Peru builds on sounder foundations
Peru’s economic miracle has taken it to the threshold of investment-grade status and enthused the country’s local and foreign bankers, who are rapidly broadening their corporate and retail markets. Leticia Lozano reports.
PERU’S RICHES HAVE always been something to marvel at. The Incas built palaces of gold and the Spanish found treasure troves of silver, spices and precious stones. Now bankers are having their day, as the Andean nation’s unprecedented economic growth and low inflation attract global institutions such as HSBC, and home-grown successes such as Banco de Crédito are harvesting impressive profits.
Peru’s private sector banks reported a 56% increase in net profits to $382 million in the first half of this year, led by a surge in demand for consumer and private sector loans. Profits at Scotiabank’s Peruvian unit alone jumped 135% in the second quarter. Indeed, credit granted by Peru’s banks and financial institutions to the private sector grew 22.3% in the past 12 months to June, and bank loans rose by 19% to a record $18.7 billion at the end of June. Peru’s past-due loan ratio could drop to 1.3% by the end of this year, even as the banking superintendency uses tighter standards for declaring past-due loans than other Latin American nations such as Chile and Mexico.
"There is a huge part of the population that was long relegated to a very limited access to credit, and what we are seeing now is that with this economic growth, that whole sector is coming forward to seek credit," says Gustavo Urrutia, a banking analyst at Lima-based brokerage Centura SAB.