvian Banks Face Headwinds

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=882955

Applicable Criteria

Global Bank Rating Criteria (pub. 20 Mar 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=863501

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

Contacts:

Fitch Ratings
Mark Narron
Director
+1-212-612-7898
Fitch Ratings, Inc.
33 Whitehall St.
New York, NY 10004
or
Larisa Arteaga
+809 563 2481
or
Abraham Martinez
+ 56 2 2499 3317
or
Sergio Pena
+ 57 1 484 6770
or
Media Relations:
Elizabeth Fogerty, New York, +1 212-908-0526
Email: elizabeth.fogerty@fitchratings.com

Data & News supplied by www.cloudquote.io
Stock quotes supplied by Barchart
Quotes delayed at least 20 minutes.
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.