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UBS Roundtable ConferenceOctober 27, 2003
Walter Bayly Head of Wholesale BankingBanco de Credito del Perú
CONTENTS
• PERUVIAN ECONOMY AND BANKING SYSTEM
• CREDICORP
• BCP
• OTHER CREDICORP’S MAJOR SUBSIDIARIES
• CREDICORP OVERVIEW 2Q 2003
PERUVIAN ECONOMY AND BANKING SYSTEM
MéxicoMéxico Brazil Colombia Chile Brazil Colombia Chile Perú Perú 2 2003*003*
**** **** **** ****GDP (US$ Bn)GDP (US$ Bn) 623.4623.4 516.6516.6 83.983.9 67.867.8 60.260.2GDP Growth (%)GDP Growth (%) 0.90.9 1.51.5 1.91.9 2.12.1 4.54.5Inflation (%)Inflation (%) 5.75.7 12.512.5 7.07.0 2.82.8 1.81.8Devaluation (%)Devaluation (%) 11.011.0 53.053.0 22.022.0 5.05.0 2.22.2Deposits/GDP (%)Deposits/GDP (%) 19.519.5 24.924.9 23.023.0 40.340.3 22.822.8Fiscal Deficit (%of GDP)Fiscal Deficit (%of GDP) (1.3)(1.3) (5.4)(5.4) (4.6)(4.6) (0.8)(0.8) (1.8)(1.8)Current Account (%of GDP) Current Account (%of GDP) (2.7)(2.7) (1.4)(1.4) (2.3)(2.3) (1.1)(1.1) (2.0)(2.0)Int. Reserves/Mthly ImportsInt. Reserves/Mthly Imports 3.33.3 9.69.6 10.110.1 10.510.5 14.614.6Country Risk (bps)+Country Risk (bps)+ 227227 822822 465465 143143 491491
* As of June 2003**As of Dec.2002 +JP Morgan Index EMBI : Spread of Government Bonds over US Treasury Bonds as of June 30, 2003
PERUVIAN ECONOMY vs. OTHER LATIN PERUVIAN ECONOMY vs. OTHER LATIN AMERICAN ECONOMIESAMERICAN ECONOMIES
Source : Latin Focus, IMF
BrasilBrasil MéxicoMéxico ChileChile Colombia Colombia Perú*Perú*
**** **** **** ****
Assets Assets 320.5 320.5 163.2 163.2 68.2 68.2 26.3 26.3 17.6 17.6
LoansLoans 90.3 90.3 90.0 90.0 42.3 42.3 16.5 16.5 10.6 10.6
DepositsDeposits 128.8 128.8 121.8 121.8 27.3 27.3 19.3 19.3 13.5 13.5
EquityEquity 25.3 25.3 16.3 16.3 5.7 5.7 2.6 2.6 1.8 1.8
Past Due Loan/ LoansPast Due Loan/ Loans 12.5%12.5% 4.8%4.8% 2.0%2.0% 10.2%10.2% 8.0%8.0%
Reserves/Past Due LoansReserves/Past Due Loans 105.4%105.4% 136.2%136.2% 135.2%135.2% 77.8%77.8% 127.5%127.5%
Cost/IncomeCost/Income 53.9%53.9% 64.5%64.5% 51.5%51.5% 84.7%84.7% 60.5%60.5%
ROEROE 16.75%16.75% 12.8%12.8% 15.8%15.8% 19.3%19.3% 9.9%9.9%
PERUVIAN BANKING SYSTEM vs. OTHER PERUVIAN BANKING SYSTEM vs. OTHER LATIN AMERICAN BANKING SYSTEMSLATIN AMERICAN BANKING SYSTEMS
* As of June 2003
** As of Dec 2002
Source: Fitch Ratings , IMF, ASBANC
US$ Bn
• Reduced growth of 3.5% of GDP for 2003- 2004, and marginal improvement in fiscal position
• Low growth of loans and deposits in line with the economy• Slight increase of private investment • Gradual reduction of interest rates of spreads due to increased
competition (Banks and Cap. Markets) as well as excess of liquidity
• Continued improvement of loan quality ratios• Lower growth of non-financial revenues due to banking
transaction taxes• Reduction of bank’s operating costs
MOST LIKELY SCENARIO FOR THE ECONOMY AND MOST LIKELY SCENARIO FOR THE ECONOMY AND THE PERUVIAN BANKING SYSTEM FOR 2003- 2004THE PERUVIAN BANKING SYSTEM FOR 2003- 2004
CREDICORP’S ORGANIZATION
BCP accounts for 85% of Credicorp’s assets
Ic
INV.CREDITO
FOCUS Banking Banking Banking Insurance Investments Brokerage
LOCATION Peru/Bolivia Cayman Colombia Peru Peru Miami
% OWNED 97% 100% 100% 75% 100% 100%
SECURITIES
• One of the top 20 financial institutions in Latin America
• Established in Bermuda in 1995
• Presence in Peru, Bolivia, Colombia, USA (Miami) and Cayman
• Total Assets US$ 8,234 MM, Net Equity US$ 856 MM
• 346 offices, 469 ATM’s
• 9,242 employees
• Listed in the NYSE
CREDICORP HIGHLIGHTS June 2003CREDICORP HIGHLIGHTS June 2003
** ** ** **Assets 41.8 39.3 15.1 4.4 8.2Loans 24.2 14.0 11.1 2.2 4.2Deposits 30.9 15.5 8.6 3.2 6.4Funds Administered 25.9 12.5 1.5 n.a. 1.3Net Equity 5.6 3.0 1.4 0.6 0.8Net Income 651 557 221 79 31
RATIOS
Past Due/ Loans 4.4% 3.1% 2.3% 2.3% 7.9%
Reserves/Past Due Loans 112.8% 181.0% 98.0% 175.5% 113.1%
Cost/Income 56.5% 54.6% 44.9% 69.5% 52.1%
ROE 12.4% 18.7% 19.0% 13.3% 7.3%
CREDICORP vs. LARGEST BANKS OF OTHER LATIN AMERICAN COUNTRIES
BBVAMéxico
BradescoBrazil
Banco de Colombia
SantanderChile
* As of June 2003
** As of Dec. 2002
Source: Bank’s Annual Reports
US$ Bn Credicorp*
** ** ** **
Branches 1,665 5,460 347 364 346
ATM’s 3,752 21,210 1,119 760 469
Employees 25,704 74,393 8,314 6,364 9,242
Market Share
- Loans 25.5% 19.4% 23.9% 12.4% 34.3%***
- Deposits 28.8% 15.5% 23.4% 11.7% 36.3%***
BBVAMéxico
BradescoBrazil
Banco de Colombia
SantanderChile
* As of June 2003
** As of Dec. 2002
***BCP’s Market Share
Source: Bank’s Annual Reports
CREDICORP vs. LARGEST BANKS OF OTHER LATIN AMERICAN COUNTRIES (Cont.)
Credicorp*
Credicorp Overview
Summary of Results (USMN) 2Q02 2Q03 6M02 6M03
Net Interest Income 86.1 89.0 170.3 177.9
Provisions 30.3 19.7 55.7 53.9
Other Income 93.8 109.6 185.3 221.9
Claims on Insurance Activities 26.9 26.4 47.9 51.6Operating Expenses 100.5 112.4 201.0 221.5
Merger Costs - 2.0 - 17.5
Translation Result -0.1 2.6 -2.0 -4.1
Earnings before Taxes and Min. Int. 22.2 40.7 49.0 51.4
Income Tax -9.1 -9.8 -17.8 -16.6
Minority Interest -2.1 -2.6 -5.4 -4.0
NET INCOME 11.0 28.3 25.8 30.8
EPS* 0.14 0.35 0.32 0.39
* Based on 79.8 million net outstanding shares in all periods
The total number of shares is 94.4 million, 14.6 million are held by affiliates as treasury shares
Credicorp Overview
Earnings Contribution (USMN) 2Q02 2Q03 6M02 6M03
Banco de Credito 13.3 27.2 27.2 35.2
Pacifico 1.4 5.6 3.6 6.7
Atlantic 0.1 1.6 1.4 2.2
Tequendama* -0.5 0.9 -0.3 -0.2
Credicorp & Others** -3.3 -7.0 -6.1 -13.1
TOTAL INCOME 11.0 28.3 25.8 30.8
Total Assets 7,291 8,234 7,291 8,234
Net Equity 801 856 801 856
BIS Ratio (%) 12.0 11.4 12.0 11.4
* Excludes transfers to Credicorp and others
**Includes income from ICSA
Credicorp Overview, Break down
(US$ Mn) BCP ASH PPS TequenCredicorp
and Others
Total
Net Income 37.4 5.4 9.3 (0.2) (3.8) 48.1 Deferred taxes (0.1) (0.1) Dividends received from Credicorp (0.5) (3.1) (0.8) (4.4) Profit from Tequendama's forward 0.0 0.0 Roham Investment loss (0.4) (0.4) Headquarters depreciation (0.3) (0.3) Credicorp loss from Tequendama portfolio (3.0) (3.0) Generic Provisions (4.5) (4.5) BCB's profit 0.0 0.0 BCP's profit 0.4 0.4Net Income after adjusting 36.5 2.3 8.9 (0.2) (11.6) 35.9 (-) Minority Interest (1.4) (2.2) (3.5)Goodwill Amortization (1.5) (1.5)
Consol. Earnings Contrib.as of June'03 35.2 2.3 6.8 (0.2) (13.1) 30.8
Consol. Earnings Contrib.as of June'02 27.2 1.4 3.6 (0.3) (6.1) 25.8
HIGHLIGHTS June 2003HIGHLIGHTS June 2003
• Largest bank in Peru
• 114 years old
•Total Assets US$ 6.7 Bn, Net Equity US$ 578 Mn
• Market share of 36.3% in deposits and 34.3% in loans
• More than 1.2 million of customers (40% of the market)
• 250 offices, over 417 ATM’s
• BCP 5,472 employees, BCP consolidated 7,570 employees,
Considered in year 2002 by LatinFinance as the best bank in Latin America
Consolidated
BUSINESS SCOPEBUSINESS SCOPE
Wholesale Banking: Commercial Banking, Investment Banking
and transactional products offered to corporate and middle
market companies.
Retail Banking: Wide range of products and services for
individuals, small businesses and non-profit institutions.
Capital Markets: Brokerage, mutual funds, foreign exchange
trading, custody, asset management, securitization and trusts.
Distribution Network: 250 offices, 417 ATMs, over 6,000 POS,
telephone banking and home banking for over 1.2 million
clients.
Consolidated
• Positive outlook for the bank during 2003 year:
- Lower provisioning requirement
- Significant growth of our non interest income. Second Quarter 2003 amounted $90.3 Mn, 16% higher than in the same period of 2002. Fees continue to have a positive trend
- Increased revenues from the merger and marginal increase of personnel expenses
• We experienced a strong recovery of written- off loans in BCP and BSCH Perú
• Market share consolidated with a slight reduction in loans after BSCH Peru acquisition
• NIM continued falling due to the excess liquidity in the market and increased competition in middle market and retail segment, as well as from domestic capital market
• The “umbrella” T-3 project of technological transformation seeks simplicity in our systems.
-As of June 2003, general expenses in this project were $3.8 Mn, still in budget for the rest of the year are $3.9Mn
• Focus on the informal sector, which is not banked. The expansion has been aimed on the perimeters of Lima, which have a large population density and a dynamic economic activity in small businesses.
Consolidated
Consolidated
Key Figures (US$MN) 2Q02 2Q03 6M02 6M03
Deposits 5,092 5,766 5,092 5,766Mkt Share (%) 31.4 36.3 31.4 36.3
Total Loans 3,756 4 ,212 3,756 4,212
Mkt Share (%) 27.2 34.3 27.2 34.3 Net Interest Income 80.3 81.9 160.5 163.1
Provisions 29.9 19.1 55.2 52.3
Non-Interest Income 54.6 61.2 107.4 132.7
Operating Expenses 85.1 85.7 169.0 175.5
Merger Costs - 2.0 - 17.4
Gains on Inflation Adjustment 6.9 1.1 7.0 -6.1
OPEX / Income (%) 54.8 53.0 56.3 53.7
CONTRIBUTION 13.3 27.2 27.2 35.2
Demand22%
Savings27% Time
51%
DEPOSIT & LOAN STRUCTUREDEPOSIT & LOAN STRUCTURE
Total Loans
Mortgages13%
Credit cards3%
Corporate43%
Middle Mkt26% PYME
10%
Consumer4%
Retail31%
US$ 4,212MnUS$ 5,766 MnDeposits
Consolidated
Loan QualityLoan Quality
5
6
7
8
9
10
1Q01 2Q01 3Q01 4Q01 1Q02 2Q02 3Q02 4Q02 IQ03 2Q03
PDL / TOTAL LOANS (Consolidated) PDL / TOTAL LOANS (w/o Bolivia)
80
90
100
110
120
130
140
150
1Q01 2Q01 3Q01 4Q01 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03
RESERVES / PDLs (Consolidated) RESERVES / PDLs (w/o Bolivia)
Consolidated
CREDICORP’S MAJOR SUBSIDIARIES
OTHER MAJOR SUBSIDIARIES OF CREDICORP
* AIG 25%
** Total Premiums market share 2002
Country Cayman Bolivia Colombia Perú%Ownership 100% 100% 100% 75%*Market Share Deposits NA 12.5% 0.8% 32.1**Market Share Loans NA 12.1% 1.5% 30.0%Ranking NA 4 22 1Assets (US$ Mn) 726 475 267 400Shareholders' Equity (US$ Mn) 129 57 29 95Funds under adm. (US$ Mn) 560 22 25 NAN° of Employees 53 670 380 1,023N° of Branches 1 46 17 37
Key Figures (US$MN) 6M02 6M03
Equity 105 129
Net Loans 167 157
Investments 312 360
Deposits 504 584
Managed Funds 502 560
NIM (%) 3.3 2.4
PDLs/ Loans (%) 0 0
OPEX / Income (%) 31.2 18
CONTRIBUTION 1.4 2.2
Atlantic Security Bank Equity as of Jun. 2002: USD 105
Equity as of Dec. 2002: USD 110 Equity as of Jun. 2003 USD 129
-Share Capital 40.1 -Share Capital 40.1
-Share premium -Share premium
account 0.6 account 0.6
-Reserve for valuation for -Net unrealized gain/loss
sale financial assets (7.4) on investment 10.6
-Retained earnings 77.1 -Dividends (5.0)
-Retained earnings 77.1
-Net income 5.4
Key Figures (US$MN) 6M02 6M03
Assets 529 463
Equity 57 57
Deposits
Market % 13.5 12.5
Loans
Market % 11.9 12.1
PDLs / Loans (%) 25.3 23.4
Reserves / PDLs (%) 47.9 69.9
Key Figures (US$MN) 6M02 6M03
Assets 334 267
Equity 33 29
Deposits
Market % 0.7 0.8
Loans
Market % 1.4 1.5
PDLs / Loans (%) 4.3 2.0
Reserves / PDLs (%) 67 122
CONTRIBUTION -0.3 -0.2
Key Figures (US$MN) 6M02 6M03
Equity 98 104
Net Premiums 84 105
-General Insurance 39 39
-Health Insurance 12 13
-Life Insurance 36 53
Market Share (%) 35.2 29.3
Net Loss Ratio (%) 58.1 48.4
Combined Ratio* (%) 80.9 69.4
CONTRIBUTION 3.6 6.7
*Sum of net claims, general expenses and commissions / net premiums
Credicorp Overview 2Q031. Good results for Credicorp during the second quarter:
● Significant increase in BCP´s revenues with control on costs
● Positive trends in most subsidiaries
2. BCB
● Improved results during the quarter with lower provisions
● Loan portfolio clean-up almost concluded
● Focus on restructure operations following BCP´s business model
3. ASB
● Improved results with increased non- realized gains in the investment portfolio
● Reduction of risk profile of investment portfolio
● Increased concentration on wealth management business
4. Tequendama
● Refocus its business to the retail and middle-market segments
● Additional support expected of close to US$4.5MM for the year
Credicorp Overview 2Q035. PPS
● Results benefited from growth in premiums relative to net claims and operating costs but are still affected by growth in reserves for life insurance
● Lower margins in property & casualty business due to increased competition and higher reinsurance costs
● Attractive growth opportunities in life insurance with short-term increase on reserves
6. BCP
● Gradual recovery in loan demand
● Continued pressure on margins due to increased competition in middle market and retail segments
● Positive outlook based on:
- Lower provisioning requirements- Significant growth in non-financial income
- Increased revenues from purchase of BSCH- Perú and full ownership of Financiera Solucion
- Reduction in personnel expenses with increased business volumes
Safe Harbor for forward-looking statements
This material includes “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934. All statement other than statements of historical information provided herein are forward-looking and may contain information about financial results, economic conditions, trends and known uncertainties.
The Company cautions readers that actual results could differ materially from those expected by the Company, depending on the outcome of certain factors, including, without limitation: (1) adverse changes in the Peruvian economy with respect to the rates of inflation, economic growth, currency devaluation, and other factors, (2) adverse changes in the Peruvian political situation, including, without limitation, the reversal of market-oriented reforms and economic recovery measures, or the failure of such measures and reforms to achieve their goals, and (3) adverse changes in the markets in which the Company operates, including increased competition, decreased demand for financial services, and other factors. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.
The Company undertakes no obligation to release publicly the result of any revisions to these forward-looking statements which may be made to reflect events or circumstances after the date hereof, including, without limitation, changes in the Company’s business strategy or planned capital expenditures, or to reflect the occurrence of unanticipated events.
Credicorp Overview
Summary of Results (USMN) 6M02 6M03
Net Interest Income 170.3 177.9
Provisions 55.7 53.9
Other Income 185.3 221.9•Fee Income 81.0 93.7
•Net gain on securities sale 7.4 7.3
•Net gain exchange operations 10.1 12.2
•Net premiums gain 63.0 64.9
•Other Income 24.3 43.8
Claims on Insurance Activities 47.9 51.6Operating Expenses 201.0 221.5
Merger Costs - 17.5Translation Result -2.0 -4.1Earnings before Taxes and Min. Int. 49.0 51.4Income Tax -17.8 -16.6Minority Interest -5.4 -4.0
NET INCOME 25.8 30.8EPS* 0.32 0.39
* Based on 79.8 million net outstanding shares in all periods
The total number of shares is 94.4 million, 14.6 million are held by affiliates as treasury shares