SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 6-K

 

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16 under the

Securities Exchange Act of 1934

 

For the month of November 2021

 

Commission File Number: 001-14014

 

CREDICORP LTD.

(Translation of registrant’s name into English)

 

Clarendon House

Church Street

Hamilton HM 11 Bermuda

(Address of principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F x Form 40-F ¨

 

 Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨

 

 Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨

 

The information in this Form 6-K (including any exhibit hereto) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act.

 

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Date: November 4^th, 2021

 

	CREDICORP LTD. (Registrant)
	By:	/s/ Miriam Bottger
		Miriam Bottger
		Authorized Representative

 

 

 

Exhibit 99.1

 

 

 

 

 

 

 

 

 

Third Quarter Results

 

 

 

Economic activity registered growth of 11.8% YoY in August, standing above pre-pandemic levels. The August 2021 level was 1.6% higher than the level reported in August 2019. Activity in the construction sector reported a particularly noteworthy expansion of 18% versus its August 2019 level. This recovery was driven primarily by the country’s strong macroeconomic fundamentals, which allowed the government to implement very expansive monetary and fiscal policies. This was accompanied by a favorable international environment, where copper prices stood at high levels. Additionally, the sanitary crisis has improved significantly, mortality rates have dropped, and the vaccination program is advancing. Currently, 81% of adults over the age of 18 have received at least one dose, and 65%, both doses.

 

Loan Growth

 

Growth QoQ, YoY and 9M YoY in loans was driven, to a significant extent, by the exchange rate. If we exclude this effect, structural loans grew 5.0% QoQ, 3.5%   YoY, and 0.1% 9M YoY. This evolution was primarily attributable to loan growth in Wholesale Banking.

 

Net Interest Income and Margin

 

		QoQ, NII rose due to an increase in active interest rates and growth in structural loans. This was slightly offset by the funding mix effect in a context marked by a decline in government loans and an uptick in debt obligations, which impact in interest expense was higher than the positive effect generated by the increase in low-cost deposits.
		YoY, NII increased due to a reduction in interest expenses. This evolution was attributable to high expenses last year through a large liability management transaction at BCP Stand-alone; a drop in market rates; and an uptick in balances of low-cost deposits in a context of excess liquidity due to government relief measures. A recovery in loan volumes and in the average investment volume also contributed, although to a lesser extent, to growth in NII.
		YTD, NII reflects lower interest expense due to the same drivers as those explained for the YoY evolution. This was partially offset by a decrease in interest income from lower volumes of structural loan and a drop in active interest rates.

 

Net provisions for loan losses and Portfolio Quality

 

		Provisions fell QoQ, driven by an improvement in payment behavior at BCP Stand-alone and Mibanco. This was partially offset by an increase in provisions at Mibanco, which was attributable to changes in write-off policies. YoY and YTD, the drop in provisions was driven by improvements in payment behavior and economic reactivation.
		The NPL ratio deteriorated QoQ due to grace period expirations in the Government Loan Portfolio. If we consider only the structural loans, NPL shows an improvement of 78bps. YoY, the ratio increased for both the structural and government loan portfolios, in a context marked by grace period expirations.

 

 

Core Other Income

 

Expansion in Core Other income was driven by growth in fees at BCP after consumption in establishments rose and interbank and international transfers increased and stood at pre-pandemic levels.

 

Other Income

 

Growth was mainly attributable to the factors outlined above. In the case of YoY and 9M YoY, results were partially offset by a drop in non-core Other income due to a loss reported in the net gain on securities following the sale of sovereign bonds at BCP.

 

Underwriting Result

 

The underwriting result was positive, which was driven by a drop in claims in Life after Covid-related mortality dropped and the vaccination rate rose. An improvement this quarter was also driven by growth in premiums across business lines.

 

Operating Efficiency

 

The efficiency ratio was situated at 46.1%, which reflected deterioration of 240bps QoQ and 110bps YoY due to growth in expenses for digital transformation and disruptive initiatives at BCP Stand-alone. In the accumulated analysis, ithe ratio improved 120bps due to an uptick in income.

 

Net Income at Credicorp and Contribution by Business Line

 

Contribution* and ROAE by subsidiary in 3Q21 (S/ millions)

 

Credicorp Consolidated: Net Income of S/1,164 million, ROAE of 18.5%

 

 

 

*Contributions to Credicorp reflect the eliminations for consolidation purposes (eliminations for transactions among Credicorp’s subsidiaries or between Credicorp and its subsidiaries).

- In Mibanco, the figure is lower than the net income because Credicorp owns 99.921% of Mibanco (directly and indirectly). ROAE including goodwill of BCP from the acquisition of Edyficar (Approximately US$ 50.7 million) was 33.2% in 3Q20, 9.7% in 2Q21 and 13.1% in 3Q21. YTD was -26.4% for September 2020 and 8.4% for September 2021.

- In Grupo Pacifico, the contribution is higher than the net income because Credicorp owns 65.20% directly, and 33.57% through Grupo Credito. Figures include unrealized gains or losses that are considered in Pacifico’s Net Equity from the investment portfolio of Pacifico Vida. ROAE excluding such unrealized gains was 2.5% in 3Q20, -32.6% in 2Q21 and 13.3% in 3Q21. YTD was 10.5% for September 2020 and -12.0% for September 2021.

- Others includes Grupo Credito excluding Prima (Servicorp and Emisiones BCP Latam), others of Atlantic Security Holding Corporation and others of Credicorp Ltd.

 

 

 

 

Overview Financial Information: Third Quarter 2021

 

Credicorp Ltd.		Quarter									% change					YTD					% change
S/ 000			3Q20			2Q21			3Q21			QoQ		YoY		Sep 20			Sep 21			Sep 21 / Sep 20
Net interest, similar income and expenses			2,161,905			2,309,042			2,451,708			6.2	%	13.4	%	6,502,782			6,884,133			5.9	%
Provision for credit losses on loan portfolio, net of recoveries			(1,305,905	)		(363,380	)		(164,414	)		-54.8	%	-87.4	%	(5,187,843	)		(1,085,441	)		-79.1	%
Net interest, similar income and expenses, after provision for credit losses on loan portfolio			856,000			1,945,662			2,287,294			17.6	%	167.2	%	1,314,939			5,798,692			341.0	%
Total other income			1,102,766			1,191,694			1,238,683			3.9	%	12.3	%	3,076,684			3,624,907			17.8	%
Insurance underwriting result			(4,340	)		(136,335	)		70,204			n.a.		n.a.		273,266			(131,378	)		-148.1	%
Total other expenses			(1,802,009	)		(1,860,447	)		(1,977,794	)		6.3	%	9.8	%	(5,209,713	)		(5,518,512	)		5.9	%
Profit (loss) before income tax			152,417			1,140,574			1,618,387			41.9	%	961.8	%	(544,824	)		3,773,709			n.a.
Income tax			(55,829	)		(423,491	)		(428,037	)		1.1	%	666.7	%	213,151			(1,189,127	)		n.a.
Net profit (loss)			96,588			717,083			1,190,350			66.0	%	1132.4	%	(331,673	)		2,584,582			n.a.
Non-controlling interest			(8,018	)		17,614			26,651			51.3	%	n.a.		(25,163	)		60,616			n.a.
Net profit (loss) attributable to Credicorp			104,606			699,469			1,163,699			66.4	%	1012.5	%	(306,510	)		2,523,966			n.a.
Net profit (loss) / share (S/)			1.31			8.77			14.59			66.4	%	1012.5	%	(3.84	)		31.64			n.a.
Loans			136,148,711			143,091,752			146,551,226			2.4	%	7.6	%	136,148,711			146,551,226			7.6	%
Deposits and obligations			137,202,674			149,161,803			152,548,368			2.3	%	11.2	%	137,202,674			152,548,368			11.2	%
Net equity			23,594,717			25,073,706			25,192,570			0.5	%	6.8	%	23,594,717			25,192,570			6.8	%
Profitability
Net interest margin			4.05	%		4.01	%		4.23	%		22	bps	18	bps	4.41	%		4.00	%		-41	bps
Risk-adjusted Net interest margin			1.60	%		3.38	%		3.95	%		57	bps	235	bps	0.89	%		3.37	%		248	bps
Funding cost			1.74	%		1.18	%		1.21	%		3	bps	-53	bps	1.90	%		1.28	%		-62	bps
ROAE			1.8	%		11.3	%		18.5	%		720	bps	1670	bps	-1.6	%		13.4	%		1500	bps
ROAA			0.2	%		1.1	%		1.9	%		80	bps	170	bps	-0.2	%		1.4	%		160	bps
Loan portfolio quality
Internal overdue ratio (1)			3.04	%		3.53	%		3.73	%		20	bps	69	bps	3.04	%		3.73	%		69	bps
Internal overdue ratio over 90 days			2.53	%		2.67	%		2.76	%		9	bps	23	bps	2.53	%		2.76	%		23	bps
NPL ratio (2)			4.17	%		4.79	%		4.96	%		17	bps	79	bps	4.17	%		4.96	%		79	bps
Cost of risk (3)			3.84	%		1.02	%		0.45	%		-57	bps	-339	bps	5.08	%		0.99	%		-409	bps
Coverage ratio of IOLs			233.1	%		185.8	%		165.8	%		-2000	bps	-6730	bps	233.1	%		165.8	%		-6730	bps
Coverage ratio of NPLs			169.9	%		137.0	%		124.8	%		-1220	bps	-4510	bps	169.9	%		124.8	%		-4510	bps
Operating efficiency
Efficiency ratio (4)			45.0	%		43.7	%		46.1	%		240	bps	110	bps	45.9	%		44.7	%		-120	bps
Operating expenses / Total average assets			2.93	%		2.96	%		3.20	%		24	bps	27	bps	3.17	%		3.00	%		-20	bps
Insurance ratios
Combined ratio of P&C (5) (6)			84.8	%		88.9	%		94.1	%		520	bps	930	bps	84.8	%		94.1	%		930	bps
Loss ratio (6)			86.0	%		107.4	%		76.5	%		-3090	bps	-950	bps	86.0	%		76.5	%		-950	bps
Capital adequacy - BCP Stand-alone (7)
BIS ratio (8)			15.39	%		15.34	%		15.16	%		-18	bps	-23	bps	15.39	%		15.16	%		-23	bps
Tier 1 ratio (9)			10.70	%		10.31	%		10.00	%		-31	bps	-70	bps	10.70	%		10.00	%		-70	bps
Common equity tier 1 ratio (10)			11.45	%		11.23	%		11.10	%		-13	bps	-35	bps	11.45	%		11.10	%		-35	bps
Capital adequacy - Mibanco (7)
BIS ratio (8)			17.69	%		17.22	%		16.79	%		-43	bps	-90	bps	17.69	%		16.79	%		-90	bps
Tier 1 ratio (9)			15.47	%		14.66	%		14.30	%		-36	bps	-117	bps	15.47	%		14.30	%		-117	bps
Common equity tier 1 ratio (10)			16.22	%		15.26	%		15.15	%		-11	bps	-107	bps	16.22	%		15.15	%		-107	bps
Employees			37,572			35,776			35,733			-0.1	%	-4.9	%	37,572			35,733			-4.9	%
Share Information
Issued Shares			94,382			94,382			94,382			0.0	%	0.0	%	94,382			94,382			0.0	%
Treasury Shares (11)			14,977			14,866			14,866			0.0	%	-0.7	%	14,977			14,866			-0.7	%
Outstanding Shares			79,405			79,516			79,516			0.0	%	0.1	%	79,405			79,516			0.1	%

 

(1) Internal overdue loans includes overdue loans and loans under legal collection, according to our internal policy for overdue loans. Internal Overdue ratio: Internal overdue loans / Total loans.

(2) Non-performing loans (NPL): Internal overdue loans + Refinanced loans. NPL ratio: NPL / Total loans.

(3) Cost of risk: Annualized provision for loan losses, net of recoveries / Total loans.

(4) Efficiency ratio = (Salaries and employee benefits + Administrative expenses + Depreciation and amortization + Association in participation + Acquisition cost) / (Net interest, similar income and expenses + Fee Income + Net gain on foreign exchange transaction + Net Gain From associates + Net gain on derivatives held for trading + Result on exchange differences + Net Premiums Earned).

(5) Combined ratio = (Net claims / Net earned premiums) + [(Acquisition cost + Operating expenses) / Net earned premiums]. Does not include Life insurance business.

(6) Considers Grupo Pacifico's figures before eliminations for consolidation to Credicorp.

(7) All Capital ratios are for BCP Stand-alone and based on Peru GAAP.

(8) Regulatory Capital / Risk-weighted assets (legal minimum = 10% since July 2011).

(9) Tier 1 = Capital + Legal and other capital reserves + Accumulated earnings with capitalization agreement + (0.5 x Unrealized profit and net income in subsidiaries) - Goodwill - (0.5 x Investment in subsidiaries) + Perpetual subordinated debt (maximum amount that can be included is 17.65% of Capital + Reserves + Accumulated earnings with capitalization agreement + Unrealized profit and net income in subsidiaries - Goodwill).

(10) Common Equity Tier I = Capital + Reserves – 100% of applicable deductions (investment in subsidiaries, goodwill, intangibles and net deferred taxes that rely on future profitability) + retained earnings + unrealized gains.

Adjusted Risk-Weighted Assets = Risk-weighted assets - (RWA Intangible assets, excluding goodwill, + RWA Deferred tax assets generated as a result of temporary differences in income tax, in excess of 10% of CET1, + RWA Deferred tax assets generated as a result of past losses)."

(11) These shares are held by Atlantic Security Holding Corporation (ASHC) and for shared based payments.

 

 

 

 

  

 

1.

Interest-earning assets (IEA)

 

Interest earning assets		As of												% change
S/ 000		Sep 20				Jun 21				Sep 21				QoQ				YoY
Cash and due from banks			28,219,512				29,058,684				36,137,443				24.4	%			28.1	%
Interbank funds			2,031				16,790				9,782				-41.7	%			381.6	%
Total investments			51,648,986				54,772,644				48,110,456				-12.2	%			-6.9	%
Cash collateral, reverse repurchase agreements and securities borrowing			2,821,116				1,616,654				2,555,337				58.1	%			-9.4	%
Financial assets designated at fair value through profit or loss			729,059				921,851				981,508				6.5	%			34.6	%
Total loans			136,148,711				143,091,752				146,551,226				2.4	%			7.6	%
Total interest earning assets			219,569,415				229,478,375				234,345,752				2.1	%			6.7	%

 

1.1. Structure and Evolution of IEA

 

IEA composition

 

At the end of September 2021, loans, our most profitable asset, represented 62.5% of IEAs, followed by investments with 20.5% and other assets1 with 16.9%. IEAs increased +2.1% QoQ and +6.7% YoY thanks to loan growth.   Loans continued to increase their share of total IEAs, spurred by structural disbursements and the exchange rate effect, while government loans (GP) continued to post a decrease in their share of the IEA structure. The share of government loans within total IEAs fell from 11.1% in Sept-20 to 10.0% in June-21 and 9.0% in Sept-21. Structural loans, in turn, registered a share of 51.0% of total IEAs in Sept-20; 52.3% in June-21; and 53.6% in Sept-21.   The share of investments of total IEAs fell while that of liquid assets increased, because of the expiration of certificate of deposits, which were not renewed.

  

Total Loans (Quarter-end Balances)

 

It is important to note that both the QoQ and YoY increases in loans was largely attributable to an exchange rate effect, which was fueled by the +7.2% and +14.9% appreciation of the US Dollar against the Sol QoQ and YoY respectively.

 

QoQ, loans in quarter-end balances increased +2.4% and structural loans, +4.5%. Both of these metrics were driven by the exchange rate effect. If we exclude the effect, total loans grew +0.1% QoQ and structural loans, 1.7%. The aforementioned was driven by:

 

(i)

Structural growth was led by Wholesale Banking at BCP Stand-alone and was spurred by economic reactivation and financing demand from the corporate segment.

 

(ii)

Growth in the structural portfolio of Retail Banking was driven primarily by the SME-Business and SME-Pyme segments and secondarily by the Mortgage segment.

 

(iii)

Mibanco’s portfolio reported a structural increase of +4.1%. This was fueled by an uptick in disbursements, which topped pre-pandemic levels this quarter.

 

GP loans in quarter-end balances fell -8.6% QoQ.

 

Similar to the quarterly evolution, total loans measured in quarter-end balances in YoY terms rose +7.6% while structural loans expanded +12.2% due to an increase in the exchange rate. If we exclude the exchange rate effect, total loans grew +2.8% and structural loans, +6.3%. This was attributable to:

 

(i)

Growth in the Wholesale Banking portfolio, which was driven by an uptick in disbursements due to: a reactivation of internal demand and a subsequent increase in financing demand; and the impulse provided by the fishing and agricultural campaigns that began at the end of 2Q21.

 

¹ Includes Cash and Due from Banks; Interbank Funds; Cash Collateral,reverse repurchase agreements, and securities borrowings, and Financial Assets designated at fair value through profit or loss.

 

 

(ii)

Growth in the Retail Banking portfolio, which was led primarily by Mortgage and secondarily by SME-Business, SME-Pyme and Consumer. The Credit Card segment registered a decrease in loan balances.

 

(iii)

Growth of 13.5% in the Mibanco portfolio, which continued to follow an upward trend to top the disbursement levels reported pre-pandemic this quarter.

 

GP loans fell -13.4% YoY.

 

Total Investments

 

Total Investments		As of												% change
S/ 000		Sep 20				Jun 21				Sep 21				QoQ				YoY
Fair value through profit or loss investments			6,658,680				6,791,288				6,660,487				-1.9	%			0.0	%
Fair value through other comprehensive income investments			40,712,831				40,273,400				33,262,618				-17.4	%			-18.3	%
Amortized cost investments			4,277,475				7,707,956				8,187,351				6.2	%			91.4	%
Total investments			51,648,986				54,772,644				48,110,456				-12.2	%			-6.9	%

 

Total investments fell -12.2% QoQ and -6.9% YoY. Both results were driven by a strategy to reduce exposure to interest rate movements by selling investments in the 2Q21, and to expirations of certificate of deposits in the 3Q21, which were not renewed.

 

Other IEA

 

Available funds increased 24.4% QoQ and 28.1% YoY. This evolution was attributable to an influx of cash driven by (i) expirations of certificates of deposits that were not subsequently renewed and (ii) growth in deposits after clients withdrew savings from pensions funds.

 

1.2. Credicorp Loans

 

1.2.1.

Evolution of loans in average daily balances (ADB)

 

The ADB of loans show growth of +4.8% QoQ and +9.0% YoY. Similar to the scenario described above for quarter-end balances, the most significant driver of growth was the uptick in the exchange rate. This impacted the most dollarized portfolios such as Wholesale Banking, and businesses such as Mibanco Colombia and BCP Bolivia, which make disbursements in FC.   If we exclude the exchange rate effect, QoQ growth in structural loans was mainly attributable to the evolution of Wholesale Banking and YoY, to an increase in balances in the Middle Market, Mortgage, SME-Pyme and Consumer segments at BCP Stand-alone and to growth in balances at Mibanco.

ADB balances provide the most complete picture of how loan interest, which constitutes Credicorp’s primary source of income, has evolved. Additionally, average daily balances reflect trends or variations to a different degree than quarter-end balances which may include pre-payments or loans made at the end of the quarter. In comparative terms, these payments, affect average daily balances less than quarter-end balances and as such, the former provide a more balanced picture of loan evolution.

  

It is important to note that structural loans registered higher growth than total loans QoQ, which reflects the gradual amortization of government loans. 

 

 

Evolution of loans in ADB by business segment ⁽¹⁾⁽²⁾

 

		TOTAL LOANS																								% change
		Expressed in million S/									Structural									% change						Structural						% Part. in total loans									Structural
		3Q20			2Q21			3Q21			3Q20			2Q21			3Q21			QoQ			YoY			QoQ			YoY			3Q20			2Q21			3Q21			3Q21
BCP Stand-alone		111,385			114,614			120,754			93,444			93,595			101,515			5.4	%		8.4	%		8.5	%		8.6	%		82.9	%		82.0	%		82.5	%		81.5	%
Wholesale Banking		54,838			51,862			57,863			48,330			46,067			53,080			11.6	%		5.5	%		15.2	%		9.8	%		40.8	%		37.1	%		39.5	%		42.6	%
Corporate		31,448			28,869			32,642			30,626			28,288			32,147			13.1	%		3.8	%		13.6	%		5.0	%		23.4	%		20.7	%		22.3	%		25.8	%
Middle - Market		23,389			22,993			25,221			17,704			17,780			20,933			9.7	%		7.8	%		17.7	%		18.2	%		17.4	%		16.5	%		17.2	%		16.8	%
Retail Banking		56,547			62,752			62,891			45,113			47,528			48,434			0.2	%		11.2	%		1.9	%		7.4	%		42.1	%		44.9	%		43.0	%		38.9	%
SME - Business		10,014			11,279			11,400			4,574			4,866			5,524			1.1	%		13.8	%		13.5	%		20.8	%		7.5	%		8.1	%		7.8	%		4.4	%
SME - Pyme		16,062			19,647			19,626			10,068			10,836			11,046			-0.1	%		22.2	%		1.9	%		9.7	%		12.0	%		14.1	%		13.4	%		8.9	%
Mortgage		16,816			17,884			18,133			16,816			17,884			18,133			1.4	%		7.8	%		1.4	%		7.8	%		12.5	%		12.8	%		12.4	%		14.6	%
Consumer		9,018			10,076			10,000			9,018			10,076			10,000			-0.8	%		10.9	%		-0.8	%		10.9	%		6.7	%		7.2	%		6.8	%		8.0	%
Credit Card		4,637			3,866			3,731			4,637			3,866			3,731			-3.5	%		-19.5	%		-3.5	%		-19.5	%		3.5	%		2.8	%		2.5	%		3.0	%
Mibanco		11,593			13,023			13,082			9,729			10,232			10,428			0.5	%		12.8	%		1.9	%		7.2	%		8.6	%		9.3	%		8.9	%		8.4	%
Mibanco Colombia		788			963			1,047			788			963			1,047			8.8	%		32.9	%		8.8	%		32.9	%		0.6	%		0.7	%		0.7	%		0.8	%
Bolivia		8,149			8,747			9,408			8,149			8,747			9,408			7.6	%		15.5	%		7.6	%		15.5	%		6.1	%		6.3	%		6.4	%		7.6	%
ASB		2,438			2,390			2,122			2,438			2,390			2,122			-11.2	%		-13.0	%		-11.2	%		-13.0	%		1.8	%		1.7	%		1.4	%		1.7	%
BAP's total loans		134,353			139,736			146,413			114,547			115,927			124,520			4.8	%		9.0	%		7.4	%		8.7	%		100.0	%		100.0	%		100.0	%		100.0	%

 

	Largest contraction in volumes
	Highest growth in volumes

 

For consolidation purposes, loans generated in FC are converted to LC.

(1) Structural Portfolio excludes the average daily balances from loans offered through de Reactiva Peru y FAE-Mype Government Programs.

(2) Figures differ from previously reported.

 

QoQ loan growth in ADB by segment

Expressed in millions of S/

 

+4.8% (+7.4% Structural Portfolio)

 

  

The figure above shows an increase of +4.8% QoQ (+7.4% structural) of loans measured in quarter-end balances; growth in both cases was driven by the exchange rate effect. If we exclude this effect, total loans grew +2.8% and structural loans, +5.0%. The structural variation was due to the following, in order of magnitude of impact:

 

(i)

Growth in the Wholesale Loan portfolio due to an increase in structural balances in the Corporate segment and, to a lesser extent, to growth in the Middle Market segment. Expansion was primarily driven by economic recovery and by the increase in financing demand in these segments.

 

(ii)

Growth in Retail Banking, where SME-Business made the highest contribution to portfolio growth, followed by SME-Pyme and Mortgage.

 

(iii)

Credit Card and Consumer loan balances fell QoQ due to a decrease in the dynamism of these segments and to the fact that clients have used liquidity to reduce their balances.

 

(iv)

Growth at Mibanco, where balances hit levels this quarter that topped those seen pre-pandemic. Mibanco Colombia resumed growth and registered record-highs for disbursements after having frozen disbursements in 2Q21 in a context of rising social tensions.

 

GP fell -8.0% QoQ.

 

YoY loan growth in ADB by segment

Expressed in millions of S/

 

+9.0% (+8.7% Structural Portfolio)  

 

 

Government Programs (Reactiva and FAE-Mype) Structural

 

YoY growth was also impacted by a depreciation in LC. If we exclude the exchange rate effect and government loans from the calculation base, total loans increased +4.5% and structural loans, +3.5%. The structural evolution was attributable to:

 

(i)

Growth in the Retail Banking portfolio, which was led Mortgage segment followed by SME-Pyme, Consumer and SME-Business. The dynamism of Retail Banking was partially offset by a decrease in Credit Card balances, which were adversely affected by the sanitary crisis; contention measures; a decrease in the appetite for risk; and the fact that clients used their liquidity to pay down balances in this segment.

 

(ii)

Growth in the Wholesale Banking portfolio, which registered an improvement in Middle Market banking that was offset by a reduction in Corporate banking, whose clients had taken advantage of low rates in 2020 and are paying off these loans.

 

(iii)

Growth in Mibanco loans, in a scenario marked by on-going recovery in structural loans, which topped pre-pandemic levels in 3Q21. Mibanco Colombia’s portfolio grew 17.0% YoY, which was attributable to an uptick in disbursements and structural increase in productivity after social tensions eased and the confidence level of economic agents improved.

 

Loan growth in ADB (9 months) by segment

Expressed in millions of S/

 

+11.4% (+0.2% Structural Portfolio)  

 

 

Government Programs (Reactiva and FAE-Mype) Structural

 

Growth in ADB (9 months) of +11.4% was primarily driven by government loans and by the exchange rate effect created by the depreciation of the Sol. The Mortgage and Consumer segments also contributed to this growth. Similar to the scenario seen in the YoY analysis, the Corporate Banking and the Credit Card segments registered the most significant drop in balances given that clients leveraged higher liquidity levels and funds from government relief programs to amortize financial obligations.

 

1.2.2. Evolution of the loan dollarization level at Credicorp by segment

 

Evolution of average daily loan balances by currency ⁽¹⁾⁽²⁾

 

		DOMESTIC CURRENCY LOANS																										% change								FOREIGN CURRENCY LOANS																	% part. by currency
			Expressed in million S/									Structural									% change								Structural								Expressed in million US$																	3Q21
			3Q20			2Q21			3Q21			3Q20			2Q21			3Q21			QoQ				YoY				QoQ				YoY				3Q20			2Q21			3Q21			QoQ				YoY				LC				FC
BCP Stand-alone			78,056			80,960			83,442			60,115			59,941			64,202			3.1	%			6.9	%			7.1	%			6.8	%			9,375			8,805			9,135			3.8	%			-2.6	%			69.1	%			30.9	%
Wholesale Banking			28,201			25,860			28,562			21,694			20,065			23,779			10.4	%			1.3	%			18.5	%			9.6	%			7,493			6,803			7,173			5.4	%			-4.3	%			49.4	%			50.6	%
Corporate			14,204			12,572			14,771			13,381			11,990			14,276			17.5	%			4.0	%			19.1	%			6.7	%			4,851			4,264			4,375			2.6	%			-9.8	%			45.3	%			54.7	%
Middle-Market			13,997			13,288			13,791			8,313			8,074			9,503			3.8	%			-1.5	%			17.7	%			14.3	%			2,642			2,539			2,798			10.2	%			5.9	%			54.7	%			45.3	%
Retail Banking			49,855			55,100			54,880			38,421			39,876			40,423			-0.4	%			10.1	%			1.4	%			5.2	%			1,882			2,002			1,962			-2.0	%			4.2	%			87.3	%			12.7	%
SME - Business			7,545			8,284			8,076			2,105			1,871			2,199			-2.5	%			7.0	%			17.6	%			4.5	%			694			783			815			4.1	%			17.4	%			70.8	%			29.2	%
SME - Pyme			15,862			19,463			19,441			9,868			10,653			10,861			-0.1	%			22.6	%			2.0	%			10.1	%			56			48			45			-5.5	%			-19.4	%			99.1	%			0.9	%
Mortgage			14,673			15,722			15,960			14,673			15,722			15,960			1.5	%			8.8	%			1.5	%			8.8	%			603			566			532			-6.0	%			-11.8	%			88.0	%			12.0	%
Consumer			7,717			8,491			8,469			7,717			8,491			8,469			-0.3	%			9.7	%			-0.3	%			9.7	%			366			415			375			-9.7	%			2.4	%			84.7	%			15.3	%
Credit Card			4,058			3,139			2,933			4,058			3,139			2,933			-6.6	%			-27.7	%			-6.6	%			-27.7	%			163			190			195			2.8	%			19.8	%			78.6	%			21.4	%
Mibanco			11,085			12,551			12,614			9,221			9,760			9,960			0.5	%			13.8	%			2.0	%			8.0	%			143			124			115			-7.2	%			-19.8	%			96.4	%			3.6	%
Mibanco Colombia			-			-			-			-			-			-			-				-				-				-				221			252			256			1.7	%			15.6	%			-				100.0	%
Bolivia			-			-			-			-			-			-			-				-				-				-				2,292			2,289			2,302			0.6	%			0.5	%			-				100.0	%
ASB			-			-			-			-			-			-			-				-				-				-				686			626			519			-17.0	%			-24.3	%			-				100.0	%
Total loans			89,141			93,511			96,056			69,336			69,701			74,162			2.7	%			7.8	%			6.4	%			7.0	%			12,717			12,095			12,328			1.9	%			-3.1	%			65.6	%			34.4	%

 

Largest contraction in volumes Highest growth in volumes

  

For consolidation purposes, loans generated in FC are converted to LC.

(1) Structural Portfolio excludes the average daily balances from loans offered through de Reactiva Peru y FAE-Mype Government Programs.

(2) Figures differ from previously reported.

 

YoY evolution of the dollarization level by Credicorp segment ^(1)(2)(3)

 

 

 

(1) Average daily balances.

(2) The FC share of Credicorp’s loan portfolio is calculated including BCP Bolivia and ASB, however the chart shows only the loan books of BCP Stand-alone and Mibanco.

(3) The year with the historic maximum level of dollarization for Wholesale Banking was 2012, for Mibanco was 2016, for Credit Card was in 2021 and for the rest of segments was

2009.

 

Portfolio dollarization levels were pressured upward by the exchange rate effect (depreciation in LC) and by amortizations of government loans. In particular, dollarization in the Credit Card segment increased throughout the pandemic and reached a record high this quarter in a context of diminishing loan balances in LC in this segment.

 

 

                      

2. Funding Sources

 

2.1 Funding Structure

2.2. Deposits

 

Deposits		As of												% change
S/ 000		Sep 20				Jun 21				Sep 21				QoQ				YoY
Demand deposits			53,574,151				59,998,764				61,112,084				1.9	%			14.1	%
Saving deposits			45,999,882				52,687,270				54,365,781				3.2	%			18.2	%
Time deposits			29,785,440				30,302,103				31,601,351				4.3	%			6.1	%
Severance indemnity deposits			7,127,617				5,456,510				4,681,224				-14.2	%			-34.3	%
Interest payable			715,584				717,156				787,928				9.9	%			10.1	%
Total Deposits			137,202,674				149,161,803				152,548,368				2.3	%			11.2	%

 

Deposits expanded +2.3% QoQ. Notwithstanding, if we control for the exchange rate, we observe a contraction of -1.2%. The main drivers of these movements were:

 

(i)

Growth in savings deposits, which expanded +3.2% QoQ (0.2% controlling for the exchange rate). This expansion primarily reflects an uptick in deposits in LC (after bi-yearly bonuses were paid) and a depreciation in the exchange rate. These effects offset the drop in FC deposits (expressed in US Dollars), which were affected by fund transfers abroad.

 

(ii)

Growth in time deposits of +4.3% (0.4% controlling for the exchange rate), which was driven by a depreciation in local currency and by growth in the deposits in FC (expressed in US Dollars). These effects offset the decrease in time deposits in LC.

 

(iii)

The increase in demand deposits, which grew +1.9% (-1.9% controlling for the exchange rate). The depreciation of the Sol and the increase in LC balances associated with withdrawals from pension funds largely offset the drop in FC balances (expressed in US Dollars).

 

 

 

(iv)

A significant drop in Severance Indemnity Deposits, after funds were freed up for withdrawal.

 

In YoY terms, total deposits grew +11.2% (+3.9% controlling for the exchange rate). The increase was primarily driven by savings and demand deposits and was attributable to: (i) depreciation in the sol; and (ii) facilities to draw down funds from Pension funds and Severance Indemnity accounts, which clients subsequently transferred to low-cost bank accounts.

 

2.2.1. Deposits: Dollarization Level

 

    Total Deposits by Currency

(measured in quarter-end balances)

Deposits by type and currency

(measured in quarter-end balances)

 

 

 

2.3. Other sources of funding

 

Other funding sources		As of												% change
S/ 000		Sep 20				Jun 21				Sep 21				QoQ				YoY
Due to banks and correspondents			6,601,722				6,239,161				7,466,434				19.7	%			13.1	%
BCRP instruments			25,344,724				23,329,990				20,746,109				-11.1	%			-18.1	%
Repurchase agreements			1,204,487				1,276,678				1,330,811				4.2	%			10.5	%
Bonds and notes issued			16,425,832				16,951,481				17,577,630				3.7	%			7.0	%
Total other funding sources			49,576,765				47,797,310				47,120,984				-1.4	%			-5.0	%

 

The total of Other Sources of Funding fell -1.4% QoQ. This evolution shows:

 

A drop in BCRP Instruments, mainly at BCP Stand-alone, due to amortization of government program loans.

 

An increase in Due to Banks and Correspondents, which was attributable to an increase in debt obligations at BCP Stand-alone after more loans were assumed with foreign financial institutions in FC to offset the effects of outflows of other sources of funding.

 

Growth in Bonds and Notes issued, which was primarily driven by the exchange rate effect given that 78% of the total balance is in FC. This increase was partially offset by expirations of corporate bonds.

 

Repurchase agreements registered a slight increase through new inter-bank repos at BCP Bolivia.

 

 

The YoY evolution registered a decrease of -5.0%, which was primarily attributable to a drop in the balance of BCRP Instruments at BCP Stand-alone -after clients amortized government program loans. This was partially offset by the exchange rate variation given the high balances of debt held in FC.

 

2.4. Loans / Deposits (L/D)

 

 

Local Currency

Foreign Currency

 

In the QoQ analysis by currency, the L/D ratio in LC at Credicorp and BCP Stand-alone registered slight growth but fell for Mibanco. The L/D ratio in FC fell somewhat at Credicorp and Mibanco but rose slightly at BCP Stand-alone. In the YoY analysis, Credicorp reported growth in the L/D ratio in LC at Credicorp, BCP and Mibanco. The increase of 12.3% at Mibanco was noteworthy and was driven by record-high disbursements in September. The L/D ratio in FC for Credicorp, BCP and Mibanco dropped for the same period.

 

2.5. Funding Cost

 

Funding Cost – Credicorp ⁽¹⁾⁽²⁾

 

 

 

(1) Expenses are included in accordance with IFRS16.

(2) Structural Funding Cost deducts the impact in expenses and funding related to GP Loans (BCRP Repos) and deducts non-recurring events from Interest Expense.

* 2Q21 Structural Funding Cost differed from previously reported

 

 

The funding cost at Credicorp rose slightly to 1.21% (+3bps QoQ), which was attributable to the increase in debt obligations with foreign financial institution at BCP Stand-alone in FC and to the depreciation of the Sol². These effects were partially offset by an increase in low-cost deposits’ share in the funding mix. The structural funding cost, which is not affected by the presence of government program loans, grew slightly to 1.27% (+2bps QoQ).

In the YoY analysis, the Cost of Funding fell -53bps, which was primarily due to an increase in low-cost deposit’s share of the funding mix and to a reduction in the interest rate of bonds and notes issued.

 

Cost of Funding– Credicorp in Local Currency ⁽¹⁾⁽²⁾

 

 

 

(1) Expenses are included in accordance with IFRS16.

(2) Structural Funding Cost deducts the impact in expenses and funding related to GP Loans (BCRP Repos) and deducts non-recurring events from Interest Expense

 

The funding cost in LC (-1bps) remained stable. In terms of structural funding, the cost of funding in LC fell to 1.13% in 3Q21 (-4bps).

 

Funding cost – Credicorp in Foreign Currency ⁽¹⁾⁽²⁾

 

 

(1) Expenses are included in accordance with IFRS16.

(2) Structural Funding Cost deducts the impact in expenses and funding related to GP Loans (BCRP Repos) and deducts non-recurring events from Interest Expense

 

The increase in the cost of funding in FC (+7bps) was attributable to a decrease in balances of low-cost deposits in FC (expressed in US Dollars) and to an increase in debt obligations with banks at BCP Stand-alone.

 

Funding costs in LC and FC fell -37bps and -76bps YoY respectively, in line with the strategy to optimize Credicorp’s liabilities.

 

² Depreciation of the sol increases the relevance of Foreign-currency denominated funding, which is relatively more expensive than our local-currency denominated funding sources. 

 

 

Funding cost by subsidiary ⁽¹⁾⁽²⁾

 

 

 

(1) Expenses are included in accordance with IFRS16.

(2) Structural Funding Cost deducts the impact in expenses and funding related to GP Loans (BCRP Repos) and deducts non-recurring events from Interest Expense.

 

(i)

The funding cost at BCP Stand-alone increased slightly to 0.96% (+3bps QoQ). This growth was driven by the depreciation of the Sol and by new debt obligations that were assumed to offset the outflow of deposits to foreign accounts. In the YoY analysis, a -53bps decrease in the cost of funding was associated with (i) an increase in the share of deposits and to (ii) the rate effect, which was mainly associated with issued bonds.

 

(ii)	The funding cost at Mibanco decreased slightly (-2bps QoQ). In the YoY analysis, a -33bps drop is evident. This variation was driven by an increase in the share of low-cost deposits and obligations with BCRP (Reactiva) within the funding mix.

 

(iii)

The funding cost at BCP Bolivia increased to 3.49% (+19bps). In the YoY analysis, we see growth of 29bps.

 

 

 

 

 

2.     Net interest income (NII)

 

Net interest income		Quarter												% change								YTD								% change
S/ 000		3Q20				2Q21				3Q21				QoQ				YoY				Sep 20				Sep 21				Sep-21 / Sep-20
Interest income			2,953,570				2,891,579				3,051,000				5.5	%			3.3	%			8,844,548				8,758,652				-1.0	%
Interest on loans			2,578,362				2,476,187				2,607,349				5.3	%			1.1	%			7,701,998				7,516,297				-2.4	%
Dividends on investments			8,871				11,536				19,668				70.5	%			121.7	%			21,617				34,425				59.2	%
Interest on deposits with banks			7,981				6,076				12,185				100.5	%			52.7	%			66,358				26,157				-60.6	%
Interest on securities			347,309				382,140				385,874				1.0	%			11.1	%			1,020,660				1,130,978				10.8	%
Other interest income			11,047				15,640				25,924				65.8	%			134.7	%			33,915				50,795				49.8	%
Interest expense (1)			791,665				582,537				599,292				2.9	%			-24.3	%			2,341,766				1,874,519				-20.0	%
Interest on deposits			258,838				210,275				209,564				-0.3	%			-19.0	%			943,114				642,482				-31.9	%
Interest on borrow ed funds			143,739				101,265				110,308				8.9	%			-23.3	%			438,684				323,801				-26.2	%
Interest on bonds and subordinated notes			301,347				178,664				179,476				0.5	%			-40.4	%			698,808				625,111				-10.5	%
Other interest expense (1)			87,741				92,333				99,944				8.2	%			13.9	%			261,160				283,125				8.4	%
Net interest income (1)			2,161,905				2,309,042				2,451,708				6.2	%			13.4	%			6,502,782				6,884,133				5.9	%
Adjusted Net interest income (2)			2,179,853				2,266,743				2,420,842				6.8	%			11.1	%			6,937,888				6,848,096				-1.3	%
Risk-adjusted Net interest income (1)			856,000				1,945,662				2,287,294				17.6	%			167.2	%			1,314,939				5,798,692				341.0	%
Average interest earning assets (1)			213,481,060				230,237,853				231,912,064				0.7	%			8.6	%			196,714,050				229,486,667				16.7	%
Net interest margin (3)			4.05	%			4.01	%			4.23	%			22bps				18bps				4.41	%			4.00	%			-41bps
Risk-adjusted Net interest margin (3)			1.60	%			3.38	%			3.95	%			57bps				235bps				0.89	%			3.37	%			248bps
Net provisions for loan losses / Net interest income			60.41	%			15.74	%			6.71	%			-9.0	%			-53.7	%			79.78	%			15.77	%			-64.01	%

 

(1) Figures differ from previously reported.

(2) Adjusted for (i) impairment from cero interest-rate loans and (ii) expenses related to liability management operations at BCP Stand-Alone.

(3) Anualizado.

 

3.1. Net Interest Income

 

Interest income – local currency

Interest income – foreign currency

(S/ millions)

(S/ millions)

 

 

 

In the QoQ analysis, the +5.5% increase in interest income was driven, to a large extent, by the uptick in the exchange rate. If we exclude this effect, interest income rose 4.3% in a context of higher interest rates and an increase in loans at BCP Stand-alone and to a lesser extent, by Mibanco. Interest generation was driven by the following dynamics:

 

(i)

Rate effect: QoQ, the rates evolved positive, mainly in the investment portfolio. This evolution was driven by an increase in yields due to an uptick in market rates. The rate effect was also positive for total loans but was partially offset by a drop in rates in Wholesale Banking due to the competitive environment.

 

(ii)

Volume effect: The volume effect, driven by loan growth, was positive but was partially offset by a drop in total investments in BCP Stand-alone’s portfolio. This dynamic generated a more profitable IEA structure.

 

In the YoY analysis, interest income rose +3.3% (+5.5% adjusted, excluding non-recurring charges for impairment amortization). This evolution was driven to a significant extent by an uptick in the exchange rate. If we exclude the exchange rate effect, interest income grew 0.5% (+2.6% adjusted), in a context affected by the increase in the volume of structural loans and investments.

 

In terms of the volume and rate effects, the evolutions were as follows

 

(i)

Volume Effect: driven primarily by growth in structural loans and in the investment portfolio.

 

(ii)

Rate effect: the rate effect was negative and partially offset the positive effect generated by the mix. YoY, active interest rates fell, mainly in Wholesale Banking, where working capital and financing for invoices were the most affected. Retail Banking segments, specifically Mortgage and Credit Card, were also negatively impacted by interest rates. This was, however, partially offset by growth in yields after moves were made to increase the duration of the portfolio.

 

 

YTD, interest income fell -1.0% (-5.9% adjusted, excluding non-recurring charges for impairment amortization). This evolution was driven by a drop in interest on loans and in interest on deposits in other banks. Lower interest from loans was primarily due to a drop in structural loan volumes, in particular in the Corporate and Credit Card segments. The performance of the loan portfolio and of liquid assets were impacted by lower interest rates. This dynamic was partially offset by an increase in interest from securities, which was attributable to an uptick in the average investment amount.

 

3.2. Interest Expenses

 

Interest expenses – Local Currency

Interest expenses – Foreign currency

(S/ millions)

(S/ millions)

 

 

 

In the QoQ analysis interest expenses rose +2.9%; this was attributable to an increase in FC expenses, which was driven by the exchange rate effect. If we exclude this effect, interest expenses rose 0.2%, which was attributable to:

 

(i)

The mix effect: funding from low-cost government loans was replaced by debt obligations with foreign banks, which have higher interest rates.

 

(ii)

Rate effect: the increase in market rates also contributed, although to a lesser extent, to growth in interest expenses.

 

In the YoY analysis, interest expenses fell -24.3% (-12.3% when adjusted for non-recurring expenses in 3Q20 for a liability management transaction). If we apply a constant rate of exchange, interest expenses fell -29% YoY (-17.7% when adjusted for non-recurring). This dynamic was attributable to:

 

(i)

Rate effect: reduction in the rate on Bonds and Issued Notes, which was mainly attributable to a subordinated debt transaction at BCP Stand-alone. The decrease in market rates also contributed, albeit to a lesser extent, to a reduction in interest expenses.

 

(ii)

Mix effect: Low-cost deposits increased their share of total funding (demand deposits and savings deposits) while due to banks and correspondents registered a reduction in share during the same period.

 

YTD, interest expenses fell -20.0%. This variation reflects the positive effect generated by the drop in market rates; the impact of the liability management transaction at BCP Stand-alone in 3Q20 and 1Q21; and a change in the funding mix, where lower-cost sources of funding tied to government pandemic relief initiatives replaced higher-cost funding sources in the mix.

 

 

 

3.3. Net interest margin (NIM) and Risk-adjusted NIM

 

NIM and Risk-adjusted NIM at Credicorp

 

 

 

 

NIM stood at 4.23% in 3Q21, which topped the 4.01% reported in 2Q21 and the 4.05% registered in 3Q20. The margin was impacted by non-recurring charges for impairment amortization. The impact of these charges on NIM was positive: +5bps for 3Q21. Also, NIM continued to be impacted by the presence of government loans. The impact of these loans on NIM is negative: -35 bps in 3T21. The analysis of structural NIM, which excludes non-recurring charges and government loans, indicates:

 

(i)

The Structural Portfolio reported an NIM of 4.53% in 3Q21; this represented an improvement of +21bps QoQ, which reflected a positive variation in interest rates and a more profitable mix of IEAs.

 

(ii)

Structural NIM increased +8bps YoY, rising from 4.45% to 4.53% due to:

 

a)

The mix effect: an increase in the volume of structural loans; growth in average investments; and a lower-cost liability structure positively affected the margin.

b)

Rate effect: a drop in passive liability rates, which was partially offset by a drop in active interest rates.

 

(iii)

YTD, structural NIM grew +6bps, going from 4.29% to 4.35%. These results were driven by the same factors as those seen YoY.

 

The table below shows the NIM and Risk-adjusted NIM for Credicorp’s main subsidiaries:

 

NIM: Annualized Net interest income / Average period end and period beginning interest earning assets.

Risk-Adjusted NIM: (Annualized Net interest income - annualized provisions) / Average period end and period beginning interest earning assets.

(1) Credicorp also includes Mibanco colombia, Credicorp Capital, Prima, Pacífico, ASB and Eliminations for consolidation purposes.

 

The dynamics of NIM at BCP Stand-alone, which is the primary contributor to NIM at the holding level, mirror the results detailed above for Credicorp. As such, our analysis will focus on relevant variations at Mibanco and BCP Bolivia:

 

(i)

Mibanco Peru reported a +71bps increase QoQ in NIM due to a reversal of interest provisions for reprogrammed loans that became past due3. This reversal was triggered after write-offs this quarter to compensate for the fact that the interest income provisions had been also recorded in IFRS provisions for credit losses for delinquent loans. Other factors that positively contributed to the margin were: an uptick in structural loans and a more profitable IEA mix.

 

YoY, NIM at Mibanco increased +63bps due to (i) an increase in structural loans and (ii) reversals of interest provisions for reprogrammed loans that became past due.

 

(ii)

QoQ, BCP Bolivia registered an increase in NIM due to the exchange rate effect. YoY, NIM fell after yields and loan levels declined, and the focus shifted from origination to bolstering collections.

 

Risk-adjusted NIM at Credicorp increased +57bps QoQ +235bps YoY; and +248bps YTD. Growth in all cases was driven by a significant reduction in provisions and by the same factors that drove variations in NIM.

 

³ In recent months, we registered provisions for interest income that was accrued over the reprogrammed loans grace periods and was not paid-back when grace periods expired due to delinquency.

 

 

 

 

 

 

4. Portfolio Quality

 

4.1. Net provisions for loan losses and CofR

 

		Quarter												% change								YTD								% change
Provision for credit losses on loan portfolio, net of recoveries S/ 000		3Q20				2Q21				3Q21				QoQ				YoY				9M - 20				9M - 21				9M - 21 / 9M - 20
Gross provision for credit losses on loan portfolio			(1,348,726	)			(441,007	)			(265,158	)			-39.9	%			-80.3	%			(5,295,095	)			(1,329,147	)			-74.9	%
Recoveries of written-off loans			42,821				77,627				100,744				29.8	%			135.3	%			107,252				243,706				127.2	%
Provision for credit losses on loan portfolio, net of recoveries			(1,305,905	)			(363,380	)			(164,414	)			-54.8	%			-87.4	%			(5,187,843	)			(1,085,441	)			-79.1	%

 

		Quarter												% change								YTD								% change
Cost of risk and Provisions		3Q20				2Q21				3Q21				QoQ					YoY			9M - 20				9M - 21				9M - 21 / 9M - 20
Cost of risk (1)			3.84	%			1.02	%			0.45	%			-57 bps				-339 bps				5.08	%			0.99	%			-409 bps
Structural Cost of risk (2)			4.37	%			1.23	%			0.54	%			-69 bps				-383 bps				6.01	%			1.15	%			-486 bps

 

(1) Annualized Provision for credit losses on loan portfolio, net of recoveries / Total loans.

(2) The Structural Cost of risk excludes the provisions for credit losses on loan portfolio, net of recoveries and total loans from the Reactiva Peru and FAE Government Programs.

 

Net provisions for loan losses fell -54.8% QoQ, following the same trend seen in previous quarters. This represents the largest drop in expenses in more than 8 years, as the conservative level of allowances for loan losses remains 1.8x above the level reported pre-pandemic. In this context, the cost of risk fell -57 bps. This was primarily due to:

 

(i)

BCP Stand-alone: due to the reduction in risk in the Individuals Banking and Wholesale Banking portfolios, which was driven by growth in income levels due to an influx of statutory bi-yearly bonus payments for individuals and companies’ uptick in sales. This positive evolution meant that the volume of loans that advanced from Stage 2 to Stage 3 fell. The provisions contraction was also attributable to an increase in recoveries of write-offs.

 

(ii)

Mibanco: due to lower passes between Stages and a decrease in the PD Bottom Up, which is related to better payment behaviors, an improvement in the portfolio quality of the new disbursements, and due to methodological adjustments. The aforementioned was slightly offset by higher provisions related to adjustments in write-offs policies, which require the establishment of total expenses for subsequent write-offs.

 

The aforementioned was partially attenuated by an increase in expenses at BCP Bolivia, which was attributable to an extraordinary provisions reversal in 2Q21, and adjustments to the PD model, which reflected operations pending to reprogram loans as mandated by the government of Bolivia.

 

If we exclude the effects of government loans, the structural cost of risk stands at 0.54%, +9 bps higher than the total ratio given that S/21 billion in government loans are excluded from the denominator.

 

QoQ evolution of the Cost of Risk	YoY evolution of the Cost of Risk
(1) Others include BCP Bolivia, ASB and eliminations.	(1) Others include BCP Bolivia, ASB and eliminations.

 

In the YoY analysis, provisions fell -87.4% due to (i) significant provisioning in 3Q20 in a context of high uncertainty relative to COVID-19 and (ii) the recovery in macroeconomic projections. This improvement was driven by all the banking subsidiaries, and was reflected in a drop of -339 bps in the cost of risk. This contraction was spurred by:

 

(i)

BCP Stand-alone: particularly in the SME-Pyme segments and Wholesale Banking. In SME-Pyme, the drop was driven by the fact that provisions were higher in 3Q20 due to adjustments to the LGD model to incorporate the impact of COVID-19. On the Wholesale Banking end, the reduction in provisions was due to positive client payment behavior, the fact that an important client emerged from default and a decrease in risk levels.

 

(ii)

Mibanco: due to improvements in clients payment behavior, which generated adjustments to the stress levels in the models, requiring lower provisions in the new disbursements, and a significant increase in the recovery of written-off loans.

 

 

(iii)

BCP Bolivia: attributable to the fact that provisioning levels were very high last year and included earmarked expenses for SME-Pyme clients and the Consumer portfolio in anticipation of an increase in the probability of loan losses.

 

The aforementioned was partially attenuated by growth in provisions for larger loans volumes in the structural portfolios at all subsidiaries, which increased +12.2% YoY in aggregate. It is important to note that the devaluation of local currency also spurred growth in loans.

 

If we exclude government loans and provisions, the structural cost of risk was 0.54%, +9 bps higher than the total ratio. This evolution was driven primarily by the loan effect.

 

YTD Evolution of the Cost of Risk

 

 

 

(1)

Others include BCP Bolivia, ASB and eliminations.

 

In the YTD analysis, net provisions for loan losses decreased -79.1% given that forward-looking provisions were set aside in 2020 in context of greater uncertainty. The contractions at each subsidiary were driven by the same factors as those mentioned in the YoY analysis. In this scenario, the cost of risk fell to 0.99% at the end of September, which represented a contraction of -409 bps. If we exclude the effect of government loans, the structural cost of risk stands at 1.15%.

 

4.2. Delinquency

 

In terms of portfolio delinquency, it is important to divide the analysis to contemplate the evolution of the Structural Portfolio and the Government Portfolio:

 

Structural Loan Portfolio:

 

Structural Portfolio quality and Delinquency ratios (1)						As of								% change
S/ 000		Sep 20				Jun 21				Sep 21				QoQ				YoY
Structural Total loans (Quarter-end balance)			111,873,729				120,095,401				125,528,623				4.5	%			12.2	%
Structural Allowance for loan losses			9,507,815				9,245,140				8,934,930				-3.4	%			-6.0	%
Structural Write-offs			20,249				742,211				670,273				-9.7	%			3210.2	%
Structural IOLs			4,142,844				4,913,569				4,776,182				-2.8	%			15.3	%
Structural Refinanced loans			1,539,484				1,800,076				1,798,965				-0.1	%			16.9	%
Structural NPLs			5,682,328				6,713,645				6,575,146				-2.1	%			15.7	%
Structural IOL ratio			3.70	%			4.09	%			3.80	%			-29 bps				10 bps
Structural NPL ratio (2)			5.08	%			5.59	%			5.24	%			-35 bps				16 bps
Structural Allowance for loan losses over Structural Total loans			8.5	%			7.7	%			7.1	%			-58 bps				-138 bps
Structural Coverage ratio of NPLs			167.3	%			137.7	%			135.9	%			-182 bps				-3143 bps

 

(1) The Structural Portfolio excludes Government Programs (GP) effects.

(2) Figures differ from previously reported, due to the methodological change in the calculation, which includes the overdue portfolio instead of the Portfolio Management figures.

 

 

In the QoQ analysis:

 

	(i)	IOL portfolio: a drop of -2.8% in IOL loans, primarily in Mibanco and Individuals at BCP Stand-alone, which posted an improvement in payment behavior.

	(ii)	Refinanced portfolio: the slight reduction of -0.1% was attributable to a decrease in the volume of refinanced loans in Individuals and Wholesale Banking at BCP Stand-alone and at Mibanco.

	(iii)	Write-offs: the drop of -9.7% was associated with BCP Stand-alone, after a significant rebound was registered in the levels of write-offs in 2Q21. This was partially attenuated by growth in charge-offs at Mibanco.

	(iv)	NPL ratio: in the aforementioned context, the NPL ratio fell -35 bps, which was primarily attributable to a -2.1% reduction in NPL loans and an increase of +4.5% in total loans.

(v)

Coverage ratio of NPLs: the ratio fell -182 bps this quarter, which was attributable to the fact that the reduction in the allowance for loan losses was greater than the decrease posted for NPL loans.

 

In the YoY analysis:

 

	(i)	IOL portfolio:  the +15.3% increase was driven by the fact that in 3Q20, the vast majority of loans were within grace period. Growth in IOLs was registered primarily by (i) SMEs, due to the expiration of grace periods of clients with loan facilities granted during the pandemic, (ii) Wholesale Banking, after specific clients in the transportation and energy sector reported deterioration, and (iii) Mibanco, which was affected by a dip in transactional activity in the microbusiness segment due to the economic closure and the maturity of reprogrammed loans during the pandemic.

	(ii)	Refinanced portfolio: the increase of +16.9% was attributable to an uptick in reprogramming in Retail Banking at BCP Stand-alone as clients continued to struggle under the weight of the pandemic.

	(iii)	Write-offs: growth was reported in all banking subsidiaries, led by Mibanco and BCP Stand-alone, given that write-offs were temporally suspended in 3Q20.

	(iv)	NPL Ratio: in the aforementioned context, growth of +16 bps in this ratio was attributable to grace period expirations, which was subsequently reflected in an uptick in non-payments. The aforementioned was partially offset by loan growth (+12.2%).

(v)

Coverage of the NPL portfolio: the contraction was driven by growth in IOL loans, given that the pandemic continues to generate negative impacts, and by a drop of -6.0% in allowances.

 

Government Loan Portfolio:

 

GP Portfolio quality and Delinquency ratios (1)						As of								% change
S/ 000		Sep 20				Jun 21				Sep 21				QoQ				YoY
GP Total loans (Quarter-end balance)			24,274,982				22,996,351				21,022,603				-8.6	%			-13.4	%
GP Allowance for loan losses			148,568				146,011				142,519				-2.4	%			-4.1	%
GP IOLs			-				140,784				697,503				395.4	%			-
GP NPLs			-				140,784				697,503				395.4	%			-
GP IOL ratio			-				0.61	%			3.32	%			271 bps				-
GP NPL ratio			-				0.61	%			3.32	%			271 bps				-
GP Allowance for loan losses over GP Total loans			0.6	%			0.6	%			0.7	%			5 bps				7 bps
GP Coverage ratio of NPLs			-				103.7	%			20.4	%			-8328 bps				-

 

(1) Government Programs (GP) include Reactiva Peru and FAE.

 

In the QoQ analysis:

 

	(i)	IOL portfolio: growth was attributable to grace period expirations, particularly in the SME-Pyme segment.

	(ii)	NPL ratio: the increase was attributable to an increase in the volume of overdue loans and to a reduction in total loans.

(iii)

Coverage of NPL loans: the reduction in this ratio was due primarily to growth in IOL loans.

 

Next, we will discuss the evolution of consolidated figures, which incorporate the effects of the evolutions of both the structural portfolio and government loan portfolio:

 

 

Total Portfolio:

 

Portfolio quality and Delinquency ratios						As of								% change
S/ 000		Sep 20				Jun 21				Sep 21				QoQ				YoY
Total loans (Quarter-end balance)			136,148,711				143,091,752				146,551,226				2.4	%			7.6	%
Allowance for loan losses			9,656,383				9,391,151				9,077,449				-3.3	%			-6.0	%
Write-offs			20,249				742,211				670,273				-9.7	%			n.a
Internal overdue loans (IOLs) (1)			4,142,844				5,054,353				5,473,685				8.3	%			32.1	%
Internal overdue loans over 90-days (1)			3,442,908				3,817,463				4,051,717				6.1	%			17.7	%
Refinanced loans			1,539,484				1,800,076				1,798,965				-0.1	%			16.9	%
Non-performing loans (NPLs) (2)			5,682,328				6,854,429				7,272,649				6.1	%			28.0	%
IOL ratio			3.04	%			3.53	%			3.73	%			20 bps				69 bps
IOL over 90-days ratio			2.53	%			2.67	%			2.76	%			9 bps				23 bps
NPL ratio			4.17	%			4.79	%			4.96	%			17 bps				79 bps
Allowance for loan losses over Total loans			7.1	%			6.6	%			6.2	%			-37 bps				-90 bps
Coverage ratio of IOLs			233.1	%			185.8	%			165.8	%			-1996 bps				-6725 bps
Coverage ratio of IOL 90-days			280.5	%			246.0	%			224.0	%			-2197 bps				-5643 bps
Coverage ratio of NPLs			169.9	%			137.0	%			124.8	%			-1219 bps				-4512 bps

 

(1) Includes overdue loans and loans under legal collection. (Quarter-end balances).

(2) Non-performing loans include internal overdue loans and refinanced loans. (Quarter-end balances).

 

When analyzing the evolution of delinquency indicators, it is necessary to note that: (i) traditional delinquency indicators (IOL and NPL ratios) continue to be distorted by the presence of loans that have collateral (commercial and residential properties). This means that a significant portion of loans that are more than 150 days overdue cannot be written off, despite being fully provisioned, given that the judicial process to liquidate the collateral can take up to five years on average.

(1) The Structural Cost of risk excludes the provisions for credit losses on loan portfolio, net of recoveries and total loans from the Reactiva Peru and FAE Government Programs.

 

In the aforementioned context, the NPL ratio at Credicorp increased +17 bps QoQ, which was primarily driven by a deterioration in the IOL portfolio from the Government Program loans.

 

In the YoY analysis, the ratio increased +79 bps. This evolution was fueled by grace period expirations in both the Structural Portfolio and Government Loan Portfolio, which reflected growth in both IOL and refinanced loans. Expansion in both of these portfolios was fueled by the on-going effects of the pandemic.

 

 

4.2.1 Delinquency by Segment

 

NPL Ratio by Segment

 

 

 

In the analysis of the NPL ratio by segment, it is important to note the following movements:

 

Structural Portfolio

 

In the QoQ analysis:

 

	(i)	Wholesale: the ratio fell -22 bps due to loan growth, as indicated in section 1.2.1. Loan evolution by business segment, and to a drop in refinanced loans, which was fueled by the exit of a number of clients in the agriculture sector.

	(ii)	SMEs: the ratio increased +19 bps, especially due to clients who also have GP loans and whose grace periods expired in the quarter; however, the majority of overdue loans were in early tranches of delinquency. The aforementioned was partially attenuated by a loan expansion of +5.6%.

	(iii)	Individuals: the drop of -38 bps was attributable to a decrease in overdue loans in the Credit Card and Consumer segments, which was driven by individual’s higher income levels after they received bi-yearly bonuses.

	(iv)	Mibanco: the significant reduction of -185 bps was attributable to a drop in IOL and refinanced loan volumes and to an increase in loans. The contraction in the NPL portfolio is the result of better risk disbursements and collections actions, higher write-offs and lower deterioration of reprogrammed loans in grace period.

(v)

BCP Bolivia: the drop of -28 bps was attributable to a decrease in the IOL loan volume due to government reprogramming; these loans are considered as current in the loan book.

 

In the YoY analysis:

 

	(i)	Wholesale Banking: increase of +42 bps, which reflected an uptick in IOL loans. This evolution was attributable to several clients in the leisure, tourism and real estate industries, whose services have been negatively impacted by the pandemic and political instability.

	(ii)	SMEs: growth of +60 bps, which was attributable to an increase in refinanced loans in Pyme-SME and in IOL loans in SME-Business.

	(iii)	Individuals: significant drop of -62 bps, spurred by improvements in payment behavior after clients registered higher levels of liquidity following AFP and Severance Indemnity fund releases.

	(iv)	Mibanco: the increase of +64 bps in the ratio was attributable to growth in IOL loans, which was concentrated in the small business segment. This was slightly attenuated by an increase in write-offs and by loan growth.

(v)

BCP Bolivia: the reduction of 14 bps reflects the same trend as that seen QoQ and was also driven by an uptick in loans.

 

 

Government Loan Portfolio:

 

In the QoQ analysis:

 

The 3Q21 presented the second quarter of installment maturities of the GP Portfolio, which consequently registered an increase of the overdue loans. This growth reflects the on-going impact of the pandemic. In this context, deterioration was registered in all segments, led by SMEs and followed by Mibanco and Wholesale Banking. It is important to note that part of the NPL portfolio is being reprogrammed or has already regularized payment dates. Additionally, lower loan volumes, which reflected advanced amortizations payments, affected delinquency ratios deterioration.

 

Total Portfolio:

 

In the QoQ and YoY analysis:

 

The ratios of the total portfolio reflect the evolution of the structural portfolio, negatively impacted by the recent deterioration of the Government Program portfolio.

 

4.3 Reprogramming and Payments Management⁴

 

4.3.1 Structural Portfolio⁵

 

At the end of September, Credicorp’s structural portfolio reported growth of +4.5% QoQ and +12.2% YoY. For more information about this evolution, see section 1.2.1. Evolution of loans by business segment. The reprogrammed structural loan portfolio registered an on-going reduction and represent 14% of structural loans, which reflect a contraction of -80 bps QoQ and -330 bps YoY.

 

 

Evolution of the Payment Ratio⁶ (%)

 

 

This quarter, the payment ratio for overdue installments improved QoQ and YoY in all segments given that the volume of expired installments increased alongside expirations in grace periods. The improvements reported for the ratios reflect an uptick in income through growth in transaction levels and sales at companies and an increase in individual funds after deposits of bi-yearly bonus payments (statutory) were made in July and pensions and severance indemnity withdrawals.

 

The majority of delinquency⁷ is concentrated in early delinquency tranches where recovery levels are high, which is not reflected in the loan book overdue portfolio. At Retail Banking, delinquency situates at 5.2%, which represents a contraction of -120 bps QoQ. 75% of this delinquency is contained in the less than 30 days overdue tranches (loans have not migrated to more advanced stages of delinquency). Late delinquency (31 to 120 days), which includes loans that are considered more difficult to recover, improved -20 bps QoQ alongside an uptick in positive payment behavior, particularly among clients that have received 2 or more facilities, which are also considered higher risk profiles. At Mibanco, the overdue loan portfolio decreased -180 bps QoQ, situating at 6.8%, after an uptick in transactions and income levels led to a subsequent improvement in payment ratios.

 

4

Portfolio Management figures, which focus on analyzing new delinquency. Figures do not include loans that are over 120 days overdue, special accounts and the under legal collections portfolio.

5

Figures do not include the government loan portfolios (GP).

6

Payment ratio: loan balances with up-to-date payments/balances of loans with due installments.

7

The overdue portfolio includes capital and interest on overdue loans beginning on day 1 and ending on day 120.

 

 

4.3.2 Government Loans (GP)⁸

 

Government Loans by Segment (S/ millions)

 

 

 

At the end of 3Q21, government loans decreased -8.8%. The reduction in the portfolio balance is due to the fact that most of the grace periods expired and clients made advanced amortizations, mainly driven by the SME-Business and Middle Market Banking. At quarter-end, government loans represented 14% of Credicorp’s total loans (in comparison to 16% in Jun 21). The reprogrammed portfolio increased QoQ and by quarter-end, represented 32% of total government loans. This growth was spurred by an increase in requests for reprogramming (under facilities mandated by the Peruvian government until 4Q21).

 

In the YoY analysis, the government loan portfolio decreased -13.1%. The trend is similar to that seen in the QoQ analysis, which translated into a -4pp drop in comparison to the results reported at the end of Sep 20.

 

Composition of the portfolio by segment (S/ millions)

 

 

In 3Q21, the reprogrammed portfolio increased across segments after the government mandated facilities in 2Q21 that allowed clients who meet certain criteria to request reprogramming. It is important to note that total maturity of the Wholesale Banking, Retail Banking and Mibanco portfolios expire in 2.2 years, 3.2 years and 2.0 years on average respectively.

 

Finally, it is important to note that the government loan portfolios are backed by state guarantees. At the end of September, average guarantees were situated at 84%, 92% and 97% for Wholesale Banking, Retail Banking and Mibanco respectively. Loans that enter more than 90 days of delinquency are transferred to Special Accounts and Payment Solutions for subsequent execution of collateral agreements with regulatory entities.

 

⁸ Government loans include current, overdue and reprogrammed loans through Reactiva Peru and FAE

 

 

 

 

 

 

5. Other Income⁹

 

Other Income						Quarter								% change								YTD								% change
(S/000)		3Q20				2Q21				3Q21				QoQ				YoY				Sep 20				Sep 21				Sep 21 / Sep 20
Fee income			775,805				862,411				876,391				1.6	%			13.0	%			2,039,622				2,569,573				26.0	%
Net gain on foreign exchange transactions			155,028				232,668				238,886				2.7	%			54.1	%			471,319				651,443				38.2	%
Net gain on securities			135,957				(69,947	)			5,739				-108.2	%			-95.8	%			295,887				(47,921	)			-116.2	%
Net gain from associates (1)			11,245				12,302				19,090				55.2	%			69.8	%			45,376				60,797				34.0	%
Net gain on derivatives held for trading			(21,297	)			45,413				43,086				-5.1	%			n.a.				22,491				158,222				603.5	%
Net gain from exchange differences			6,530				45,924				3,233				-93.0	%			-50.5	%			9,526				43,621				357.9	%
Other non-financial income			39,498				62,923				52,258				-16.9	%			32.3	%			192,463				189,172				-1.7	%
Total non-financial income, net			1,102,766				1,191,694				1,238,683				3.9	%			12.3	%			3,076,684				3,624,907				17.8	%

 

	(1)	Includes gains on other investments, mainly made up of the profit of Banmedica.
	(2)	3Q20 Figures differ from what was previously reported by reclassification of IFRS16.

 

Evolution of Other income		QoQ evolution of Other income
(1) Others includes Net gain from associates, Net gain from exchange difference and Other non-financial income.		(1) Others includes Grupo Crédito, Credicorp Stand-alone, elimination and others.

 

In the QoQ analysis, core other income was relatively stable, reporting a slight increase of +1.84%. This growth was driven by a marginal increase in Fee Income in Universal Banking (+4.74%) and Microfinanzas (+55.9%), which we will explain in greater detail in the next section; and higher Net gain on foreign exchange transactions in Universal Banking, driven by higher FX transactions at BCP Bolivia.

The aforementioned scenario was partially offset by a decrease in Fee Income in Investment Banking and Wealth Management (-11.9%); this was driven by the fact that extraordinary income for brokerage and up-front fees to enter third-party funds was comparatively higher in 2Q21.

 

Core other income grew +27.7% due to:

 

(i)

The positive evolution of Universal Banking, since losses were recorded from sales of sovereign bonds in 2Q21.

 

(ii)

Growth in Net earnings for investment in associates, which was generated by an increase in gains in the EPS business due to a decrease in COVID-19 claims.

 

The aforementioned was partially offset by a decrease in results for the Net gain on derivatives and for the Net gain from exchange differences given that during 2Q21 a large volume of foreign currency was sold, taking advantage of the volatility of the exchange rate to offset the losses generated by the sale of sovereign bonds.

 

The results led other income to increase +3.9%.

 

 

⁹ Previously reported as Non-financial income

 

 

YoY evolution of Other Income		YTD evolution of Other income
(1) Others includes Grupo Crédito, Credicorp Stand-alone, elimination and others.		(1) Others includes Grupo Crédito, Credicorp Stand-alone, elimination and others.

 

 

 

5.1. Fee Income

 

5.1.2. Fee income in the Banking Business

 

Fee Income						Quarter								% change								YTD								% change
S/ 000		3Q20				2Q21				3Q21				QoQ				YoY				Sep 20				Sep 21				Sep 21 / Sep 20
Miscellaneous accounts (1)			165,699				180,183				211,284				17.3	%			27.5	%			446,247				572,531				28.3	%
Credit cards (2)			51,781				56,218				44,557				-20.7	%			-14.0	%			124,822				154,794				24.0	%
Drafts and transfers			62,106				98,796				108,981				10.3	%			75.5	%			164,947				292,403				77.3	%
Personal loans (2)			29,197				27,608				17,925				-35.1	%			-38.6	%			68,847				69,804				1.4	%
SME loans (2)			20,161				16,821				7,441				-55.8	%			-63.1	%			45,419				38,797				-14.6	%
Insurance (2)			23,990				26,897				28,713				6.8	%			19.7	%			71,916				82,800				15.1	%
Mortgage loans (2)			14,085				9,373				7,277				-22.4	%			-48.3	%			22,617				24,413				7.9	%
Off-balance sheet (3)			48,430				60,592				65,919				8.8	%			36.1	%			147,754				186,376				26.1	%
Payments and collections (3)			99,836				108,670				117,185				7.8	%			17.4	%			283,443				332,238				17.2	%
Commercial loans (3)(4)			16,626				16,766				16,504				-1.6	%			-0.7	%			45,052				48,662				8.0	%
Foreign trade (3)			12,079				17,905				18,497				3.3	%			53.1	%			33,615				51,593				53.5	%
Corporate finance and mutual funds (4)			13,162				13,011				9,165				-29.6	%			-30.4	%			41,986				35,759				-14.8	%
Mibanco			3,639				10,727				18,583				73.2	%			410.6	%			27,811				46,956				68.8	%
BCP Bolivia			19,863				30,558				30,494				-0.2	%			53.5	%			70,283				95,585				36.0	%
ASB			10,024				21,590				24,545				13.7	%			144.9	%			39,549				57,993				46.6	%
Others (4)(5)			11,290				5,019				16,150				221.8	%			43.1	%			28,398				31,752				11.8	%
Total fee income			601,968				700,733				743,220				6.1	%			23.5	%			1,662,708				2,122,456				27.7	%

 

Source: BCP

(1) Saving accounts, current accounts, debit card and master account.

(2) Mainly Retail fees.

(3) Mainly Wholesale fees.

(4) Figures differ from previously reported, please consider the data presented on this report.

(5) Includes fees from trust business, wealth management, network usage and other services to third parties, among others.

 

Fee income in the banking business grew 6.1% QoQ. The items that reported the most significant increases were:

 

(i)

Miscellaneous accounts, where growth was mainly driven by an increase in consumption in establishments through POS with credit and debit cards (+30.9%) and an increase in fees for account maintenance (+8.2%).

 

(ii)

Others, which was driven by an increase in fees for network use by non-clients and for other third-party services.

 

(iii)

Drafts and transfers, which continue to grow due to an uptick in outflows to foreign destinations due to political uncertainty.

 

(iv)

Mibanco, which registered an improvement due to a decrease in commissions paid to third parties for physical agreements given that fewer disbursements were made through these channels and the conditions for third-party contracts improved.

 

This growth was partially offset by a decrease in the fee level for Credit Cards, Personal Loans and SME-Pyme loans after penalty fees for past due payments were waived in June in accordance with new legislation.

 

At the YoY and 9 month YoY analyses, growth was primarily attributable to Miscellaneous Accounts and Drafts and Transfers, which were impacted in 2020 by fee exemptions to aid clients during the quarantine.

 

It is important to note that despite the fact that we stopped collecting fees for inter-place transfers and past-due penalties, we are 4.4% above pre-pandemic levels due to growth in fees for drafts and transfers (+51.31%), off balance sheets (+28.6%) and POS consumption with debit and credit cards (+19.5%).

 

 

 

 

 

 

 

6. Insurance Underwriting Result

 

Insurance underwriting result (1)						Quarter								% change								YTD								% change
S/ 000		3Q20				2Q21				3Q21				QoQ				YoY				9M-20				9M-21				9M-21 / 9M-20
Net earned premiums			595,394				639,944				675,571				5.6	%			13.5	%			1,775,390				1,959,443				10.4	%
Net claims			(513,091	)			(691,335	)			(517,951	)			-25.1	%			0.9	%			(1,215,376	)			(1,832,639	)			50.8	%
Acquisition cost (2)			(86,644	)			(84,944	)			(87,416	)			2.9	%			0.9	%			(286,748	)			(258,182	)			-10.0	%
Total insurance underwriting result			(4,340	)			(136,335	)			70,204				151.5	%			n.a.				273,266				(131,378	)			-148.1	%

 

(1) Includes the results of the Life, Property & Casualty and Crediseguros business.

(2) Includes net fees and underwriting expenses.

 

6.1. Life Insurance

 

Total life insurance premiums	Net earned premiums (10)
(S/ millions)	(S/ millions)

 

 

 

Total premiums grew 19.0% QoQ, which was driven by: (i) Annuities, primarily associated with an increase in sales in Annuities for Survivorship due to COVID-19 cases; (ii) Individual Life, due to an increase in sales and to and uptick in the exchange rate; (iii) Group Life, which was attributable to an increase in volumes of renewals for the SCTR product (Complementary Insurance for high-risk Occupations); (iv) D&S, after collections recovery of premiums for SISCO V⁽¹¹⁾; y (v) Credit Life, which was primarily generated through the bancassurance channel due to an increase in Mibanco loans.

 

In the YoY analysis, total premiums increased 37.3%, which was driven by (i) Annuities, primarily due to an increase in sales in Annuities for Survivorship; (ii) D&S, due to an increase in collections under SISCO V due higher premium rates; (iii) Credit Life, due to a decrease in loan volumes at Mibanco in 3Q20 in a challenging economic context; (iv) Individual Life, which was attributable to an increase in sales and in the exchange rate; and (v) Group Life, primarily due to an uptick in volumes of renewals.

 

Net earned premiums increased 4.6% QoQ, driven by the same factors outlined in the QoQ analysis. This was partially offset by an increase in the number of underwriting reserves that were set aside to cover growth in sales. In the YoY analysis, net earned premiums rose 18.9% due to the effects described in the analysis of total premiums; this evolution was offset by an increase in reserves for Annuities and Individual Life, and higher ceded premiums in D&S due to the conditions of the new SISCO V contract.

 

YTD, total premiums and net earned premiums increased 26.1% and 15.9% respectively, driven by the factors outlined in the YoY analysis.

 

⁽¹⁰⁾ Total premiums excluding premiums ceded to reinsurance and premium reserves.

⁽¹¹⁾ Collective Disability, Survival and Burial Insurance of the private pension system.

 

 

Net life insurance claims

(S/ millions)

 

 

 

Net claims fell 37.2% QoQ, which was attributable to the release of IBNR COVID-19 provisions for a total of S/104 million (vs S/35 million in reserves in 2Q21). We expect IBNR releases to continue if cases continue to be registered. COVID-19 reported claims during the second wave totaled S/ 150 million (vs S/ 219 million in 2Q21), driven by the evolution of Credit Life in particular.

 

In the YoY analysis, claims fell 7.9% due to releases of IBNR provisions (vs S/ 50 million in reserves in 3Q20), which reflected an improvement in the sanitary situation and an increase in ceded premiums in the D&S line due to the conditions of the new SISCO V contract, YTD, net claims increased 65.0%, which was attributable to an uptick in reported claims for COVID-19 at the end of September 21 for S/ 487.6 million. This result was mitigated by a decrease in the IBNR provisions set aside for COVID-19 and an increase in ceded premiums.

 

After registering a peak in COVID-19 claims in 2Q21, the claims level began falling in July and the trend remains favorable due to progress in the vaccination process. Currently the vaccination level of the population reaches 70% with at least one doses.

 

6.2. P&C Insurance

 

Total P&C Premiums	Net earned premiums (12)
(S/ millions)	(S/ millions)

 

 

 

Total premiums increased 8.0% QoQ, which was attributable to: (i) Cars, driven by an increase in new sales and renewals in the brokers channel and in bancassurance due to recovery in the Cars segment; (ii) Personal Lines, mainly due to an increase in policy issuances for the Mortgage Product and growth in volumes of renewals for Card Protection; (iii) Commercial Lines, due to an uptick in new sales in the Aviation and Third-party Liability Lines and (iv) SOAT⁽¹³⁾, which was associated with an increase in sales in the digital and bancassurance channels. The aforementioned was attenuated by the evolution of Medical Assistance, which reported a high volume of renewals last quarter.

 

In the YoY analysis, total premiums increased 18.8%, which was driven primarily by (i) Commercial Lines, due to an increase in new sales in the Fire, Third-party Liability and Aviation lines; (ii) Personal lines, due to an increase in sales for Card Protection, Personal life Accidents and Mortgage products; (iii) Medical Assistance, due to an increase in renewal volumes for comprehensive health and oncological products; (iv) Cars, due to an increase in renewals in the broker and digital channels. The aforementioned was attenuated by the evolution of SOAT, which registered a decrease in new sales through the broker and bancassurance channels.

 

⁽¹²⁾ Total premiums less premiums ceded to reinsurance and premium reserves.

⁽¹³⁾ Mandatory Insurance Against Traffic Accidents.

 

 

Net earned premiums QoQ increased 6.7% due to the factors described in the analysis of total premiums. These effects were partially mitigated by higher levels of ceded premiums in the Commercial Lines and by an increase in the underwriting reserves set aside in Cars and SOAT. Net earned premiums YoY increased 8.1%, driven by the factors outlined in the QoQ analysis.

 

YTD, total premiums increased 10.4% while net earned premiums rose 4.7%. This evolution was attributable to the factors explained in the YoY analysis and was attenuated by a decrease in renewals in Cars.

 

Net Claims in P&C

(S/ millions)

 

 

Net claims increased 20.9% QoQ, which was driven by: (i) Commercial Lines, and the Machinery line in particular due to damage associated with sinkholes at mining sites and to damaged merchandise in the transportation line; (ii) Cars, due to an increase in claims frequency and in the use of vehicles; (iii) Medical Assistance, due to a recovery in the demand for non-Covid medical services and, (iv) Personal Lines, mainly relative to the card protection product.

 

In the YoY analysis, net claims increased 31.1%, which was attributable to (i) Commercial Lines, given an uptick in the severity of cases in the transportation, machinery and Maritime Hulls lines; (ii) Medical Assistance, due to an increase in the severity of COVID claims and to growth in the number of medical services for other illnesses; (iii) Cars and SOAT, due to an increase in claims frequency; and (iv) Personal Lines, which was driven primarily by the card protection product. YTD, net claims increased 20.1% due to the reasons outlined in the YoY analysis; this was attenuated by the evolution of Personal Lines, which experienced a drop in case frequency for the card protection product.

 

6.3. Acquisition Cost

 

Acquisition cost						Quarter								% change								YTD								% change
S/ 000		3Q20				2Q21				3Q21				QoQ				YoY				9M-20				9M-21				9M-21 / 9M-20
Net fees			(59,653	)			(53,808	)			(51,617	)			-4.1	%			-13.5	%			(175,388	)			(161,030	)			-8.2	%
Underwriting expenses			(27,716	)			(31,842	)			(33,543	)			5.3	%			21.0	%			(113,366	)			(96,942	)			-14.5	%
Underwriting income			725				706				(2,256	)			n.a.				n.a.				2,004				(210	)			-110.5	%
Acquisition cost			(86,644	)			(84,944	)			(87,416	)			2.9	%			0.9	%			(286,749	)			(258,182	)			-10.0	%

 

Acquisition cost per business

(S/ million)

 

 

The acquisition cost increased 2.9% QoQ, which was primarily attributable to the Life business due to: (i) growth in underwriting expenses, after uncollectible reinsurance premiums were registered in Credit Life and Group Life, and (ii) a decrease in underwriting income due to profit sharing in Credit life and (iii) growth in commissions in Credit Life and Annuities. The aforementioned was mitigated by the evolution of the P&C business, which recorded a decrease in commissions in Personal Lines and a drop in underwriting expenses in Medical Assistance, both of which were associated with a decrease in provisions for doubtful collections.

 

In the YoY analysis, the acquisition cost increased, 0.9% which was primarily driven by the Life business (for the same reasons indicated in the QoQ analysis) and by an increase in underwriting expenses in P&C after more provisions were set aside for doubtful collections in the Commercial Lines and Cars. The aforementioned was mitigated by a decrease in commissions in P&C, which was spurred mainly by drops in Commercial Lines, Medical Assistance and Personal Lines.

 

YTD, the acquisition cost fell 10.0%. This was primarily attributable to the uptick registered in underwriting expenses last year in P&C, which was driven mainly by Cars and attributable to reimbursements of premiums during the pandemic (clients were unable to use their cars). The Life business reported a decrease in underwriting expenses, mainly through Individual Life. Finally, fee income dropped in the P&C business, which was primarily attributable to the evolution of Cars and of the Life business.

 

6.4. Underwriting Result by Business

 

Underwriting Result by Business

(S/ millions)

 

 

In the QoQ analysis, the underwriting result returned to a positive range, due primarily to an improvement in the life insurance result. This advance was driven by an increase in net earned premiums and to a decrease in claims due to an improvement in the sanitary situation. In P&C, the reduction in the underwriting result was attributable to an increase in claims, which was seen primarily in Commercial Lines due to an uptick in claim severity, which was accompanied by growth in claims in Cars and Medical Assistance, which was driven by an uptick in case frequency.

 

In the YoY analysis, the improvement in the underwriting result was attributable to an increase in net earned premiums in both businesses, and to lower life business claims given the release of IBNR claims of COVID-19 provisions after the second wave of the pandemic subsided. The aforementioned was attenuated by an uptick in claims in P&C, which was primarily attributable to Medical Assistance, Commercial Lines and Cars.

 

YTD, the decrease in the result was attributable to the results for Life and, to a lesser extent, to the results posted by P&C. In Life, the reduction in the result was associated with an increase in claims during the second wave of COVID-19. This effect was partially mitigated by an increase in net premiums and a decrease in acquisition costs. In P&C, the drop in the underwriting result was driven by an uptick in claims in Medical Assistance and in Commercial Lines and Cars, which registered an increase in claims frequency. This effect was partially mitigated by an increase in sales reported by Commercial Lines and Medical Assistance.

 

 

  

 

 

7. Operating Expenses

 

Operating expenses		Quarter												% change								YTD								% change
S/ 000		3Q20				2Q21				3Q21				QoQ				YoY				9M - 20				9M - 21				9M - 21 / 9M - 20
Salaries and employees benefits			803,438				882,177				915,564				3.8	%			14.0	%			2,520,618				2,655,300				5.3	%
Administrative, general and tax expenses (1)			591,213				672,804				803,156				19.4	%			35.8	%			1,644,010				2,056,803				25.1	%
Depreciation and amortization (1)			166,105				163,869				170,960				4.3	%			2.9	%			505,374				501,594				-0.7	%
Association in participation			10,566				8,879				10,426				17.4	%			-1.3	%			34,940				33,211				-4.9	%
Acquisition cost (2)			86,643				84,944				87,416				2.9	%			0.9	%			286,748				258,182				-10.0	%
Operating expenses (3)			1,657,965				1,812,673				1,987,522				9.6	%			19.9	%			4,991,690				5,505,090				10.3	%

 

(1)

3Q20 figures differ from what was previously reported by reclassification of IFRS16.

(2)

The acquisition cost of Pacifico includes net fees and underwriting expenses.

(3)

Operating expenses = Salaries and employee’s benefits + Administrative expenses + Depreciation and amortization + Association in participation + Acquisition cost.

 

	In the QoQ, YoY and 9 month YoY analyses, operating expenses rose due to:
	(i)	Growth in administrative and general expenses and taxes, which was primarily attributable to BCP Stand-alone, where efforts are underway to accelerate the organization’s digital transformation by increasing investment in technology, data analysis and consultancy among others.
	(ii)	The increase in Salaries and Employee Benefits, given that more provisions were set aside for employee profit sharing, which was in line with growth in earnings this quarter, and more personnel with specialized technical profiles were hired under the organization’s digital transformation strategy.
	It is important to note that exchange rate volatility significantly impacted expenses this quarter. If we exclude this effect, growth in spending situates at 9.1% (50bps less).

 

7.1. Administrative and general expenses and taxes

 

Administrative and general expenses and taxes

 

Administrative, general and tax expenses		Quarter												% change								YTD								% change
S/ 000		3Q20				2Q21				3Q21				QoQ				YoY				9M - 20				9M - 21				9M - 21 / 9M - 20
IT, Repair and maintenance			107,236				125,427				154,788				23.4	%			44.3	%			289,039				386,840				33.8	%
Marketing			90,912				104,862				123,370				17.6	%			35.7	%			219,673				300,502				36.8	%
Taxes and contributions			59,866				77,406				80,626				4.2	%			34.7	%			191,227				226,840				18.6	%
Consulting and professional fees			45,962				57,720				112,917				95.6	%			145.7	%			131,859				211,495				60.4	%
Transport and communications			44,794				53,394				59,008				10.5	%			31.7	%			113,003				155,100				37.3	%
IT third-party services			40,148				42,826				49,786				16.3	%			24.0	%			103,463				133,057				28.6	%
Comissions by agents			22,270				25,218				26,486				5.0	%			18.9	%			62,775				11,120				-82.3	%
Security and protection			16,101				15,691				15,469				-1.4	%			-3.9	%			47,903				47,119				-1.6	%
Sundry supplies			12,679				14,171				13,067				-7.8	%			3.1	%			46,226				42,058				-9.0	%
Leases of low value and short-term			14,157				20,145				23,517				16.7	%			66.1	%			50,551				64,564				27.7	%
Electricity and water			12,171				12,709				11,102				-12.6	%			-8.8	%			37,117				34,502				-7.0	%
Subscriptions and quotes			12,263				13,462				13,312				-1.1	%			8.6	%			35,234				39,957				13.4	%
Insurance			20,392				5,320				36,968				594.9	%			81.3	%			28,497				50,562				77.4	%
Electronic processing			8,824				11,123				10,864				-2.3	%			23.1	%			24,301				31,954				31.5	%
Cleaning			6,705				5,206				4,630				-11.1	%			-30.9	%			17,745				15,118				-14.8	%
Audit Services			3,693				2,206				2,479				12.4	%			-32.9	%			6,163				5,944				-3.6	%
Services by third-party and others (1)			73,040				85,919				64,767				-24.6	%			-11.3	%			239,234				300,071				25.4	%
Total administrative and general expenses			591,212				672,805				803,156				19.4	%			35.8	%			1,644,010				2,056,803				25.1	%

 

(1) The balance consists mainly of security and protection services, cleaning service, representation expenses, electricity and water utilities, insurance policiy expenses, subscription expenses and commission expenses.

 

 

In the QoQ, YoY and 9 month YoY analyses, administrative and general expenses and taxes rose due to:

 

(i)

Growth in expenses in IT, Repairs and Maintenance, which was associated with the development of new IT projects for digital transformation; business improvements; and sustainability.

 

(ii)

Growth in expenses in Marketing due to an uptick in consumption of LATAM miles through the client fidelity program after consumption with credit and debit cards rose in a context of economic reactivation post-quarantine.

 

(iii)

An increase in expenses for Consultancy and professional services due to an uptick in investment in the digital transformation program and in new disruptive initiatives.

 

 

  

8. Operating Efficiency

 

Operating Efficiency		Quarter												% change								Year								% change
S/ 000		3Q20				2Q21				3Q21				QoQ				YoY				9M - 20				9M - 21				9M - 21 / 9M - 20
Operating expenses (1)			1,657,964				1,812,674				1,987,522				9.6	%			19.9	%			4,991,690				5,505,090				10.29	%
Operating income (2)			3,684,610				4,147,704				4,307,965				3.9	%			16.9	%			10,866,506				12,327,232				13.4	%
Efficiency ratio (3)			45.0	%			43.7	%			46.1	%			240 bps				110 bps				45.9	%			44.7	%			-120 bps
Operating expenses / Total average assets (4)			2.93	%			2.96	%			3.20	%			24 bps				27 bps				3.17	%			3.00	%			-17 bps

 

(1) Operating expenses = Salaries and employee’s benefits + Administrative expenses + Depreciation and amortization + Association in participation + Acquisition cost.

(2) Operating income = Net interest, similar income and expenses + Fee income + Net gain on foreign exchange transactions + Net gain from associates + Net gain on derivatives held for trading + Net gain from exchange differences + Net premiums earned

(3) Operating expenses / Operating income.

(4) Operating expenses / Average of Total Assets. Average is calculated with period beginning and period-ending balances.

 

8.1

Efficiency ratio by income and expense item

 

QoQ and YoY, the efficiency ratio deteriorated 240 bps and 110 pbs. This decline was attributable to an increase in Administrative and general expenses and taxes, which was driven by an uptick in investment in digital transformation at BCP Stand-alone, and by growth in Salaries and Employee Benefits, which was fueled by an increase in provisions for profit sharing and by growth in expenses to hire personnel with specialized technical profiles.

 

YTD evolution of the efficiency ratio by account

 

 

(1) Other operating income includes: Net gain on foreign exchange transactions, Net gain from associates, Net gain on derivatives held for trading and Net gain from exchange difference.

(2) Other operating expenses includes: Acquisition cost and Association in participation.

 

YTD (9 months)¹⁴, the efficiency ratio improved 120pbs due to:

 

(i)

The increase in Fee Income, given that throughout the most part of 2020, fee exemptions were offered to clients to mitigate the impact of the pandemic. During this same period, restrictions on mobility were in place that reduced the transactions base.

 

(ii)

Growth in Net interest income, which was driven by an uptick in structural loans at Mibanco this quarter.

 

(iii)

An increase in income from Net earned premiums, which rose after Pacifico was awarded a larger tranche of SISCO V, which offers a better premiums structure than SISCO IV, and due to growth in premiums for credit life insurance, in line with an uptick in loan disbursements at Mibanco.

 

(iv)

Growth in Net gains on foreign exchange transactions, which were affected by the volatility created by political uncertainty.

 

The improvement this quarter was partially offset by growth in Administrative and general expenses and taxes (increase in expenses related to digital transformation at BCP Stand-alone) and in Salaries and employee benefits (increase in provisions for profit sharing, in line with an improvement in results).

 

¹⁴ This is the most efficient measurement of said indicator given that it eliminates the effects of seasonality between quarters.

 

 

8.2. Efficiency ratio reported by subsidiary ⁽¹⁾

 

		BCP Stand-alone				BCP Bolivia				Mibanco Peru				Mibanco Colombia				Pacifico				Prima AFP				Credicorp
3Q20			40.8	%			51.2	%			58.7	%			113.3	%			35.4	%			49.3	%			45.0	%
2Q21			40.3	%			58.9	%			55.6	%			74.1	%			36.6	%			44.9	%			43.7	%
3Q21			45.3	%			53.0	%			49.7	%			86.4	%			36.9	%			51.1	%			46.1	%
Var. QoQ			500 bps				-590 bps				-590 bps				1230 bps				30 bps				620 bps				240 bps
Var. YoY			450 bps				180 bps				-900 bps				-2690 bps				150 bps				180 bps				110 bps
9M - 20			40.8	%			52.9	%			65.2	%			98.4	%			38.7	%			47.9	%			45.9	%
9M - 21			42.0	%			56.9	%			55.4	%			79.9	%			37.0	%			47.5	%			44.7	%
% change			120 bps				400 bps				-980 bps				-1850 bps				-170 bps				-40 bps				-120 bps
9M - 21 / 9M - 20

 

(1)

(Salaries and employees benefits + Administrative, general and tax expenses + Depreciation and amortization + Acquisition cost + Association in participation) / (Net interest income + Fee income + Net gain on foreign exchange transactions + Net gain from associates + Net gain on derivatives held for trading + Result on exchange differences + Net premiums earned).

 

In the QoQ and YoY analysis, the efficiency ratio deteriorated due to an increase in expenses for digital transformation and for disruptive initiatives at BCP Stand-alone. The improvement registered in Mibanco’s results, which were boosted by growth in structural loans and better funding structure, was insufficient to offset the aforementioned increase.

 

YTD evolution of the efficiency ratio by subsidiary

 

 

(1) Others includes Grupo Credito, among other subsidiaries and consolidation eliminations.

 

YTD (9 months), the efficiency ratio improved due to: 

 

(i)

Growth in interest income at Mibanco due to an uptick in structural loan disbursements in 2Q21 and 3Q21.

 

(ii)

Growth in premiums at Pacifico, after the company won a larger tranche of the SISCO V tender, which contemplates a better premiums structure than SISCO IV; expansion was also fueled by an increase in health insurance policy renewals.

 

(iii)

An increase in fee income from Investment Banking and Wealth Management, as a result of the increase in clients that entered international platforms through ASB services, mainly during 2Q21.

 

 

 

 

 

 

In the YoY analysis, the capital ratio registered a slight increase, which was attributable to (i) the exchange rate effect at the subordinated debt level and, (ii) a base effect, associated with losses incurred in 3Q20.

 

9.2. Regulatory Capital BCP Individual – Peru GAAP

 

(1) Regulatory Tier 1 Capital / Total Risk-weighted assets

(2) Total Regulatory Capital / Total Risk-weighted assets (legal minimum = 10% since July 2011).

 

The YoY evolution shows the same trend, which reflects a decrease in the BIS ratio and in the Tier 1 ratio in comparison to the levels reported in 3Q20. Both ratios were affected by 8.2% growth in RWAs. These reductions were partially offset by an increase in capital levels and in reserves, which was driven by an improvement in BCP’s results. The BIS ratio fell to a less significant degree than Tier 1 due to an increase in subordinated debt through a liability management transaction at BCP Stand-alone.

 

Common Equity Tier 1 Ratio– BCP Stand-alone

 

 

 

(*) Figures at Jun21 differ from previously reported.

(1) Includes investments in BCP Bolivia and other subsidiaries.

 

Finally, the Common Equity Tier 1 ratio (CET 1), which is considered the most rigorous indicator of capitalization levels, posted a drop of -13bps QoQ to stand at 11.10% at the end of 3Q21. This evolution was primarily attributable to an increase in RWAs (+3.3% QoQ). Growth in RWAs was driven by an uptick in the exchange rate, which subsequently affected the loan portfolio and, to a lesser extent, by a decrease in unrealized gains. These effects were partially offset by an improvement in retained earnings.

 

 

In the YoY analysis, the CET1 ratio fell -35bps due to a +7.2% increase in RWAs and to a decrease in unrealized gains. These effects were partially offset by an increase in retained earnings and, to a lesser extent, to growth in the levels of capital and reserves.

 

9.3. Regulatory Capital Mibanco – Perú GAAP

 

(1) Regulatory Tier 1 Capital / Total Risk-weighted assets

(2) Total Regulatory Capital / Total Risk-weighted assets (legal minimum = 10% since July 2011).

 

The YoY evolution reflects a decrease of -117bps and -90bps in the Tier 1 and BIS ratios respectively. Both variations were attributable to a +13.9% increase in RWAs, which was driven by the same factors that impacted the QoQ evolution. The drop in the Tier 1 Ratio was partially attenuated by growth in Tier 1 Regulatory Capital (+2.6%) while the decrease in BIS ratio was mitigated by growth in Total Regulatory Capital (+2.6%). Growth in both of these capital ratios was attributable to an increase in share earnings agreements.

 

Finally, the Common Equity Tier 1 ratio (CET 1), which is considered the most rigorous indicator of capitalization levels, registered a decrease of -11bps QoQ and stood at 15.15% in 3Q21. This decrease was primarily due to growth of +6.1% in RWAs, which was attributable to loan expansion. This effect was partially mitigated by an increase in Common Equity Tier 1, which was driven by growth in retained earnings (+42.9%). In the YoY analysis, the CET1 ratio fell -107bps due to the effect described in the QoQ analysis.

 

 

  

 

 

10. Digital Transformation at BCP Stand-alone

 

10.1. Client digitalization in Personal Banking

 

(1) Digital clients: Retail Baking clients that conduct 50% of their monetary transactions through digital channels or who purchased online products in the last 12 months.

 

The number of digital clients this quarter has followed the upward trend seen in previous quarters. In 3Q21, digital clients represented 56.94% of all Personal Banking clients. Through the digital education program, 55.82% of the clients in the Consumer segment have been digitalized. By driving migration to digital channels, we increase the convenience of services and improve customer experiences while optimizing our efficiency in the medium term. In this context, we are accelerating initiatives to improve digital functions and products.

 

10.2. Migration of Transactions to digital channels

 

The total monthly average transactions grew 10.9%

QoQ and +44.4% YoY, which was driven primarily by monetary transactions (+18.8% QoQ and +60.2% YoY).

 

Growth in monetary transactions was seen across channels.

 

In digital channels, growth in monthly average transactions was particularly noteworthy for:

 

(i)

Yape, which grew 32.6% QoQ and 220.7% YoY, (see section 10.5. Disruptive Initiatives – Yape.).

 

(ii)

Mobile Banking grew 14.5% QoQ and 35.7% YoY, which reflected the significant upward trend in play since the beginning of the pandemic. A new version of the mobile banking platform was launched in June to improve the customer experience.

 

In traditional channels, growth in monthly average transactions was significant in:

 

(i)

POS, which grew +23.3% QoQ and +94.8% YoY, hand-in-hand with economic reactivation and in consumption in business establishments with credit and debit cards.

 

(ii)

Agentes BCP, which registered growth of +9.1% QoQ and +20.0% YoY, in line with the increase in the number of agents generated by the strategy to optimize the physical network.

 

 

The results of the migration of transactions to digital and cost-efficient channels, the monthly average transaction per unit cost fell from 0.28 in 3Q20 to 0.19 in 3Q21.

 

10.3. Self-service and Digital Sales

 

Self-service and digital sales, measured in units, continued to follow an upward trend.

 

At the end of 3Q21, self-service sales represented 16% of total units sold, compared to 10% at the end of 3Q20, while digital sales represent 36% of total units sold, compared to 29% in 3Q20.

 

Retail Banking Sales

 

		Unit sold per Quarter												% Change								Unit sold YTD								% Change
		3Q20				2Q21				3Q21				TaT				AaA				Sep 20				Sep 21				Jun 21/ Jun 20
Traditionals Sales			975,019				1,459,229				1,140,335				-21.9	%			17.0	%			2,952,832				3,666,699				24.2	%
Selfserved Sales (1)			159,462				337,929				376,945				11.5	%			136.4	%			772,295				979,941				26.9	%
Digital Sales (2)			462,048				816,952				842,501				3.1	%			82.3	%			1,418,335				2,388,461				68.4	%
Total Sales			1,596,529				2,614,110				2,359,781				-9.7	%			47.8	%			5,143,462				7,035,101				36.8	%

 

	(1)	Sales made through ATMs and Kioskos BCP.
	(2)	Sales made through Mobile Banking, Internet Banking, Yape and other digital channels.

 

In Self-Service sales, the YoY growth trend Savings account (+129%) and Advances on Wages (+199%).

 

In Digital Sales, the YoY growth trend was particularly positive for Advances on Wages (+197%), Insurance (+540%) and Personal Loans (+251%).

 

The decrease in total sales QoQ was driven by seasonality in April and May, when statutory Severance Indemnity Deposits are made.

 

10.4. Optimization of BCP’s Physical Network

 

The advance of client migration to physical channels has allowed us to optimize BCP’s physical network. The optimization process entails branch closings; an increase in agents; and growth in ATMs to complement our transactional capacity. This process also involves remodeling and redesigning office space emphasize the commercial side of the business.

 

BCP point of contact

 

		As of												change (units)
		Sep 20				Jun 21				Sep 21				QoQ				YoY
Branches			393				363				359				-4				-34
ATMs			2,299				2,291				2,248				-43				-51
Agentes BCP			6,997				6,818				6,998				180				1
Total BCP’s Network			9,689				9,472				9,605				133				-84

 

10.5. Disruptive Initiatives – Yape

 

Yape was initially designed to allow users to make money transfers or payments through mobile phones or with a QR code. The application’s objective was to replace cash in small recurring transfers or to pay services. Today, Yape’s ambition is far greater:

 

	(i)	To become a SuperApp.
	(ii)	To contribute to increasing financial inclusion for Peruvians who lack access to banking services.
	(iii)	To become the main digital channel that companies use to sell in Peru.

 

 

 

The number of Yape users has registered pronounced growth since the beginning of the pandemic. In this context, we have gone from registering a user base of 2.5 million to posting a level of 7.2 million users at the end of September. This growth was strengthened by the creation of the Yapecard in May 2020, which allows users to open a digital wallet solely with a DNI and without a bank account. Currently, 49% of Yape’s users are active on a monthly basis.

 

Yape has spurred the financial inclusion of 1.3 million people in Peru, primarily through Yapecard. This product began channeling government social assistance payments to beneficiaries in November 2020, which captured new users that had yet to be bancarized. Yape will channel a new round of government assistance payments to vulnerable families in 4Q21.

 

Finally, if we look at the current composition of Yape users, BCP’s clients represent 61% of total users; Yapecard users, 34%, and associated financial institutions, 5%. Additionally, 19% of the users are microbusinesses, which have digitalized their collections and transactions through Yape.

 

 

 

 

 

 

11. Economic Perspectives

 

11.1. Peru: Economic Forecasts

 

Peru		2017				2018				2019				2020				2021 (3)
GDP (US$ Millions)			214,330				225,430				230,966				205,188				219,444
Real GDP (% change)			2.5				4.0				2.2				-11.0				12.0
GDP per capita (US$)			6,740				7,001				7,107				6,289				6,653
Domestic demand (% change)			1.5				4.2				2.3				-9.4				12.5
Gross fixed investment (as % GDP)			20.6				21.6				21.1				18.7				20.5
Public Debt (as % GDP)			24.9				25.8				26.8				34.7				34.5
System loan growth (% change)(1)			5.6				10.1				6.2				12.4				-
Inflation(2)			1.4				2.2				1.9				2.0				6.0
Reference Rate			3.25				2.75				2.25				0.25				2.00
Exchange rate, end of period			3.24				3.37				3.31				3.62				4.00
Exchange rate, (% change)			0.0	%			0.9	%			1.4	%			4.7	%			10.6	%
Fiscal balance (% GDP)			-3.1				-2.5				-1.6				-8.9				-4.4
Trade balance (US$ Millions)			6,700				7,197				6,614				7,750				16,000
(As % GDP)			3.1	%			3.2	%			2.9	%			3.8	%			7.3	%
Exports			45,422				49,066				47,688				42,413				59,000
Imports			38,722				41,870				41,074				34,663				43,000
Current account balance (US$ Millions)			-2,779				-3,821				-3,531				995				-3,796
Current account balance (As % GDP)			-1.3	%			-1.7	%			-1.5	%			0.5	%			-1.7	%
Net international reserves (US$ Millions)			63,621				60,121				68,316				74,707				75,000
(As % GDP)			29.7	%			26.7	%			29.6	%			36.4	%			34.2	%
(As months of imports)			20				17				20				26				21

 

Source: INEI, BCRP, and SBS.

(1) Financial System, Current Exchange Rate.

(2) Inflation target: 1% - 3%.

(3) Estimates by BCP Economic Research as of July 2021.

 

10.2. Main Economic Variables

 

Gross Domestic Product

(Annual Variations, % YoY)

 

In August, the economy grew 11.8% YoY and was 1.6% above its level in August 2020.   Our estimates suggested that the economy would have rebounded 11.2% in 3Q21, after falling -8.8% YoY in the third quarter of last year as a result of quarantines, thus reaching 1.5% above the levels of the third quarter of 2020.   So far this year, Jan-Sep, GDP has accumulated a rebound of 17.4% and 0.4% versus 2020.

Source: Banco Central de Reserva del Perú. Estimate: BCP

 

 

Inflation and Monetary Policy Rate (%)

 

Annual inflation ended 3Q21 at 5.2% YoY (2Q21: 3.3%) and continue at the upper limit of BCRP's target range (1% - 3%).   The acceleration of inflation in 3Q21 is mainly explained by food and energy in response to factors such as a higher exchange rate and higher prices of agricultural commodities; for example, in 3Q21 soybean prices rose 23% compared to 3Q20, likewise, corn prices rose 42%, wheat 26% and WTI oil 87%.

 

Source: Banco Central de Reserva del Perú    

 

Core inflation (excluding food and energy) stood at 2.6% YoY (2Q21: 1.9%).

 

The reference rate remained at 0.25% until July 2021. Since August 2021, the Central Reserve Bank (BCRP) has made increases in its reference rate by +25 bps in Aug 21 to 0.50%, and by +50 bps in Sep 21 to 1.00%. BCRP’s board considered that monetary policy continues to be expansionary with a historically low benchmark interest rate, and that the September decision does not necessarily imply a cycle of successive increases in the benchmark interest rate.

 

At the end of 3Q21, the reporting operations with state guarantee (associated with the Reactiva Peru program) totalled S/43.7 billion (2Q21: S/47.9 billion).

 

Fiscal Result and Current Account Balance
(% of GDP, Quarter)

 

In annualized terms, the fiscal deficit decreased to 4.8% of GDP in 3Q21 (2Q21: -6.4%).   General government revenue grew 47.1% YoY after falling 38% YoY in 3Q20 and 17.6% compared to the same period of 2019.   The increase in tax revenue of 51.9% (22.7% compared to the same period of 2019) is explained by the favourable situation of higher mineral prices and the recovery of economic activity, as well as greater extraordinary income from tax debts and supervision. In this period, non-tax income grew 32.7% compared to 3Q20 (2.8% versus the same period in 2019).

 

* BCP Estimate

Source: Banco Central de Reserva del Perú

 

The increase in non-financial expenses of the general government in the period to 3Q21 in 20.6% versus 3Q20 (25.6% compared to 2019) was mainly explained by 95% higher public investment (27% compared to similar period of 2019) in the three levels of government and, to a lesser extent, due to the 11.7% higher current expenditure (24.8% compared to the same period of 2019), mostly in goods and services to address COVID-19.

 

In September 2021, Moody’s cut Peru's credit rating from A3 to Baa1, with a stable outlook.

 

In the Jan-Aug 2021 period, the trade balance accumulated a surplus of US$ 8,009 million, which is almost 165% greater than the same period of the previous year (Jan-Aug 2020: US$ 3,036 million).

 

Exports grew 58.5% YoY in said period, due to higher traditional shipments (+ 68.3%), while non-traditional shipments increased 36% YoY. Also, imports advanced 43.5% YoY; with an increase in inputs of 53.2%, and imports of capital goods increased 47% YoY.

 

 

In the last twelve months until Aug-21, the accumulated trade surplus reaches US$ 13.2 billion, a new all-time high. Finally, in Aug-21, terms of trade rose 5.3% YoY, favored by higher export prices. In 3Q21, the international price of copper averaged US$ 4.26 / lb, an increase of 44% versus USD 2.96 / lb in 3Q20 and US$ 2.63 / lb in 3Q19.

 

Exchange rate
(S/ por US$)

 

The exchange rate ended 3Q21 at USDPEN 4.1345 (historical maximum), which represented a 7% depreciation of the Peruvian Sol compared to the end of 2Q21 (USDPEN 3.8659), 14.3% compared to the end of 2020 (USDPEN 3.6180) and 24.8% compared to the end of 2019 (USDPEN 3.3123).   It is important to note that the currencies in the region presented similar results during 3Q21: there was a depreciation of the Brazilian Real (9.54%), the Chilean Peso (10.31%), the Colombian Peso (1.44%) and the Mexican Peso (3.53%).

 

Source: SBS

 

During 3Q21, BCRP made net sales in the spot exchange market for US$ 4,279 million, and accumulated sales between January and September by US$ 9,249 million. Likewise, the bank continued to use a set of FX instruments to mitigate pressures on the exchange rate: at the end of 3Q21 the balance of ADC of BCRP stood at S/ 3.9 billion (2Q21: S/ 7.7 billion), and the balance of Swaps Foreign exchange (sale) was S/ 29.4 billion (2Q21: S/ 26.9 billion).

 

Net International Reserves ended 3Q21 at US$ 76.0 billion versus US$ 71.9 billion at the end of 2Q21 (at the end of 2020 they were US$ 74.7 billion). Finally, the exchange position of BCRP was US$ 55.9 billion, a drop of US$ 2.5 billion compared to the end of 2Q21 (at the end of 2020 it was US$ 58.8 billion).

 

 

Safe Harbor for Forward-Looking Statements

 

This material includes “forward-looking statements” within the meaning of Section 27A of the U.S. Securities Act of 1933 and Section 21E of the U.S. Securities Exchange Act of 1934. All statements other than statements of historical fact are forward-looking and may contain information about financial results, economic conditions, trends and known uncertainties. Forward-looking statements are not assurances of future performance. Instead, they are based only on our management’s current views, beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions.

 

Many forward-looking statements can be identified by words such as: “anticipate”, “intend”, “plan”, “goal”, “seek”, “believe”, “project”, “estimate”, “expect”, “strategy”, “future”, “likely”, “would”, “may”, “should”, “will”, “see” and similar references to future periods. Examples of forward-looking statements include, among others, statements or estimates we make regarding guidance relating to losses in our credit portfolio, efficiency ratio, provisions and non-performing loans, current or future market risk and future market conditions, expected macroeconomic events and conditions, our belief that we have sufficient capital and liquidity to fund our business operations, expectations of the effect on our financial condition of claims, legal actions, environmental costs, contingent liabilities and governmental and regulatory investigations and proceedings, strategy for customer retention, growth, governmental programs and regulatory initiatives, credit administration, product development, market position, financial results and reserves and strategy for risk management.

 

We caution readers that forward-looking statements involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those that we expect or that are expressed or implied in the forward-looking statements, depending on the outcome of certain factors, including, without limitation, adverse changes in:

 

·

Economic conditions in Peru;

·

The occurrence of natural disasters or political or social instability in Peru;

·

The adequacy of the dividends that our subsidiaries are able to pay to us, which may affect our ability to pay dividends to shareholders and corporate expenses;

·

Performance of, and volatility in, financial markets, including Latin-American and other markets;

·

The frequency, severity and types of insured loss events;

·

Fluctuations in interest rate levels;

·

Foreign currency exchange rates, including the Sol/US Dollar exchange rate;

·

Deterioration in the quality of our loan portfolio;

·

Increasing levels of competition in Peru and other markets in which we operate;

·

Developments and changes in laws and regulations affecting the financial sector and adoption of new international guidelines;

·

Changes in the policies of central banks and/or foreign governments;

·

Effectiveness of our risk management policies and of our operational and security systems;

·

Losses associated with counterparty exposures;

·

The scope of the coronavirus (“COVID-19”) outbreak, actions taken to contain the COVID-19 and related economic effects from such actions and our ability to maintain adequate staffing; and

·

Changes in Bermuda laws and regulations applicable to so-called non-resident entities.

 

See “Item 3. Key Information—3.D Risk Factors” and “Item 5. Operating and Financial Review and Prospects” in our most recent Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission for additional information and other such factors.

 

You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof and are based only on information currently available to us. Therefore, you should not rely on any of these forward-looking statements. We undertake no obligation to publicly update or revise these or any other forward-looking statements that may be made to reflect events or circumstances after the date hereof, whether as a result of changes in our business strategy or new information, to reflect the occurrence of unanticipated events or otherwise.

 

 

 

 

 

12.1. Credicorp

 

CREDICORP LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(In S/ thousands, IFRS)

 

		As of												% change
		Sep 2020				Jun 2021				Sep 2021				QoQ				YoY
ASSETS
Cash and due from banks
Non-interest bearing			6,916,416				8,883,164				8,360,631				-5.9	%			20.9	%
Interest bearing			28,221,543				29,075,474				36,147,225				24.3	%			28.1	%
Total cash and due from banks			35,137,959				37,958,638				44,507,856				17.3	%			26.7	%
Cash collateral, reverse repurchase agreements and securities borrowing			2,821,116				1,616,654				2,555,337				58.1	%			-9.4	%
Fair value through profit or loss investments			6,658,680				6,791,288				6,660,487				-1.9	%			0.0	%
Fair value through other comprehensive income investments			40,712,831				40,273,400				33,262,618				-17.4	%			-18.3	%
Amortized cost investments			4,277,475				7,707,956				8,187,351				6.2	%			91.4	%
Loans			136,148,711				143,091,752				146,551,226				2.4	%			7.6	%
Current			132,005,867				138,037,399				141,077,541				2.2	%			6.9	%
Internal overdue loans			4,142,844				5,054,353				5,473,685				8.3	%			32.1	%
Less - allow ance for loan losses			(9,656,383	)			(9,391,151	)			(9,077,449	)			-3.3	%			-6.0	%
Loans, net			126,492,328				133,700,601				137,473,777				2.8	%			8.7	%
Financial assets designated at fair value through profit or loss			729,059				921,851				981,508				6.5	%			34.6	%
Accounts receivable from reinsurers and coinsurers			833,039				1,043,042				1,097,493				5.2	%			31.7	%
Premiums and other policyholder receivables			801,480				780,824				801,531				2.7	%			0.0	%
Property, plant and equipment, net			2,073,864				1,944,127				1,911,478				-1.7	%			-7.8	%
Due from customers on acceptances			256,238				558,934				776,863				39.0	%			203.2	%
Investments in associates			627,786				627,683				648,041				3.2	%			3.2	%
Intangible assets and goodw ill, net			2,474,665				2,647,676				2,682,216				1.3	%			8.4	%
Other assets (1)			7,780,221				8,455,556				9,995,835				18.2	%			28.5	%
Total Assets			231,676,741				245,028,230				251,542,391				2.7	%			8.6	%
LIABILITIES AND EQUITY
Deposits and obligations
Non-interest bearing			45,680,396				52,879,988				54,546,530				3.2	%			19.4	%
Interest bearing			91,522,278				96,281,815				98,001,838				1.8	%			7.1	%
Total deposits and obligations			137,202,674				149,161,803				152,548,368				2.3	%			11.2	%
Payables from repurchase agreements and securities lending			27,778,922				25,963,227				23,363,030				-10.0	%			-15.9	%
BCRP instruments			25,344,724				23,329,990				20,746,109				-11.1	%			-18.1	%
Repurchase agreements w ith third parties			1,204,487				1,276,678				1,330,811				4.2	%			10.5	%
Repurchase agreements w ith customers			1,229,711				1,356,559				1,286,110				-5.2	%			4.6	%
Due to banks and correspondents			6,601,722				6,239,161				7,466,434				19.7	%			13.1	%
Bonds and notes issued			16,425,832				16,951,481				17,577,630				3.7	%			7.0	%
Banker’s acceptances outstanding			256,238				558,934				776,863				39.0	%			203.2	%
Reserves for property and casualty claims			1,982,653				2,492,303				2,583,777				3.7	%			30.3	%
Reserve for unearned premiums			9,111,195				9,664,914				9,928,912				2.7	%			9.0	%
Accounts payable to reinsurers			222,194				317,185				278,220				-12.3	%			25.2	%
Financial liabilities at fair value through profit or loss			352,889				313,256				879,177				180.7	%			149.1	%
Other liabilities			7,675,618				7,789,038				10,434,536				34.0	%			35.9	%
Total Liabilities			207,609,937				219,451,302				225,836,947				2.9	%			8.8	%
Net equity			23,594,717				25,073,706				25,192,569				0.5	%			6.8	%
Capital stock			1,318,993				1,318,993				1,318,993				0.0	%			0.0	%
Treasury stock			(209,305	)			(207,756	)			(207,745	)			0.0	%			-0.7	%
Capital surplus			157,767				224,103				215,071				-4.0	%			36.3	%
Reserves			21,405,740				21,725,663				21,350,150				-1.7	%			-0.3	%
Unrealized gains and losses			1,224,135				677,159				19,435				-97.1	%			-98.4	%
Retained earnings			(302,613	)			1,335,544				2,496,665				86.9	%			-925.0	%
Non-controlling interest			472,087				503,222				512,875				1.9	%			8.6	%
Total Net Equity			24,066,804				25,576,928				25,705,444				0.5	%			6.8	%
Total liabilities and equity			231,676,741				245,028,230				251,542,391				2.7	%			8.6	%
Off-balance sheet			131,512,273				149,828,527				154,907,974				3.4	%			17.8	%
Total performance bonds, stand-by and L/Cs.			18,519,960				22,723,385				22,665,879				-0.3	%			22.4	%
Undrawn creditlines, advised but not committed			81,926,284				91,280,633				94,165,966				3.2	%			14.9	%
Total derivatives (notional) and others			31,066,029				35,824,509				38,076,129				6.3	%			22.6	%

 

(1) Includes mainly accounts receivables from brokerage and others.

 

 

CREDICORP LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(In S/ thousands, IFRS)

 

		Quarter												% change								YTD								% change
		3Q20				2Q21				3Q21				QoQ				YoY				Sep 20				Sep 21				Sep 21 / Sep 20
Interest income and expense
Interest and dividend income			2,953,570				2,891,579				3,051,000				5.5	%			3.3	%			8,844,548				8,758,652				-1.0	%
Interest expense (1)			(791,665	)			(582,537	)			(599,292	)			2.9	%			-24.3	%			(2,341,766	)			(1,874,519	)			-20.0	%
Net interest income			2,161,905				2,309,042				2,451,708				6.2	%			13.4	%			6,502,782				6,884,133				5.9	%
Gross provision for credit losses on loan portfolio			(1,348,726	)			(441,007	)			(265,158	)			-39.9	%			-80.3	%			(5,295,095	)			(1,329,147	)			-74.9	%
Recoveries of written-off loans			42,821				77,627				100,744				29.8	%			135.3	%			107,252				243,706				127.2	%
Provision for credit losses on loan portfolio, net of recoveries			(1,305,905	)			(363,380	)			(164,414	)			-54.8	%			-87.4	%			(5,187,843	)			(1,085,441	)			-79.1	%
Risk-adjusted net interest income			856,000				1,945,662				2,287,294				17.6	%			167.2	%			1,314,939				5,798,692				341.0	%
Non-financial income
Fee income			775,805				862,411				876,391				1.6	%			13.0	%			2,039,622				2,569,573				26.0	%
Net gain on foreign exchange transactions			155,028				232,668				238,886				2.7	%			54.1	%			471,319				651,443				38.2	%
Net gain on sales of securities			135,957				(69,947	)			5,739				n.a.				-95.8	%			295,887				(47,921	)			-116.2	%
Net gain from associates			11,245				12,302				19,090				55.2	%			69.8	%			45,376				60,797				34.0	%
Net gain on derivatives held for trading			(21,297	)			45,413				43,086				-5.1	%			n.a.				22,491				158,222				603.5	%
Net gain from exchange differences (1)			6,530				45,924				3,233				-93.0	%			-50.5	%			9,526				43,621				357.9	%
Other non-financial income (1)			39,498				62,923				52,258				-16.9	%			32.3	%			192,463				189,172				-1.7	%
Total non-financial income			1,102,766				1,191,694				1,238,683				3.9	%			12.3	%			3,076,684				3,624,907				17.8	%
Insurance underwriting result
Net earned premiums			595,394				639,944				675,571				5.6	%			13.5	%			1,775,390				1,959,443				10.4	%
Net claims			(513,091	)			(691,335	)			(517,951	)			-25.1	%			0.9	%			(1,215,376	)			(1,832,639	)			50.8	%
Acquisition cost (2)			(86,643	)			(84,944	)			(87,416	)			2.9	%			0.9	%			(286,748	)			(258,182	)			-10.0	%
Total insurance underwriting result			(4,340	)			(136,335	)			70,204				n.a.				n.a.				273,266				(131,378	)			-148.1	%
Total expenses
Salaries and employee benefits			(803,438	)			(882,177	)			(915,564	)			3.8	%			14.0	%			(2,520,618	)			(2,655,300	)			5.3	%
Administrative, general and tax expenses (1)			(591,212	)			(672,805	)			(803,156	)			19.4	%			35.8	%			(1,644,010	)			(2,056,803	)			25.1	%
Depreciation and amortization (1)			(166,105	)			(163,869	)			(170,960	)			4.3	%			2.9	%			(505,374	)			(501,594	)			-0.7	%
Impairment loss on goodwill			(63,978	)			-				-				n.a.				n.a.				(63,978	)			-				n.a.
Association in participation			(10,566	)			(8,879	)			(10,426	)			17.4	%			-1.3	%			(34,940	)			(33,211	)			-4.9	%
Other expenses (1)			(166,710	)			(132,717	)			(77,688	)			-41.5	%			-53.4	%			(440,793	)			(271,604	)			-38.4	%
Total expenses			(1,802,009	)			(1,860,447	)			(1,977,794	)			6.3	%			9.8	%			(5,209,713	)			(5,518,512	)			5.9	%
Profit before income tax			152,417				1,140,574				1,618,387				41.9	%			961.8	%			(544,824	)			3,773,709				-792.6	%
Income tax			(55,829	)			(423,491	)			(428,037	)			1.1	%			666.7	%			213,151				(1,189,127	)			n.a.
Net profit			96,588				717,083				1,190,350				66.0	%			1132.4	%			(331,673	)			2,584,582				-879.3	%
Non-controlling interest			(8,018	)			17,614				26,651				51.3	%			n.a.				(25,163	)			60,616				n.a.
Net profit attributable to Credicorp			104,606				699,469				1,163,699				66.4	%			1012.5	%			(306,510	)			2,523,966				n.a.

 

(1) The amounts differ from those previously reported in 2020 period due to reclassifications.

(2) The acquisition cost of Pacifico includes net fees and underwriting expenses.

 

 

Regulatory Capital and Capital Adequacy Ratios

(S/ thousands, IFRS)

 

		As of												% Change
		Sep 20				Jun 21				Sep 21				QoQ				YoY
Capital Stock			1,318,993				1,318,993				1,318,993				0.0	%			0.0	%
Treasury Stocks			(209,305	)			(207,756	)			(207,745	)			0.0	%			-0.7	%
Capital Surplus			157,767				224,103				215,071				-4.0	%			36.3	%
Legal and Other capital reserves (1)			21,405,740				21,725,663				21,350,150				-1.7	%			-0.3	%
Minority interest (2)			421,250				429,448				423,897				-1.3	%			0.6	%
Loan loss reserves (3)			1,818,720				1,913,045				1,993,306				4.2	%			9.6	%
Perpetual subordinated debt			-				-				-				-				-
Subordinated Debt			5,241,953				5,979,619				6,393,706				6.9	%			22.0	%
Investments in equity and subordinated debt of financial and insurance companies			(699,066	)			(717,711	)			(727,585	)			1.4	%			4.1	%
Goodwill			(790,335	)			(813,492	)			(826,196	)			1.6	%			4.5	%
Current year Net Loss			(306,510	)			-				-				-				-
Deduction for subordinated debt limit (50% of Tier I excluding deductions) (4)			-				-				-				-				-
Deduction for Tier I Limit (50% of Regulatory capital) (4)			-				-				-				-				-
Regulatory Capital (A)			28,359,206				29,851,912				29,933,596				0.3	%			5.6	%
Tier 1 (5)			14,987,233				15,337,348				15,305,134				-0.2	%			2.1	%
Tier 2 (6) + Tier 3 (7)			13,371,972				14,514,564				14,628,462				0.8	%			9.4	%
Financial Consolidated Group (FCG) Regulatory Capital Requirements (8)			18,607,279				17,894,230				18,710,799				4.6	%			0.6	%
Insurance Consolidated Group (ICG) Capital Requirements (9)			1,241,465				1,325,595				1,418,922				7.0	%			14.3	%
FCG Capital Requirements related to operations with ICG			(477,400	)			(471,394	)			(503,809	)			6.9	%			5.5	%
ICG Capital Requirements related to operations with FCG			-				-				-				-				-
Regulatory Capital Requirements (B)			19,371,344				18,748,432				19,625,912				4.7	%			1.3	%
Regulatory Capital Ratio (A) / (B)			1.46				1.59				1.53
Required Regulatory Capital Ratio (10)			1.00				1.00				1.00

 

(1) Legal and other capital reserves include restricted capital reserves (PEN 14,745 million) and optional capital reserves (PEN 6,661 million).

(2) Minority interest includes Tier I (PEN 429 million)

(3) Up to 1.25% of total risk-weighted assets of Banco de Credito del Peru, Solucion Empresa Administradora Hipotecaria, Mibanco and Atlantic Security Bank.

(4) Tier II + Tier III cannot be more than 50% of total regulatory capital.

(5) Tier I = capital + restricted capital reserves + Tier I minority interest - goodwill - (0.5 x investment in equity and subordinated debt of financial and insurance companies) + perpetual subordinated debt.

(6) Tier II = subordinated debt + TierII minority interest tier + loan loss reserves - (0.5 x investment in equity and subordinated debt of financial and insurance companies).

(7) Tier III = Subordinated debt covering market risk only.

(8) Includes regulatory capital requirements of the financial consolidated group.

(9) Includes regulatory capital requirements of the insurance consolidated group.

(10) Regulatory Capital / Total Regulatory Capital Requirements (legal minimum = 1.00).

 

 

 

12.2. Credicorp Stand-alone

 

Credicorp Ltd.
Separate Statement of Financal Position
(S/ thousands, IFRS)

 

		As of												% change
		Sep 20				Jun 21				Sep 21				QoQ				YoY
ASSETS
Cash and cash equivalents			777,709				1,019,773				598,770				-41.3	%			-23.0	%
At fair value through profit or loss			-				520,413				1,091,138				109.7	%			n.a
Fair value through other comprehensive income investments			459,217				397,551				342,485				-13.9	%			-25.4	%
In subsidiaries and associates investments			27,361,569				29,354,310				29,862,234				1.7	%			9.1	%
Loans			1,064,712				-				-				0.0	%			0.0	%
Other assets			300				345				328				-4.9	%			9.3	%
Total Assets			29,663,507				31,292,392				31,894,955				1.9	%			7.5	%
LIABILITIES AND NET SHAREHOLDERS’ EQUITY
Dividend Payable			-				-				471,912				n.a.				n.a.
Bonds and notes issued			1,795,528				1,914,141				2,066,412				8.0	%			15.1	%
Other liabilities			99,861				149,936				143,382				-4.4	%			43.6	%
Total Liabilities			1,895,389				2,064,077				2,681,706				29.9	%			41.5	%
NET EQUITY
Capital stock			1,318,993				1,318,993				1,318,993				0.0	%			0.0	%
Capital Surplus			384,542				384,542				384,542				0.0	%			0.0	%
Reserve			21,070,409				21,417,403				20,945,491				-2.2	%			-0.6	%
Unrealized results			1,020,916				495,986				(281,545	)			n.a.				n.a.
Retained earnings			3,973,258				5,611,391				6,845,768				22.0	%			72.3	%
Total net equity			27,768,118				29,228,315				29,213,249				-0.1	%			5.2	%
Total Liabilities And Equity			29,663,507				31,292,392				31,894,955				1.9	%			7.5	%

 

		Quarter												% change
		3Q20				2Q21				3Q21				QoQ				YoY
Interest income
Net share of the income from investments in subsidiaries and associates			238,049				725,297				1,256,878				73.3	%			428.0	%
Interest and similar income			8,378				7,062				13,909				97.0	%			66.0	%
Net gain on financial assets at fair value through profit or loss			-				4,898				3,860				-21.2	%			n.a
Total income			246,427				737,257				1,274,647				72.9	%			417.3	%
Interest and similar expense			(15,052	)			(14,357	)			(15,161	)			5.6	%			n.a
Administrative and general expenses			(16,216	)			(3,832	)			(4,367	)			14.0	%			-73.1	%
Total expenses			(31,268	)			(18,189	)			(19,528	)			7.4	%			-37.5	%
Operating income			215,159				719,068				1,255,119				74.5	%			483.3	%
Exchange differences, net			(4,622	)			(15	)			(415	)			2666.7	%			-91.0	%
Other, net			(123	)			(10	)			(6	)			-40.0	%			-95.1	%
Profit before income tax			210,414				719,043				1,254,698				74.5	%			496.3	%
Income tax			(32,986	)			(19,546	)			(20,079	)			2.7	%			n.a
Net income			177,428				699,497				1,234,619				76.5	%			595.8	%
Double Leverage Ratio			98.54%				100.43	%			102.22	%			179bps				369bps

 

 

12.3. BCP Consolidated

 

BANCO DE CREDITO DEL PERU AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(In S/ thousands, IFRS)

 

						As of								% change
		Sep 20				Jun 21				Sep 21				QoQ				YoY
ASSETS
Cash and due from banks
Non-interest bearing			5,097,856				6,919,815				6,157,037				-11.0	%			20.8	%
Interest bearing			26,887,477				26,482,164				33,783,609				27.6	%			25.6	%
Total cash and due from banks			31,985,333				33,401,979				39,940,646				19.6	%			24.9	%
Cash collateral, reverse repurchase agreements and securities borrowing			1,767,692				544,937				1,027,761				88.6	%			-41.9	%
Fair value through profit or loss investments			1,874,577				2,118,559				1,406,424				-33.6	%			-25.0	%
Fair value through other comprehensive income investments			27,515,047				25,735,158				18,191,125				-29.3	%			-33.9	%
Amortized cost investments			4,251,291				7,366,267				7,597,755				3.1	%			78.7	%
Loans			124,515,950				130,864,182				133,369,027				1.9	%			7.1	%
Current			120,522,261				126,045,797				128,090,680				1.6	%			6.3	%
Internal overdue loans			3,993,689				4,818,385				5,278,347				9.5	%			32.2	%
Less - allowance for loan losses			(9,078,981	)			(8,797,871	)			(8,474,947	)			-3.7	%			-6.7	%
Loans, net			115,436,969				122,066,311				124,894,080				2.3	%			8.2	%
Property, furniture and equipment, net (1)			1,803,139				1,681,651				1,634,143				-2.8	%			-9.4	%
Due from customers on acceptances			256,238				558,934				776,863				39.0	%			203.2	%
Other assets (2)			6,522,817				6,772,279				7,497,739				10.7	%			14.9	%
Total Assets			191,413,103				200,246,075				202,966,536				1.4	%			6.0	%
Liabilities and Equity
Deposits and obligations
Non-interest bearing (1)			49,111,613				45,881,848				47,262,689				3.0	%			-3.8	%
Interest bearing (1)			73,488,701				86,547,213				86,404,649				-0.2	%			17.6	%
Total deposits and obligations			122,600,314				132,429,061				133,667,338				0.9	%			9.0	%
Payables from repurchase agreements and securities lending			25,869,675				23,879,115				21,308,690				-10.8	%			-17.6	%
BCRP instruments			25,344,725				23,329,990				20,746,109				-11.1	%			-18.1	%
Repurchase agreements with third parties			524,950				549,125				562,581				2.5	%			7.2	%
Due to banks and correspondents			6,410,499				5,636,702				6,973,909				23.7	%			8.8	%
Bonds and notes issued			14,081,882				14,368,316				14,838,736				3.3	%			5.4	%
Banker’s acceptances outstanding			256,238				558,934				776,863				39.0	%			203.2	%
Financial liabilities at fair value through profit or loss			116,523				84,071				484,531				476.3	%			315.8	%
Other liabilities (3)			4,743,779				4,261,450				5,287,243				24.1	%			11.5	%
Total Liabilities			174,078,910				181,217,649				183,337,310				1.2	%			5.3	%
Net equity			17,238,525				18,908,512				19,505,851				3.2	%			13.2	%
Capital stock			10,774,006				11,024,006				11,024,006				0.0	%			2.3	%
Reserves			5,945,313				6,488,969				6,488,969				0.0	%			9.1	%
Unrealized gains and losses			330,977				(123,542	)			(583,178	)			n.a.				n.a.
Retained earnings			188,229				1,519,079				2,576,054				69.6	%			1268.6	%
Non-controlling interest			95,668				119,914				123,375				2.9	%			29.0	%
Total Net Equity			17,334,193				19,028,426				19,629,226				3.2	%			13.2	%
Total liabilities and equity			191,413,103				200,246,075				202,966,536				1.4	%			6.0	%
Off-balance sheet			114,983,316				131,540,506				139,250,038				5.9	%			21.1	%
Total performance bonds, stand-by and L/Cs.			16,977,684				21,228,772				20,761,917				-2.2	%			22.3	%
Undrawn credit lines, advised but not committed			68,867,418				75,964,511				80,631,043				6.1	%			17.1	%
Total derivatives (notional) and others			29,138,214				34,347,223				37,857,078				10.2	%			29.9	%

 

(1) Right of use asset of lease contracts is included by application of IFRS 16.

(2) Mainly includes intangible assets, other receivable accounts and tax credit.

(3) Mainly includes other payable accounts.

(4) Figures differ from those presented in fiscal year 2020.

 

 

BANCO DE CREDITO DEL PERU AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(In S/ thousands, IFRS)

 

		Quarter												% change								YTD								% change
		3Q20				2Q21				3Q21				QoQ				YoY				Sep 20				Sep 21				9M-2021 / 9M-2020
Interest income and expense
Interest and dividend income			2,553,354				2,446,731				2,542,011				3.9	%			-0.4	%			7,642,396				7,396,739				-3.2	%
Interest expense			(655,384	)			(438,943	)			(443,398	)			1.0	%			-32.3	%			(1,952,448	)			(1,437,349	)			-26.4	%
Net interest income			1,897,970				2,007,788				2,098,613				4.5	%			10.6	%			5,689,948				5,959,390				4.7	%
Provision for credit losses on loan portfolio			(1,250,211	)			(480,116	)			(249,273	)			-48.1	%			-80.1	%			(5,016,939	)			(1,314,646	)			-73.8	%
Recoveries of written-off loans			40,126				73,023				93,671				28.3	%			133.4	%			100,264				227,790				127.2	%
Provision for credit losses on loan portfolio, net of recoveries			(1,210,085	)			(407,093	)			(155,602	)			-61.8	%			-87.1	%			(4,916,675	)			(1,086,856	)			-77.9	%
Risk-adjusted net interest income			687,885				1,600,695				1,943,011				21.4	%			182.5	%			773,273				4,872,534				530.1	%
Non-financial income
Fee income			572,044				648,980				688,357				6.1	%			20.3	%			1,554,562				1,969,115				26.7	%
Net gain on foreign exchange transactions			152,862				240,553				234,313				-2.6	%			53.3	%			474,174				648,331				36.7	%
Net gain on securities			73,630				(130,474	)			(30,017	)			-77.0	%			n.a.				114,189				(118,379	)			-203.7	%
Net gain on derivatives held for trading			12,502				31,844				462				-98.5	%			-96.3	%			46,913				44,626				-4.9	%
Net gain from exchange differences			1,320				56,816				11,037				-80.6	%			736.1	%			(9,028	)			65,032				n.a.
Others			36,309				41,734				31,437				-24.7	%			-13.4	%			150,629				131,563				-12.7	%
Total other income			848,667				889,453				935,589				5.2	%			10.2	%			2,331,439				2,740,288				17.5	%
Total expenses
Salaries and employee benefits			(568,595	)			(632,636	)			(629,810	)			-0.4	%			10.8	%			(1,816,262	)			(1,865,621	)			2.7	%
Administrative expenses			(452,624	)			(516,669	)			(634,281	)			22.8	%			40.1	%			(1,241,305	)			(1,584,666	)			27.7	%
Depreciation and amortization			(127,028	)			(125,592	)			(131,420	)			4.6	%			3.5	%			(391,175	)			(384,590	)			-1.7	%
Other expenses			(86,663	)			(59,093	)			(50,893	)			-13.9	%			-41.3	%			(315,412	)			(159,163	)			-49.5	%
Total expenses			(1,234,910	)			(1,333,990	)			(1,446,404	)			8.4	%			17.1	%			(3,764,154	)			(3,994,040	)			6.1	%
Profit before income tax			301,642				1,156,158				1,432,196				23.9	%			374.8	%			(659,442	)			3,618,782				n.a.
Income tax			(32,021	)			(356,194	)			(371,383	)			4.3	%			1059.8	%			292,510				(1,002,375	)			n.a.
Net profit			269,621				799,964				1,060,813				32.6	%			293.4	%			(366,932	)			2,616,407				n.a.
Non-controlling interest			8,220				(2,742	)			(3,838	)			40.0	%			n.a.				20,952				(7,160	)			n.a.
Net profit attributable to BCP Consolidated			277,841				797,222				1,056,975				32.6	%			280.4	%			(345,980	)			2,609,247				n.a.

 

 

 

BANCO DE CREDITO DEL PERU AND SUBSIDIARIES
SELECTED FINANCIAL INDICATORS

 

		Quarter												YTD
		3Q20				2Q21				3Q21				Sep 20				Sep 21
Profitability
Earnings per share (1)			0.025				0.070				0.093				(0.031	)			0.231
ROAA (2)(3)			0.6	%			1.6	%			2.1	%			-0.3	%			1.8	%
ROAE (2)(3)			6.5	%			17.2	%			22.0	%			-2.6	%			18.4	%
Net interest margin (2)(3)			4.20	%			4.12	%			4.32	%			4.58	%			4.11	%
Risk adjusted NIM (2)(3)			1.52	%			3.28	%			4.00	%			0.63	%			3.43	%
Funding Cost (2)(3)(4)			1.60	%			0.99	%			1.00	%			1.75	%			1.10	%
Quality of loan portfolio
IOL ratio			3.03	%			3.71	%			3.68	%			3.03	%			3.68	%
NPL ratio			3.99	%			5.11	%			5.03	%			3.99	%			5.03	%
Coverage of IOLs			214.7	%			196.1	%			182.6	%			214.7	%			182.6	%
Coverage of NPLs			163.5	%			142.3	%			133.7	%			163.5	%			133.7	%
Cost of risk (5)			7.94	%			1.68	%			1.24	%			5.26	%			1.09	%
Operating efficiency
Oper. expenses as a percent. of total income - reported (6)			43.5	%			42.7	%			46.0	%			44.5	%			44.1	%
Oper. expenses as a percent. of total income - including all other items			45.0	%			46.0	%			47.7	%			46.9	%			45.9	%
Oper. expenses as a percent. of av. tot. assets (2)(3)(6)			2.46	%			2.54	%			2.77	%			2.68	%			2.57	%
Share Information
N° of outstanding shares (Million)			11,317				11,317				11,317				11,317				11,317

   

(1) Shares outstanding of 11,317 million is used for all periods since shares have been issued only for capitalization of profits.

(2) Ratios are annualized.

(3) Averages are determined as the average of period-beginning and period-ending balances.

(4) The funding costs differs from previously reported due to a methodoloy change in the denominator, which no longer includes the following accounts: acceptances outstanding, reserves for property and casualty claims, reserve for unearned premiums, reinsurance payable and other liabilities.

(5) Cost of risk: Annualized provision for loan losses / Total loans.

(6) Total income includes net interest income, fee income, net gain on foreign exchange transactions, result on exchange difference and net gain on derivatives. Operating expenses includes Salaries and social benefits, administrative, general and tax expenses and depreciation and amortization.

 

  

12.4. BCP Stand-alone

 

BANCO DE CREDITO DEL PERU
STATEMENT OF FINANCIAL POSITION
(S/ thousands, IFRS)

 

		As of												% change
		Sep 20				Jun 21				Sep 21				QoQ				YoY
ASSETS
Cash and due from banks
Non-interest bearing			4,571,558				6,413,791				5,666,863				-11.6	%			24.0	%
Interest bearing			25,949,154				25,585,201				32,819,306				28.3	%			26.5	%
Total cash and due from banks			30,520,712				31,998,992				38,486,169				20.3	%			26.1	%
Cash collateral, reverse repurchase agreements and securities borrowing			1,767,692				544,937				1,027,761				88.6	%			-41.9	%
Fair value through profit or loss investments			1,874,577				2,118,559				1,406,424				-33.6	%			-25.0	%
Fair value through other comprehensive income investments			26,341,443				24,477,519				16,931,666				-30.8	%			-35.7	%
Amortized cost investments			3,958,403				7,071,197				7,307,678				3.3	%			84.6	%
Loans			113,384,719				118,872,541				121,459,651				2.2	%			7.1	%
Current			110,133,503				115,221,323				117,256,286				1.8	%			6.5	%
Internal overdue loans			3,251,216				3,651,218				4,203,365				15.1	%			29.3	%
Less - allowance for loan losses			(7,255,183	)			(7,124,855	)			(6,976,762	)			-2.1	%			-3.8	%
Loans, net			106,129,536				111,747,686				114,482,889				2.4	%			7.9	%
Property, furniture and equipment, net			1,431,269				1,359,061				1,328,385				-2.3	%			-7.2	%
Due from customers on acceptances			256,238				558,934				776,863				39.0	%			203.2	%
Investments in associates			1,691,592				2,142,791				2,214,558				3.3	%			30.9	%
Other assets (1)			5,617,808				5,836,135				6,576,750				12.7	%			17.1	%
Total Assets			179,589,270				187,855,811				190,539,143				1.4	%			6.1	%
Liabilities and Equity
Deposits and obligations
Non-interest bearing			49,107,276				45,880,454				47,272,754				3.0	%			-3.7	%
Interest bearing			65,263,615				78,320,355				77,851,798				-0.6	%			19.3	%
Total deposits and obligations			114,370,891				124,200,809				125,124,552				0.7	%			9.4	%
Payables from repurchase agreements and securities lending			24,169,302				21,394,306				19,109,582				-10.7	%			-20.9	%
BCRP instruments			23,644,352				20,845,181				18,547,001				-11.0	%			-21.6	%
Repurchase agreements with third parties			524,950				549,125				562,581				2.5	%			7.2	%
Due to banks and correspondents			5,349,981				4,830,856				6,191,543				28.2	%			15.7	%
Bonds and notes issued			13,946,887				14,179,541				14,652,059				3.3	%			5.1	%
Banker’s acceptances outstanding			256,238				558,934				776,863				39.0	%			203.2	%
Financial liabilities at fair value through profit or loss			116,523				84,071				484,531				476.3	%			315.8	%
Other liabilities (2)			4,138,755				3,695,174				4,690,015				26.9	%			13.3	%
Total Liabilities			162,348,577				168,943,691				171,029,145				1.2	%			5.3	%
Net equity			17,240,693				18,912,120				19,509,998				3.2	%			13.2	%
Capital stock			10,774,006				11,024,006				11,024,006				0.0	%			2.3	%
Reserves			5,945,313				6,488,969				6,488,968				0.0	%			9.1	%
Unrealized gains and losses			330,977				(123,542	)			(583,178	)			n.a.				n.a.
Retained earnings			190,397				1,522,687				2,580,202				69.5	%			1255.2	%
Total Net Equity			17,240,693				18,912,120				19,509,998				3.2	%			13.2	%
Total liabilities and equity			179,589,270				187,855,811				190,539,143				1.4	%			6.1	%
Off-balance sheet			112,924,725				119,457,875				135,953,567				13.8	%			20.4	%
Total performance bonds, stand-by and L/Cs.			16,978,003				21,229,047				20,762,191				-2.2	%			22.3	%
Undrawn credit lines, advised but not committed			68,568,756				75,613,731				79,357,524				5.0	%			15.7	%
Total derivatives (notional) and others			27,377,966				22,615,097				35,833,852				58.5	%			30.9	%

  

(1) Mainly includes intangible assets, other receivable accounts and tax credit.

(2) Mainly includes other payable accounts.

 

 

BANCO DE CREDITO DEL PERU
STATEMENT OF INCOME
(S/ thousands, IFRS)

 

		Quarter												% change								YTD								% change
			3Q20				2Q21				3Q21				QoQ				YoY				Sep 20				Sep 21				9M-2021 / 9M-2020
Interest income and expense
Interest and dividend income			2,055,845				1,930,221				1,996,856				3.5	%			-2.9	%			6,203,562				5,866,826				-5.4	%
Interest expense (1)			(572,738	)			(382,994	)			(393,036	)			2.6	%			-31.4	%			(1,681,851	)			(1,268,129	)			-24.6	%
Net interest income			1,483,107				1,547,227				1,603,820				3.7	%			8.1	%			4,521,711				4,598,697				1.7	%
Provision for credit losses on loan portfolio			(853,111	)			(337,668	)			(103,385	)			-69.4	%			-87.9	%			(4,021,827	)			(876,431	)			-78.2	%
Recoveries of written-off loans			33,342				55,807				70,441				26.2	%			111.3	%			81,853				176,274				115.4	%
Provision for credit losses on loan portfolio, net of recoveries			(819,769	)			(281,861	)			(32,944	)			-88.3	%			-96.0	%			(3,939,974	)			(700,157	)			-82.2	%
Risk-adjusted net interest income			663,338				1,265,366				1,570,876				24.1	%			136.8	%			581,737				3,898,540				570.2	%
Other income
Fee income			568,394				637,821				669,583				5.0	%			17.8	%			1,526,026				1,921,827				25.9	%
Net gain on foreign exchange transactions			151,694				238,775				231,547				-3.0	%			52.6	%			468,691				642,810				37.2	%
Net gain on securities			174,600				(130,488	)			(30,044	)			-77.0	%			-117.2	%			120,627				(118,568	)			-198.3	%
Net gain from associates			(254,578	)			52,809				73,843				39.8	%			n.a.				(386,729	)			140,762				n.a.
Net gain on derivatives held for trading			11,496				31,076				4,260				-86.3	%			-62.9	%			44,624				47,164				5.7	%
Net gain from exchange differences			2,806				55,219				7,277				-86.8	%			159.3	%			1,261				59,444				4614.0	%
Others			36,864				41,144				32,642				-20.7	%			-11.5	%			128,930				123,716				-4.0	%
Total other income			691,276				926,356				989,108				6.8	%			43.1	%			1,903,430				2,817,155				48.0	%
Total expenses
Salaries and employee benefits			(386,520	)			(444,586	)			(449,094	)			1.0	%			16.2	%			(1,235,296	)			(1,312,078	)			6.2	%
Administrative expenses			(413,568	)			(461,867	)			(580,194	)			25.6	%			40.3	%			(1,118,675	)			(1,421,692	)			27.1	%
Depreciation and amortization (2)			(103,615	)			(104,592	)			(111,360	)			6.5	%			7.5	%			(318,722	)			(319,816	)			0.3	%
Other expenses			(73,863	)			(50,765	)			(37,124	)			-26.9	%			-49.7	%			(279,520	)			(130,081	)			-53.5	%
Total expenses			(977,566	)			(1,061,810	)			(1,177,772	)			10.9	%			20.5	%			(2,952,213	)			(3,183,667	)			7.8	%
Profit before income tax			377,048				1,129,912				1,382,212				22.3	%			266.6	%			(467,046	)			3,532,028				n.a.
Income tax			(98,775	)			(332,151	)			(324,697	)			-2.2	%			228.7	%			122,825				(921,234	)			n.a.
Net profit attributable to BCP Stand-alone			278,273				797,761				1,057,515				32.6	%			280.0	%			(344,221	)			2,610,794				n.a.

  

(1) As of 2019, financing expenses related to lease agreements is included according to the application of IFRS 16.

(2) From this quarter, the effect is being incorporated by the application of IFRS 16, which corresponds to a greater depreciation for the asset for right-of-use". Likewise, the expenses related to the depreciation of improvements in building for rent is being reclassified to the item "Other expenses".

 

 

BANCO DE CREDITO DEL PERU
SELECTED FINANCIAL INDICATORS

 

		Quarter												YTD
			3Q20				2Q21				3Q21				Sep 20				Sep 21
Profitability
ROAA (2)(3)			0.6	%			1.7	%			2.2	%			-0.3	%			1.9	%
ROAE (2)(3)			6.5	%			17.2	%			22.0	%			-2.5	%			18.5	%
Net interest margin (1)(2)			3.53	%			3.43	%			3.57	%			3.93	%			3.44	%
Risk adjusted NIM (1)(2)			1.58	%			2.81	%			3.49	%			0.51	%			2.91	%
Funding Cost (1)(2)			1.49	%			0.93	%			0.95	%			1.62	%			1.04	%
Quality of loan portfolio
IOL ratio			2.87	%			3.07	%			3.46	%			2.87	%			3.46	%
NPL ratio			4.07	%			4.50	%			4.86	%			4.07	%			4.86	%
Coverage of IOLs			223.2	%			195.1	%			166.0	%			223.2	%			166.0	%
Coverage of NPLs			157.0	%			133.1	%			118.3	%			157.0	%			118.3	%
Cost of risk (3)			2.89	%			0.95	%			0.11	%			4.63	%			0.77	%
Operating efficiency
Oper. expenses as a percent. of total income - reported (4)			40.8	%			40.3	%			45.3	%			40.7	%			42.0	%
Oper. expenses as a percent. of total income - including all other items			45.0	%			42.9	%			45.4	%			45.9	%			42.9	%
Oper. expenses as a percent. of av. tot. assets (1)(2)			2.06	%			2.15	%			2.41	%			2.22	%			2.18	%

 

(1) Ratios are annualized.

(2) Averages are determined as the average of period-beginning and period-ending balances.

(3) Cost of risk: Annualized provision for loan losses / Total loans.

(4) Total income includes net interest income, fee income, net gain on foreign exchange transactions, result on exchange difference and net gain on derivatives. Operating expenses includes Salaries and social benefits, administrative, general and tax expenses and depreciation and amortization.

 

 

Regulatory Capital and Capital Adequacy Ratios at BCP Stand-alone

(S/ thousands, Peru GAAP)

 

Regulatory Capital and Capital Adequacy Ratios - SBS		As of												% change
S/ 000		Sep 20				Jun 21				Sep 21				QoQ				YoY
Capital Stock			11,067,387				11,317,387				11,317,387				0.0	%			2.3	%
Legal and Other capital reserves			6,164,175				6,707,831				6,707,831				0.0	%			8.8	%
Accumulated earnings with capitalization agreement			-				-				-				n.a.				n.a.
Loan loss reserves (1)			1,565,704				1,676,768				1,720,951				2.6	%			9.9	%
Perpetual subordinated debt			-				-				-				n.a.				n.a.
Subordinated Debt			4,787,489				5,223,300				5,595,900				7.1	%			16.9	%
Investment in subsidiaries and others, net of unrealized profit and net income			(1,934,790	)			(2,263,859	)			(2,263,805	)			0.0	%			17.0	%
Investment in subsidiaries and others			(2,018,037	)			(2,326,241	)			(2,377,058	)			2.2	%			17.8	%
Unrealized profit and net income in subsidiaries			83,247				62,381				113,253				81.5	%			36.0	%
Goodwill			(122,083	)			(122,083	)			(122,083	)			0.0	%			0.0	%
Total Regulatory Capital - SBS			21,527,881				22,539,343				22,956,180				1.8	%			6.6	%
Off-balance sheet			85,546,759				96,842,778				100,119,715				3.4	%			17.0	%
Regulatory Tier 1 Capital (2)			14,971,384				15,142,961				15,142,988				0.0	%			1.1	%
Requlatory Tier 2 Capital (3)			6,556,497				7,396,382				7,813,192				5.6	%			19.2	%
Total risk-weighted assets - SBS (4)			139,910,769				146,936,014				151,415,294				3.0	%			8.2	%
Credit risk-weighted assets			125,256,288				132,013,903				135,576,214				2.7	%			8.2	%
Market risk-weighted assets (5)			4,701,577				3,127,460				3,792,119				21.3	%			-19.3	%
Operational risk-weighted assets			9,952,904				11,794,652				12,046,961				2.1	%			21.0	%
Total capital requirement -SBS			15,355,747				13,925,638				14,356,117				3.1	%			-6.5	%
Credit risk capital requirement			12,525,629				10,561,112				10,846,097				2.7	%			-13.4	%
Market risk capital requirement			470,158				312,746				379,212				21.3	%			-19.3	%
Operational risk capital requirement			995,290				1,179,465				1,204,696				2.1	%			21.0	%
Additional capital requirements			1,364,670				1,872,315				1,926,112				2.9	%			41.1	%
Common Equity Tier 1 - Basel (6)			15,256,858				15,531,636				15,871,353				2.2	%			4.0	%
Capital and reserves			17,231,562				18,025,217				18,025,217				0.0	%			4.6	%
Retained earnings			785,734				1,159,776				2,006,514				73.0	%			155.4	%
Unrealized gains (losses)			326,616				(130,864	)			(584,466	)			346.6	%			-278.9	%
Goodwill and intangibles			(1,069,018	)			(1,196,253	)			(1,196,454	)			0.0	%			11.9	%
Investments in subsidiaries			(2,018,037	)			(2,326,241	)			(2,379,458	)			2.3	%			17.9	%
Adjusted Risk-Weighted Assets - Basel (7)			133,285,120				138,305,356				142,930,956				3.3	%			7.2	%
Total risk-weighted assets			139,910,769				146,936,014				151,415,294				3.0	%			8.2	%
(-) RWA Intangible assets, excluding goodwill.			7,924,480				9,951,130				9,837,459				-1.1	%			24.1	%
(+) RWA Deferred tax assets generated as a result of temporary differences in income tax, in excess of 10% of CET1			1,298,830				1,320,471				1,353,120				2.5	%			4.2	%
(+) RWA Deferred tax assets generated as a result of past losses			-				-				-				-				-
Capital ratios
Regulatory Tier 1 ratio (8)			10.70	%			10.31	%			10.00	%			-31	bps			-70	bps
Common Equity Tier 1 ratio (9)			11.45	%			11.23	%			11.10	%			-13	bps			-35	bps
BIS ratio (10)			15.39	%			15.34	%			15.16	%			-18	bps			-23	bps
Risk-weighted assets / Regulatory capital			6.50				6.52				6.60				1.2	%			1.5	%

 

(1) Up to 1.25% of total risk-weighted assets.

(2) Regulatory Tier 1 Capital = Capital + Legal and other capital reserves + Accumulated earnings with capitalization agreement + (0.5 x Unrealized profit and net income in subsidiaries) - Goodwill - (0.5 x Investment in subsidiaries) + Perpetual subordinated debt (maximum amount that can be included is 17.65% of Capital + Reserves + Accumulated earnings with capitalization agreement + Unrealized profit and net income in subsidiaries - Goodwill).

(3) Regulatory Tier 2 Capital = Subordinated debt + Loan loss reserves + Unrestricted Reserves + (0.5 x Unrealized profit and net income in subsidiaries) - (0.5 x Investment in subsidiaries).

(4) Since July 2012, Total Risk-weighted assets = Credit risk-weighted assets * 1.00 + Capital requirement to cover market risk * 10 + Capital requirement to cover operational risk * 10 * 1.00 (since July 2014)

(5) It includes capital requirement to cover price and rate risk.

(6) Common Equity Tier I = Capital + Reserves – 100% of applicable deductions (investment in subsidiaries, goodwill, intangibles and net deferred taxes that rely on future profitability) + retained earnings + unrealized gains.

(7) Adjusted Risk-Weighted Assets = Risk-weighted assets - (RWA Intangible assets, excluding goodwill, + RWA Deferred tax assets generated as a result of temporary differences in income tax, in excess of 10% of CET1, + RWA Deferred tax assets generated as a result of past losses).

(8) Regulatory Tier 1 Capital / Total Risk-weighted assets

(9) Common Equity Tier I / Adjusted Risk-Weighted Assets

(10) Total Regulatory Capital / Total Risk-weighted assets (legal minimum = 10% since July 2011)

 

 

12.5. BCP Bolivia

 

BCP BOLIVIA
(S/ thousands, IFRS)

 

		As of												% change
		Sep 20				Jun 21				Sep 21				QoQ				YoY
ASSETS
Cash and due from banks			2,184,964				2,228,226				2,625,523				17.8	%			20.2	%
Investments			1,282,579				1,671,904				1,794,096				7.3	%			39.9	%
Total loans			8,449,617				9,197,759				9,919,102				7.8	%			17.4	%
Current			8,321,906				9,045,300				9,782,780				8.2	%			17.6	%
Internal overdue loans			100,875				112,005				95,751				-14.5	%			-5.1	%
Refinanced			26,835				40,455				40,572				0.3	%			51.2	%
Allowance for loan losses			(434,471	)			(433,953	)			(467,583	)			7.7	%			7.6	%
Net loans			8,015,146				8,763,806				9,451,520				7.8	%			17.9	%
Property, plant and equipment, net			50,678				56,091				61,986				10.5	%			22.3	%
Other assets			192,489				393,292				414,892				5.5	%			115.5	%
Total assets			11,725,856				13,113,320				14,348,016				9.4	%			22.4	%
LIABILITIES AND NET SHAREHOLDERS’ EQUITY
Deposits and obligations			10,023,973				11,057,286				12,114,178				9.6	%			20.9	%
Due to banks and correspondents			83,660				119,795				89,697				-25.1	%			7.2	%
Bonds and subordinated debt			110,625				178,578				191,218				7.1	%			72.9	%
Other liabilities			824,117				994,580				1,111,166				11.7	%			34.8	%
Total liabilities			11,042,375				12,350,240				13,506,259				9.4	%			22.3	%
Net equity			683,481				763,080				841,757				10.3	%			23.2	%
TOTAL LIABILITIES AND NET SHAREHOLDERS’ EQUITY			11,725,856				13,113,320				14,348,016				9.4	%			22.4	%

 

		Quarter												% change								Year								% change
			3Q20				2Q21				3Q21				QoQ				YoY				Sep 20				Sep 21				9M-21/ 9M-20
Net interest income			91,255				79,897				97,603				22.2	%			7.0	%			169,809				155,086				-8.7	%
Provision for loan losses, net of recoveries			(71,996	)			49,116				(23,161	)			n.a.				-67.8	%			(136,716	)			25,534				-118.7	%
Net interest income after provisions			19,260				129,012				74,441				-42.3	%			286.5	%			33,093				180,620				445.8	%
Non-financial income			27,561				37,598				44,902				19.4	%			62.9	%			51,403				73,222				42.4	%
Total expenses			(61,480	)			(127,985	)			(78,514	)			-38.7	%			27.7	%			(119,359	)			(192,727	)			61.5	%
Translation result			(93	)			21				(89	)			-523.9	%			-4.2	%			11				9				-20.9	%
Income taxes			(6,165	)			(23,486	)			(17,619	)			-25.0	%			185.8	%			2,098				(34,509	)			n.a.
Net income			(20,916	)			15,161				23,121				-52.5	%			-210.5	%			(32,754	)			26,615				-181.3	%
Efficiency ratio			51.2	%			58.9	%			53.0	%			-590	pbs			180	pbs			52.9	%			56.9	%			400	pbs
ROAE			-12.1	%			8.2	%			11.5	%			330	pbs			2365	pbs			-15.1	%			13.0	%			2810	pbs
L/D ratio			84.3	%			83.2	%			81.9	%			-130	pbs			-241	pbs
IOL ratio			1.19	%			1.22	%			0.97	%			-20	pbs			-22	pbs
NPL ratio			1.51	%			1.66	%			1.37	%			-30	pbs			-14	pbs
Coverage of IOLs			430.7	%			387.4	%			488.3	%			10090	pbs			5763	pbs
Coverage of NPLs			340.2	%			284.6	%			343.0	%			5840	pbs			280	pbs
Branches			54				47				43				-4				-11
Agentes			664				851				876				25				212
ATMs			310				305				306				1				-4
Employees			1,659				1,564				1,575				11				-84

 

 

12.6. Mibanco

Mibanco

(S/ thousands, IFRS)

 

		As of												% change
		Sep 20				Jun 20				Sep 21				QoQ				YoY
ASSETS
Cash and due from banks			1,532,886				1,477,527				1,577,391				6.8	%			2.9	%
Investments			1,453,377				1,533,808				1,525,592				-0.5	%			5.0	%
Total loans			12,146,975				13,039,316				13,288,672				1.9	%			9.4	%
Current			11,271,599				11,824,810				12,172,179				2.9	%			8.0	%
Internal overdue loans			732,964				1,158,977				1,067,142				-7.9	%			45.6	%
Refinanced			142,412				55,529				49,351				-11.1	%			-65.3	%
Allowance for loan losses			-1,807,822				-1,662,457				-1,487,787				-10.5	%			-17.7	%
Net loans			10,339,153				11,376,859				11,800,884				3.7	%			14.1	%
Property, plant and equipment, net			158,793				148,899				145,753				-2.1	%			-8.2	%
Other assets			1,073,139				1,075,526				1,035,653				-3.7	%			-3.5	%
Total assets			14,557,348				15,612,618				16,085,272				3.0	%			10.5	%
LIABILITIES AND NET SHAREHOLDERS’ EQUITY
Deposits and obligations			8,289,196				8,292,913				8,620,050				3.9	%			4.0	%
Due to banks and correspondents			2,138,329				1,898,921				2,232,497				17.6	%			4.4	%
Bonds and subordinated debt			134,995				188,775				186,677				-1.1	%			38.3	%
Other liabilities			2,307,485				3,058,752				2,803,336				-8.4	%			21.5	%
Total liabilities			12,870,004				13,439,362				13,842,559				3.0	%			7.6	%
Net equity			1,687,344				2,173,257				2,242,714				3.2	%			32.9	%
TOTAL LIABILITIES AND NET SHAREHOLDERS’ EQUITY			14,557,348				15,612,618				16,085,272				3.0	%			10.5	%

 

		Quarter												% change								YTD								% change
			3Q20				2Q21				3Q21				QoQ				YoY				Sep 20				Sep 21				Sep 21 / Sep 20
Net interest income			413,164				458,762				493,183				7.5	%			19.4	%			1,163,502				1,355,353				16.5	%
Provision for loan losses, net of recoveries			-385,892				-124,451				-122,711				-1.4	%			-68.2	%			-972,335				-385,880				-60.3	%
Net interest income after provisions			27,272				334,311				370,472				10.8	%			N/A				191,166				969,472				407.1	%
Non-financial income			7,906				16,552				22,207				34.2	%			180.9	%			50,714				67,098				32.3	%
Total expenses			-260,131				-271,465				-269,221				-0.8	%			3.5	%			-813,533				-809,437				-0.5	%
Translation result			-				-				-				0.0	%			0.0	%			-				-				0.0	%
Income taxes			66,568				-24,093				-46,543				93.2	%			-169.9	%			169,659				-80,858				-147.7	%
Net income			-158,385				55,305				76,915				39.1	%			-148.6	%			-401,993				146,275				-136.4	%
Efficiency ratio			58.7	%			55.6	%			49.7	%			-590	bps			-900	bps			65.2	%			55.7	%			-950	bps
ROAE			-35.8	%			10.3	%			13.9	%			360	bps			4970	bps			-28.4	%			9.0	%			3740	bps
ROAE incl. Goowdill			-33.2	%			9.7	%			13.2	%			350	bps			4640	bps			-26.4	%			8.5	%			3490	bps
L/D ratio			146.5	%			157.2	%			154.2	%			-300	bps			770	bps
IOL ratio			6.0	%			8.9	%			8.0	%			-90	bps			200	bps
NPL ratio			7.2	%			9.3	%			8.4	%			-90	bps			120	bps
Coverage of IOLs			246.6	%			143.4	%			139.4	%			-400	bps			-10720	bps
Coverage of NPLs			206.5	%			136.9	%			133.3	%			-360	bps			-7320	bps
Branches (1)			323				319				318				-1				-5
Employees			11,133				10,057				9,874				-183				-1,259

 

(1) Includes Banco de la Nacion branches, which in September 20 were 34, in June 21 were 34 and in September 21 were 34

 

 

   

Regulatory Capital and Capital Adequacy Ratios at Mibanco

(S/ thousands, Peru GAAP)

 

		As of												% change
		Sep 20				Jun 21				Sep 21				QoQ				YoY
Capital Stock			1,714,369				1,714,577				1,714,577				0.0	%			0.0	%
Legal and Other capital reserves			246,305				246,305				246,305				0.0	%			0.0	%
Accumulated earnings with capitalization agreement			-				46,524				94,945				104.1	%			n.a.
Loan loss reserves (1)			127,730				138,555				146,213				5.5	%			14.5	%
Perpetual subordinated debt			-				-				-				n.a.				n.a.
Subordinated Debt			130,000				185,000				185,000				0.0	%			42.3	%
Investment in subsidiaries and others, net of unrealized profit and net income			-				-				-				-				-
Investment in subsidiaries and others			-				-				-				-				-
Unrealized profit and net income in subsidiaries			-				-				-				-				-
Goodwill			(139,180	)			(139,180	)			(139,180	)			0.0	%			0.0	%
Total Regulatory Capital - SBS			2,079,224				2,191,781				2,247,861				2.6	%			8.1	%
Regulatory Tier 1 Capital (2)			1,818,754				1,865,495				1,913,912				2.6	%			5.2	%
Regulatory Tier 2 Capital (3)			260,469				326,287				333,948				2.3	%			28.2	%
Total risk-weighted assets - SBS (4)			11,755,497				12,728,511				13,385,231				5.2	%			13.9	%
Credit risk-weighted assets			9,736,476				10,662,694				11,237,705				5.4	%			15.4	%
Market risk-weighted assets (5)			114,638				195,522				266,551				36.3	%			132.5	%
Operational risk-weighted assets			1,904,383				1,870,294				1,880,975				0.6	%			-1.2	%
Total capital requirement			1,176,550				1,273,851				1,339,523				5.2	%			13.9	%
Credit risk capital requirement			973,648				1,066,269				1,123,771				5.4	%			15.4	%
Market risk-weighted assets			11,464				19,552				26,655				36.3	%			132.5	%
Operational risk capital requirement			190,438				187,029				188,097				0.6	%			-1.2	%
Additional capital requirements			1,000				1,000				1,000				0.0	%			0.0	%
Common Equity Tier 1 - Basel (6)			1,790,675				1,797,589				1,892,846				5.3	%			5.7	%
Capital and reserves			1,960,674				1,960,882				1,960,882				0.0	%			0.0	%
Retained earnings			73,928				140,952				201,478				42.9	%			172.5	%
Unrealized gains (losses)			8,214				1,563				(5,892	)			-477.1	%			-171.7	%
Goodwill and intangibles			(229,447	)			(243,880	)			(246,432	)			1.0	%			7.4	%
Excess DT of 10% CET1 Basilea			(22,694	)			(61,928	)			(17,191	)			-72.2	%			-24.2	%
Adjusted Risk-Weighted Assets - Basel (7)			11,042,007				11,783,071				12,496,366				6.1	%			13.2	%
Total risk-weighted assets			11,755,497				12,728,511				13,385,231				5.2	%			13.9	%
(-) RWA Intangible assets, excluding goodwill.			713,490				836,447				1,049,881				25.5	%			47.1	%
(+) RWA Deferred tax assets generated as a result of temporary differences in income tax, in excess of 10% of CET1			-				232,440				238,755				2.7	%			n.a.
(-) RWA assets that exceed 10% of CET1 SBS			-				352,031				75,000				-78.7	%			n.a.
(-) RWA difference between excees SBS and Basel methodology			-				(10,598	)			2,738				n.a.				n.a.
Capital ratios
Regulatory Tier 1 ratio (8)			15.47	%			14.66	%			14.30	%			-36	bps			-117	bps
Common Equity Tier 1 ratio (9)			16.22	%			15.26	%			15.15	%			-11	bps			-107	bps
BIS ratio (10)			17.69	%			17.22	%			16.79	%			-43	bps			-90	bps
Risk-weighted assets / Regulatory capital			5.65				5.81				5.95				2.5	%			5.3	%

 

(1) Up to 1.25% of total risk-weighted assets.

(2) Regulatory Tier 1 Capital = Capital + Legal and other capital reserves + Accumulated earnings with capitalization agreement + (0.5 x Unrealized profit and net income in subsidiaries) - Goodwill - (0.5 x Investment in subsidiaries) + Perpetual subordinated debt (maximum amount that can be included is 17.65% of Capital + Reserves + Accumulated earnings with capitalization agreement + Unrealized profit and net income in subsidiaries - Goodwill).

(3) Regulatory Tier 2 Capital = Subordinated debt + Loan loss reserves + Unrestricted Reserves + (0.5 x Unrealized profit and net income in subsidiaries) - (0.5 x Investment in subsidiaries).

(4) Since July 2012, Total Risk-weighted assets = Credit risk-weighted assets * 1.00 + Capital requirement to cover market risk * 10 + Capital requirement to cover operational risk * 10 * 1.00 (since July 2014)

(5) It includes capital requirement to cover price and rate risk.

(6) Common Equity Tier I = Capital + Reserves – 100% of applicable deductions (investment in subsidiaries, goodwill, intangibles and net deferred taxes that rely on future profitability) + retained earnings + unrealized gains.

(7) Adjusted Risk-Weighted Assets = Risk-weighted assets - (RWA Intangible assets, excluding goodwill, + RWA Deferred tax assets generated as a result of temporary differences in income tax, in excess of 10% of CET1, + RWA Deferred tax assets generated as a result of past losses).

(8) Regulatory Tier 1 Capital / Total Risk-weighted assets

(9) Common Equity Tier I / Adjusted Risk-Weighted Assets

(10) Total Regulatory Capital / Total Risk-weighted assets (legal minimum = 10% since July 2011)

 

  

12.8. Investment Banking & Wealth Management

 

Investment Banking & Wealth Management

(S/ thousands, IFRS)

 

Banca de Inversión y Gestión de Patrimonios S/ 000		Quarter												%change								YTD								% change
		3Q20				2Q21				3Q21				QoQ				YoY				Sep 20				Sep 21				Sep 21 / Sep 20
Net interest income			17,786				23,055				14,290				-38.0	%			-20	%			49,055				60,432				23.2	%
Non-financial income			170,987				213,732				217,358				1.7	%			27.1	%			586,730				609,155				3.8	%
Fee income			143,492				168,937				149,029				-11.8	%			3.9	%			349,752				465,560				33.1	%
Net gain on foreign exchange transactions			8,846				-8,270				-3,033				-63.3	%			n.a				11,649				985				-91.5	%
Net gain on sales of securities			58,045				44,184				34,790				-21.3	%			-40.1	%			211,388				34,922				-83.5	%
Derivative Result			-33,610				14,447				42,607				194.9	%			n.a				-24,399				113,319				n.a
Result from exposure to the exchange rate			5,306				-11,695				-10,599				-9.4	%			n.a				21,077				-23,295				n.a
Other income			-11,092				6,129				4,564				-25.5	%			n.a				17,263				17,664				2.3	%
Operating expenses (1)			-208,324				-162,087				-166,716				2.9	%			-20.0	%			-503,081				-485,488				-3.5	%
Operating income			-19,551				74,700				64,932				-13.1	%			n.a				132,704				184,099				38.7	%
Income taxes			-14,397				-9,314				-9,284				-0.3	%			-35.5	%			-23,940				-25,735				7.5	%
Non-controlling interest			219				943				1,537				63.0	%			n.a				363				3,109				n.a
Net income			-34,167				64,443				54,111				-16.0	%			n.a				108,401				155,255				43.2	%

 

* Unaudited results.

(1) Includes: Salaries and employee benefits + Administrative expenses + Assigned expenses + Depreciation and amortization + Tax and contributions + Other expenses.

 

12.9. Grupo Pacifico

 

		As of												% change
		Sep 20				Jun 21				Sep 21				QoQ				YoY
Total assets			15,115,751				15,775,105				15,949,391				1.1	%			5.5	%
Invesment on securities (6)			11,625,405				12,102,502				12,129,220				0.2	%			4.3	%
Technical reserves			11,098,905				12,173,277				12,531,003				2.9	%			12.9	%
Net equity			2,829,498				2,125,685				1,895,643				-10.8	%			-33.0	%

 

		Quarter												% change								YTD								% change
			3Q20				2Q21				3Q21				QoQ				YoY				Sep20				Sep21				Sep 21 / Sep 20
Net earned premiums			602,361				643,970				677,204				5.2	%			12.4	%			1,803,822				1,972,683				9.4	%
Net claims			(517,735	)			(691,450	)			(517,950	)			-25.1	%			0.0	%			(1,236,412	)			(1,837,191	)			48.6	%
Net fees			(123,463	)			(144,590	)			(149,570	)			3.4	%			21.1	%			(398,378	)			(436,859	)			9.7	%
Net underwriting expenses			(26,991	)			(31,136	)			(35,798	)			15.0	%			32.6	%			(117,255	)			(97,152	)			-17.1	%
Underwriting result			(65,828	)			(223,206	)			(26,115	)			-88.3	%			-60.3	%			51,776				(398,519	)			n.a.
Net financial income			149,354				159,184				182,019				14.3	%			21.9	%			422,101				490,661				16.2	%
Total expenses			(105,640	)			(103,844	)			(111,326	)			7.2	%			5.4	%			(323,726	)			(324,006	)			0.1	%
Other income			9,972				10,177				16,413				61.3	%			64.6	%			29,746				29,832				0.3	%
Traslations results			(1,500	)			(92	)			547				n.a.				-136.5	%			241				1,022				324.6	%
EPS business & Medical Services deduction			9,417				8,800				12,994				47.7	%			38.0	%			43,409				45,171				4.1	%
Medical Assistance insurance deduction			(10,566	)			(8,879	)			(10,426	)			17.4	%			-1.3	%			(34,940	)			(33,211	)			-5.0	%
Income tax			86				(2,029	)			(333	)			-83.6	%			n.a.				(2,589	)			(3,761	)			45.3	%
Income before minority interest			(14,705	)			(159,887	)			63,773				-139.9	%			n.a.				186,018				(192,812	)			-203.7	%
Non-controlling interest			1,496				(659	)			(1,245	)			89.0	%			-183.2	%			(2,875	)			(3,633	)			26.4	%
Net income			(13,209	)			(160,546	)			62,529				-138.9	%			n.a.				183,143				(196,445	)			-207.3	%
Ratios
Ceded			12.4	%			15.5	%			16.8	%			130	bps			440	bps			14.3	%			16.9	%			260	bps
Loss ratio (1)			86.0	%			107.4	%			76.5	%			-3090	bps			-950	bps			68.5	%			93.1	%			2460	bps
Fees + underwriting expenses, net / net earned premiums			25.0	%			27.3	%			27.4	%			10	bps			240	bps			28.6	%			27.1	%			-150	bps
Operating expenses / net earned premiums			17.5	%			16.1	%			16.4	%			30	bps			-110	bps			17.9	%			16.4	%			-150	bps
ROAE (2)(3)			-2.1	%			-28.4	%			13.1	%			4150	bps			1520	bps			-2.1	%			13.1	%			1520	bps
Return on written premiums			-1.5	%			-17.0	%			5.6	%			2260	bps			710	bps			7.1	%			-6.4	%			-1350	bps
Combined ratio of Life (4)			115.4	%			143.3	%			95.1	%			-4820	bps			-2030	bps			115.4	%			95.1	%			-2030	bps
Combined ratio of P&C (5)			84.8	%			88.9	%			94.1	%			520	bps			930	bps			84.8	%			94.1	%			930	bps
Equity requirement ratio (7)			1.33				1.22				1.19				-200	bps			-1380	bps			1.33				1.19				-1380	bps

 

*Financial statements without consolidation adjustments.

(1) Net claims / Net earned premiums.

(2) Includes unrealized gains.

(3) Annualized and average are determined as the average of period beginning and period ending.

(4) (Net claims / Net earned premiums) + Reserves / Net earned premiums) + [(Acquisition cost + total expenses) / Net earned premiums] - (Net Financial Income without real state sales, securities sales, impairment loss and fluctuation / Net earned premiums).

(5) (Net claims / Net earned premiums) + [(Acquisition cost + total expenses) / Net earned premiums].

(6) Excluding investments in real estate.

(7) Support to cover credit risk, market risk and operational risk.

 

From 1Q15 and on, Grupo Pacifico’s financial statements reflect the association with Banmedica. This partnership includes:

 

The private health insurance business, which is managed by Grupo Pacifico and incorporated in each line of Grupo Pacifico’s financial statements; corporate health insurance for payroll employees; and medical services.

 

The businesses described in ii) and iii) are managed by Banmedica, therefore they do not consolidate in Grupo Pacifico’s financial statements. The 50% of net income generated by Banmedica is recorded in Grupo Pacifico’s Income Statement as a gain/loss on investments in subsidiaries.

 

As explained before, corporate health insurance and medical services businesses are consolidated by Banmedica. The following table reflects the consolidated results from which Grupo Pacifico receives the 50% net income.

 

 

Corporate health insurance and Medical services

(S/ thousands, IFRS)

 

		Quarter												% change								YTD								% change
			3Q20				2Q21				3Q21				QoQ				YoY				Set 20				Set 21				Set20 / Set21
Results
Net earned premiums			285,899				288,352				301,598				4.6	%			5.5	%			830,770				867,894				4.5	%
Net claims			(243,096	)			(273,350	)			(259,820	)			4.9	%			-6.9	%			-630,785				-748,809				18.7	%
Net fees			(12,185	)			(12,231	)			(12,836	)			-4.9	%			-5.3	%			-35,758				-37,377				4.5	%
Net underwriting expenses			(2,646	)			(2,412	)			(2,566	)			-6.4	%			3.0	%			-8,421				-7,856				-6.7	%
Underwriting result			27,972				358				26,376				n.a.				-5.7	%			155,806				73,853				-52.6	%
Net financial income			1,658				1,904				1,775				-6.8	%			7.0	%			4,180				4,866				16.4	%
Total expenses			(18,340	)			(19,179	)			(22,725	)			-18.5	%			-23.9	%			-57,766				-62,613				8.4	%
Other income			513				-13				-8				38.0	%			-101.5	%			919				-438				-147.6	%
Traslations results			776				3,005				5,087				69.3	%			n.a.				3,081				9,477				207.6	%
Income tax			(3,655	)			3,503				(8,175	)			n.a.				123.7	%			-33,179				-13,318				-59.9	%
Net income before Medical services			8,923				-10,422				2,329				-122.3	%			-73.9	%			73,041				11,828				-83.8	%
Net income of Medical services			9,936				27,939				23,575				-15.6	%			137.3	%			13,532				78,264				478.3	%
Net income			18,860				17,517				25,904				47.9	%			37.3	%			86,574				90,091				4.1	%

 

 

 

 

 

 

12.10. Prima AFP

Prima AFP

(S/ thousands, IFRS)

 

		As of												% change
			3Q20				2Q21				3Q21				QoQ				YoY
Total assets			1,015,828				867,605				796,553				-8.2	%			-21.6	%
Total liabilities			379,394				223,284				257,554				15.3	%			-32.1	%
Net shareholders’ equity			636,434				644,321				538,999				-16.3	%			-15.3	%

 

		Quarter												% change								YTD								% change
		3Q20				2Q21				3Q21				QoQ				YoY				Sep 20				Sep 21				Sep 21 / Sep 20
Income from commissions			89,242				97,331				94,620				-2.8	%			6.0	%			264,771				289,552				9.4	%
Administrative and sale expenses			(36,958	)			(38,412	)			(42,006	)			9.4	%			13.7	%			(102,893	)			(119,296	)			15.9	%
Depreciation and amortization			(5,982	)			(5,541	)			(5,845	)			5.5	%			-2.3	%			(18,208	)			(17,310	)			-4.9	%
Operating income			46,302				53,378				46,769				-12.4	%			1.0	%			143,670				152,946				6.5	%
Other income and expenses, net (profitability of lace)			4,855				6,577				(2,371	)			-136.1	%			-148.8	%			(16,058	)			2,652				-116.5	%
Income tax			(12,918	)			(16,134	)			(13,592	)			-15.8	%			5.2	%			(41,832	)			(45,953	)			9.9	%
Net income before translation results			38,239				43,822				30,806				-29.7	%			-19.4	%			85,779				109,646				27.8	%
Translations results			(202	)			479				891				85.9	%			-541.3	%			(589	)			948				-261.0	%
Net income			38,037				44,301				31,697				-28.5	%			-16.7	%			85,190				110,594				29.8	%
ROAE (1)			24.6	%			28.5	%			21.4	%			-706	pbs			-321	pbs			17.0	%			23.8	%			678	pbs

 

(1) Net shareholders' equity includes unrealized gains from Prima's investment portfolio.

(*) The net profitability of lace and mutual funds is being presented net of taxes, for which the retroactive change was made (it was presented gross before).

 

Funds under management

 

Funds under management		Jun 21				% share				Sep 21				% share
Fund 0			1,175				2.5	%			1,205				3.1	%
Fund 1			7,156				15.2	%			6,394				16.5	%
Fund 2			33,757				71.6	%			26,698				69.0	%
Fund 3			5,027				10.7	%			4,421				11.4	%
Total S/ Millions			47,114				100	%			38,719				100	%

 

 

Source: SBS

 

Nominal profitability over the last 12 months

 

		Jun 21 / Jun 20				Sep 21 / Sep 20
Fund 0			1.5	%			1.0	%
Fund 1			9.6	%			4.2	%
Fund 2			27.3	%			11.7	%
Fund 3			17.2	%			23.1	%

 

AFP fees

 

Fee based on flow			1.60	%		Applied to the affiliates’ monthly remuneration.
Mixed fee
Flow			0.18	%		Applied to the affiliates’ monthly remuneration since June 2017. Feb 17- may 17 =0.87%.
Balance			1.25	%		Applies annualy to the new balance since February 2013 for new affiliates to the system and beginning on June 2013 for old affiliates who have chosen this commission scheme.

 

Main Indicators

 

		Prima				System				% share				Prima				System				% share
Main indicators and market share			2Q21				2Q21				2Q21				3Q21				3Q21				3Q21
Affiliates			2,353,808				7,987,142				29.5	%			2,351,087				8,120,364				29.0	%
New affiliations (2)			-				114,820				0.0	%			-				139,360				0.0	%
Funds under management (S/ Millions)			47,114				158,148				29.8	%			38,719				129,169				30.0	%
Collections (S/ Millions) (1)			689				3,295				20.9	%			1,016				3,591				28.3	%
Voluntary contributions (S/ Millions) (1)			1,011				2,476				40.8	%			1,073				2,620				41.0	%
RAM (S/ Millions) (3)			1,379				4,479				30.8	%			1,316				4,322				30.4	%

 

Source: SBS

(1) Information available as of August 2021.

(2) As of June 2021, another AFP has the exclusivity of affiliations.

(3) Prima AFP estimate: Average of aggregated income for flow during the last 4 months, excluding special collections and voluntary contribution fees.

 

 

12.11. Portfolio Quality indicators by Business Segment

 

Wholesale Banking

 

SME-Business

 

SME-Pyme

 

 

Mortgage

 

Consumer

 

Credit Card

 

 

Mibanco

 

BCP Bolivia

 

 

12.12. Table of calculations

 

 

(1) Averages are determined as the average of period-beginning and period-ending balances.

(2) Includes total deposits, due to banks and correspondents, BCRP instruments, repurchase agreements and bonds and notes issued.

(3) Does not include Life insurance business.

(4) Tier 1 = Capital + Legal and other capital reserves + Accumulated earnings with capitalization agreement + (0.5 x Unrealized profit and net income in subsidiaries) - Goodwill - (0.5 x Investment in subsidiaries) + Perpetual subordinated debt (maximum amount that can be included is 17.65% of Capital + Reserves + Accumulated earnings with capitalization agreement + Unrealized profit and net income in subsidiaries - Goodwill).

(5) Includes investment in subsidiaries, goodwill, intangibles and deferred tax that rely on future profitability.

 

 

12.13. Glossary of terms

 

Government Program Loans (“GP or GP loans”)	Loan Portfolio related to Reactiva Peru and FAE-Mype programs to respond quickly and effectively to liquidity needs and maintain the payment chain.
Structural Loans	Loan Portfolio excluding GP Loans.
Non-Recurring Events at Interest Income	Impairment charge (related to the government facility that allowed for deferrement of certain installments at zero cost) and subsequent amortization thereof.
Non-Recurring Events at Interest Expense	Charges related to the liability management operation at BCP (3Q20,1Q21).
Structural Cost of risk	Cost of Risk related to the Structural Loans. It excludes, in the numerator, provisions for credit losses on GP loans, and in the denominator, the total amount of GP Loans.
Structural NPL ratio	NPL Ratio related to Structural Loans. It excludes the impact of GP Loans.
Structural NIM	NIM related to structural loans and other interest earning assets. It deducts the impact from GP loans and non-recurring events from Interest Income and Interest Expenses.
Structural Funding Cost	Funding Cost deducting the impact in expenses and funding related to GP Loans and deducting non-recurring events from Interest Expense.