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9 Feb, 2021
By Alan Luigi Flores
Credicorp Ltd.'s attributable net profit in the fourth quarter of 2020 fell 32.8% from a year ago due to a rise in provisions for credit losses and a decrease in net interest income.
Credicorp booked a fourth-quarter 2020 net profit attributable to the company of about 653.4 million Peruvian soles, or 8.22 soles per share, down from about 972.8 million soles, or 12.24 soles per share, in the year-ago quarter.
Net interest income in the three-month period was about 2.07 billion soles, down 4.3% from the previous quarter and 12.5% lower than the 2.37 billion soles posted a year earlier. The company's net interest margin came in at 3.73%, down from 4.05% in the linked quarter and 5.49% a year ago.
Credicorp's insurance underwriting result plunged 40.4% annually to 84.9 million soles. Nonfinancial income, meanwhile, jumped 5.1% to 1.33 billion soles.
Provisions for credit losses on the loan portfolio, net of recoveries, shot up 43.2% to 732.7 million soles from 511.7 million soles in the year-ago period. Compared to the linked quarter, provisions fell 43.9% "due to an improvement in macroeconomic expectations and to adjustments in the expected loss mode," the company said.
Credicorp's nonperforming loan ratio for the quarter increased to 4.61% from 4.17% in the third quarter and 3.88% a year ago. The company said the NPL ratio is "distorted by the presence of loans with real estate collateral," meaning that a significant portion of loans more than 150 days past due cannot be written off, despite provisions being set aside, since a lengthy judicial process must be initiated to liquidate the collateral.
The company's total loan portfolio expanded 19.1% in the 12 months through December 2020 to reach 137.66 billion soles, driven by the participation of units Banco de Crédito del Perú SA and Mibanco Banco de la Microempresa SA in the Peruvian government's Reactiva Peru credit program.
Total expenses at the company ticked 5.2% higher year over year to 1.98 billion soles.
Credicorp registered a return on average equity of 10.8% for the fourth quarter of last year, down from 14.9% in the prior-year period.
As of Feb. 8, US$1 was equivalent to 3.64 Peruvian soles.