Winner: Banco de Crédito del Perú
Peru faced one of its worst years in decades in 2020, a combination of the pandemic, weak social programs and a frayed political system.
The economy contracted by 11% in 2020 and unemployment shot up to 16%. Poverty went up 10 points, to 30%, and Peru had one of the most substantial spikes in hunger worldwide, according to the Food and Agriculture Organization. It also has the highest per capita mortality rate from Covid-19 in the world, with 6,065 deaths per 1mn people, according to Johns Hopkins University. It ranks sixth worldwide for Covid-19 deaths.
Those dramatic numbers were accompanied by a near collapse of the country’s political system. Peru had three presidents in the span of one week in November 2020. President Pedro Castillo was inaugurated in July, the fifth man to hold the job in five years. Speculation has been rampant since his inauguration in July that that he will not last.
The country’s banks took a beating, with combined profits for the 16 full-service commercial banks falling 76.7% in 2020 compared to the previous year. More recently, the top banks saw their credit ratings lowered by Moody’s and Fitch, following the downgrade of the sovereign by these agencies in September and October, respectively.
The economy is bouncing back, however – growth could be in double digits this year – and banks are following, with the largest bank, Banco de Crédito del Peru (BCP), in the lead.
BCP’s performance in the crisis and its leading role in digital transformation won it the Bank of the Year award for Peru.
“The financial sector depends on the general state of the economy. Peru’s economy is coming close to pre-pandemic levels, with growth near 20% in the first six months of 2021. We project 9% growth for the Peruvian economy in 2021,” says CEO Gianfranco Ferrari.
Apoyo & Asociados, a Peru-based research firm, reported in September that BCP’s “solid solvency has been demonstrated through its capacity to face changes in market condition, such as the economic slowdown. The bank was resilient, with ample levels of coverage, capitalization and liquidity during the pandemic crisis.”
BCP’s net income was up by 56.1% in June 2021 compared to the previous year, while loans were up by 7.8% and deposits were up by 15%. The bank accounted for 34.5% of loans and 36.2% of deposits in the system in June, according to the banking regulator, SBS.
The bank continued to maintain a high level of provisions, 134.2% in June, despite a strong improvement in loans that had been reprogrammed during the crisis. Reprogrammed loans accounted for 13% of the total in June 2021, down from 27% in the same month a year earlier. Past due loans were 3.6% in June.
If the crisis had any positive impact, it would be in financial inclusion, an area where BCP has been a leader with both traditional and new digital products.
According to the SBS, 52% of the population had a savings account in June 2021, up from 43% a year earlier. The National Financial Inclusion Plan, which was approved in 2020, aims to have 75% of the population in the financial system by the end of the decade.
BCP led the Peruvian system with the introduction of a proprietary digital wallet, Yape, in 2017. Yape had 7mn users midway through 2021 and has added 1mn new users to the financial system.
It is being used for 27 million transactions monthly, 68% of which are being done by small businesses. BCP also opened Yape to other institutions, including the state-owned Banco de la Nación, which channeled stimulus payments during the crisis, and three savings and loans, adding another layer, particularly with small and medium enterprises.
“At BCP, we began a digital transformation process more than five years ago to adapt to our clients and stay ahead of their needs. I believe that the results are palpable. Yape is a clear example,” says Ferrari.