NEW YORK--(BUSINESS WIRE)--Fitch Ratings has today affirmed Banco de Credito del Peru's ratings as follows:
-- Long-term foreign currency Issuer Default Rating (IDR) at 'BBB';
-- Short-term foreign currency IDR at 'F2';
-- Long-term local currency IDR at 'BBB';
-- Short-term local currency IDR at 'F2';
-- Individual rating to at 'C';
-- Support rating at '3';
-- Support floor at 'BB+';
-- Senior unsecured debt at 'BBB';
-- Subordinated debt at 'BBB-';
-- Junior subordinated debt at 'BB+'.
The Rating Outlook is Stable.
In addition, Fitch affirmed BCP Emisiones Latam 1 ratings as follows:
-- National Senior Unsecured Long Term Rating at 'AA-(cl)'.
Banco de Credito del Peru's (BCP) ratings reflect its dominant franchise; large market share; sound performance through the crisis; diversified balance sheet and revenue stream; broad, low-cost deposit base; sound asset quality and adequate reserves and capital. The ratings also reflect BCP's systemic importance as well as the room for progress in its efficiency levels. BCP's relatively high support floor reflects its systemic importance, and Fitch believes it is the Peruvian bank most likely to receive support from the government, should it be required. Peru's ability to provide such support is considered moderate and reflected in its Sovereign ratings ('BBB-'/'BBB'). BCP's ratings could benefit from higher efficiency and sustained performance, as well as from a stronger capital base. The ratings could suffer if the operating environment turns down significantly, affecting the bank's asset quality and performance so as to erode the bank's reserve and capital cushions.
BCP's performance improved during 2010 and into 2011, driven by strong loan growth across all segments, resilient margins underpinned by lower funding costs, and improving non-interest revenues that reflect the banks franchise and earning capacity. Operating costs reverted to more moderate growth levels after a peak during 2008-2009 that was caused by the bank's expansion while credit cost declined after reaching record levels at the height of the crisis. Hence, costs declined in relative terms and allowed BCP to improve its efficiency and sustain a strong profitability with an ROAE of 28% at March 2011 and an ROAA of about 2.1%. Asset quality improved and is at the Industry average, comparing well to that of its regional peers.
After the perfect storm of 2009, where loan growth halted but operating costs continued to grow and LLP pressured the bottom line, BCP has resumed a more normal revenue/expense pattern. In spite of the hiatus due to the elections, loan growth should resume a rapid pace into 2012. Margins should be underpinned by growth into microcredit and consumer lending but heightened competition is likely to keep them in check. Operating costs should stabilize and decline in relative terms while credit cost should remain stable given the sound asset quality and strong economic prospects. Hence, BCP should continue to improve its efficiency and maintain adequate profitability with an ROAE comfortably above 20% and an ROAA around 2%. BCP's performance could further improve in the medium term, once the political uncertainty is cleared and the economy grows at its full potential.
BCP is Peru's largest bank, with a dominating market share of about 37% of the system's assets. It is the principal operating company within Credicorp, Peru's largest financial services company, which controls 97.4% of BCP; Credicorp is widely held.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
-- 'Global Financial Institutions Rating Criteria' (Aug. 16, 2010).
Applicable Criteria and Related Research:
Global Financial Institutions Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=547685
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.