Peru: A financial system on the rise with high expectations for retail banking. March 2007 BCP Retail2.ppt

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1 Peru: A financial system on the rise with high expectations for retail banking March 2007 BCP Retail2.ppt

2 Content Operating environment in Peru Peru s financial system BCP s highlights Opportunities in retail banking 2

3 Peru: In relation to other countries Dec 2006 US Brazil Mexico Colombia Chile Peru Population (MM) GDP (US$Bn) 13, GDP per capita (US$) 44,200 5,100 7,400 2,950 8,750 3,300 Inflation (%) Debt/GDP (%) Int. Reserves/ Mthly Imports Country Risk (bps)

4 Peru: A success story GDP (US$ MM) 57,002 61,476 69,726 79,395 93,350 Growth (%) GDP per capita (US$) 2,151 2,287 2,592 2,916 3,330 Inflation rate (annual) Fiscal Deficit (% of GDP)* Exports (US$ MM) 7,714 9,091 12,809 17,336 23,750 Imports (US$ MM) 7,422 8,238 9,805 12,076 14,897 Net International Reserves (US$ MM) 9,598 10,194 12,631 14,097 17,275 Negative means surplus; ** Central Government revenues and expenditures Source: INEI, BCR, BCP 4

5 Peru: Macroeconomic scenario Opportunities Investment Grade Mining Projects Gas Project LNG (Camisea) Inter-Oceanic Road Brazil Peru Large irrigation projects Sierra Exportadora Domestic demand / Construction sector Challenges Commodity Prices Approval of FTA with USA Employment 5

6 Content Operating environment in Peru Peru s financial system BCP s highlights Opportunities in retail banking 6

7 Banking systems comparison US$ Bn 2006 Mexico Chile Colombia Peru Assets Loans Deposits Equity Past Due Loan/ Loans 2.0% 0.8% 2.6% 1.9% Reserves/Past Due Loans 214.2% 152.0% 150.4% 223.3% Cost/Income 50.4% 48.9% 57.9% 58.7% ROE 25.1% 19.4% 19.0% 24.7% Information for September

8 Peru s financial system: Growth in deposits and loans Deposits (US$ Bn) Loans (US$ Bn) CAGR 15% CAGR 20%

9 Peru s financial system: Disintermediation and growth of capital markets 6 Capital Markets (US$ Bn) P r i v a t e B o n d Is s u e M a r k e t C a p i t a l i z a t i o n 4 0 An important disintermediation has taken place Stock prices are in its peak levels '0 0 '0 1 '0 2 '0 3 '0 4 '0 5 ' Private Pension Funds (US$ Bn) F u n d % G D P Private Pension Funds and Mutual Funds have increased substantially '0 0 '0 1 '0 2 '0 3 '0 4 '0 5 '

10 Despite the aggressive competition, BCP maintains its leadership in deposits Deposits market share 4 4 % 4 0 % 3 6 % % % % % % 3 2 % 2 8 % 2 4 % % % % % % 2 0 % 1 6 % % % % % % 1 2 % 8 % B C P B B V A S c o t i a 4 % I n t e r b a n k O t h e r s 0 % D 0 2 D 0 3 D 0 4 D 0 5 D

11 and in loans Loans market share 4 4 % 4 0 % B C P B B V A S c o t i a I n t e r b a n k O t h e r s C i t i b a n k 3 6 % 3 2 % 2 8 % 2 4 % 2 0 % % % % % % % % % % % 1 6 % 1 2 % % % % % % 8 % 4 % 0 % D 0 2 D 0 3 D 0 4 D 0 5 D

12 Content Operating environment in Peru Peru s financial system BCP s highlights Opportunities in retail banking 12

Credicorp & BCP s history 1889 Founded as Banco Italiano by Genoese traders 1919 The Banca Commerciale Italiana takes control of the Bank 1920 Becomes the most important bank of the country 1941

13 Credicorp & BCP s history 1889 Founded as Banco Italiano by Genoese traders 1919 The Banca Commerciale Italiana takes control of the Bank 1920 Becomes the most important bank of the country 1941 Changes its name to Banco de Credito del Peru 1964Becomes one of the top 500 banks in the world 1979 Peruvian shareholders assume control of the bank 1987 Nationalization attempt. Ownership and management are transferred to employees 1990 Legislation is passed overruling Nationalization. Management is returned to its shareholders 1993 Acquisition of Banco Popular in Bolivia 1995 Creation of Parent Company CREDICORP, listed in NYSE 2002Acquisition of BSCH Peru 2005Creation of AFP Prima 2006Acquisition of AFP Union Vida 13

BCP is leading Credicorp s growth Total Assets & Total Loans (US$ MM) Net Income (US$ MM) & ROE 9,3 1 7 1 0,8 0 3 7,3 1 2 6,6 8 8 7,3 1 1 4,1 5 3 3,8 0 1 3,8 5 7 4,8 6 9 5,8 7 1 2 0 0 2 2 0 0 3 2 0 0

14 BCP is leading Credicorp s growth Total Assets & Total Loans (US$ MM) Net Income (US$ MM) & ROE 9, , , , , , , , , , T o t a l A s s e t s T o t a l L o a n s % % % % % N e t i n c o m e R O E 3 5 % 3 0 % 2 5 % 2 0 % 1 5 % 1 0 % 5 % 0 % Past Due Loans / Total Loans Efficiency Ratio 8.6 % % 6.1 % % 3.7 % % % % 1.9 % 1.3 %

15 and retail banking is driving the growth trend Loan volume by segment (US$ MM) Loan volume: Wholesale vs. Retail 2, % 27% % % % % % 2, % % % % % 1, % R e t a i l W h o l e s a l e 1, C o r p. M i d. R e t a i l a n d S M E Growth Credit Card % SMEs 34% Consumer 36% Mortgages 17% 15

16 Content Operating environment in Peru Peru s financial system BCP s highlights Opportunities in retail banking 16

17 still the market poses more opportunities Peru s population # Persons Lima Prov Total >18 yrs Total Urban Rural Source : Population Statistics 2006 Apoyo based on sense and INEI 2005 EAP Public Sector Wage-earners Independents Business market Business Category Annual Sales % GDP Formality Level Micro Businesses <US$ 160k 42% 25% Large, Medium & Small Businesses >US$ 160K 58% 71% Fuentes: SUNAT 2004 y el INEI 2002 Annual gross sales 17

18 BCP's response: core retail strategy Lead in payrolls services Increase network Continue growth in small and micro business Keep developing initiatives in the mortgage business 18

19 Aggressive growth in payroll services Evolution of payroll services 4, , , , , , , , , , , , D i c D i c D i c D i c B u s i n e s s e s # o f C u s t o m e r s i n P a y r o l l 8 0 0, , , , with a continued renewal of our value proposition Accounts for wage earners with special conditions regarding fees and interest rates Aggressive cross sell strategy with special benefits in key products Retention programs expanding benefits to non banking products (discounts or access to products at a discount) 19

20 Distribution channels are key in increasing banking penetration Channel Teller A.T.M Internet Banking Telephone Banking Agente ViaBcp Others TOTAL Monthly Average por transactions in thousands ,730 6,790 7,311 8,003 2,955 2,942 3,055 3,826 2,140 2,675 3,578 5, ,744 5,277 5,891 6,813 17,172 18,364 20,555 24,677 CAGR (%) Transaction Distribution 4 7 % 4 3 % 3 9 % 3 7 % 3 6 % 3 2 % T e l l e r 5 3 % 5 7 % 6 1 % 6 3 % 6 4 % 6 8 % E l e c t r o n i c C h a n n e l s

21 Including the development of tailored distribution channels customer withdrawals, deposits and payments Agente Via BCP Small Merchant BCP s Data Processing Convenience stores, Drug stores, Hardware stores, Gas stations, etc. Channel introduction that is innovative and cost efficient # of Channels ATMs Branches Agente Via Bcp BCP

22 Continued growth in small and micro business Small & micro market distribution 2006 O t h e r s, 3 4 % B C P, 2 2 % Small & micro business evolution (US$ MM) Market and BCP s market share 1,6 6 5 Market s CAGR 34% C M P i u, 5 % C M A q p, 6 % C M T r u j, 6 % T r a b a j o, 8 % M i B a n c o, 1 4 % S c o t i a b a n k, 8 % BCP s CAGR 38% 22% 19% 18% Small and micro business contributes with 14 % of the net income for retail banking M k t B C P 22

23 Mortgage initiatives Total mortgage (US$ MM) Market and BCP s market share 1, , The market shows a CAGR of 20% while BCP s CAGR is 22% 1, , Subset market - MiVivienda (US$ MM) Market and BCP s market share 35.7% 32.5% 38.1% 37.5% % % % M k t B C P M k t B C P 23

25 Credicorp: Organizational structure BCB BCB Industry Banking Banking Banking Insurance Investments Country Peru Bolivia Cayman Peru Peru Ownership 96% 100% 100% 76% 100% BCP accounts for 85% of Credicorp s assets 25

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Disclaimer. commitment. This document may not be photocopied, reproduced and/or distributed in whole or in part,

Disclaimer. commitment. This document may not be photocopied, reproduced and/or distributed in whole or in part, December 2013 Disclaimer This document has been elaborated as a part of the information policies and transparency of BBVA Continental and contains public information, own source and provided by third parties,