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Company Overview
Credicorp emphasizes the importance of capitalizing on synergies between the subsidiaries to establish the market dominance of each. Revenue breakdown by subsidiary:
- BCP: 75.1%
- ASHC: 1.1%
- PPS: 20.4%
- Grupo Credito: 3.4%
Business and Financial Metrics
- Credicorp showed improved financials in 2009 in year-end earnings due to a growing ROE and ROA. ROAE is expected to have increased 25.6% in 2009.
- The company uses its own funding structure and is largely independent of foreign funding.
- Improved asset and funding structure affected Net Interest Income positively.[4]
- The insurance operations of the companies returned to profitability in 2009 from a -11.7MMUSD loss in 2Q08 to 14.9MM gain in 2Q09. This was possible due to technical results. [5]
- Total assets increased 17.6% in 2008 to 20.8BB as a result of strong growth in deposits.
- Growth within BAP was possible due to a strong growth in net interest income resulting from portfolio expansion, an increase in non-financial income (higher fees and commissions) and a controlled network growth.[6]
Business Segments and Strategies
- Banking(25.7% of net income): product offering includes personal loans, credit cards (Visa and Amex), Mortgages, Small Loans, and Mutual Funds.
Increase in this business unit is due to the loan book recovering growth in domestic currency, a strong loan portfolio in domestic retail, network expansion through agents (“Agentes”) and a shift to focus on operating efficiency. [7] It has also been aided by an increased offering of retail banking products, a growing network and transactional business.
- Insurance: growth has come from developing personal insurance, using the BCP network, and reducing corporate exposure through diversification.
The insurance business segment offers corporate and retail insurance PPS has focused on restructuring itself to focus on lower-risk retention in high-risk lines, pushing for growth in the retail segment.[8]
- Asset Management: The company adheres to a conservative strategy but has grown by developing innovative products that are centrally controlled and improving risk analysis and management capitalizing on banking experience.
Asset management offers distinct financial options through its subsidiaries: mutual funds through BCP, Portfolio Mutual Funds Pools through ASHC and pension funds through Prima. [9]
Key Trends and Forces
Peruvian Banking System
Despite the economic downturn and the wide-spread credit crisis the Peruvian banking environment remains strong and healthy. The total amount of assets and loans held by the banks as well as total net income (with projections made for 2009) as well as total deposits show at least modest growth. While the total number of institutions in the banking system dropped to 15 from 16 in 2008, the number of branches in Peru as well as ATMs has increased. The slight decrease in number of people employed – now 41,336 – can be explained by the disappearance of one institution.[11]
Sol vs. Dollar
Though the Sol has remained relatively stable against the dollar with other Latin American currencies fluctuating, companies like Credicorp Ltd prepare their financials in terms of Nuevos Soles despite filing functional currency statements in dollars and paying dollar dividends. Though there is no current measure to limit the transfer of currency in-and-out of Peru, there have been in the past and it is always a risk. Further, historical precedent suggest that if Peru fails to maintain an appropriate level of USD reserves, the country may impose exchange controls. [12]
Competition
Banking
Though BCP is the market leader in the Peruvian banking industry with a 35.9% market share, the main competitors are:
Insurance
With 36% of the market, PPS is one of two leaders in the Peruvian insurance market. Its competitors include:
References
- ↑ http://www.nyse.com/about/listed/bap.html
- ↑ Form 20-F, June 30, 2009
- ↑ LatAm Financials Presentation – Slide 15, October 2009
- ↑ LatAm Financials Presentation – Slide 36, October 2009
- ↑ LatAm Financials Presentation – 43, October 2009
- ↑ Form 20-F, June 30, 2009
- ↑ LatAm Financials Presentation – Slide 22-36,40, October 2009
- ↑ LatAm Financials Presentation – 43, 44, October 2009
- ↑ LatAm Financials Presentation – 49, October 2009
- ↑ LatAm Financials Presentation – Slide 19, October 2009
- ↑ LatAm Financials Presentation – Slide 11, October 2009
- ↑ Form 20-F, June 30, 2009
- ↑ LatAm Financials Presentation – Slide 38, October 2009
- ↑ LatAm Financials Presentation – 43, October 2009
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