Interbank. We know you best

Interbank We know you best Annual report 2005

Contents 1 2 5 Statement of Responsibility A Brief Company Profile Letter from the Chairman and the General Manager Main Financial Figures - Fiscal Year 2005 6 8 10 12 We know that you seek financial strength and reliability A Bank Focused on Persons Generating Financial Strength and Reliability Leading Personal Banking 14 16 18 We know that you seek more advantages Credit Card: More Benefits for Customers More and Improved Services for Corporate Customers 20 22 24 We know that you want your bank ever closer Developing the Best Financial Service Distribution Network Using State-of-the-Art Technology / Improving Infrastructure 26 28 We know that you want your dreams come true Making Home Ownership Accessible to Peruvian Families 30 32 We know that you need more advantages Supplying Mutual Funds and the Best Securitization Services 34 36 38 We know that we can exceed your expectations Recognitions that Encourage and Commit Us Committed to Active Social Responsibility 40 40 42 44 Financial Presentation - Fiscal Year 2005 The Peruvian Economy The Financial System Management Presentation of Results 53 53 54 60 Audit Report Report from Independent Auditor Consolidated Financial Statements Notes to Consolidated Financial Statements

Interbank A brief summary of the Company Statement of Responsibility The information in this document truthfully and comprehensively reflects the development of Interbank's business in the year 2005. Exempting the issuer of this document all liability for the contents of this document, the undersigned accept all responsibility for its contents in accordance with the applicable Peruvian legal provisions. With its headquarters in Lima, Perú, Interbank is one of the top Peruvian commercial banks with over US$ 1.830 million in assets and a domestic network of 105 branch offices and 500 ATMs nationwide. The Bank provides banking services to more than 950,000 customers and is Perú's second banking institution making loans through credit cards, with over 368,000 accounts, and offering the 3 worldwide leading credit cards: American Express, MasterCard, and Visa, and the private brand card VEA. The activity developed by the Bank in personal banking ranks it as Perú's most important bank in consumer credits, with a 20% market share in effective loans within this segment. Committed to constant Innovation, Interbank offers Quality Service as a way to provide added value to its customers. Interbank also operates in the Mutual Funds market through Interfondos, and in the Asset-Backed Securities market through Intertítulos. The Bank's stock trades in the Lima Stock Exchange under the symbol INTERBC1. Carlos Rodríguez - Pastor P. Chairman Ismael Benavides F. General Manager This disclaimer is issued in compliance with the provisions of the regulations governing the preparation of Annual and Quarterly Reports approved by CONASEV (Peruvian Supervisory Commission of Securities and Companies) General Management Resolution N 040-99-EF/94.11

Interbank We know you best Annual report 2005

2 3 Letter from the Chairman and the General Manager

In 2005 our income reached US$33.0 million -our highest historical level so far. To our Customers, Team Members, Shareholders and Friends: We are pleased to report that 2005 was a great year for Interbank: We attracted 180,000 new customers and for the fifth consecutive year we generated significant improvements in financial results, with our income reaching US$33.0 million -our highest historical level so far- which rose 64% above our income for the previous year. Our average return on equity was 21.4%. The asset quality continued to improve, the non-performing loan ratio decreased from 4.9% to 2.9% and the loan-loss provision coverage increased from 151.7% to 175.8%. The financial solidity of our equity, the continuous improvement in our portfolio quality, the higher level of coverage of the non-performing portfolio, the diversification of the Bank's funding, an increase in public deposits, and our focusing in profitable businesses, all allowed Interbank to continue rating as category A, one of the highest classifications available in the Peruvian financial system. Interbank's strategic orientation to retail banking, defined over the last five years, is reflected both by the placement portfolio structure, in which the retail banking share has gone from 23% to 47%, and by the income it generated, which increased from 44% to 73% of the Bank's total income for that term. Also, the funding from natural persons represented more than 56% of total deposits. In line with the decision to continue strengthening our retail banking, we maintain our commitment to providing our clients with leading products such as cards, mortgage loans, personal loans and a number of alternative types of deposits, with a personalized quality service. During fiscal year 2005 Interbank retained its leadership in the retail banking sector with a market share of 20% for personal loans. And in an unprecedented effort, we opened 36 new Financial Service Shops in Lima and provinces, thus increasing our national network to 105 spots. We also continued developing our project of Convenience Stores located in areas of dense traffic, where service is available at special times, with additional attractions implemented for customers to have a better time while carrying out their banking operations. The strategic investment made by Grupo Interbank in Supermercados Peruanos, continued to generate important synergies in developing Personal and Entrepreneurial banking: as of December 2005 there were 150,000 VEA credit cards and the number of financial service suppliers increased significantly to more than 700. In addition, there are 19 Money Markets located in Hipermercados Plaza Vea and Supermercados Vivanda, to provide banking services to our customers and contribute to attracting new customers. We keep committed with our vision of making Interbank the best bank with the best people, focused on generating competitive advantages addressed at providing our customers with exceptional value and convenience. We are therefore glad to mention that for the fourth year running we were selected as one of Perú's Top 10 Best Places to Work by The Great Place to Work Institute, and were the highest ranked bank.

4 5 Letter from the Chairman and the General Manager Additionally, in 2005 we were granted the Entrepreneurial Creativity Award for the fourth consecutive time in the category of banking services with our product called Coin Dispenser. Thus, ever since this award was created, Interbank is the bank that has received the largest number of awards in this category. Our personnel and staff including more than 2,479 members remains as our primary strategic advantage and once again we would like to thank them all for their effort and desire to excel. The Peruvian financial system has shown a positive evolution over 2005, and this has led an increasing number of Peruvians to a more intensive economic interaction with banks, thus gaining access to loans, both addressed at consumption and housing and micro-businesses as well. Heavy portfolio reductions and the good net financial income obtained by the institutions that make up the system have allowed us to show outstanding international level indicators. The regulatory framework remained stable, facilitating this favorable evolution and controlling various initiatives that would have otherwise affected such ambit, hindering the future development of the financial system. to cover the country's both household and industrial energy requirements at competitive costs. The entering of a Free Trade Agreement with the United States will mean a substantial contribution to economic growth. In addition, we expect that the level of liquidity maintained by financial institutions will help keep stable interest and exchange rates, especially during the second half of the year. Our financial goals for 2006 include a net income growth of at least 40%, and a return on equity of over 25%. In line with the modernization of out distribution model, we expect that 75% of our total transactions will take place through electronic channels such as the Internet, telephone, selfservice kiosks, and ATMs. The significant results obtained over this exceptional year were possible because of the support and trust of our customers, our correspondent banks, and our investors, and especially because of the commitment and professionalism of our members, with whom we share our purpose of being recognized as the best financial institution in Perú. For 2006 we envision a promising economic scenario, despite this being an elections year. The evolution of global economy will allow to maintain for favorable prices for Perú's primary exports and tourism will continue its expansion by virtue of the modernization of its transport and service infrastructure. Natural gas from Camisea will continue to be developed during the year, allowing Carlos Rodríguez - Pastor P. Chairman Ismael Benavides F. General Manager

Main Financial Figures Fiscal Year 2005 For the fourth year running we were selected as one of Perú's Top 10 Best Places to Work. In US$ millions 2005 2004 2003 2002 Profit and Loss Statement Financial Income 158.8 133.8 117.3 137.4 Financial Expenses 38.0 32.7 33.4 37.6 Net Financial Income 120.8 101.1 83.9 99.9 Non Financial Income 76.7 60.7 50.6 41.6 Operation Expenses 118.7 96.4 88.1 77.4 Operating Income (before provisions and taxes) 78.7 65.4 46.4 64.0 Net Income 33.0 20.1 15.1 10.0 End of Term Balance Sheet Gross Loans 1,211.0 1,108.0 992.0 917.0 Loan Loss Provisions -61.0-83.0-97.0-133.0 Total Assets 1,830.0 1,767.0 1,570.0 1,466.0 Deposits 1,342.0 1,346.0 1,187.0 1,058.0 Other Liabilities 117.0 113.0 121.0 207.0 Outstanding Bonds 111.0 87.0 84.0 54.0 Shareholders Equity 164.0 149.0 122.0 110.0 Operation Ratios Return on Average Assets 1.8% 1.2% 1.0% 0.7% Return on Average Equity 21.4% 15.1% 12.0% 9.6% Leverage 8.3 8.0 8.0 9.0 Delinquent / Overdue Portfolio 2.9% 4.9% 6.5% 7.9% Provisions on Past Due Loans 175.8% 151.7% 151.9% 184.3% Efficiency Ratio 60.1% 59.6% 65.5% 54.8% N.B.: The financial data contained in this document result from converting Peruvian soles into U.S. dollars, using the annual closing exchange rate for the figures in the End of Term Balance, and the monthly average exchange rates for the figures in the Profit and Loss Statement.

We know that you seek strength and reliability We keep growing because we provide more effective solutions to each of your needs. We know all our customers - corporations, small and medium enterprises, and persons. Our baseline is to generate the highest profitability for your money and offer you more and improved products. That's why we view every day as a new chance to grow. Miguel Uccelli General Manager - Interfondos

8 9 A bank focused on persons We are aware of what you need. Interbank aims to become the best peopleoriented bank, based on best staff. The growth of the retail business will allow us to upgrade our current base by permanently innovating products and distribution channels and, above all, by reinforcing our service quality for the benefit of our more than 950 thousand customers. In 2005 Interbank consolidated its focus on Persons, with more than 47% of its current loans made to consumers, a segment that generated approximately 73% of financial income. Interbank kept its leadership in consumer loans, a segment that includes personal and car loans, with a market share of over 20%. Once again it was the second largest issuer of credit cards in the banking system, with a 23% market share, showing the highest growth rate among all banks Milagros Mosca Iraola Winner of the Team Work Award.

Interbank maintains the leadership in retail banking in the Peruvian financial system over the last four years. In mortgage loans, it reached a 7.5% market share, showing a higher growth rate than the system as a whole for the last fiscal year. supported by their commitment to enhance the well-being of Peruvian households, continues making a difference and keeps Interbank at the top of multi-bank service measurements. The Bank continues to base its development on the concept of Convenience for our customers. Our product development aims at creatively meeting their needs and our distribution network is therefore designed for the purpose of becoming part of our customers' everyday routine, through convenience and ease of access, through a network of 105 physical branches located in high transit areas, and the latest generation electronic media. A key element in the implementation of this strategy is Interbank's team of 2,479 associates whose ability to provide good service nationwide,

10 11 Generating financial strength and reliability In 2005 Interbank maintained an A rating, one of the highest in the Peruvian financial system, a recognition of its strong equity base, the continuous improvement of its portfolio quality, the coverage of its past due loan portfolio and the diversification of its funding sources. As of December 31, 2005 the Bank's shareholders' equity was US$164.0 million, 10% greater than the previous year, reflecting its good performance in the current fiscal year, supported by the shareholders' policy of capitalizing 50% of the Bank's earnings. The leverage ratio of 8.3x (12%) was well within the legal limit of 11. The liquidity ratio, calculated as the percentage of available funds over total assets, reached 24% of

Our funding source structure continued improving: our deposits reached US$1,342 million, 56% of which come from natural persons. assets, similar to 2004. The diversification of the Bank's funding structure, based on a consistent policy of attracting retail funds from both persons and companies, reached US$1,342 million, minimizing the relative importance of corporate investors. It should be noted that 56% of these deposits come from individuals and 27% from companies, while loans from foreign banks fell by US$17.1 million. The loan portfolio closed at US$1,211 million, 9.23% higher than the 2004 year-end figure. The continual application of the Recoveries Monitoring System (SER) allowed us to improve collateral and restructure debts, thus decreasing the problem loan portfolio in US$49.1 million. Conservative provisioning and charge-off policies continued being applied to the personal banking portfolio. The Bank's profitability showed significant growth in 2005: Net earnings reached US$33.0 million, higher by 64% than the previous fiscal year; and operating earnings before provisions and taxes were US$78.7 million. This allowed for US$36.0 million in provisions for doubtful loans. Interbank thus continued as the third most profitable bank in the Peruvian financial system.

12 13 Leading retail banking Our personal banking business recorded an outstanding performance during fiscal year 2005: n Personal Deposits increased by more than 18%, exceeding US$750 million, n n n Consumer Credits amounted to US$365 million, higher by 19% than the balance recorded for the previous fiscal year, The Bancaassurance business sold more than 119,400 policies during the fiscal year, and More than 250,000 family remittances were processed. Interbank maintained its leadership in retail banking, with a 20% market share in the segment of personal loans The increase in Deposits from individuals occurred mainly in the Savings segment, in which the Cuenta Millonaria accounted for the highest growth, allowing Interbank to reach a market share of more than 14% in this segment. Significant increase recorded in Time Deposits and Retirement Funds (CTS) will allow us to continue introducing product improvements. During 2005 Interbank maintained its leadership in retail banking, with a 20% share in the Consumer Credit segment. These loans were boosted by the deployment of the Consumer Card, which allows customers to perform transactions through more than 500 Global Net ATMs nationwide, as well as well as through financial kiosks and the Internet. Another innovation in Consumer Loans was the

implementation of disbursements through Internet, a feature exclusive to Interbank that provides customers who live in distant locations witho convenient mechanisms to access their accounts. Interbank Consumer Credits US$ million 308 365 The Bancassurance business has evolved favorably and more than 119,400 new policies were sold during fiscal 2005, thus setting a new base for developing this new market niche in the short term. 85% of sales were made throughout the branch network and 15% through telemarketing. 176 239 In 2005 agreements were made with 30 remittance companies based in 12 countries, in order to channel family remittances to Perú. Contact was made with Peruvian workers and professionals who work abroad for the purpose of offering them remittance services through Interbank in a quick and safe way, at competitive costs, and by using our nationwide Store network. The evolution of this business line has been very favorable, processing more than 250 thousand remittances for US$75 million, representing an increase of 65% as compared to the previous year. As of December 2005, more than 34,000 Peruvians based abroad trusted their monthly remittances to Interbank, 60% of which were addressed to Lima beneficiaries and 40% to beneficiaries in the rest of the country. 2002 2003 2004 2005 Interbank Personal Deposits US$ million 534 603 639 752 2002 2003 2004 2005

We know that you seek more advantages We have simplified our processes by implementing a system for issuing cards in less than 20 minutes, an initiative that has been recognized as one of the most important innovations in Latin America. We launched the Vea card, a platform that became in only 3 months the main means of payment, following cash. And our card issue increased by 63% as compared to the previous year. Fernando Durán Vea and Megaplaza Credit Card

16 17 Credit cards clients with more benefits The evolution of the credit card business during 2005 was remarkable: total existing cards reached a number of 368,000 accounts, representing a 47% increase as compared to the previous year; outstanding balances increased by 27%, exceeding US$159 million, and the Banmat Visa Electron debit card was launched in association with the Banco de Materiales. We work focused in serving our customers. The increase in loans was accompanied by rigorous loan admission procedures and risk follow-up, thus keeping the same portfolio quality levels. Year-end delinquency rates were within the system average. Service quality is key in the development of the card business, and this was enhanced through the installation of the Contact Center - CRM system. Its application significantly increased staff productivity in telephone banking, requests and claims service, and telephone collections, providing more customers with personalized, timely service. The VEA Credit Card, launched October 2004, in alliance with Supermercados Peruanos and targeted at the customers of Hipermercados Plaza VEA, showed an outstanding performance, reaching more than 150,000 units at the end of the year. The special benefits provided by this card to its users have allowed it to become the preferred means of payment in these modern hypermarkets. Christian Peraldo Salas, Winner of the Sense of Humor Award.

The Vea Credit Card, launched along with supermercados peruanos, expanded to 150,000 units as of december 2005 The Megaplaza Interbank Visa card kept growing, exceeding 49,000 units, 42% higher than the level recorded the previous year. Applications continued being processed at the module located in the same Shopping Mall. Credit Card placements US$ million 160 In November 2005 the Banmat Visa Electron credit card was launched under an agreement with Banco de Materiales. This card allows Banco de Materiales customers to purchase construction materials for building their own houses directly from any Visa affiliated establishments, as well as to make cash withdrawals for up to 30% of their credit lines through the Global Net ATM network. Apart from providing their customers with a modern and safe means of payment, Banco de Materiales also benefits from the elimination of transactional costs related to the issue of checks and the optimization of its administrative procedures. 62 94 126 2002 2003 2004 2005 Number of Credit Card Accounts US$ million 110 130 251 399 2002 2003 2004 2005

18 19 More and improved services for corporate clients Companies need simple, fast and safe solutions to meet their financial needs. By keeping these ideas in mind, Interbank has developed a number of products and services that it continually upgrades in order to supply the best solutions to its regular customers. The Payroll Payment service, principally through Internet Banking, grew by 39% in 2005, balances in the Payroll Account increased by 30%, and the number of companies using this service increased at a similar pace. Payments to Suppliers through Interbank increased 37%. This product allows the bank's corporate clients are able to make payments to other clients directly through deposits in their accounts or alternatively through cashier's checks to non clients. These results have encouraged Interbank to implement a new Electronic Factoring product and to continue offering better alternative options to its corporate clients. In Foreign Trade, the bank continued upgrading the services and products addressed at the customers in this market segment in order to serve them with the speed and efficiency they need. The volume of import and export letters of credit, collection services, the transfers and the loans extended to customers engaged in foreign trade were 34% higher than the year before.

Services to corporate clients continue growing at rates higher than 30% On the other hand, Interleasing completed its third year sustained growth: current loans exceeded US$103 million with a higher financial margin and an average past-due rate of less than 1%. Active management of the client relationships and quality of service resulted in 25% of the deals closed this year being with recurrent customers, who decided to trust Interleasing to cover their financing needs again. and payments to Private Pension Funds (AFPs). These services provide convenience to corporate clients and are a source of non-financial revenue for the bank, while allowing for significant operational float. Despite efforts from the competition during 2005, Interbank confirmed its position as the leading private bank in Collection of Taxes for SUNAT (National Superintendence of Tax Administration),

We know that you want us closer We have increased our accessibility by enhancing our distribution network, implementing Financial Shops throughout the country and developing a direct sales force. We have upgraded our network though new Convenience Stores located in areas of dense traffic, where service is available at special times, with additional attractions implemented for customers to have a good time while carrying out banking operations. Gabriela Prado Recovery Risk Manager

22 23 Developing the best financial service distribution network Interbank firmly aims at becoming a part of our customers' daily routine. To this end it seeks to be present in the most convenient locations, providing safety and offering quality services and products. National Branch Network In an unprecedented effort in the local banking business, during 2005 Interbank opened 36 new branches nationwide, 19 of them in Plaza VEA hyper-markets and VIVANDA super markets, both owned by Supermercados Peruanos, a company that joined Grupo Interbank in the year 2003. The main innovation in the branch network, begun in the previous fiscal, was the launching of new Convenience Stores located in areas of dense traffic, where service is available on an extended schedule every day of the week. Their functional design allows for space to serve customers comfortably and offer them a higher added value through education, health, and entertainment campaigns, sponsored by renowned companies. The average number of enquiries made by clients in each campaign was higher than 20,000, thus reflecting the warm reception of the public to this original innovation. Our strategic alliance with Lima Airport Partners allowed Interbank to be the only financial institution at Jorge Chávez International Airport. To meet the needs of both customers and the general public, it has a financial store, two exchange rate modules and a network of 14 ATMs located in the higher traffic zones. During the year 2005 implementation of the Transactor front-end system in the 105 branch stores of Interbank located throughout the country was completed. This tool simplifies processes, facilitates the operational tasks of our employees, and allows for better and faster service to customers. Electronic Banking: Growth with Innovation At Interbank, electronic transactions continue to register significant growth: As of December 2005, almost 70% of the total transactions were done through electronic means, based on the expansion of the Global Net ATM network, the modern Web Site of Interbank, the good impact had by Coin Dispensers, and the Saldos y Pagos @l Toque feature (web-enabled kiosks). Global Net is the broadest coverage ATM network in Perú and the only one that takes cards from all banks, department stores, and municipal loans and savings institutions. It encompasses 500 ATMs nationwide, and during 2005 it incorporated four new partners: Banco Financiero, Caja Municipal de Trujillo, Caja Municipal de Piura, and Ingenicard. The everyday need to have coins at hand for commercial transactions is common in all socio-

In an unprecedented effort in the local banking business, during 2005 interbank opened 36 new branch offices in lima and provinces economic levels in Perú. With this in mind, Interbank implemented the Coin Dispensers, the first electronic device in South America that allows customers to have coins in an easy, comfortable, and safe way. This product was the result of more than 4 years of joint work among Interbank as project leader, IBM del Perú as technological partner, and XAC Automation Corporation of Taiwan as manufacturer. Currently, Interbank has 50 Dispensers operating in its branches throughout the country, serving more than 100,000 monthly transactions. This product received the 2005 Entrepreneurial Creativity Award in the category of Financial Services. Interbank's Internet banking web site, www.interbank.com.pe is currently accessed by an increasingly higher number of users. One of every five transactions carried out during fiscal year 2005 was made through this channel in an efficient and particularly safe way, within the framework of one of the friendliest and quickestaccess Web sites in the financial system. Number of Interbank ATMs 202 335 479 500 2002 2003 2004 2005 Electronic Cards 44% 55% 62% 69% 2002 2003 2004 2005

24 25 Improving infrastructure and operational and technological support In accordance with our goal of being the leading financial institution in retail banking in Perú, several projects addressed at improving our service to customers and providing them with even higher quality and added value were implemented in 2005. The main projects include: We provide simple solutions n n n n Centralization of operational support that will free the branches from certain back-office tasks, thus allowing them to focus their efforts on serving customers. This trend began with Money Markets and Convenience Stores and will expand to the rest of the network over the year 2006, The deployment of Transactor, the new frontend system installed in every branch throughout the country, that provides improved functionality, ease of use, and natural connectivity with data exploitation applications, currently undergoing development, The implementation of a new software for serving enquiries and claims which allows decentralized follow up, thus improving customer service, and The roll-out of a new system for the detection of suspicious transactions and the prevention of asset and money laundering. The robustness of Interbank's processes and systems was evidenced by our quick reaction to Alex Rubio Silva, Winner of the Accountability Award

Operative processes continued recording improvements in line with our objective of having the bank's main processes iso 9001 certified. the appearance in the country of super dollars, highly sophisticated forged notes very similar to the originals and therefore extremely difficult to recognize. As soon as this fact was known, Interbank set up detection mechanisms in the branch network, and took the necessary steps to withdraw all such notes from circulation. Thus we protected not only our depositors but the entire financial system, while at the same time taking steps to serve any customers who might have been affected by this situation. Operative processes continued to show improvements in line with our objective of having the main processes of our bank ISO 9001 certified. The level of rigor of this certification implies detailed reviews to ensure process functionality and simplicity and, therefore, an efficient management. During fiscal year 2005 the processes being granted such certification included Payroll-Loan Cards, servicing of enquiries and claims, and normalization processes.. Additionally, we maintained the certification of the processes that had been certified in 2004, while introducing substantial improvements in their performance. The quality of the information generated by the Financial Controllership allowed all the bank areas to make decisions in an opportune and safe manner, and the 2006-2008 Strategic Planning Process, involved the participation of all the bank's areas and management, concluding with the implementation of the Balanced Scorecard for the entire organization.

We know that you want your dreams come true We have come closer to more people by financing a larger number of construction programs, creating a positive synergy to make more loans effective, and enhancing the facilities of program MIVIVIENDA in order to provide our customers more opportunities to access their own dwelling. Juan José Rossel Senior Executive - Corporate Finances

28 29 Making home ownership accessible to peruvian families The mortgage business is particularly important to Interbank since it is the tool that enables Peruvian families to purchase their own home, thus enhancing their well-being. Along this line, in 2005 Interbank created it's Mortgage Center, aimed at offering specialized services to our customers and at providing our employees with the appropriate environment and tools to ensure efficient operations. We grow along with our customers The growth rate of mortgage loans during fiscal year 2005 was higher than 18%, exceeding US$139 million, and raising market share to 7.5%, all the while maintaining a conservative lending policy, and reducing the non-performing loan rate from 3.4% to 2.9%, in line with the average for the system. As has happened during the last three years, one of the more dynamic mortgage business lines was MIVIVIENDA, a successful program sponsored by the current administration to encourage housing construction throughout the country, which allowed Interbank to disburse more than US$45 million during the fiscal year, 35% more than in the previous year, a figure that represents more than 50% of total annual disbursements for this concept. The product called Ahorro-Casa has been gaining more acceptance from customers who cannot César Guevara Baratta, Winner of the Service Attitude Award

Through our product Ahorro-casa, more than 400 households whose income cannot be evidenced by payment vouchers accessed a mortage loan. evidence regular monthly income through a payroll slip, but who intend to purchase their own dwelling. This product has enabled more than 400 Peruvian families to access a mortgage loan and purchase the house of their choice. For the purpose of fostering extended housing construction programs, Interbank has financed investments of specialized promoters and constructors for approximately US$223 million that will enable the construction of 8,600 housing units, mainly within the framework of MIVIVIENDA. Total Interbank Mortgage Loans. US$ millions The favorable performance of Interbank's mortgage loan portfolio was valued by the market, through the successful placement of the second issue of mortgage bonds for US$ 10 million. This issue received a domestic AAA rating, the highest for placements of this type by rating agencies Apoyo and Class. 62 91 117 138 2002 2003 2004 2005

We know that you seek more advantages We innovate because we want to grow, and have increased our nationwide network of stores and number of ATMs. We have developed new channels like the Saldos y Pagos @l Toque and the coin dispensers. Thus customers are not charged with operation costs and can access our services more easily and comfortably, saving time and money. Patricia Jiménez Manager, Risk Admissions Division.

32 33 Providing profitable mutual funds and the best securitization services Interbank has two subsidiaries providing financial services: We focus in providing clients our customized service. n n Interfondos SAF, a mutual fund manager, and Intertítulos, a securitization company. INTERFONDOS SAF The mutual fund industry exceeded US$1,997 million, increasing volume by US$230 million during 2005, which represents a 13% growth as compared to the previous fiscal year. The number of investors increased by 40% to 115,500. This significant growth resulted from the efforts made by the managers to attract more customers by offering a wider variety of products at attractive rates of profitability. In such context, the funds managed by Interfondos SAF as a whole were US$ 314 million, growing by more than 14% as compared to the previous year. This exceeded the average of the industry and increased its market share from 15.1% in 2004 to 15.7% in this fiscal year. The quality of our personalized service provided by a specialized professional staff with the support of the nationwide Interbank branch network has led us to increase the total number of investors in the various funds managed by Interfondos to more than 14,100 throughout Perú, which represents an increase of more than 39% as compared to the previous year. Víctor Arana Corso, Winner of the Drive to Excel Award

Our diversified investment policy and conservative risk management have led the dollardenominated fixed income fund to the highest level of profitability of the system for the sixth consecutive year. Also, the Interfondo Mixto and Interfondo Global funds achieved the highest profitability in their respective categories. INTERTITULOS ST After six years of operations, Intertítulos ST has maintained its leadership in the Peruvian capitals market, managing equity flows and Securitization guarantees from 15 public and private operations, for more than US$500 million. Interfondos and Intertitulos, the two subsidiaries of Interbank engaged in financial services, achieved in 2005 the best results so far since they started operations During 2005 Intertítulos ST successfully made the following placements: n n n US$25 million from Corporación Drokasa, securitizing future flows and accounts receivable of Grupo Drokasa companies, US$8 million from Cineplex, operation backed by the transfer of credit rights and income from future sales of movie complexes, and US$8 million from the second issue of securitized Bonds of Supermercados Peruanos, operation backed by credit rights and income from future credit card receivables. Intertitulos continued introducing innovative structured products partnered with renowned international financial institutions, among them three private placements for local institutional investors for US$243 million, which allowed the investors to diversify the risk profile of their portfolios.

We know that we can exceed your expectations We have developed new products and innovative services to facilitate banking processes and to improve the people's quality of life. Our efforts have been recognized on several occasions: the Entrepreneurial Creativity Award to our Coin Dispenser; the acknowledgement by American Express for being one of the 3 banks issuing the Amex Card with top service quality in over 90 countries; and the recognition of our own members as one of Perú's Top 10 Great Places to Work. Jonathan Golergant Deputy Manager, Human Resources Management and Development.

36 37 Recognitions that encourage and commit us A Good Working Environment In 2005, Interbank was elected for the fourth consecutive year as one of the top ten companies to work in Perú, according to the Organizational Climate survey carried out by The Great Place to Work Institute. The Bank also ranked among the 100 best companies to work in Latin America, and was also recognized as the highest-ranked bank in Perú. This acknowledgement is ultimately due to the effort of our associates since it validates our permanent effort to generate an organizational climate that will allow them to innovate and develop their skills in an environment of harmony and mutual confidence. Continuous Learning and Performance Based Compensation are essential components of Interbank's organizational culture. During 2005 training opportunities were provided to more than 90% of our associates, stressing participation in leadership development programs by all those in a supervisory position. Top executives took part in an intensive individual advisory and coaching program in order to upgrade their managerial skills. Over 400 assocites from Lima and the Provinces attended the Graceland program, designed to transmit Interbank's culture and values to our new employees. This year the program was taken to every region of the country where the bank operates. To strengthen our values, a new monthly communications program was

For the fourth year running, Interbank ranked among the top ten best companies to work in perú implemented, through which the Bank's vicepresidents work on our various institutional values interacting with the staff of their own divisions in ways that are fun and reflective at the same time. In consistence with Interbank's policy of reinforcing integral career lines and recognizing the achievements of our associates by giving them priority to the advancement opportunities generated by corporate development, 175 employees from various parts of the country were either promoted or transferred during 2005. Fosters Creativity and Innovation For the fourth time running, in 2005 Interbank received the Entrepreneurial Creativity award in the banking services category, for its Coin Dispensing device. Since this award was created, Interbank has been the bank with the greater number of acknowledgements. The Coin Dispenser was created by the staff of our Electronic Banking division with the support of IBM del Perú as technological partner and XAC Automation Corporation of Taiwan as manufacturer. The Coin Dispenser is the first electronic device in South America allowing customers to obtain small change in an easy, comfortable, and safe way. In recognition for its Marketing and Advertising effectiveness, Interbank got two 2005 Silver Effie Awards: one for the introduction of the VEA Card in the Services Launching category; and another one for the Mortgage Solutions Campaign in the Banking Services category.

38 39 Committed to active social responsibility We create innovative options 2005 witnessed the completion of the first 11 years of Interbank's support to Asociación VIDA Perú, a philanthropic institution that manages donations in support to health care granted by Peruvian and foreign public and private organizations. For such purpose, VIDA Perú counts on the support of volunteers and associates who take inventories, classify, and organize the donated medicines and medical equipment in order to facilitate subsequent free distribution nationally. The donations received in fiscal year 2005 amounted to more than US$ 15 million and benefited more than 600 requests from 172 institutions nationwide. The major programs developed by VIDA Perú in this fiscal year were: Olga Baca Olazábal, Winner of the Creativity Award.

Interbank keeps its commitment to cooperate with education, health, and art for the benefit of all peruvians. n n n Puentes de Vida (Bridges for Life), health care and medical diagnosis services and free medication addressed at impoverished urban communities in Callao, San Juan de Miraflores, and Ate. This Program arrived to the final selection in the I World Congress of Non Profit Organizations called by Global Philanthropy Forum and held in San Francisco, USA. Banco de Muletas (Crutch Bank), the lending of crutches, wheelchairs, and orthopedic material to low-income people who require these implements temporarily. The program met needs in 15 zones in Perú; and Misiones Internacionales (International Missions), two run by Operation Rainbow in Callao, one run by the Grupo de Terapia Respiratoria (Respiratory Therapy Group) in Iquitos, and two run by Interplast in Puno and Piura. Once again, Interbank sponsored the National Contest Plata del Perú [ Silver of Perú ] organized by the Patronato de la Plata [Silver Patronage] in its ninth issue, which was held in June in La Oroya. The event counted on the participation of 224 artisans from Piura, Lambayeque, La Libertad, Arequipa, Ayacucho, Cajamarca, Junín, Cusco, and Lima who participated in the categories of filigree, jewelry, gold- and silversmithing, and sculpture. Subsequently, as is traditional, the 24 winning pieces were exhibited in the Gallery of the Interbank Tower. Interbank supported the Foundation Carlos Rodríguez-Pastor Mendoza, who along with newspaper El Comercio sponsored the First National PUCP Award in the categories of Essay, Poetry, and Narrative organized by Pontificia Universidad Católica del Perú. The event gathered more than 500 young writers from all over the country. The award winning works were published.

40 41 The Peruvian Economy in 2005 Latin American economies continued growing in 2005, and the performance of Peruvian economy clearly stood out at 6.7%, higher than the 4.8% it posted for 2004, the greatest growth rate it has achieved since 1997. This was driven not only by foreign demand but also by the strengthening of domestic demand. Non-primary sectors remained as the major driver of economic growth. Sectors such as other services and trade, that grew 6%, stood out for their contribution to the growth of economy based on the expansion of domestic demand. Private consumption and private investment recorded growth rates of 4.4% and 11.8% respectively. Manufacturing grew by 7.0%, boosted by higher private consumption as well as by the continuous drive provided by the ATPDEA. Likewise, the 8.7% growth rate of the construction sector resulting from the housing programs promoted by the government such as Mivivienda and Techo Propio, and the expansion of mortgage loans also contributed to stregthen the demand for manufactured products both in the form of building materials and as final goods for household furnishings. In the case of the primary sectors, mining grew by 8.7%, with the greater gold production resulting from the start of production of Barrick Misquichilca's Alto Chicama mining unit providing the outstanding note. The fiscal deficit was 0.4% of the GDP in 2005, below the 1.0% goal set by the government and lower than the 1.1% of GDP deficit recorded in 2004. The improvement of the fiscal balance was mainly due to the greater tax collections, boosted by the greater economic activity in 2005 and to the higher corporate profits in 2004, which enhanced tax receipts from income tax regularization. On the other hand, the pressure for higher expenditures continued, thus limiting the improvement of the fiscal accounts due to a 12.5% expansion current expenses. The government was active in both the domestic and foreign debt markets mainly as a result of the reprofiling of the public debt. In this sense, the prepayment of part of the debt to the Paris Club for

The Peruvian economy continued growing at a rate of 6.3%, representing the highest growth rate achieved since 1997 US$1,555 million and the debt to Japan Peru Corporation (JAPECO) for US$830 millions involved the issuance of considerable amounts of debt in both the domestic and foreign markets. Additionally, the government issued bonds for US$400 million, due in 2033, to fund the 2005 budget, and made dynamic use of the domestic market makers program, with various issues amounting to S/. 2,013 million, and a swap of debt which was nearing maturity date for S/. 851 million. Total exports rose by 36.7%, thus reaching a new record of US$17,247 million, favored mainly by the increase in the prices of base minerals and precious metals as a consequence of the greater demand from China and continued growth in the US. On the other hand, imports rose by 23.0% to US$12,084 million due to greater imports of raw materials and machinery generated by the expansion of private investment and the strength of domestic consumption. Thus, the trade surplus reached US$5,163 millions, an 84.9% increase from last yaear. This, along with the 24.1% increase in the balance of current transfers resulting from greater family remittances from Peruvians living abroad, contributed to boost the current account balance to a surplus equivalent to 1.6% of the GDP. However, in spite of the above, the local currency recorded a 4.3% depreciation as a consequence of the differential between short-term interest rates in soles and dollars, and also due to concerns regarding the political scenario towards the end of the year. The Central Bank recorded net purchases of US$2,697 million during the year, 16.1% more than the net purchases for 2004. In this context, international reserves reached US$14,097 million, equivalent to 14 months of imports. The inflation was 1.5% in 2005, mainly because the higher supply of some food products off-set the rising trend resulting from the increase in international oil prices. Average interest rates on deposits in local and foreign currency went up, following the trend of international interest rates. However, in regard to loan rates, the average rate in dollars increased due to a rise in international interest rates, while the average interest rate in local currency dropped as a consequence of the

42 43 The Peruvian economy in 2005 improved portfolio quality in the system. After hitting historically low levels during the year as a consequence of the better perception of both country and regional risk due to the inherent fundamentals of global growth, the sovereign spread as measured by the EMBI+ Perú closed the year with a drop of 14 basis points to 206 bps. The Peruvian Financial System In 2005 the Peruvian financial system continued showing improving asset quality and higher profits. Portfolio quality continued improving in the face of high liquidity and rising international interest rates. During the year most banking companies kept their strategies of increasing consumer loans, which grew by 29.3.0%; mortgage loans, which grew by 26.2%; and loans to micro-businesses, which grew by 41.2%. Basically what allowed for this performance was the 4.4% increase in private consumption, an improvement in the population's disposable income, and the attractive spreads of these sectors. On the other hand, loans to large companies showed an increase after the drop recorded in 2004, as evidenced by the 15.4% rise in commercial loans, mainly due to the greater local economic activity despite their ability to access to the capital markets. As a result of these factors, total loans by the banking system rose by 14.8% to US$ 12,212 million. The growth in mortgage loans continued being promoted by the government program MIVIVIENDA, which allowed the system to place 9,205 mortgage loans for more than US$213 million as compared with 7,960 mortgage loans valued at around US$ 172 million disbursed in 2004. The open credit exposure for the system (problem loans less provisions as a percentage of equity) decreased from 15.3% in 2004 to 17.2% as of the end of the last fiscal year. This, once again, is attributable to the conservative credit policies

For fiscal year 2006 the financial system will continue in optimal conditions so as to contribute to the growth of domestic demand implemented, the strengthening of equity resulting of the capitalization of profits, and the efforts to create adequate levels of provisions. The profitability of the financial system showed an increase as a consequence of a slight improvement of financial margins and the lower level of provisions demanded based on the improvement of the quality of the loan portfolio. The delinquency rate fell from 3.7% in 2004 to 2.2% in 2005, while the coverage of past due loans rose to 233.4%. The return on equity reached 21.0% by the end of 2005, and total net profits significantly grew by 90.3% to US$432.0 million. The greater dynamism in domestic demand and a high quality of the portfolio continued strengthening the financial system and allowed for significantly better profitability ratios. For fiscal year 2006 the financial system will continue in optimal conditions so as to support the growth of local demand and higher private investment.

44 45 Management Presentation of Results Analysis of Operations Results and the Economic and Financial Situation. 1. Introduction Interbank is one of Perú's major commercial banks providing a wide range of financial products and services to more than 950 thousand customers through a network of 105 branch offices and 500 ATMs, strategically located throughout the country. As of December 31st, 2005 the Bank's assets totaled US$1,830 million, it had US$1,342 million in deposits, and a net worth of US$164 million, all of which kept its rank as the fourth largest bank in the Peruvian banking system in terms of total assets and the third in profitability. More than one decade after it was privatized, Interbank has made a significant improvement in its financial performance. One such improvement is the adequate management of its loan portfolio, which has led to better asset quality indicators and to a diversified and profitable loan structure. Notice should be taken of the efforts undertaken to achieve a more diversified funding structure and a better allocation of costs. Due to innovative and successful policies Interbank has received continual acknowledgment from renowned market institutions andmaintained one of the strongest risk ratings in the financial system. Interbank participates in the Mutual Funds market through Interfondos SAF and in the securitization market through Intertítulos ST, both wholly owned subsidiaries. It is also the second largest issuer of credit cards in Perú's banking system with loans for more than US$159 million, and the only bank that offers the three leading market brands: American Express, Master Card, and Visa. 2. Earnings Summary Interbank's net earnings for 2005 were US$ 33.0 million, 64% above 2004 results. The bank continues to exhibit a solid, steady evolution of its profitability ratios, having attained a return on assets (ROA) de 1.8%, and a return on equity (ROE) of 21.4%. These results were explained by operating earnings before provisions and taxes of US$ 78.7 million, based on net-interest income of US$ 120.8 million and non interest income for US$ 76.7 million. Thus, the bank's increased activity accounted for an annual increase in total income of 22%. On the other hand, the larger volume of transactions and expenditures associated with new projects and investments resulted in an annual increase of operating expenses of 23%.

Interbank has 355'261,470 outstanding shares and the earnings per share were US$0.0962, 65% higher than the previous year's, which were US$ 0.0579 3. Portfolio At the end of fiscal year 2005, Interbank's Gross Loans amounted to US$ 1,211 million, an increase of US$ 103 million with regard to 2004. The efforts made by the Bank to position itself as a Retail Bank continued providing positive results. This explains why the personal loan portfolio came to represent 47% of current placements, and Interbank remains the leader in consumer credit, with a market share of 20%. Important growth was recorded in mortgage loans, credit cards, and personal loans. Net earnings US$ million Earning per share US$ million Gross loans Retail banking US$ million 15.1 20.1 33.0 0.0535 0.0579 0.0962 326 421 505 2003 2004 2005 2003 2004 2005 2003 2004 2005

46 47 Management Presentation of Results: Analysis of Operations Results and the Economic and Financial Situation. 4. Financial Margin Net interest margin was US$ 120.8 million, US$ 19.7 million greater than 2004. It is important to note that financial income is recurrent for the most part. Despite a scenario of falling interest rates due to a more competitive market in the personal banking segment, income from the loan portfolio rose by 21% due to a larger volume of personal loans, which account for 47% of the current portfolio. Thus, corporate loans, presenting lower income margins, are being substituted by placements with greater yields and a more diversified risk. On the other hand, financial expenditures recorded a 16.3% rise in a scenario of climbing deposit interest rates in line with the trend in international rates. However, the bank's effort in diversifying its funding sources ought to be highlighted, and is illustrated by the fact that the share of personal deposits of the bank's total deposits went from 47% by late 2004, to 56% by late 2005. Also, during 2005, Interbank continued attracting funds in the local capital markets at very competitive interest rates for mortgage credit and leasing operations. Financial Margin US$ millions 84 101 121 2003 2004 2005 5. Non Financial Income Non Financial Income US$ millions 51 61 77 2003 2004 2005 Interbank continues its policy of promoting businesses that generate non-capital intensive, recurring fee income through the development of innovative mechanisms that improve and facilitate the provision of services to our clients. Non-Financial Income thus amounted to US$76.7 million, equivalent to an annual increase of US$ 16.0 million, a monthly average of US$1.3 million higher in comparison with last year. This was based on the increased revenue from credit card fees resulting from the expansion of the number of cards and the successful marketing campaigns

Total Transactions per channel In thousands Dec. 04 Dec. 05 Var % Transactions through Counter Tellers 1,999 36% 2,008 31% 0% Electronic Transactions 3,490 64% 4,524 69% 30% Total 5,489 6,532 19% implemented, as well as from the good performance of the foreign exchange business, especially in the retail sector. Equally, the convenient location of the Global Net ATMs translated into a significant increase of revenue; and the active sales of non-credit related insurances through the branch network generated a considerable drive for the Banca Seguros business. As for corporate services, they recorded a higher number of foreign trade operations and an increase in the volume of payments, collections, and payrolls, based on greater facilities of the corporate software applications and improvements in the products and services supplied. other hand, the increase in the number of credit cards involved larger expenses associated with customer attraction and retention. Likewise, the expansion and remodeling of the branch and ATM network have demanded additional resources. Thus, Interbank's efficiency ratio reached 60%, like the previous year. 6. Operating Expenses Operating Expenses, including personnel expenses and general expenses, were US$119 million, 23.1% higher than the previous year. The increase in expenses recorded in 2005 stems from the bank's strategy of strengthening its leadership position in the retail banking market, expanding and managing the customer base, and maintaining a high quality service, all aimed at continuing with the increase of income in the medium term. Due to the Bank's greater activity, currently effecting more than 6 million monthly contacts with clients, additional personnel have been hired in order to keep up with the service quality standards. On the Operating Expenses US$ millions 88 96 119 2003 2004 2005 Efficiency Ratio (Operating expenses / total income) 66 60 60 2003 2004 2005

48 49 Management Presentation of Results: Analysis of Operations Results and the Economic and Financial Situation 7. Asset Quality 8. Provisions By the end of fiscal year 2005, Interbank's assets were US$1,830 million, showing an increase of US$63 million over December 2004. This growth was due to the higher level of outstanding consumer loans, in line with Interbank's strategy to consolidate as a retail Bank. As far as corporate loans were concerned, growth was concentrated in financial leasing agreements and the financing of foreign trade operations, both deemed as strategic products in view of their risk and profitability profile. On the other hand, the portfolio of refinanced loans, restructured loans, past-due loans, and loans in legal collection was reduced by US$ 49 million. During fiscal year 2005 the Bank made US$36.0 million in provisions for loan losses generated by operating income. By setting aside this amount the Bank was able to write off irrecoverable loans for US$44.3 million. Consistently with its solid risk management culture, Interbank maintained a policy to strengthen its loan portfolio, which allowed it to close 2005 with a delinquency rate of 2.9%. On the other hand, total provisions amounted to US$67 million, enabling the coverage ratio, which indicates the level of provisions for impaired credits, was 176% as of the end of 2005. In US$ million Dec. 2004 Dec. 2005 Variación Var. % Available funds 377 384 7 2% Investment 137 100-37 -27% Gross loans 1,108 1,211 103 9% Current 931 1,091 160 17% Consumer 415 505 90 22% Businesses 511 580 69 14% Others 6 7 1 14% Restructured abd refinanced 122 85-37 -30% Overdue and judiciary collection 54 35-20 -36% Total activos 1,767 1,830 63 4%

In US$ million Dec. 2004 Dec. 2005 Variación Var. % Deposits 1,346 1,342-5 0% Consumer 639 752 113 18% Businesses 347 366 19 6% Institutional 361 224-137 -38% Values 87 111 23 27% Due to banks 113 117 4 4% Domestic 68 89 21 31% Foreign 46 29-17 -37% Total Pasivos 1,619 1,661 43 3% Delinquency ratio. (% Coloc. Brutas) NP (*) Deposits Market Share (% Coloc. Brutas) 6.5 9.8 10.3 4.9 2.9 10.8 products and services aimed at cash management. Similarly, concerning corporate deposits, the lower requirements of institutional funds at special rates ought to be highlighted. 2003 2004 2005 2003 2004 2005 9. Liabilities The Bank's total liabilities as of December 2005 were US$ 1,666 million, recording an increase of US$ 48 million. While the overall System showed a higher level of deposits, the effort of Interbank's branch network stands out in attracting retail deposits within the framework of a funding source policy oriented to develop a diversified and low-cost deposit structure. Thus, the Bank's market share in the persons segment continued to grow, reaching 10.7% as of the closing of fiscal year 2005. With regard to corporate deposits, the strategy is focused on attracting transactional funds associated with Regarding the structure of Liabilities, the decrease of foreign loans continued since the Bank's liquidity allowed it to finance foreign trade operations with local funds. The Bank's funding strategy continued aiming at the development of a diversified and stable fund structure that is not vulnerable to any adverse impacts of eventual financial crises. Domestic loans, associated mostly with Mivivienda credit operations, increased by US$ 21 million. It ought to be pointed out that during 2005 Interbank issued leasing bonds valued at US$ 15 million, and mortgage bonds valued at US$ 10 million, and short-term certificates of deposit for S/. 109 million. The joint effort of the Capital Market Division and the Branch Network should be mentioned regarding the bond issues since, in contrast to other local issues, they succeeded in generating considerable participation by natural persons.

50 51 Management Presentation of Results: Analysis of Operations Results and the Economic and Financial Situation 10. Liquidity 11. Equity Interbank's available funds at the end of fiscal year 2005 were US$399 million, representing 22% of total Assets. The liquidity ratio, which includes other liquid assets of the Bank, was 43.8% in US dollars and 22.8% in soles, percentages that are considerably higher than the limits required by the Peruvian Superintendence of Banking and Insurance (SBS) and the Central Reserve Bank of Perú (BCRP), which are 20% and 8%, respectively. By the end of 2005, the Bank's equity was US$164 million, reflecting an increase of US$14.9 million with regard to the previous year. This explains Interbank's leverage ratio of 8.3, considerably lower than the legal limit. 12. Dividend Policy Interbank maintains its commitment to capitalize a substantial portion of its net income in order to guarantee an adequate capital base to support its operations. Net Equity US$ million 122 149 164 The Bank's dividend policy approved by the General Shareholder Meeting held April 5th 2005 agreed to set a dividend policy for 2005 consisting of the distribution of a maximum of 50% of the fiscal year's net profits, as established in articles 65 and 66, Law 26702, and in the relevant sections of the General Corporations Law. In 2005 S/.30 million were distributed as dividends for fiscal year 2004. 2003 2004 2005

13. Derivative Instruments As of December 31, 2004 the Bank maintained a short position of forward contracts of US$40.2 million. As of December 31, 2005 that position was US$14.8 million. The Bank covered its short position through spot purchases in the currency it is obliged to deliver on the contract's maturity date. differences or mismatches between the maturity dates of one and the other. The Bank's policy emphasizes a prudent handling of those differences, matching the maturities of assets and liabilities. However, Treasury may, within its delegated powers and approved limits, actively manage said mismatches in the short term, in order to maximize profits or improve the Bank's risk profile. Interbank has also offered interest rate hedges to some clients, keeping a short position of swaps of LIBOR rate versus fixed rate for a notional amount of US$0.97 million. The income and loss of these derivative instruments and the corresponding hedge positions are recorded monthly in the Bank's Profit and Loss Accounts, according to the regulations of the Peruvian Superintendence of Banking and Insurance. Interbank does not maintain other positions in derivative instruments neither for its own account nor for those of its customers. 14. Interest Rate Mismatch and Sensitivity Due to the characteristics of the Peruvian financial market, maturities of medium term lending operations are inherently different from collection terms. This generates The sensitivity of Interest Rates refers to the effect of a change in interest rates on the Bank's earnings, resulting from the mismatch between the assets and liabilities repricing dates and the different base rates of said assets and liabilities. The Bank measures the potential impact of these mismatches through an Earnings at Risk model based on the guidelines provided by the Peruvian Superintendence of Banking and Insurance. This model seeks to quantify the negative impact of a variation in the interest rate on the company's financial margin. According to the model mentioned above, the absolute value of the reduction in the Bank's financial margins considering a variation in the interest rate estimated at 300 bps in local currency, 100 bps in the VAC rate, 100 bps in the base rate in foreign currency, 50 bps in the LIBOR rate, and 50 bps in TIPMEX rate was S/.9.3 million as of December 31, 2004, and S/.8.5 million as of December 31, 2005.

52 53 Management Presentation of Results: Analysis of Operations Results and the Economic and Financial Situation The Bank seeks to minimize the effects of potential variations in interest rates through hedging operations such as term matching and rate reformulation. It ought to be said that the above mentioned model does not measure the consequences that a variation in the interest rate included in the main assumption would have on the general level of economic activity. Likewise, the analysis does not include the measurements of repreciation or acceleration to which the Bank might resort within its contractual rights. 15. Business Perspectives Interbank has developed a plan for the next three years that will allow it to maintain consistent growth in profitability. The Bank's growth strategy is based on reliable personnel, the development of profitable businesses channeled through a modern distribution network, and the creation of synergies with the various companies of the group. The development of lines of business in retail banking requires the Bank to maintain and improve the standards of service attained, which represent Interbank's most distinguishable quality. The Bank will continue implementing actions oriented at improving the quality of service including improvements in personnel qualification based on modern selection processes and a permanent training plan. The financial goals for 2006 include an increase in net income equivalent to at least 40% and a return on equity higher than 25%. The objectives and strategies for the period 2006-2008 are based upon the Bank's plans, which include Management's assumptions and expectations for future scenarios, which may be susceptible to variations.

Report of the Independent Auditors

54 55 Balance sheets As of December 31, 2005 and 2004 Note 2005 2004 S/(000) S/(000) Assets Cash and due from banks - 4 Cash and clearing 292,068 273,215 Deposits in Central Reserve Bank of Peru 924,061 859,643 Deposits in local and foreign banks 100,956 102,338 Restricted funds 678 1,558 Accrued interest on cash and due from banks 1,528 1,238 1,319,291 1,237,992 Inter-bank funds 51,009 138,011 Marketable securities, net 5 287,458 385,797 Loan portfolio, net 6 3,876,470 3,300,627 Assets received in payment and seized through legal actions, net 7 16,809 29,270 Permanent investments 8 83,491 84,744 Property, furniture and equipment, net 9 389,460 395,463 Other assets, net 10 182,964 174,947 Total assets 6,206,952 5,746,851 Off-balance sheet accounts 17 Contingent assets 3,902,401 2,992,135 Other off-balance sheet accounts 11,894,672 8,186,574 15,797,073 11,178,709 The accompaying notes to the financial statements are an integral part of these balance sheets.

Note 2005 2004 S/(000) S/(000) Liabilities and shareholders' equity Deposits and obligations - 11 Demand deposits 818,516 698,710 Saving accounts 1,661,931 1,362,433 Time deposits 1,880,171 2,153,548 Other obligations 188,634 154,286 Interest payable for deposits and obligations 13,702 13,994 4,562,954 4,382,971 Inter-bank funds 20,182 - Short-term deposits from financial entities 69,448 67,079 Due to banks and correspondents - short-term 12 78,447 102,578 Due to banks and correspondents - long-term 12 325,765 268,224 Securities, bonds and obligations outstanding 13 383,044 289,769 Provisions and other liabilities 10 198,857 142,796 Deferred liability from income tax and workers profit sharing 14 6,185 5,398 Total liabilities 5,644,882 5,258,815 Shareholders' equity Capital stock 15 355,261 326,057 Treasury stocks (30,533) (21,433) Legal and special reserves 124,135 117,548 Retained earnings 113,207 65,864 Total shareholders' equity 562,070 488,036 Total liabilities and shareholders' equity 6,206,952 5,746,851 Off-balance sheet accounts 17 Contingent liabilities 3,902,401 2,992,135 Other off-balance sheet accounts 11,894,672 8,186,574 15,797,073 11,178,709 The accompaying notes to the financial statements are an integral part of these balance sheets.

56 57 Statements of income For the years ended December 31, 2005 and 2004 Note 2005 2004 S/(000) S/(000) Financial income 18 599,660 508,511 Less - Financial expenses 18 138,697 117,412 Gross financial margin 460,963 391,099 Provision for possible loan losses, net 6(h) (109,919) (118,870) Provision for impairment of investments, net 5(g) (6,446) (431) Net financial margin 344,598 271,798 Income from banking services 19 218,243 179,453 Expenses from banking services 19 (19,428) (13,926) Operating margin 543,413 437,325 Administrative expenses 20 (344,642) (285,415) Net operating margin 198,771 151,910 Provision for contingencies and other (5,519) (7,516) Depreciation and amortization 9(a) y 10(d) (33,557) (31,780) Amortization of goodwill 10(f) (11,548) (11,548) Other amortizable expenses (1,626) (1,615) Operating income 146,521 99,451 Other income (expenses), net 21 20,934 (13,270) Gain (loss) from exposure to inflation 2(a) - 763 Income before workers' profit sharing and income tax 167,455 86,944 Workers' profit sharing, current and deferred 14 (8,085) (3,147) Income tax, current and deferred 14 (46,088) (17,933) Net income 113,282 65,864 Basic and diluted earnings per share (stated in Nuevos Soles) 22 0.334 0.191 Weighted average number of outstanding shares, adjusted by stock splits (in thousands of units) 22 339,475 344,253 The accompaying notes to the financial statements are an integral part of these statements.

Statements of changes in shareholders' equity For the years ended December 31, 2005 and 2004 Number of outstanding shares Issued Treasury Capital Treasury Legal and Retained Total stock stock stocks special reserves earnings (in thousands) (in thousands) S/(000) S/(000) S/(000) S/(000) S/(000) Balance as of January 1st, 2004 281,861 8,689 300,087 (13,079) 101,262 54,727 442,997 Transfer - - - - 16,295 (16,295) - Capitalization of net income and increase in number of 28,965 893 25,970 - - (25,970) - shares for the inflation adjustment, Note 15(a) Declared dividends, Note 15(a) - - - - - (12,462) (12,462) Others - - - - (9) - (9) Purchase of treasury stocks, Note 15(b) - 5,390 - (8,354) - - (8,354) Net income - - - - - 65,864 65,864 Balance as of December 31, 2004 310,826 14,972 326,057 (21,433) 117,548 65,864 488,036 Transfer - - - - 6,587 (6,587) - Capitalization of net income and increase in number of shares for the inflation 44,435-29,204 - - (29,204) - adjustment, Note 15(a) Declared dividends, Note 15(a) - - - - - (30,073) (30,073) Value fluctuation losses of investments available for sale Purchase of treasury stocks, Note 15(b) - 2,630 - (9,100) - - (9,100) Net income - - - - - 113,282 113,282 Balance as of December 31, 2005 355,261 17,602 355,261 (30,533) 124,135 113,207 562,070 The accompaying notes to the financial statements are an integral part of these statements.

58 59 Statements of cash flows For the years ended December 31, 2005 and 2004 2005 2004 S/(000) S/(000) Reconciliation of net income with cash provided by operating activities Net income 113,282 65,864 Adjustments to net income Add (less) Provision for possible loan losses, net of recoveries 109,919 118,870 Provision for impairment of investments, net of recoveries 6,446 431 Depreciation and amortization of intangibles 33,557 31,780 Amortization of goodwill 11,548 11,548 Provision for assets received in payment and seized through legal actions, Note 21 17,410 31,597 Reversion of the provision for assets received in payment and seized through legal actions, Note 21 (3,602) - Deferred workers' profit sharing and income taxes 787 (10,859) Gain from sale of marketable securities, net (3,363) (13,925) Income from the equity method of permanent investments (11,057) (11,757) Expenses from the equity method of permanent investments 8,294 6,832 Gain from sale of assets received in payment and seized through legal actions, Note 21 (23,359) (10,833) Reserve for other accounts receivable 1,968 1,081 Net changes in asset and liability accounts Increase in receivable accrued interests (3,811) (1,647) Increase (decrease) in payable accrued interests 121 (482) Net decrease (net increase) in other assets (8,905) 18,788 Net increase in other liabilities 55,986 21,558 Net cash provided by operating activities 305,221 258,846

Statements of cash flows (continued) 2005 2004 S/(000) S/(000) Cash flows provided by (used in) investing activities Purchase of fixed assets (34,372) (75,584) Sale of fixed assets 300 9 Purchase of intangibles (3,320) (1,421) Sale of assets received in payment and seized through legal actions 47,367 21,273 Purchase of treasury stocks (9,100) (8,354) Net cash provided by (used in) investing activities 875 (64,077) Cash flows used in financing activities Net increase in loan portfolio (711,256) (220,074) Decrease in investments held-to-maturity, net - 3,311 Decrease in marketable securities, net 96,126 11,235 Decrease in permanent investments, net 4,016 3,026 Increase in deposits and obligations, net 180,275 49,712 Increase (decrease) in deposits from financial entities 2,369 (13,036) Increase in due to banks and correspondents 33,049 4,347 Increase (decrease) in securities, bonds and obligations outstanding 93,223 (19,720) Decrease (increase) in receivable inter-bank funds 87,002 (129,356) Increase (decrease) in payable inter-bank funds 20,182 (3,147) Balance of cash dividends (30,073) (12,462) Net cash used in financing activities (225,087) (326,164) Net increase (net decrease) in cash 81,009 (131,395) Balance of cash at the beginning of year, Note 2(s) 1,236,754 1,368,149 Balance of cash at end of year, Note 2(s) 1,317,763 1,236,754 Non-cash flows financial transactions Exchange of Public Treasury Bonds for loan portfolio (Supreme Decree N 099-99 EF), Note 6(g) - 65,404 Capitalization of credits, net - 19,575 The accompaying notes to the financial statements are an integral part of these statements.

60 61 Notes to the financial statements As of December 31, 2005 and 2004 1. Business activity Banco Internacional del Perú - Interbank (hereafter "the Bank") is a subsidiary of IFH Perú Ltd. (hereafter IFH ), and is authorized by the Superintendencia de Banca, Seguros y Administradoras de Fondos de Pensiones - SBS (the Peruvian banking, financing, private pension funds and insurance authority, hereafter the SBS for its Spanish abbreviation), to engage in banking activities in accordance with legal regulations in force in Peru. The Bank's operations are ruled by the Ley General del Sistema Financiero y de Seguros y Orgánica de la SBS - Ley 26702 (General Law of the Financial and Insurance Systems and Organic of the SBS - Law 26702, hereafter the Banking Law ). The Bank is authorized to receive third parties deposits and invest such funds, together with its own capital, in loans placements and securities acquisitions; likewise, the Bank may also grant guarantees and letters of credit and perform in any other financial intermediation and banking service and other activities permitted by the Banking Law. Furthermore, the Bank may engage in underwriting and brokerage activities related to the stock exchange, and may establish and administrate mutual funds, among other activities, to the extent these activities are carried out by subsidiaries organized for such purposes, see Note 8. The Bank's main office is located at Av. Carlos Villarán 140 Urb. Santa Catalina, La Victoria, Lima, Peru. At December 31, 2005, the Bank had 2,475 employees and 106 offices (2,210 employees and 97 offices as of December 31, 2004). The financial statements as of December 31, 2004 have been approved in the General Shareholders' Meeting dated April 5, 2005. The accompanying financial statements as of December 31, 2005 have been approved by Management and will be submitted for approval by the Board of Directors and the Shareholders' Meeting that will take place within the period established by law. In Management's opinion, the accompanying financial statements will be approved by the Board of Directors and the Shareholders' Meeting without modifications.

2. Principios y prácticas contables In the preparation and presentation of the accompanying financial statements, Management has complied with the regulations established by the SBS and effective in Peru as of December 31, 2005 and 2004. Significant accounting principles and practices used in the preparation of the Bank's financial statements are described below: (a) Basis of presentation and changes in accounting policies - n Basis of presentation The accompanying financial statements have been prepared from the Bank's accounting records, which are maintained in nominal Peruvian Nuevos Soles at the transaction date, in accordance with SBS regulations and, in a supplementary manner, with International Financial Reporting Standards - IFRS approved in Peru and effective as of December 31, 2005 and 2004. The preparation of financial statements requires Management to make estimates that affect the reported amounts of assets and liabilities as of the date of the financial statements, and the disclosure of material contingencies in the notes to the financial statements, as well as the amounts of revenues and expenses presented for the period. Actual results may differ from those estimates. The most significant estimates included in the accompanying financial statements are related to the provision for possible loan losses, the investments valuation, the useful life and the recoverable value of properties, furniture and equipment and intangibles, the provision for assets received as payment and seized through legal actions, the valuation of derivatives and the calculation of deferred income tax and workers' profit sharing; the accounting criteria for each of these estimates are presented later in this Note. The accompanying financial statements do not include the effects of the consolidation of the Bank with its subsidiaries, which are detailed in Note 8. The investment in these subsidiaries as of December 31, 2005 and 2004, has been recorded under the equity method of accounting, the non-consolidation of these subsidiaries does not affect the Bank's net income. The effect of non-consolidation is not significant to the revenue, expense, asset and liability accounts presented in the Bank's financial statements. n Changes in accounting policies Starting from the year 2005, the accounting treatment related to the adjustment from exposure to inflation (see following paragraphs), the investment valuation (see paragraphs (f) and (h) and assets received in payment and seized through legal action (see paragraph (j)), has been modified. According to SBS accounting

62 63 Notes to the financial statements As of December 31, 2005 and 2004 standards, said modifications have been made in a prospective manner and prior year balances have not been modified. Until December 31, 2004, the financial statements were adjusted to reflect the effects of variations in the acquisition power of the Peruvian currency following the methodology approved by the National Accounting Standards Board ( CNC for its Spanish abbreviation). Said methodology required the restatement of the nonmonetary items in the balance sheets using coefficients determined based on the Wholesale Price Index, according to the item's original transaction date. Monetary and foreign currency items were not restated as their book balances represented the monetary value of their components as of the dates of the balance sheets. Price variation according to the acquisition power of the Peruvian currency, base on the Wholesale Price Index was 3.6 and 4.9 percent for the years 2005 and 2004, respectively, according to official statistics. By means of Resolution N 031-2004-EF/93.01, the CNC suspended, starting from the year 2005, the application of financial statements inflation adjustment. The adjusted book balances as of December 31, 2004 have been considered as the initial balances as of January 1, 2005. This accounting treatment has been also adopted by the Tax Authority to determine the income tax starting from the year 2005. (b) Financial Instruments - Financial instruments are classified as assets, liabilities or equity in accordance with the substance of their contractual arrangement that originated such. Interest, dividends, gains and losses relating to financial instruments classified as assets or liabilities are recorded as income or expense. Financial instruments are offset when the Bank has a legally enforceable right to offset and the intention to either settle on a net basis or to realize the asset and settle the liability simultaneously. Financial assets and liabilities carried on the balance sheets include cash and due from banks, inter-bank funds, marketable securities, loans, accounts receivable, permanent investments and other liabilities in general, except for the deferred liability from income tax and workers' profit sharing. Additionally, all derivative instruments and indirect loans are considered to be financial instruments. The specific accounting policies on recognition and measurement for each of these items are discussed below in the respective accounting policies included in this Note. (c) Recognition of revenues and expenses - Financial revenues and expenses are recognized on an accrual basis over the period and contractual provisions of the related operations; interest rates are determined based on

free market negotiations with clients. Interests on accounts/loans that are in the situation of past due, refinanced, restructured and under legal collection; as well as interests of loans classified as doubtful or loss are recognized in income on a cash basis. When Management determines that the debtor's financial condition has improved and the loan is reclassified to the standing loan situation or in the categories of normal, with potential problems or substandard, according to the guidelines established in SBS Resolution N 808-2003, interest is again recorded on an accrual basis. Interest revenues include the income on fixed income securities and trading securities, as well as discount and premium recognition on the Bank's financial instruments. Dividends are recognized as income when they are declared. Commissions on financial and banking services are recognized as income when collected. All other revenues and expenses are recognized on an accrual basis as earned or incurred. (d) Loans portfolio and provision for possible loan losses - Direct loans are recorded when the related funds are provided to the clients. Indirect loans (contingent) are recorded when the supporting related documents are issued. Capital leasing transactions, which meet the criteria for financial leases as defined by accounting principles, are registered using the principal value of all installment lease payments to be received in the future. The financial income, or interest component, is determined by applying a constant interest rate to the investment, upon which periodic interest will be recognized. The initial direct costs associated with the item subject to the capital lease, are recorded immediately as expenses. The provision for possible loan losses is determined by the Bank's Management and is calculated in accordance with guidelines and procedures established by the SBS. In Accordance with SBS procedures, Management periodically conducts a formal review and analysis of the Bank's loan portfolio, classifying its portfolio in one of the following categories: normal, with potential problem, substandard, doubtful or loss; based on the risk of payment default of each loan, in accordance with the guidelines of SBS Resolution N 808-2003. For commercial loans, the classification takes into consideration several factors, such as the payment history of the particular loan, the history of the Bank's dealings with the borrower's management, operating history, repayment capability and availability of funds of the borrower, status of any collateral and guarantee, the borrower's financial statements, general risk of the sector in which the borrower operates, the borrower's risk classification made by other financial institution in the market and other relevant factors. For micro-business, consumer and residential mortgage loans, the classification is based on the payments delay.

64 65 Notes to the financial statements As of December 31, 2005 and 2004 The computation of the provision is made considering the classifications assigned and using specific percentages, which vary depending upon whether the client's debts are collateralized by preferred self-liquidating guarantees (cash deposits and rights over letters of credit) or by preferred guarantees that may be readily liquidated (treasury bonds issued by the Central Government, marketable securities included for the Selective Index of the Lima Stock Exchange, among others) or by other preferred guarantees which are considered at their net realizable value as determined by an independent appraiser (primary lien on financial instruments and properties, primary lien on agricultural or mining concessions, insurance on export credits, among others). The provision for possible loan losses for direct loans is presented as an asset deduction, while the provision for indirect loans is presented as a liability; see Note 6(h). (e) Foreign currency transactions and derivatives instruments - Assets and liabilities in foreign currency are recorded in Peruvian currency by applying to the foreign currency amount the exchange rate at the transaction date and are expressed in Peruvian currency at the close of each month using the exchange rates established by the SBS, see Note 3. Exchange gains or losses generated from the restatement of foreign currency transactions at the exchange rates prevailing as of the dates of the balance sheets are recorded in the statements of income. Foreign currency forward operations and exchange interest rates transactions are presented at their fair value, with an asset or a liability being recognized in the balance sheet and any related gain or loss being recognized in the statements of income. Forward contracts and exchange interest rates transactions are also recorded in the off balance sheet accounts at their nominal value, and in their required settlement currency, see Note 17. (f) Marketable securities - Until December 31, 2004, investments were valuated according to Resolution SBS N 1053-99- Regulations for the Classification, Valuation and Provisions of the Investments, and its modifications. Starting from January 1, 2005, investments are valuated according to Resolution SBS N 1914-2004, dated November 23, 2004, by means of which, the SBS has made some additional modifications and precisions to the Regulations for the Classification, Valuation and Provisions of the Investments and to the Accounting Manual for Financial Entities with the purpose of harmonizing these ones in certain aspects with the international accounting principles.

In years 2004 and 2005, the valuation's criteria of investments according to their classification, are as follows: n Trading - Are investments intended for sale in the short-term, which are marked to market daily on an individual basis, with related gains and losses being recognized in the statement of income. Interest on trading securities is recognized when accrued and dividends are recognized when declared. n Available for sale - Are investments recorded at the lower of their cost or market value, on the basis of the global portfolio; nevertheless, starting from year 2005, the provisions recorded as a result of the valuation process does not affect the results of the period, as it was until 2004. These provisions are recorded in the shareholders' equity as Value fluctuation losses of investments available for sale which is included in the caption Retained earnings, until the sale of these investments takes place. When sold, the unrealized losses recorded by their market value, previously recognized as a part of the equity, have to be included in the result of the year. On the other hand, when the Bank's Management estimates that the decrease in the market value or the equity value is not temporary, the amount of the unrealized losses should be recorded affecting the results of the year. Interests on securities available for sale are recognized when accrued and dividends when declared. In the case of debt securities, their book value are updated on a monthly basis through the premium or discount amortization. In any case, if the SBS, in use of its powers, estimates that it is necessary to record a provision for any investment, it will be determined on an individual basis and recorded in the results of the year. (g) Investments originated from loans capitalization - Corresponds to investments originated from the loan capitalization on debtor companies, when that capitalization is made as part of a refinancing process. These investments can not be held for a term longer than the refinancing plan execution or the program to clean and strengthen the equity of the company or, in any case, five years. The initial cost of these investments is equal to the equity value of the shares received. In case the equity value received is greater than the gross amount of the loan, the Bank will

66 67 Notes to the financial statements As of December 31, 2005 and 2004 be able to recognize a deferred earning for such difference, which will be only recognized as an income when the shares are transfer to a third party. Additionally, when the gross amount of the loans is greater than the equity value, the Bank should immediately record a loss for the difference. These investments are recorded in the caption Investments available for sale in representative capital values, see (f), and are recorded by the equity method; i.e., gains or losses generated by the companies are included in the income statements in an amount proportional to the Bank's participation. (h) Permanent investments - These investments are recorded as follows: n Investments in subsidiaries are recorded under the equity method; i.e., gains or losses generated by the subsidiaries are included in the income statements in an amount proportional to the Bank's participation in the subsidiary. n Investments in shares are recorded at the lower of their equity value or their market quotation value, with the exception of the investment in Compass Capital (Cayman) Limited, which is stated at cost, net of impairments recognized on value fluctuations deemed to be permanent, see Note 8(b). The equity value should be determined to SBS satisfaction. In the case of securities quoted in centralized trading mechanisms, when their market value shows a decreasing trend due to reasons not considered as of a temporary nature, the SBS, in use of its powers, may require the recording of a provision, for the difference between market value and equity value.

(i) Property, furniture and equipment - Property, furniture and equipment are stated at acquisition cost, modified by the voluntary revaluation of buildings and lands performed in December 2000, less accumulated depreciation. Depreciation is computed on a straight-line basis over the following estimated useful lives: Years Buildings and installations 33 and 10 Furniture and equipment 10 and 5 Vehicles 5 Leasehold improvements 5 The useful life assigned and depreciation method selected are periodically reviewed to ensure that the method and period of depreciation chosen are consistent with the economic benefit and life expectations for use of property, furniture and equipment items. Equipment in transit and work in progress amounts include furniture and equipment in construction or in transit and are recorded at cost, which includes the acquisition or construction cost together with other costs directly attributable to the asset. These assets are not depreciated until they are received or finished and placed into service. Maintenance and repair costs are charged to expenses, any significant renewals and improvements are capitalized only when these disbursements improve the asset condition and extend the useful live beyond their original performance standard. The cost and accumulated depreciation of assets sold or retired are eliminated from the corresponding accounts and the related gain or loss is included in the income statement. (j) Assets received in payment and seized through legal actions - Assets received in payment and seized through legal actions are recorded according with the guidelines of the SBS. In this sense, until September 30, 2005, these assets are recorded according to SBS Circular N B-2075-2000 - Regulations for Realizable Assets, Assets Received in Payment and Assets Seized through Legal Actions and its Provisions and modifying and supplementary norms. By means of Resolution SBS N 1535-2005, dated October 2005, the SBS has made some additional modifications and precisions

68 69 Notes to the financial statements As of December 31, 2005 and 2004 issuing a new Regulation; consequently, the determination and recording of provisions for these assets have been modified since October 1, 2005. According to this rule, realizable assets, assets received in payment and assets seized through legal actions are recorded at the value assigned to them through legal proceeding, at a value assigned through an out of court settlement, at the market value or at the unpaid value of the debt, whichever is lower. Simultaneously with the establishment of the value, a provision equivalent to 20 percent of the legal settlement of recoverable asset value is recognized; having the possibility to maintain the provision for possible loan losses that was originally constituted relating to the debt. In addition, until September 30, 2005, the provision for these assets was determined according the following criteria: (i) Non real estate assets - subsequent to the seizure date a provision was required to recognize the impairment in its net book value, and, starting from such date, a monthly provision equal to one-eighteenth of the book value was recorded. This provision was net of the provision referred to above. All assets that had not been sold or leased within 18 months of their receipt should be provisioned at 100 percent of their net book value. (ii) Real estate assets - twelve months after the seizure of a real estate asset, the Bank should contract for an appraisal of the real estate property and establish, if necessary, an impairment provision. In the event that the appraisal value exceeded the net book value no increase in the value was recognized. In addition, beginning in the thirteenth month after asset receipt, the Bank should record a monthly provision on the real estate asset until such provision reaches 100 percent of net book value as determined at the twelve-month appraisal. This monthly provision should be recognized at an amount equal to one-eighteenth of the net real estate asset carrying value. Starting October 1, 2005, the Bank recalculated the amount of the accumulated provision at said date, according to the new provisions requirements and the following criteria: (i) Non real estate assets - a provision is constituted on a monthly basis, as of the first month of adjudication or recovery of the property, equivalent to 1/18 of the book cost of the asset, net of the initial 20 percent provision recorded in the adjudication or recovery of the asset and the provision for impairment (if applicable), until reaching 100 percent of the book value of the unsold asset upon expiration of the aforementioned term. Assets without the sale term extension provided in Article

215 of the Banking Law approved by the SBS, had to fully provisional in a one-year term. (ii) Real estates assets - at the end of the eighteenth or twelfth month after the adjudication or recovery of the asset, depend on whether said asset had or failed to have the sale term extension provided in Article 215 of the Banking Law approved by the SBS, respectively; and within a term of three and a half years, uniform monthly provisions must be constituted on the net book value up to completing an amount equivalent to 100 percent of the book value of the unsold real property. Prior to that, a provision for impairment must be constituted, if applicable. The update of the value of said asset, whose age cannot exceed one year, will necessarily imply the constitution of provisions for impairment if the net realization value of the asset is lower than its net book value. In the case that the net realization value exceeds the net book value, the greater value cannot be recognized for accounting purposes. According to SBS rules, the provision surplus determined due to the recalculation of the provision in October 2005 was recorded as an income in the caption Other income (expenses), net of the statement of income; and the reallocation required in the caption Provision for possible loan losses, net of the statement of income, see Note 7 (d). (k) Goodwill and other intangible assets - Goodwill arose from the differences between the market value of assets and the market value of liabilities incorporated from Banco Latino (including the Treasury Bonds issued pursuant to Emergency Decree N 108-2000 and its Operative Rule), and costs incurred by the Bank which were directly attributable to the Banco Latino equity block acquisition, see note 10(f). The amortization of goodwill is calculated using the straight-line method over a period of time that will end in the year 2006. Other intangible asset amounts, included in the Other assets, net caption of the balance sheets, are principally composed of investment costs incurred in the acquisition and development of computer software used in Bank operations. Period expense is calculated following the straight-line method of amortization, considering the useful lives disclosed in Note 10(d).

70 71 Notes to the financial statements As of December 31, 2005 and 2004 (l) Securities, bonds and obligations outstanding - Liabilities arising from the issuance of securities, bonds and obligations are recorded at face value, recognizing the accrued interest in the statement of income. Discounts or premiums resulting from differences in face versus market value at the time of issuance are deferred in the Other assets or Other liabilities captions of the balance sheet, respectively, and are amortized over the life of the securities, bonds and obligations outstanding. (m) Income tax and workers' profit sharing - Income tax and worker's profit sharing are computed based on taxable income determined for tax purposes, based on principles that differ from the Bank's accounting principles, and therefore, the accounting for the deferred income tax and workers' profit sharing has been made in accordance with the principles of IAS 12- Income tax. In this sense, deferred income tax and workers' profit sharing recognize the effects of temporary differences between the carrying amounts of assets and liabilities for financial accounting purposes and the amounts determined for tax purposes. Deferred assets and liabilities are measured using the tax and workers' profit sharing rates that are expected to exist in the future and to be applied to taxable income in the years in which temporary differences are expected to be recovered or settled. The measurement of deferred tax assets and deferred tax liabilities reflects the tax consequences that arise from the manner in which the Bank expects, at the balance sheet dates, to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets and liabilities are recognized regardless of when the timing differences are likely to reverse. Deferred tax assets are recognized when it is probable that sufficient taxable income will be generated against which the deferred assets can be offset. At each balance sheet date, the Bank assesses unrecognized deferred assets and the carrying amount of deferred assets recognized. The Bank may recognize a previously unrecognized deferred tax asset to the extent that it has now become probable that future taxable income will allow the deferred tax asset to be recovered. Likewise, the carrying amount of a deferred tax asset is reduced when it is no longer probable that sufficient future taxable income will be available to allow the benefit related to the deferred tax asset to be recognized in part or in full. According to IAS 12, the Bank determines its deferred income tax and workers' profit sharing considering the tax rate applicable to its non-distributed earnings; any additional tax on distribution of dividends is recorded on the date such distribution is approved.

(n) Impairment of assets - When situations or economics changes indicate that the value of an asset could not be recoverable, the Bank reviews the value of property, furniture and equipment, and intangible assets in order to verify if there is no permanent impairment in their values. When the book value of the asset exceeds its recoverable value, a loss for impairment is recognized in the income statement for each caption mentioned above. The recoverable value is the higher between the net sale price and its useful value. The net sale price is the amount that can be obtained from the sale of an asset in a free market, while the useful value is the present value of the estimated future cash flows by the continuous use of an asset and its disposal at the end of its useful life. The recoverable amounts are estimated for each asset or if not possible, for each cash generating unit. (o) Fiduciary activities - Assets and revenues from fiduciary operations in which there is a commitment to return such assets to the clients and in which the Bank participates as a trustee have been excluded from these financial statements, because these are not owned by the Bank. These assets have been recorded, for control purposes, in off-balance sheet accounts. (p) Provisiones - Provisions are recognized when the Bank has a present legal obligation (legal or implicit) as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. Provisions are reviewed at each balance sheet date and adjusted to reflect Management's best estimate based on current information. When the effect of the time value of money is material, the amount recorded as a provision is equal to the present value of future payments required to settle the obligation. (q) Contingencies - Contingent liabilities are not recognized in the financial statements. They are disclosed in notes to the financial statements unless the possibility of an outflow of resources embodying economic benefits is remote. Contingent assets are not recognized in the financial statements; however, they may be disclosed if it is probable that an inflow of economic benefits will be realized. (r) Earnings per share - Basic earnings per share are computed dividing the net income among the weighted average number of shares outstanding at the balance sheet dates, deducing the treasury

72 73 Notes to the financial statements As of December 31, 2005 and 2004 stocks. Additional shares issued or shares cancelled in order to maintain investment parity after inflationary or deflationary adjustments of the financial statements until December 31, 2004, or after capitalization of earnings are treated as a stock-split and it is considered as if such shares were always issued. Thus, the weighted average number of shares used in prior year calculations has been modified to make the computation per share comparative (Note 22). As of December 31, 2005 and 2004, the Bank has no financial instruments with potentially dilutive effects, and therefore, basic and diluted earnings per share are the same. (s) Statements of cash flows - Cash presented in the statements of cash flows include cash and due from banks presented in the balance sheets as of December 31, 2005 and 2004, excluding their respective accrued interests. (t) Financial statements as of December 31, 2004 - Certain reclassifications have been made to the year 2004 financial statements in order to make them comparable with year 2005 financial statements. In Bank's Management's opinion, the amount of the reclassifications made is not significant in relation to the financial statements taken as a whole. (u) New accounting standards - The International Accounting Standards Board (IASB) has completed the review process of the International Financial Reporting Standards (IFRS), process known as the Improvement Project, and has issued new accounting standards. All revisions to the current IAS and the new issued IFRS are effective on an international basis starting January 1, 2005 (except IFRS 7 - Financial Instruments - Disclosures, which is effective starting January 1, 2007). As of today, the standards indicated in the following paragraph have been approved in Peru by the Peruvian Accounting Regulation Board (CNC, for its Spanish abbreviation) and its application is mandatory in Peru since January 1st, 2006; however, because these standards only apply in a supplementary manner to the accounting rules established by the SBS in its Accounting Manual, they will not have any significant effect in the preparation of the financial statements of the Bank, unless the SBS adopts them in the future through the modification of its Accounting Manual or the issuance of the specific standards.

Following a summary of the changes is presented: n IASB Improvement Project, reviewed fifteen IAS, which are IAS 1, 8, 10, 16, 17, 21, 24, 27, 28, 31, 32, 33 and 40 (reviewed in 2003) and IAS 39 (reviewed in 2004). n In addition, as a result of the revision of the standards related to business combinations, it was issued IFRS 3 - Businesses combinations, and were reviewed IAS 36 - Impairment of assets and IAS 38 - Intangible assets. n Also, the following IFRS have been issued: IFRS 1 - First-time Adoption of International Financial Reporting Standards, IFRS 2 - Share-Based Payments, IFRS 3 - Businesses Combinations, IFRS 4 - Insurance Contracts, IFRS 5 - Non-Current Assets Held for Sale and Discontinued Operations, IFRS 6 - Exploration and Evaluation of Mineral Resources, IFRS 7- Financial Instruments - Disclosures. As regards with modified IAS 21 and IAS 27, the CNC, bearing in mind the further technical criteria study required, the circumstances prevailing in some companies to establish their functional currency and the importance granted by legal provisions in Peru to individual financial statements; by means of Resolution N 038-2005-EF/93.01 dated December 28, 2005, agreed to suspend the entry into effect of modified IAS 21 until December 31, 2006, without barring optional application thereof under the terms provided in Resolution N 034-2005-EF/93.01; and to maintain the use of the equity method in the preparation of individual financial statements to valuate investments in subsidiaries and associated companies, in addition to those mentioned in modified IAS 27 and IAS 28.

74 75 Notes to the financial statements As of December 31, 2005 and 2004 3. Transactions in foreign currency and exchange risk exposure Transactions in foreign currency are carried out using exchange rates prevailing in the market. As of December 31, 2005, the weighted average exchange rates in the market as published by the SBS for transactions in U. S. Dollars was S/3.429 for buying and S/3.431 for selling (S/3.280 for buying and S/3.283, for selling, as of December 31, 2004). As of December 31, 2005, the exchange rate established by the SBS to record assets and liabilities in foreign currency was S/3.430 for each U.S. dollar (S/3.282 as of December 31, 2004). A detail of the Bank's foreign currency assets and liabilities is shown below (expressed in U.S. dollars): 2005 2004 US$ (000) US$ (000) Assets Cash and due from banks 341,653 337,478 Marketable securities, net 15,788 33,697 Loan portfolio, net 707,079 661,418 Permanent investments 1,113 3,529 Other assets, net 19,615 11,915 1,085,248 1,048,037 Liabilities Deposits and obligations 807,908 787,042 Short term deposits from financial entities 8,346 8,443 Due to banks and correspondents 110,866 112,594 Securities, bonds and obligations outstanding 94,178 70,198 Provisions and other liabilities 42,818 24,747 1,064,116 1,003,024 Derivative operations - Net sale position 14,806 40,234 Net asset position 6,326 4,779

As of December 31, 2005, the net sale position from derivative transactions, corresponds to foreign currency forward purchase and sale contracts for approximately US$36,494,000 and US$51,300,000, equivalent to S/125,175,000 and S/175,959,000, respectively (US$36,511,000 and US$76,745,000 as of December 31, 2004, equivalent to S/119,828,000 and S/251,878,000, respectively), see Note 17. As of December 31, 2005, the Bank has contingent operations, in foreign currency, for approximately US$187,838,000, equivalent to S/644,286,000 (US$150,969,000 equivalent to S/495,479,000 as of December 31, 2004), see Note 17. In prior years, depreciation (revaluation) of Peruvian currency with respect to the U.S. dollar and inflation (deflation), in accordance with the National Wholesale Price Index published by the Instituto Nacional de Estadística e Informática (the Peruvian statistics authority), was as follows, stated in percentages: Year Devaluación Inflation (revaluation) (deflación) 2001 (2.3) (2.2) 2002 2.3 1.7 2003 (1.5) 2.0 2004 (5.2) 4.9 2005 4.5 3.6

76 77 Notes to the financial statements As of December 31, 2005 and 2004 4. Cash and due from banks As of December 31, 2005, cash and due from banks includes approximately US$234,288,000 and S/118,006,000 (US$218,873,000 and S/108,501,000 as of December 31, 2004), representing the legal reserve that the Bank must establish for deposits received from third parties. These funds are kept in the Bank's vaults and in the Central Reserve Bank of Peru (BCRP for its Spanish abbreviation). The Bank maintains this reserve within the limits required by current legal regulations. The legal reserve maintained with the BCRP does not earn interest, except to the extent that deposits in foreign currency exceed the minimum reserve required by law. As of December 31, 2005, the monthly amount by which foreign currency deposits exceeded minimum reserve requirements was approximately US$12,390,000 equivalent to S/42,498,000 (US$13,950,000 equivalent to S/45,784,000 as of December 31, 2004). These excess amounts earn interest at an annual rate of 2.25 percent as of December 31, 2005 and 2004. Deposits in local and foreign banks correspond, mainly, to balances in Peruvian Nuevos Soles and U.S. dollars, as well as minimal amounts being maintained in other currencies. With the exception of restricted funds as discussed in the following paragraph, all amounts are unrestricted and bear interest at market rates. As of December 31, 2005 and 2004, the Bank does not have significant deposits in any financial institution. As of December 31, 2005 and 2004, the balance sheets of the Bank include restricted funds of approximately S/678,000 and S/1,558,000, respectively. The restricted funds are related to retained funds due to legal actions against the Bank.

5. Marketable securities, net (a) As of December 31, 2005 and 2004, this account includes trading investments and investments classified by the Bank as available for sale. This item is made up as follows: 2005 2004 S/(000) S/(000) Trading investments Peruvian Sovereign bonds 37,060 23,512 Investments available for sale Public Treasury Bonds RFA bonds 5,238 5,012 FOPE bonds 1,159 1,109 TES 137 and TES 138 bonds (b) - 4,187 6,397 10,308 Negotiable bank certificates Central Reserve Bank of Peru (c) 189,040 239,112 Readjustable bank certificates Central Reserve Bank of Peru 4,882 - Local mutual and investment funds participation Interfondo RF 32,771 27,334 Credifondo RF dólares - 22,974 Compass (PYMES) - 11,464 Interfondo Cash - 3,843 Other 3,856 3,821 36,627 69,436 Loans capitalization investments Agro Guayabito S.A. (d) 24,842 24,842 Cosapi S.A. (e) 10,879 14,609 35,721 39,451

78 79 Notes to the financial statements As of December 31, 2005 and 2004 2005 2004 S/(000) S/(000) Other investments Common and investment stock 11,140 11,140 Comercial papers and securitization bonds - Drokasa - 20,855 Other bonds 5,615 4,025 16,755 36,020 326,482 417,839 Less Provision for impairment of Agro Guayabito S.A. (d) (23,409) (15,647) Provision for impairment of Cosapi S.A. (e) (4,419) (4,229) Provision for impairment of other investments available for sale (12,611) (12,711) (40,439) (32,587) Marketable securities, net 286,043 385,252 Accrued interest of marketable securities 1,415 545 287,458 385,797 (b) The TES 137 and TES 138 bonds matured on November and December 2005, respectively. (c) As of December 31, 2005, the negotiable bank certificates issued by the Central Reserve Bank of Peru, are denominated in Nuevos Soles, have maturities between January 2006 and June 2007 (between January 2005 and September 2006, as of December 31, 2004), and accrue effective annual interest rates between 3.72 and 6.35 percent (between 2.91 and 6.35 percent as of December 31, 2004). As of December 31, 2005 and 2004, the interest accrued on these certificates amounted to approximately S/9,440,000 and S/7,930,000, respectively, and is included in the Financial income caption of the statements of income; see Note 18.

As of December 31, 2005, the Bank had repurchase agreements with the Central Reserve Bank of Peru, for part of its negotiable bank certificates portfolio for a market value of approximately S/22,554,000. The certificates sold with repurchase agreements are considered only as a guarantee of the transaction and thus are maintained as investments and a liability is recognized for the amount that will be paid for the resources obtained, see Note 12(a). (d) On January 2004, Agro Guayabito S.A.'s Restructuring Plan (hereafter Agro Guayabito ) was approved, which includes the agreement for the capitalization of part of the Bank's loans. On November 2004, the Bank capitalized 49.72 percent of its loans approximately US$13,779,000. As a result of this capitalization, the Bank acquired 47,714,416 shares with a nominal value of S/1.00 per share, which represents a participation in Agro Guayabito equity of 42.78 percent. As of December 31, 2004, the Bank has recorded this investment for an amount equal to the loan net book value, recognizing approximately S/24,842,000 as cost and S/15,647,000 as a provision which is included in the caption "Provision for impairment of investments available for sale", which was originated from the provision for possible loan losses recorded by the Bank previously; consequently, the Bank did not recorded any gain or loss related to this transaction. On December 2005, Agro Guayabito's assets were sold. As a result of this transaction, the Bank received an amount of approximately US$8,939,000 (equivalent to approximately S/30,660,000), amount proportional to the Bank's participation in this company. The Bank applied the amount received to settle the total amount of its loans with Agro Guayabito, for an amount equal to the loan net book value of approximately US$6,676,000 (equivalent to approximately S/22,898,000), determining a recovery of provision for possible loan losses of approximately US$2,263,000 (equivalent to approximately S/7,762,000), which is included in the caption "Provision for possible credit losses, net of the statement of income. Additionally, the Bank increased the provision that had constituted for the investment in Agro Guayabito in S/7,762,000, which is included in the caption Provision for impairment of investment, net of the statement of income. (e) On October 2004, the Restructuring Plan of Cosapi S.A. (hereafter Cosapi ) was approved, in such plan it was agreed to cancel the Bank's debt through obtaining the property of the trust that guaranteed the transaction. The Bank settled the total amount of its direct loan, recording its participation in the trust that grants the Bank the rights over the assets in guarantee up to an amount of approximately US$4,451,000.

80 81 Notes to the financial statements As of December 31, 2005 and 2004 The Bank has recorded this investment for an amount equal to the loan net book value, recognizing approximately US$4,451,000 as cost and US$1,289,000 as a provision, which is included in the caption "Provision for impairment of investments available for sale", which was originated from the provision for possible loan losses recorded by the Bank previously; consequently, the Bank did not record any gain or loss related to this transaction. On October 2005, the Guarantee Trust administration sold part of the assets that conform the trust; as a result of this transaction, the Bank received an amount of approximately US$1,279,000, which was applied to the cost of this investment, reducing it in said amount. (f) As of December 31, 2004, the Bank held repurchase agreements for part of its available for sale bond portfolio for a nominal amount equal to US$705,000 (equivalent to approximately S/2,314,000). The investment bonds sold with repurchase agreements are considered only as a guarantee of the transaction and thus are maintained as investments and a liability is recognized for the amount that will be paid for the resources obtained, see Note 11(c). As of December 31, 2005, the Bank did not have any repurchase agreements of its available for sale bonds portfolio. (g) Movements in the provision for impairment of investments available for sale are as follows: 2005 2004 S/(000) S/(000) Balance at the beginning of the year 32,587 12,809 Provisions recognized as year expense 7,762 431 Recoveries (1,316) - Reclassification of provisions for capitalization of loans (d) and (e) - 19,876 Exchange result (result from exposure to inflation in 2004) 1,406 (529) Balance at the end of the year 40,439 32,587

In Management's opinion, the provision recorded is sufficient to cover potential losses in marketable securities as of December 31, 2005 and 2004. (h) The reconciliation between the book value and the market value of the marketable securities as of December 31, 2005 and 2004 is shown below: 2005 2004 S/(000) S/(000) Gross book value 326,482 417,839 Unrealized gain 1,291 846 Unrealized losses (40,439) (32,587) Estimated market value 287,334 386,098 Management has estimated the fair value of its marketable securities using market price quotations from the Lima Stock Exchange or, if a price is not available, market value is estimated by discounting the expected future cash flows at an interest rate that reflects the risk classification of the financial instrument and at the equity value of the loans capitalization investments. (i) The balance of marketable securities as of December 31, 2005 and 2004, classified by maturity date is as follows: 2005 2004 S/(000) S/(000) Trading investments From 1 to 6 months 37,060 23,512 Investments available for sale Due within 1 month 36,629 69,435 From 1 to 3 months 171,293 245,541 From 3 months to 1 year 22,631 17,660 From 1 year to more 10,464 9,412 Shares (without maturity) 7,966 19,692 286,043 385,252

82 83 Notes to the financial statements As of December 31, 2005 and 2004 6. Loan portfolio, net (a) This item is made up as follows: 2005 2004 S/(000) S/(000) Overdrafts and advances 69,784 29,569 Credit cards 549,764 415,090 Loans 2,064,805 1,761,852 Mortgage loans 464,152 348,302 Leasing and leaseback transactions 351,660 275,127 Discounted notes 158,447 166,580 Factoring transactions 62,930 41,346 Loans to employees 22,130 18,773 Restructured and refinanced loans 291,478 400,681 Past due and under legal collection loans 118,688 178,457 4,153,838 3,635,777 Add (less) Accrued interest from standing loans 31,846 29,195 Deferred interests and interest collected in advance (100,591) (93,699) Provision for possible loan losses (208,623) (270,646) Net direct loan portfolio 3,876,470 3,300,627 (b) As of December 31, 2005 and 2004, 51 percent of the loan portfolio balance was concentrated in approximately 187 and 199 clients, respectively.

(c) As of December 31, 2005 and 2004, the loan portfolio is distributed among the following economic sectors: 2005 2004 Sector Number of Amount Number of Amount clients S/(000) clients S/(000) Manufacturing 632 893,099 684 926,176 Commerce 901 325,607 984 288,054 Agriculture, herding, hunting and silviculture 182 212,778 213 153,076 Lease and real-state activities 401 189,742 397 173,009 Transportation, storage and communications 257 130,828 242 95,903 Fishing 31 130,465 37 117,425 Mining 45 91,616 47 121,067 Financial intermediation 30 71,188 30 31,540 Electricity, gas and water 16 69,840 23 73,154 Construction 129 55,265 146 59,295 Public administration and defense 11 49,402 16 33,134 Hotels and restaurants 44 19,611 69 24,415 Other activities 441 99,675 228 114,310 Other loans Consumer loans 398,226 1,315,136 318,736 1,041,683 Mortgage loans 6,229 499,586 4,780 383,536 Total 407,575 4,153,838 326,632 3,635,777 (d) The loan portfolio of the Bank is made up as follows: 2005 2004 S/(000) S/(000) Direct loans 4,153,838 3,635,777 Indirect loans, Note 17 851,954 666,716 5,005,792 4,302,493

84 85 Notes to the financial statements As of December 31, 2005 and 2004 The loan portfolio is classified by risk, according to legislation effective as of December 31, 2005 and 2004, considering the following categories: Credits Affected to Counterparty substitution (CACS), Loans With Preferred Guarantees (LWPG), Loans With Readily Liquid Preferred Guarantees (LWRLPG), Loans With Preferred Self Liquidating Guarantees (LWPSLG) and Loans Without Guarantees (LWG), these are shown below: As of December 31, 2005 Risk category CACS LWPG LWRLPG LWPSLG LWG Total % S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) Normal 148,666 909,488 94,932 63,540 2,918,485 4,135,111 83 With potential problem 1,547 168,640 2,834 1,546 205,558 380,125 7 Substandard 33 154,400 263 313 122,805 277,814 6 Doubtful - 43,160 726 373 106,197 150,456 3 Loss - 29,414 583 251 32,038 62,286 1 Total 150,246 1,305,102 99,338 66,023 3,385,083 5,005,792 100 As of December 31, 2004 Risk category CACS LWPG LWRLPG LWPSLG LWG Total % S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) Normal 124,026 663,613 73,244 66,066 2,424,251 3,351,200 78 With potential problem - 160,258 1,581 1,785 150,654 314,278 7 Substandard - 114,480 896 73 88,504 203,953 5 Doubtful - 226,097 92 249 135,766 362,204 8 Loss - 37,151 273 29 33,405 70,858 2 Total 124,026 1,201,599 76,086 68,202 2,832,580 4,302,493 100

(e) Financial entities in Peru should constitute their provision for possible loan losses, considering the risk classifications previously discussed and using the following percentages, which differ depending upon if the loan is a Loan Without Guarantee (LWG), Loan With Preferred Guarantee (LWPG), Loan With Readily Liquid Preferred Guarantee (LWRLPG) or Loans With Preferred Self - Liquidating Guarantees (LWPSLG): Risk category LWG LWPG LWRLPG LWPSLG % % % % Normal 1.00 1.00 1.00 1.00 With potential problem 5.00 2.50 1.25 1.00 Substandard 25.00 12.50 6.25 1.00 Doubtful 60.00 30.00 15.00 1.00 Loss 100.00 60.00 30.00 1.00 For the loans that present Credits Affected to Counterparty Substitution (CACS), the requirement of their provision depends on the classification of the counterparty, for the covered amount, independently of the classification of the loan, using the percentages previously indicated. (f) During 2005 and 2004, the Bank has not acquired loan portfolios from financial entities. (g) In compliance with the Contrato de Transferencia Temporal de Derechos a Cambio de Bonos y Fideicomiso de Cobranza y Garantia (Contract for the Temporary Transfer of Bond Rights and the establishment of a Guaranty and Collection Trust) signed between the Bank and COFIDE; during 2004 the Bank repurchased approximately US$18,004,000 (equivalent to approximately S/65,404,000) corresponding to the final amount of the loan portfolio transferred to COFIDE under Supreme Decree N 099-99-EF. In accordance with the effective legal requirements, the Bank reclassified the repurchased loan portfolio from Accounts Receivable to Loan Portfolio, net in the balance sheets, establishing the related provision for possible loan losses according to the Regulation for the Evaluation and Classification of Debts and Provision Required.

86 87 Notes to the financial statements As of December 31, 2005 and 2004 (h) Movements in the provision for possible loan losses, determined according to the classifications and percentages aforementioned, are as follows: 2005 2004 S/(000) S/(000) (*) (*) Balance at the beginning of the year 285,194 372,639 Provisions recognized as year expense 140,322 130,763 Provision recognized as year expense, which correspond to the reallocation of the provision for assets received in payment and seized through legal actions 3,602 - Reclassification of credit capitalization provision, Note 5(g) - (19,876) Write-offs (172,293) (158,805) Recoveries (34,005) (11,893) Exchange result (result from exposure to inflation in 2004) 7,749 (27,634) Balance at the end of the year 230,569 285,194 (*) The provision for possible loan losses, include provision for contingent loans amounting to approximately S/21,946,000 as of December 31, 2005 (approximately S/14,548,000 for provision for contingent loans as of December 31, 2004) which are recorded in the Provisions and other liabilities caption of the balance sheets, see Note 10(a). In Management's opinion, the provision for possible loan losses recorded by the Bank as of December 31, 2005 and 2004, is in compliance with SBS rules and authorizations received at those dates, see Note 2(d). (i) The rate of interest earned on loans is freely determined, with general consideration given to the rates prevailing in the Peruvian market. Interest rates achievable fluctuate between 0.20 and 5.75 percent per month in Peruvian currency (0.35 and 5.75 percent per month during 2004) and between 0.28 and 2.39 percent per month in foreign currency (0.17 and 2.39 percent per month during 2004).

(j) As of December 31, 2005 and 2004, the direct loan portfolio has the following maturity schedule: 2005 2004 S/(000) S/(000) Past due loans 31,793 18,705 Loans under legal collection 86,895 159,752 Pending - Due within 1 month 677,475 718,927 From 1 to 3 months 641,798 529,341 From 3 months to 1 year 1,075,410 879,352 More than 1 year 1,640,467 1,329,700 4,153,838 3,635,777

88 89 Notes to the financial statements As of December 31, 2005 and 2004 7. Assets received in payment and seized through legal actions, net (a) The movement of these accounts, for the years 2005 and 2004, is as follows: Lands Buildings and Machinery Merchandise Transport 2005 2004 S/(000) other S/(000) and furniture units Total Total constructions and equipment S/(000) S/(000) S/(000) S/(000) S/(000) Cost Balance as of January 1st 55,125 75,461 15,373 1,972 413 148,344 167,094 Additions 9,272 2,116 16,757 - - 28,145 9,993 Retirements (40,880) (20,501) (26,372) (398) (38) (88,189) (30,375) Transfers (e) (1,765) (2,157) - - - (3,922) - Loan portfolio written off 51 2,113 1,545 10 2 3,721 1,632 Balance as of December 31 21,803 57,032 7,303 1,584 377 88,099 148,344 Accumulated provision Balance as of January 1st 44,843 56,547 15,367 1,904 413 119,074 105,780 Provision for the year, Note 21 8,151 5,291 3,900 68-17,410 31,597 Provision reallocate (d) (62) (3,540) - - - (3,602) - Retirements (34,803) (15,432) (13,509) (398) (38) (64,180) (19,935) Transfers (e) (517) (616) - - - (1,133) - Loan portfolio written off 51 2,113 1,545 10 2 3,721 1,632 Balance as of December 31 17,663 44,363 7,303 1,584 377 71,290 119,074 Net book value 4,140 12,669 - - - 16,809 29,270 (b) As of December 31, 2005 and 2004, the Bank had sold assets received in payment and seized through legal actions for approximately S/47,367,000 and S/21,273,000, respectively, generating a net gain amounting to S/23,359,000 and S/10,833,000, respectively, which is included in the Other income (expenses), net caption of the statement of income; see Note 21.

(c) As of December 31, 2005 and 2004, the net book value of assets received in payment and seized through legal actions includes certain assets seized prior to December 31, 1994 for approximately S/8,155,400 and S/8,370,000, respectively. In accordance with Legislative Decree N 770 (which is no longer effective), an equity reserve was established in previous years respective to those assets received in payment and seized through legal action prior to December 31, 1994. As of December 31, 2005 and 2004 the equity reserve relating to pre-1994 asset balances, amounts to approximately S/8,819,000, Note 15(c). (d) As explained in Note 2(j), in October 2005, the accounting treatment for realizable assets, assets received in payment and assets seized through legal actions was modified. In this sense, the Bank recalculated these provisions according to new regulation, determining an excess of provision which amounts to approximately S/3,602,000, see Note 21. According to SBS requirements, this excess was used to increase the provision for possible loan losses, see Note 6(h). (e) During the year 2005, the Bank, authorized by the SBS, transferred at it net book value one property from assets received in payment and assets seized through legal actions to the caption Property, furniture and equipment of the balance sheet; because this asset will be used by the Bank for its operations, see Note 9. (f) In Management's opinion, the accumulated provision for assets received in payment and seized through legal action recorded by the Bank at December 31, 2005 and 2004, is in compliance with SBS rules effective at those dates.

90 91 Notes to the financial statements As of December 31, 2005 and 2004 8. Permanent Investments (a) This item is made up as follows: Percentage of ownership Book Value 2005 2004 2005 2004 S/(000) S/(000) Participation in a foreign mutual fund (b) 6.66 6.66 8,535 11,473 Investments in subsidiaries (c) Corporación Inmobiliaria La Unión 600 S.A. (d) 100.00 100.00 23,097 24,893 Interfondos S.A. Sociedad 100.00 100.00 17,873 12,479 Internacional de Títulos Sociedad Titulizadora S.A. - Internacional de Títulos Sociedad Titulizadora S.A. - Intertítulos S.T. 100.00 100.00 5,749 4,670 Inversiones Huancavelica S.A. 100.00 100.00 1,179 1,314 Other - - 1,217 312 Associate and other Supermercados Peruanos S.A. 12.25 13.21 18,485 18,721 Procesos MC Perú S.A. 50.00 50.00 8,257 6,841 Visanet Perú S.A. 16.45 15.00 1,902 1,928 Banco Latinoamericano de Exportaciones - BLADEX 0.10 0.10 1,555 1,835 La Fiduciaria S.A. 35.00 35.00 545 1,078 Other - - 3,450 2,968 91,844 88,512 Less - Provision for impairment losses of permanent investment (8,353) (3,768) 83,491 84,744

(b) The participation in a foreign mutual fund, corresponds to the investment in Compass Capital (Cayman) Limited for the amount of US$2,488,000, equivalent to S/8,535,000, (US$3,496,000, equivalent to S/11,473,000 as of December 31, 2004). As of December 31, 2005 and 2004, the market value estimated by the Bank of this investment is equal to approximately US$386,000 (equivalent to S/1,324,000) and US$2,696,000 (equivalent to S/8,848,000), respectively. As of December 31, 2005 and 2004, as a result of the market value estimated, the Bank has recorded a provision for this investment for an amount of approximately S/7,211,000 (S/2,625,000 as of December 31, 2004). (c) During 2005 and 2004, the Bank recognized gains respective to its investments in subsidiaries for approximately S/7,380,000 and S/6,846,000, respectively, and losses for approximately S/2,371,000 and S/2,298,000, respectively. These gains and losses are included in the Financial income and Financial expenses captions of the statements of income. During the years 2005 and 2004 the Bank did not receive dividends from subsidiaries. (d) Corporación Inmobiliaria de la Unión 600 S.A. is a private entity and was incorporated in July 2000 to engage in activities related to the real estate property and construction industry. As of December 31, 2005, its total assets amounted to approximately S/25,884,000 and its main assets are represented by three buildings, being the most significant building located in downtown Lima, where the old Bank's main office was located.

92 93 Notes to the financial statements As of December 31, 2005 and 2004 9. Property, furniture and equipment, net (a) The movement of these accounts, for the years 2005 and 2004, is as follows: Lands Buildings and Furniture and Vehicles Leasehold Equipment in Total Total S/(000) installations equipment S/(000) improve- transit and work 2005 2004 S/(000) S/(000) ments in progress S/(000) S/(000) S/(000) S/(000) Cost Balance as of January 1st 57,837 427,203 138,275 4,411 17,806 39,057 684,589 612,434 Additions 556 31 6,667 21 257 26,840 34,372 75,584 Transfer of asset seized through legal actions, Note 7(e) 1,248 1,541 - - - - 2,789 - Retirements (145) (1,051) - - - - (1,196) (1,543) Transfers and write-offs (8,781) 26,139 12,648-244 (43,587) (13,337) (1,886) Balance as of December 31 50,715 453,863 157,590 4,432 18,307 22,310 707,217 684,589 Accumulated depreciation Balance as of January 1st - 198,737 69,733 4,162 16,494-289,126 262,375 Depreciation of the year - 12,306 16,687 94 457-29,544 27,877 Retirements - (913) - - - - (913) (1,126) Balance as of December 31-210,130 86,420 4,256 16,951-317,757 289,126 Net book value 50,715 243,733 71,170 176 1,356 22,310 389,460 395,463

(b) On May 2004, the Bank acquired from Ronepeto S.A. (hereafter Ronepeto ), a related entity, the land where the Interbank Tower, the Bank's headquarters, is built, for an amount of approximately US$4,000,000 (equivalent approximately to S/14,050,000 as of December 31, 2005). Additionally, on May 2004, the Bank acquired from Promotora Intercorp S.A., a related entity, the air and roof rights of the B tower of the Interbank Tower, for an amount of approximately US$2,500,000 (equivalent approximately to S/8,781,000 as of December 31, 2005). The value of these acquired assets was determined based on individual appraisals reports, made by independent appraisers, dated March 16 and May 28, 2004, respectively. After these acquisitions, the Bank is the owner of all the Interbank Tower and of the land in which it is built. (c) Banks are prohibited from pledging their fixed assets.

94 95 Notes to the financial statements As of December 31, 2005 and 2004 10. Other assets, provisions and other liabilities (a) These items are made up as follows: 2005 2004 S/(000) S/(000) Other assets Rights paid to affiliate and others (b) 37,922 40,166 Operations in process (c) 51,099 30,239 Intangible assets, net (d) 25,211 13,441 Deferred charges 18,031 8,278 Leasing paid in advance (e) 12,439 13,126 Other accounts receivable, net 10,868 10,454 Advance payments of income tax, net 7,212 22,548 Accounts receivable related to derivative financial instruments 4,211 13,193 Net premium 2,842 4,466 Goodwill, net (f) 1,443 12,991 Other 11,686 6,045 182,964 174,947 Provisions and other liabilities Operations in process (c) 87,553 47,740 Other accounts payable 50,694 39,199 Provision for contingent loan amounts, Note 6(h) 21,946 14,548 Workers' profit sharing and salaries payable 14,691 14,296 Other contingencies provisions 9,011 11,448 Accounts payable related to derivative financial instruments 3,492 3,526 Other 11,470 12,039 198,857 142,796

(b) The Bank maintains with Supermercados Peruanos S.A. an agreement for the use of financial units in its stores for a 15 year-term for an amount initially of approximately US$10,000,000. During 2004, the Value - Added - Tax originated in this transaction, which is not recoverable by the Bank, was recorded as part of the lease payment made. Since October 2004, the Bank has started the amortization of the lease payment, recording during the year 2005 an expense amounting to S/2,240,000 (S/539,000 during the year 2004), which is included in the caption Administrative expenses of the statements of income. (c) Operations in process include deposits received, loans disbursed, payments collected, funds transferred and other similar types of transactions, which are realized at the end of the month and not reclassified to their final balance sheets account until the beginning days of the following month. These transactions do not affect the Bank's net income. (d) The movement within these accounts, for the years 2005 and 2004, is as follows: Description Software Other Total Total intangibles 2005 2004 S/(000) S/(000) S/(000) S/(000) Amortization period 5 years 5 and 10 years Cost Balance as of January 1st 103,570 38,971 142,541 139,930 Additions 2,777 543 3,320 1,421 Transfers of equipment in transit 12,463-12,463 1,190 Balance as of December 31 118,810 39,514 158,324 142,541 Accumulated amortization Balance as of January 1st 96,717 32,383 129,100 125,197 Amortization of the year 2,799 1,214 4,013 3,903 Balance as of December 31 99,516 33,597 133,113 129,100 Net book value 19,294 5,917 25,211 13,441

96 97 Notes to the financial statements As of December 31, 2005 and 2004 (e) Leasing paid in advance correspond to leasing rents in a shopping mall until 2018. (f) On April 2001, the Bank acquired a negative equity block from Banco Latino. The net liability incorporated was compensated with Treasury Bonds issued by the Peruvian Government (under the Urgency Decree N 108-2000 and its Operative Rule). The incorporation of Banco Latino's equity block was recorded in accordance with the Purchase Method established in the International Accounting Standard-IAS 22, Business Combinations, according to which, assets and liabilities incorporated should be recorded at their fair value and the difference between the assets' and liabilities' estimated fair value and what the buyer gives or receives as counter transaction, is a goodwill. In such case, based on objective facts and the best available evidence to the valuation date, the Bank determined that the face value of the Treasury's Bonds received was different from its fair market value. Therefore, the Bank, with SBS's authorization recorded a goodwill. Additionally, in accordance with generally accepted accounting principles in Peru, the Bank has included, as a part of the goodwill, the costs that it assumed in the acquisition process of Banco Latino. Movements within the goodwill account as of December 31, 2005 and 2004 are detailed as follows: 2005 2004 S/(000) S/(000) Cost 81,717 81,717 Accumulated amortization Balance as of January 1st 68,726 57,178 Straight-line amortization, Note 2(k) 11,548 11,548 Balance as of December 31 80,274 68,726 Net book value 1,443 12,991

11. Deposits and obligations (a) As of December 31, 2005 and 2004 the Bank's deposits and obligations balance in number of clients and amounts according to the scale determinated by the SBS are as follows: Scale 2005 2004 Number Amount Number Amount S/(000) S/(000) Demand deposits Up to 50% FSD 13,709 50,655 19,077 64,364 From 50% + 1 to 200% FSD 1,178 86,728 1,280 89,133 From 200% + 1 to 5000% FSD 650 376,913 681 328,688 From 5000% + 1 to more 26 222,736 21 176,302 Management checks and other - 81,484-40,223 Sub total 15,563 818,516 21,059 698,710 Saving accounts Up to 50% FSD 365,823 782,527 346,920 655,501 From 50% + 1 to 200% FSD 7,378 487,909 6,688 540,830 From 200% + 1 to 5000% FSD 1,053 320,614 103 88,958 From 5000% + 1 to more 12 70,881 12 77,144 Sub total 374,266 1,661,931 353,723 1,362,433 Time deposits Up to 50% FSD 142,343 456,478 151,372 443,156 From 50% + 1 to 200% FSD 5,995 407,963 5,550 356,793 From 200% + 1 to 5000% FSD 954 374,686 929 422,976 From 5000% + 1 to more 52 641,044 81 930,623 Sub total 149,344 1,880,171 157,932 2,153,548 Other obligations, see paragraph (c) 188,634 154,286 Interest payable for deposits and obligations 13,702 13,994 Total 4,562,954 4,382,971

98 99 Notes to the financial statements As of December 31, 2005 and 2004 (b) The Deposits Insurance Fund (FSD for its Spanish abbreviation) as of December 31, 2005 amounts to S/74,231 (S/72,540 as of December 31, 2004. Deposits and obligations with the public pay interest at rates established by the Bank, based on the interest rates prevailing in the Peruvian market. (c) As of December 31, 2005 and 2004, the balance in the Other obligations caption includes: 2005 2004 S/(000) S/(000) Guarantee deposits (*) 165,909 132,094 Taxes payable 14,106 12,335 Repurchase agreements on TES 137 and TES 138 Bonds, Note 5(f) - 2,314 Other obligations 8,619 7,543 188,634 154,286 (*) Amount corresponds to restricted deposits, and includes amounts given as guarantees by clients in connection to direct and indirect loans made by the Bank to such clients. (d) As of December 31, 2005 and 2004, the maturity schedule of time deposits is as follows: 2005 2004 S/(000) S/(000) Due within 1 month 711,741 178,902 From 1 to 3 months 457,047 242,375 From 3 months to 1 year 455,846 1,675,942 From 1 to 5 years 255,537 56,181 More than 5 years - 148 1,880,171 2,153,548

12. Due to banks and correspondents (a) This item is made up as follows: 2005 2004 S/(000) S/(000) By type - Loans received from foreign entities (b) 98,163 150,031 Promotional credit lines (c) 282,071 219,648 Repurchase agreements with the Central Reserve Bank of Peru, Note 5(c) 22,494-402,728 369,679 Interest and commissions payable 1,484 1,123 404,212 370,802 By term - Short term 78,447 102,578 Long term 325,765 268,224 404,212 370,802 (b) Due to banks and correspondents relate, primarily, to loans received from foreign entities to fund export and import operations and working capital requirements. As of December 31, 2005 and 2004, the balance is composed by 7 and 6 foreign financial entities, two of them representing approximately 70 and 60 percent of the balance, respectively. Some of the loan contracts include standard clauses requiring the Bank to comply with financial ratios, use of funds criteria and other administrative matters. In Management's opinion, such standard clauses do not limit the normal operation of the Bank and are substantially fulfilled in accordance with the international standard practices for these transactions. This balance includes a subordinated loan from the FMO for approximately US$15,000,000 (approximately S/51,450,000), which matures in the year 2012. Due to banks and correspondents bear interests at current local and international market rates.

100 101 Notes to the financial statements As of December 31, 2005 and 2004 (c) Promotional credit lines include loans received from Corporación Financiera de Desarrollo (COFIDE), which correspond to credit lines granted with self-resources in order to promote the country development. These loans are guaranteed with loan portfolios up to the limit of the credit line used and include specific agreements about their usage, the financial conditions that the Bank should maintain and other administrative matters that the Bank, in Management's opinion, has been complying. (d) As of December 31, 2005 and 2004, the long-term portion of due to banks and correspondents has the following scheduled maturities: Year 2005 2004 S/(000) S/(000) 2006-37,358 2007 33,427 32,856 2008 30,509 22,041 2009 and thereafter 261,829 175,969 325,765 268,224

13. Securities, bonds and obligations outstanding (a) This caption is made up as follows: Issuance Annual interest Tipe Matu- Authorized Used Outstanding balances as Outstanding balances as rate of rate rity amount amount of December 31, 2005 of December 31, 2004 (000) (000) US$ (000) S/. (000) US$ (000) S/. (000) Bonds Leasing bonds 4 th issuance 3.125%- 2.98% Nominal 2006 US$30,000 US$30,000 30,000 102,900 30,000 98,460 5th issuance (A and B series) 4.7501% - Libor 3M + 0.875 p.b. Nominal 2008 US$30,000 US$15,000 15,000 51,450-45,000 154,350 30,000 98,460 Subordinated bonds 1st issuance 6.75% Nominal 2013 US$30,000 US$15,000 15,000 51,450 15,000 49,230 3rd issuance 5.65% (VAC) Effective 2007 S/48,000 S/48,000-60,012-59,380 5 th issuance (A, B and C series) 10.50% - 8.80% Nominal 2011 US$30,000 US$15,000 15,000 51,450 15,000 49,230 30,000 162,912 30,000 157,840 Mortgage bonds 1st issuance 4.90% Nominal 2014 US$10,000 US$10,000 8,400 28,812 9,400 30,851 5.6355% - Libor 6M + 2nd issuance (A and B series) 0.90 p.b. Nominal 2015 US$10,000 US$10,000 10,000 34,300 - - 18,400 63,112 9,400 30,851 Interest payable 2,670 2,618 383,044 289,769 (b) Subordinated bonds do not have specific guarantees. (c) As indicated in Note 9(c), banks are prohibited from pledging their fixed assets. Fixed assets acquired in connection with capital leasing operations that are financed through the issuance of leasing bonds, are used as a guarantee of the related bonds.

102 103 Notes to the financial statements As of December 31, 2005 and 2004 (d) As of December 31, 2005 and 2004, the schedule of repayment for these obligations is made up as follows: Year 2005 2004 S/(000) S/(000) 2005-2,618 2006 105,570 98,460 2007 60,012 59,380 2008 51,450-2009 to 2015 166,012 129,311 383,044 289,769

14. Deferred asset and liability from workers' profit sharing and income tax (a) This item is made up as follows: Debit (credit) Results from Balance Debit (credit) Balance Balance as of to statement exposure to as of December to statement as of December January 1, 2004 of income inflation 31, 2004 of income 31, 2005 S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) Deferred asset Generic provisions (13,070) (2,435) 611 (14,894) (2,095) (16,989) Provision for assets received in payment and seized through legal actions - (8,397) - (8,397) 6,319 (2,078) Investment provisions - - - - (2,923) (2,923) (13,070) (10,832) 611 (23,291) 1,301 (21,990) Deferred liability Voluntary revaluation 16,821 2,480 (786) 18,515 (634) 17,881 Leasing 12,506 (2,756) (584) 9,166 (965) 8,201 Amortization of intangible - 1,008-1,008 844 1,852 Accounts receivable related to forwards not accrued, net - - - - 241 241 29,327 732 (1,370) 28,689 (514) 28,175 Total deferred liability, net 16,257 (10,100) (759) 5,398 787 6,185

104 105 Notes to the financial statements As of December 31, 2005 and 2004 (b) The amounts presented in the balance sheets and statements of income as of and for the years ended December 31, 2005 and 2004 are as follows: Balance sheets Deferred liability 2005 2004 S/(000) S/(000) Income tax 5,262 4,593 Workers' profit sharing 923 805 6,185 5,398 Statements of income Workers' Income tax profit sharing 2005 2004 2005 2004 S/(000) S/(000) S/(000) S/(000) Current 7,968 4,654 45,418 26,526 Deferred 117 (1,507) 670 (8,593) 8,085 3,147 46,088 17,933

(c) The reconciliation of the effective tax rate to the statutory tax rate for the years ended 2005 and 2004 is as follows: 2005 2004 S/(000) % S/(000) % Income before income tax and workers' profit sharing 167,455 100.00 86,944 100.00 Theoretical tax (compound rate 33.50%) 56,097 33.50 29,126 33.50 Effect of non-taxable income Revenues exempt from taxation (20,677) (12.35) (22,758) (26.18) Effect of non-deductible expenses Non-deductible expenses 18,753 11.20 14,712 16.92 Expense recognized for workers' profit sharing and income tax 54,173 32.35 21,080 24.24

106 107 Notes to the financial statements As of December 31, 2005 and 2004 15. Shareholders' equity (a) Capital stock - As of December 31, 2005, the Bank's capital stock is composed of 355,261,470 fully subscribed and paid common shares, each with a face value of one Peruvian Nuevo Sol. As of December 31, 2005 and 2004, the primary shareholder of the Bank, IFH Peru Ltd., holds a 96.24 and 92.60 percent direct and indirect interest in the Bank's capital stock, respectively. Additionally, the Bank has acquired treasury stocks which represent 4.95 percent of its capital stock as of December 31, 2005 (4.82 percent as of December 31, 2004), see following paragraph (b). In General Shareholders' Meeting held on April 5, 2005, it was agreed the capitalization of income generated in 2004, net from the legal reserve and dividend distribution, of approximately S/29,204,000. In addition, the Bank agreed to distribute dividends corresponding to year 2004 for approximately S/30,073,000. In General Shareholders' Meeting held on March 29, 2004, it was agreed the capitalization of income generated in 2003, net from the legal reserve and dividend distribution, of approximately S/25,970,000. In addition, the Bank agreed to distribute dividends corresponding to year 2003 for approximately S/12,462,000. The Bank's dividend policy establishes the distribution of up to 50 per cent of the net income as dividends. Under current regulations, there are no restrictions governing dividend distributions abroad or foreign capital repatriation. (b) Treasury stocks - The General shareholders' meeting held on July 23, 2002, approved the execution of an equity participation program for executives and employees (hereafter titled the ESOP program ). The scope of this program encompasses the transfer of Bank shares to workers in amounts up to the equivalent of 5 percent of the Bank's capital stock. The program will be granted to the Bank's executives that have, at least, two years working at the Bank and will be implemented in five phases, the first will begin in 2006. The ESOP program incorporates two types of prizes: (i) The "Grant", which grants shares without cost or its equivalent in cash on the basis of the permanence of the personnel by a specific period of time and (ii) the "Stock option", that allows to acquire shares at a previously established execution price or with a yield of at least 10 per cent per year, the

greater of both. The "Grant" and the "Stock option" have a four year maturity term and an additional three years period after its maturity to be executed. With the purpose of complying with the ESOP program, until December 31, 2003, the Bank acquired 8,689,150 shares of the Bank owned by IFH. In addition, the Bank has received 892,943 liberated shares during 2004. Likewise, the Board of Directors meeting dated August 23, 2004, approved to complete the investment for the ESOP program, with this purpose in September 2004 and 2005 the Bank acquired 5,390,000 and 2,630,000 shares from IFH, respectively. As a result of the aforementioned purchases, as of December 31, 2005, the Bank maintains 17,602,093 treasury stock (14,972,093 treasury stock as of December 31, 2004) amounting to S/30,533,000 (S/21,433,000 as of December 31, 2004). (c) Legal and special reserves - In accordance with prevailing legal and banking regulations, the Bank is required to establish a legal reserve for an amount equal to at least 35 percent of its paid-in capital; this legal reserve is to be funded through an annual appropriation of at least 10 percent of net income. In General Shareholders' meeting held on April 5, 2005 and March 29, 2004 it was approved the constitution of the legal reserve of the year amounting to approximately S/6,586,000 and S/5,473,000, respectively. In accordance with Legislative Decree 770 (abrogated at present), the Bank established a legal reserve in order to cover losses recognized on assets received in payment and seized through legal actions prior to December 31, 1994. As of December 31, 2005 and 2004 the amount of this legal reserve is S/8,819,000. The General Shareholders' Meeting dated March 29, 2004, approved the constitution of a special reserve for an approximate amount of S/10,822,000. This reserve was constituted with the income generated in 2003 and can not be distributed or disposed without the SBS authorization.

108 109 Notes to the financial statements As of December 31, 2005 and 2004 (d) Shareholders' equity for legal purposes (regulatory capital) - As of December 31, 2005 and 2004, the shareholders' equity for legal purpose (regulatory capital) as determined in accordance with current regulations was as follows: 2005 2004 S/(000) S/(000) Paid-in-capital 355,261 326,057 Plus Legal reserves 113,312 106,726 Retained earnings with capitalization agreement 36,102 29,204 Due to international correspondents - subordinated loans 51,450 49,230 Subordinated bonds 102,900 98,460 Generic provisions for possible loan losses 39,562 32,088 Less Investment in subsidiaries and others (52,206) (36,677) Treasury stock (30,533) (21,433) Goodwill (1,443) (12,991) Premium for interest, net (2,842) (4,466) Other (3,212) - 608,351 566,198 As of December 31, 2005 and 2004, contingent assets and liabilities weighted by credit risk, and the obligation to maintain minimum net equity requirements based on market risk and with consideration of applicable exchange risk, as determined by the Bank, amount to approximately S/5,008,752,000 and S/4,501,615,000, respectively, which lead to the calculation of a global ratio for credit and market risk that is 8.27 and 7.98 times, respectively, of the Bank's regulatory capital. According to the Banking Law, this ratio cannot be more than 11 times.

16. Tax situation (a) The Bank is subject to Peruvian Tax Law. As of December 31, 2005 and 2004, the statutory income tax was 30 percent on taxable income, including the result from exposure to inflation for the year 2004, Note 2(a). Individual persons and corporations not domiciled in Peru must pay an additional tax of 4.1 percent on dividends received. Effective January 1, 2004, the following changes to tax law were in force: n Bank's transactions for amounts above S/5,000 o US$1,500, should be performed through the financial system. The payments performed without using said media will not be valid for tax purposes. n Effective March 1, 2004, individual persons and corporations in Peru must pay an additional tax of 0.15 percent on transactions (0.10 percent effective April 1, 2004), and 0.08 percent effective January 1, 2005, regarding debits as well as credits realized in bank accounts, for operations in local and foreign currency. This tax will be considered a deductible expense toward the annual income tax and must be retained and paid by financial entities. Effective January 1, 2005, the following changes to tax law were in force: n It has been established an advance payment of the income tax denominated Temporary Tax on Net Assets, which will be required to enterprises subject to the Income Tax General Regimen and that will be in force until December 31, 2006. The basis to calculate that tax payment is the value of the net assets as of December 31 of the previous year. The tax is calculated using a rate of 0.60 percent of the assets that exceed S/5 millions. The obligation to pay this tax remains although the entity has had tax losses in the precedent periods or even in the cases that it has credit for income tax advanced payments made. The paid tax, totally or partially, could be used as credit against the advanced payments in advance of the Income Tax from the periods going from March to December of the taxable period for which the Bank paid the tax, as well as against the final payment of the correspondent period. It is also possible to request for a refund of the tax when the Bank demonstrates a tax loss or a minor income tax based on the general regimen standards. The right to request for a refund will be generated with the presentation of the annual tax return of the relating period.

110 111 Notes to the financial statements As of December 31, 2005 and 2004 (b) To determine the income tax and the value added tax, the transfer prices of transactions with related entities and with or through entities domiciled in low or zero tax countries tax havens must be supported by documentation containing information about the valuation, methods applied and criteria used in determination of such. The Tax Authority has the faculty to request this information. Based on an analysis of the operations, Bank's Management and its legal advisors believe that the application of these tax standards will not originate significant contingencies for the Bank as of December 31, 2005 and 2004. (c) Tax Authority is legally entitled to review and, if necessary, adjust the income tax calculated by the Bank during the four years subsequent to the year of the related tax return filing. The income tax and value added tax returns from 2001 to 2005 are still subject to review by the Tax Authority. Due to various possible interpretations of current legislation, it is not possible to determine whether or not such audits will result in tax liabilities for the Bank; therefore, any additional tax or surcharge that may result from eventual tax reviews would be applied to the results of the year in which it is determined. However, in the opinion of the Bank's Management and its legal advisors, any additional tax assessment would not be significant to the Bank's financial statements as of December 31, 2005, and 2004. As indicated in paragraph (d), fiscal year 2000 has been reviewed during the year 2004 and the fiscal years 2001 to 2004 are in process of review by the Tax Authority, as a consequence of these reviews no additional liability significant to the Bank has been generated. (d) On April 2004, the Bank received Resolutions of Determination and Fine corresponding mainly to the income tax for the year 2000. The Bank has filed a claim against such resolutions. As of December 31, 2005 the Tax Authority's Claims Area has not solved these processes yet. In Bank's Management and its legal advisors opinion, any additional tax assessment would not be significant to the Bank's financial statements as of December 31, 2005 and 2004.

17. Off-balance sheet accounts (a) This item is made up as follows: 2005 2004 S/(000) S/(000) Contingent Contingent operations, Note 6(d) Guarantees and stand by letters of credit (b) 661,730 523,394 Import and export letters of credit (b) 151,287 116,797 Due from bank acceptances (b) 38,937 26,525 851,954 666,716 Purchase of foreign currency forwards (c) 125,175 119,828 Selling of foreign currency forwards (c) 175,959 251,878 301,134 371,706 Responsibilities under credit line agreements 2,749,313 1,953,713 Total contingent 3,902,401 2,992,135 Other off-balance sheet accounts (d) Guarantees received 3,670,818 3,176,197 Securities in custody 1,295,797 1,033,825 Suspended interests 169,697 241,104 Trust commissions 162,375 111,748 Collections on behalf of third parties 253,957 102,494 Equity trust funds received from Banco Nuevo Mundo - in liquidation 286,600 345,552 Loan portfolio sold 77,654 75,564 Equity trust funds received from Banco Latino - in liquidation 74,667 101,856 Equity trust fund received from Latino Leasing S.A. - in liquidation 104,643 114,945 Other 5,798,464 2,883,289 Total other off-balance sheet accounts 11,894,672 8,186,574 Total off-balance sheet accounts 15,797,073 11,178,709

112 113 Notes to the financial statements As of December 31, 2005 and 2004 (b) In the normal course of business operations, the Bank is party to transactions with offbalance sheet risk exposures. These transactions expose the Bank to additional credit risk beyond those amounts recognized in the balance sheets. The Bank applies the same credit policies in the granting of commitments, guarantees, letters of credit and other conditional obligations as it does for the granting of on-balance sheet instruments or direct credits, Note 6; such policies include the requirement to obtain sufficient guarantees when such are deemed necessary. Guarantees held by the Bank vary in nature, and include deposits held in financial institutions, securities or other assets. Due to the fact that many of the contingent operations are expected to expire without any performance being required of the Bank, the total committed amounts do not necessarily represent future cash requirements. (c) As of December 31, 2005 and 2004, the derivative operations maintained by the Bank relate to purchase and sale agreements of foreign currency forward transaction, were as follow: Notional amount Fair value 2005 2004 2005 2004 US$(000) S/(000) US$(000) S/(000) US$(000) S/(000) Purchase agreements 36,494 125,175 36,511 119,828 2,946 942 Sale agreements 51,300 175,959 76,745 251,878 2,113 8,852 These contracts are made only with the purpose of satisfying the clients' needs and have maturities no longer than two years. Additionally, as of December 31, 2005, the Bank maintains exchange interest rates transactions that were realized by a notional amount of approximately S/57,485,000, equivalent to approximately US$16,759,000, and their fair values amounted to a liability of approximately S/71,040 (S/4,073,000, equivalent to US$1,241,000 as of December 31, 2004 and their fair value amounted to a liability of approximately S/64,235), the face value of these transactions are recorded in the caption Other off-balance sheet accounts - Other.

(d) The balance of Other off-balance sheet accounts includes many transactions that are recorded principally for control purposes. The most significant component of this balance relates to the caption "Guarantees received ; this balance presents items received in guarantee at the value agreed as of the date of the loan contract and does not necessarily represent the market value of guarantees received by the Bank. In addition, the balance of Other off-balance sheet accounts includes certain assets and liabilities from financial institutions in liquidation that were transferred to the Bank after public contests convened by the SBS and the execution of the Program for Consolidation of the Financial System. Consequently, the Bank acts as a trust to manage the assets and liabilities from these institutions, receiving fees indicated in the trustee agreements. In order to comply with the clauses included in those agreements, the Bank has granted stand-by letters for these institutions for approximately S/600,000 as of December 31, 2005 and 2004, which mature when the agreements cease, in year 2006.

114 115 Notes to the financial statements As of December 31, 2005 and 2004 18. Financial income and expense (a) This item is made up as follows: 2005 2004 S/(000) S/(000) Financial income Interest and commissions on loan transactions 502,074 427,901 Exchange difference, net 43,318 24,879 Interest accrued on due from banks and inter-bank funds 23,431 13,683 Interest accrued on negotiable bank certificates, Note 5(c) 9,440 7,930 Income from the equity method from investments in subsidiaries, Note 8(c) 7,380 6,846 Result recognized on the purchase and sale of other marketable securities 4,484 5,739 Income from the equity method from other permanent investments 3,677 4,911 Result recognized on sale of marketable and held to maturity Global Bonds (b) 206 8,939 Others 5,650 7,683 Total 599,660 508,511 2005 2004 S/(000) S/(000) Financial expenses Interest and commissions paid on deposits and obligations 80,074 68,055 Interest and commission paid on deposits of financial entities 21,040 15,736 Interests on securities, bonds and obligations outstanding 18,064 17,362 FSD fees 9,063 8,112 Loss from the equity method from other permanent investments 5,923 4,534 Loss from the equity method from investments in subsidiaries, Note 8(c) 2,371 2,298 Results on the purchase and sale of investments 1,327 497 Other expenses 835 818 Total 138,697 117,412 Gross financial margin 460,963 391,099

(b) During 2005 and 2004, the Bank bought and sold all its Global Bonds available for sale portfolio for a nominal amount of approximately US$5,000,000 and US$103,000,000, respectively, generating a profit in the year 2005 of approximately US$60,000, equivalent approximately to S/206,000 (US$2,646,000, equivalent to approximately S/8,683,000 in the year 2004). Likewise, as of December 31, 2004, with the SBS's knowledge, the Bank sold a portion of its Global Bonds portfolio held to maturity, with a nominal value of approximately US$93,447,000, generating a profit of approximately US$78,000 (equivalent to approximately S/256,000). 19. Income and expenses from financial services This item is made up as follows: 2005 2004 S/(000) S/(000) Income from financial services Income on credit and debit card services 63,544 47,720 Income from commissions of insurances, savings accounts, excess transactions and others 58,173 45,423 Income from bearings 14,300 11,468 Income related to contingent operations 10,630 11,151 Income from commissions of collection and payment services 10,142 9,650 Income on savings accounts and demand deposits maintenance 10,076 9,822 Income on funds transfer services 9,662 8,111 Income from lease of ATMs 9,346 5,504 Income from trust funds 7,480 5,660 Income on real estate and legal advisory services 6,758 5,380 Income from commission of collection of taxes 6,745 7,499 Income from lease of buildings 5,059 5,008 Income from financial advisory services 2,680 3,022 Other 3,648 4,035 218,243 179,453 Expenses from financial services Credit and debit card expenses 15,455 10,492 Commissions paid to foreign bankers 3,633 3,015 Other expenses 340 419 19,428 13,926

116 117 Notes to the financial statements As of December 31, 2005 and 2004 20. Administrative expenses (a) This item is made up as follows: 2005 2004 S/(000) S/(000) Services received from third parties (b) 194,221 151,457 Personnel and Board of Directors expenses (c) 137,201 120,786 Taxes and contributions 13,220 13,172 344,642 285,415 (b) The amounts paid and recorded as services received from third parties correspond primarily to transportation services, repairs and maintenance services, branches leases, advertising expenses, public relation expenses, telecommunication costs, professional fees, among others. (c) This item is made up as follows: 2005 2004 S/(000) S/(000) Salaries 109,225 96,049 Social security 12,631 11,353 Severance indemnity expenses 8,630 7,418 Vacations, medical assistance and others 6,715 5,966 137,201 120,786 The average number of employees for the years 2005 and 2004 was 2,345 and 1,935, respectively.

21. Other income (expenses), net This item is made up as follows: 2005 2004 S/(000) S/(000) Recovery of accounts previously written-off 28,822 14,852 Gain form sale of assets received in payment and seized through legal actions, Note 7(b) 23,359 10,833 Provision for assets received in payment and seized through legal actions, Note 7(b) (17,410) (31,597) Reversion of provision for assets received in payment and seized through legal actions, Note 7(d) 3,602 - Recognition of interest from prior years past due loans (2,522) (2,329) Personnel incentive program (1,323) (1,899) Other (13,594) (3,130) Total other income (expenses), net 20,934 (13,270)

118 119 Notes to the financial statements As of December 31, 2005 and 2004 22. Earnings per share The calculation of the weighted average number of shares and the earnings per share, basic and diluted are as follows: Outstanding Shares Days as of the Weighted shares, net of considered in end of year average treasury stocks computation number of shares (in thousands) (in thousands) (in thousands) 2004 Period Balance as of January 1st, 2004 273,172 273,172 365 273,172 Retained earnings capitalization from 2005-44,435 365 44,435 Retained earnings and inflation adjustment capitalization 28,965 28,965 365 28,965 Liberated shares received (893) (893) 365 (893) Purchase of treasury stocks (1,890) (1,890) 105 (544) Purchase of treasury stocks (3,500) (3,500) 92 (882) Balance as of December 31, 2004 295,854 340,289 344,253 2005 Period Balance as of January 1st, 2005 295,854 295,854 365 295,854 Retained earnings capitalization 44,435 44,435 365 44,435 Purchase of treasury stocks (2,630) (2,630) 113 (814) Balance as of December 31, 2005 337,659 337,659 339,475 The base used in the share computation, considers the effect of the capital stock inflation adjustment, as discussed in Note 2(r). The computation of the earnings per share as of December 31, 2005 and 2004 is as follows: Year Income Shares Earnings (numerator) (denominator) per share S/(000) (In thousands) S/ 2005 113,282 339,475 0.334 2004 65,864 344,253 0.191

23. Transactions with related parties, subsidiaries and affiliated companies (a) The most significant balances between the Bank and its shareholder, subsidiaries and other related parties as of December 31, 2005 and 2004, are summarized below: 2005 Supermercados IFH Blu Bank Interseguro Centura Interfondos Corporación Procesos Contacto Other Total Santa Isabel S/(000) Ltd. Compañía Sociedad S.A. Inmobiliaria MC Servicios S/(000) S/(000) S.A (formerly de Seguros Agente S/(000) de la Unión Perú Integrales S/(000) IBO) de Vida S.A. de Bolsa 600 S.A. S.A. de Crédito S/(000) S/(000) S/(000) S/(000) S/(000) y Cobranza S.A. S/(000) Assets Cash and due from banks - - 8,832 - - - - - - - 8,832 Loan portfolio, net 3,481 6,333-2 - 7 - - - 4 9,827 Other assets 37,922 - - 3,360 9 120 - - 18 46 41,475 Liabilities Deposits and obligations 583 21-6,501 9,254 1,008 6-882 1,629 19,884 Securities, bonds and obligations outstanding 2,311 - - 6,933 - - 826-71 123 10,264 Profit and losses Financial income 89 441 - - - - - - - - 530 Insurance expense, net - - - (12,232) - - - - - - (12,232) Other, net (5,538) - 348 7,251 287 364 - - (2,527) (3,453) (3,268) 2004 Supermercados IFH Blu Bank Interseguro Centura Interfondos Corporación Procesos Contacto Other Total Santa Isabel S/(000) Ltd. Compañía Sociedad S.A. Inmobiliaria MC Servicios S/(000) S/(000) S.A (formerly de Seguros Agente S/(000) de la Unión Perú Integrales S/(000) IBO) de Vida S.A. de Bolsa 600 S.A. S.A. de Crédito S/(000) S/(000) S/(000) S/(000) S/(000) y Cobranza S.A. S/(000) Assets Cash and due from banks - - 10,956 - - - - - - - 10,956 Loan portfolio, net 873 14,129 - - - 2-139 - 436 15,579 Other assets 33,838 412-3,576 1 2 - - 6 144 37,979 Liabilities Deposits and obligations 11,131 537-4,614 8,719 220 2-391 1,314 26,928 Securities, bonds and obligations outstanding - - - 5,210 - - - - - - 5,210 Profit and losses Financial income 413 812 - - - - - - 40 234 1,499 Insurance expense, net - - - (5,973) - - - - - - (5,973) Other, net 977-592 5,930 45 380 - - (9,053) (2,982) (4,111)

120 121 Notes to the financial statements As of December 31, 2005 and 2004 Under Peruvian legislation, all loans to related parties must be made on terms no more favorable than the best terms that the Bank offers to the general public. Management believes that the Bank is in full compliance with all requirements imposed by current regulations respective to related party transactions. (b) Loans to employees - The Bank grants loans to its employees and officers under terms that are similar to those offered to third parties for the various types of loans and other financial products available through the Bank. Loans granted to employees principally relate to mortgage loans and are presented in the Loan portfolio caption of the balance sheets. The interest rates applied to employee loans are generally lower than market interest rates; however, all other terms of the loan are substantially the same as those of the market. As of December 31, 2005 and 2004, loans to employees amounted to approximately S/20,021,000 and S/21,430,000, respectively. (c) Board of Directors fees - Total fees paid to the Board of Directors amounted to approximately S/839,000 and S/779,000 for the years ended 2005 and 2004, respectively; such amounts are included in the Administration expenses caption in the statements of income.

24. Risk assessment In the normal course of business operations, the Bank is exposed to market, liquidity, exchange and credit risks. In this sense, the Bank's Management, based on their knowledge and experience, controls said risks according to the following: Market risks - The Bank is exposed to market risk, which includes the risk of loss due to future adverse movements in the prices of products in the financial markets in which the Bank holds open positions. The Bank applies, on the basis of a series of assumptions for a variety of changes in the conditions of the market, the Value-at-Risk (VAR) methodology to estimate the market risk of main positions held and the maximum losses expected, Management sets the Value-at-Risk limits, that are acceptable; which are then monitored on a daily basis. Management also establishes individual limits for marketable securities, for the exchange positions, as well as for the derivative instruments; these limits consider the maximum amount of exposure, as the maximum values of individual loss that can be tolerated before demanding an immediate liquidation in the market (stop-loss); the fulfillment of these limits, along with the VAR of the Bank, are reviewed by Management. Nevertheless, the use of this control measurement does not eliminate all the probability that losses beyond the established limits take place due to extreme movements in the market prices. Liquidity risk - The Bank is exposed to daily withdrawal of its available cash resources from overnight deposits, current accounts, maturing deposits, loans reductions, guarantees and other withdrawals. The Bank does not maintain funds in cash for all of the aforementioned needs, since experience has proved that a minimum level of reinvestment of funds upon their maturity can be predicted with high degree of certainty. The Banks' Management establishes the limits as to the minimum amount of funds available to meet such calls and the minimum level of inter-bank loans and other types of loans that should be in place to cover withdrawals at unexpected levels of demands. In this sense, the matching and controlled mismatching of the maturities and interest rates of assets and liabilities is fundamental to the Management of the Bank; however, it is unusual for banks to be completely matched, as transacted business if often based on uncertain terms and of different types. The maturities of assets and liabilities and the ability to replace, at an acceptable cost, interestbearing liabilities as they mature are important factors in assessing the liquidity of the Bank and its exposure to changes in interest and an exchange rate.

122 123 Notes to the financial statements As of December 31, 2005 and 2004 Interest rate risk - The Bank is exposed to the effect of fluctuations in the prevailing levels of market interest rates on both its fair value and cash flow risks. Interest margins may increase as a result of such changes, but may reduce or create losses in the event that an unexpected movement arose. Management sets limits on the level of mismatch of interest rate repricing that may be undertaken, which is monitored frequently, nevertheless, in general, the Bank mainly presents short-term financings with variable interest rates. Resources for investing are mainly obtained form short-term liabilities, the interest of which are agreed at fixed and variable interest rates prevailing in the market. Loans, customer deposits and other financing instruments are subject to risk derived from interest rate fluctuations. The relevant contract maturity characteristics and interest rate of such financial instruments are disclosed in Note 6, 11 and 13. Currency risk - The Bank is exposed to effects of fluctuations in the prevailing foreign currency exchange rates on its financial position and cash flows. Management sets limits on the level of exposure by currency and in total of overnight positions, which are monitored daily. Most assets and liabilities are maintained in foreign currency. Foreign currency transactions are made at the free market exchange rate. As of December 31, 2005 and 2004, the Banks' assets and liabilities by currencies are shown in Note 3. Credit risk - The Bank structures the levels of credit risk it undertakes by placing limits on the amount of risk accepted in relation to one borrower or groups of borrowers, and to geographical and industry segments. Such risks are monitored constantly and subject to a frequent review. Limits in the level of credit risk by product and industry sector are approved by the Board of Directors. Exposure to credit risk is managed through regular analysis of the ability of borrowers and potential borrowers to meet interest and capital repayment obligations and by changing these lending limits when appropriate. Exposure to credit risk is also managed in part by obtaining corporate and personal guarantees, but there is a significant portion of personal loans where no such guarantees can be obtained. Financial assets which show a potential credit risk are mainly cash and cash equivalents, interest bearing deposits in banks, trading securities, investments available-for-sale, loan portfolio and other assets. Cash and cash equivalent, as well as the deposits in banks are placed in prestige financial institutions. Real exposures against limits setting are monitored daily.

25. Fair value Fair value is defined as the amount for which an asset could be exchanged or a liability settled, between knowledgeable, willing parties in an arm's length transaction, assuming an on-going enterprise. When a financial instrument is traded in an active and liquid market, its quoted market price in an actual transaction provides the best evidence of its fair value. When a quoted market price is not available, or may not be indicative of the fair value of the instrument, to determine such fair value the current market value of another instrument that is substantially similar, its discounted cash flow analysis or other estimation techniques may be used, all of which are significantly affected by assumptions used. Although Management uses its best judgment in estimating the fair value of these financial instruments, there are inherent weaknesses in any estimation technique. As a result, the fair value may not be indicative of the net realizable or liquidation value. A significant portion of the Banks' assets and liabilities are short-term financial instruments, with a remaining maturity of under one-year. These short-term financial instruments are considered to have a fair value equivalent to their carrying value at the balance sheet date, except for those with and active market. The methodologies and assumptions used to determine fair values depend on the terms and risk characteristics of the various financial instruments as show below: n Cash and due from banks represent cash and short-term deposits that do not represent significant credit or interest risks; in consequence, their book value is equivalent to their fair value. n The available-for-sale securities portfolio, are stated at the lower of cost or market value. Consequently, the estimated market value encompasses potential gains expected by the market but not realized, the fair value of these securities has been determined based on stock exchange prices or using investment valuation techniques. n The fair value of loans is similar to their book value, because such loans are mainly of a short-term nature and are shown net of their respective allowance for loan losses, which are considered by Management the best estimation of the recoverable amount at the date of the financial statements. n Management considers that the book value of the permanent investments approximates their fair value. This assumption is supported on the fact that a majority of the permanent investments are not traded financial instruments and are recorded under the equity method.

124 125 Notes to the financial statements As of December 31, 2005 and 2004 n The fair value of deposits and obligations is similar to their book value; mainly because of their liquid nature and that their variable interest rates can be compared with other similar liabilities. n For due to banks and correspondents that include variable interest rate terms and preferential rates, the Bank has estimated that carrying values do not differ significantly from their fair values. n For liabilities that bear interest and have original maturities greater than one year, the fair value was calculated based on discounted future cash flows, using the Bank's effective interest rate for liabilities with similar characteristics. n As disclosed in Note 17, the Bank has various commitments to extend credit, open documentary credits and outstanding guarantees and it has received guarantees in endorsement of the granted credits. Based on the level of fees currently charged for granting such commitments and open documentary credits, taking into account maturity and interest rates, together with the present creditworthiness of the counterparties, the difference between the book value and the fair value is not significant. n Except for currency forwards and interest rate swaps, the Bank does not enter into other agreements, generally described as derivative transactions. The Bank records these derivatives in the balance sheet at their fair value. As a consequence of the analysis previously describe, Bank's Management considered that as of December 31, 2005 and 2004, the book values of its financial instruments do not differ significantly from their fair values. 26. Explanation added for English translation The accompanying financial statements are presented on the basis of accounting principles generally accepted in Peru for financial entities. Certain accounting practices applied by the Bank, that conform to accounting principles generally accepted in Peru for financial entities, may differ in certain respects to generally accepted accounting principles in other countries. In the event of a discrepancy, the Spanish - language version prevails.

Directors Ismael Benavides General Manager Banco Internacional del Perú Ramón Barúa General Manager IFH Perú Ltd. Alfonso de los Heros Partner Echecopar García Abogados Augusto Baertl Business Consultant

Carlos Rodríguez-Pastor Chairman of the Board Banco Internacional del Perú Alfredo Gastañeta Managing Director Sindicato de Inversiones y Administración S.A. David Fischman Associate Dean, Innovation & Development UPC José Chlimper Chairman of the Board Corporación Drokasa S.A. Bernardo Rehder Chairman of the Board Corporación Rehder y Asociados Felipe Morris Chairman of the Board Interseguro Patrick Barclay Director Tecnoquímica S.A.

Leonel Henríquez Vice President - Commercial Banking Juan D Auriol Vice President - Credit Cards Ismael Benavides General Manager Jorge Flores Vice President - Finance Management commitee Carlos Cano Vice President - Consumer Banking & Marketing Fuad Khoury Control manager Susana Llosa Human Resources Manager Andrés Muñoz Vice President - Credit Risk

Offices Interbank Torre Interbank Carlos Villarán 140 Lima 13, Perú T. (511) 219 2000 www.interbank.com.pe Urbi/Domun Propiedades Torre Interbank Carlos Villarán 140 Lima 13, Perú T. (511) 219 2222 F. (511) 219 2223 Interfondos SAF Torre Interbank Carlos Villarán 140 Lima 13, Perú T. (511) 219 2121 F. (511) 219 2122 Centura SAB Torre Interbank Carlos Villarán 140 Lima 13, Perú T. (511) 219 2300 F. (511) 219 2311 Intertítulos ST Torre Interbank Carlos Villarán 140 Lima 13, Perú T. (511) 219 2285 F. (511) 219 2287 IFH Perú LTD Sassoon House Shirley Street & Victoria Avenue P.O. Box N-272 Nassau, Bahamas T. (511) 219 2195 F. (511) 219 2346 Interinvest Torre interbank Carlos Villarán 140 Lima 13, Perú T. (511) 219 2200 F. (511) 219 2220 E-mail: interinvest@intercorp.com.pe Interseguro Pardo y Aliaga 640, piso 2 Lima 27, Perú T. (511) 611 4700 F. (511) 611 4720 BluBank LTD Montague Sterling Centre East Bay Street, 3rd. Floor P.O. Box Nº 3242 Nassau, Bahamas T. (242) 394 3007 F. (242) 393 0253 Sucursal de Panamá Edificio Torre Banco General Calle Aquilino de la Guardia y Av. 5B Sur Piso 16 Panamá 7, República de Panamá T. (507) 265 7300 F. (507) 223 3333

Design and Concept Icono Comunicadores Photography Hans Stoll Printing Lettera Gráfica

Torre Interbank Carlos Villarán 140 Lima 13 Perú T (511) 219 2000