trending Market Intelligence /marketintelligence/en/news-insights/trending/KpK7Fxi4BUlf86cYhroChw2 content esgSubNav
In This List

Peruvian private bank lending up nearly 7% in H1 YOY, but loan quality worsens

Blog

Global Capital Markets & SPAC Activity – H1 2021

Blog

Banking Essentials Newsletter: July Edition - Part 3

Blog

Banking Essentials Newsletter: July Edition - Part 2

Blog

Anticipate the Unknown Go Beyond Fundamentals to Uncover Early Signs of Private Company Credit Deterioration


Peruvian private bank lending up nearly 7% in H1 YOY, but loan quality worsens

Peru'sprivate banks increased their total loan book to 228.65 billion Peruvian soles inJune, up 6.95% from the same month a year ago at a constant exchange rate, as higherdemand for loans denominated in soles offset lower lending in U.S. dollars, Peru'sbanking association, Asbanc, said.

Loansdenominated in the local currency rose 17.86% during the period, while lending operationsin foreign currency fell 11.18% from a year ago.

However,the year-over-year rise in lending in soles is the lowest since March 2013, whilethe drop in lending in U.S. dollars is the smallest decrease since April 2015, Asbancsaid in a July 22 statement.

Despitelower lending growth in the local currency, the percentage of total loans denominatedin soles continues to rise, Asbanc noted. As of June, local currency loans represented68.79% of total loans, up 5.56 percentage points from June 2015 and 0.36 pointsfrom the previous month.

The figurescorrespond to the 17 commercial banks operating in Peru's financial system.

Separately,the quality of the banks' total loan portfolio is worsening. The delinquency rateon Peruvian bank loans rose to 2.87% in June from 2.86% the previous month, andwas up 0.18 percentage points from the same month a year ago, El Comercio reported, citing an Asbanc statement.

The mainreason for the month-over-month increase is a rise in the delinquency rate for loansdenominated in soles, which rose to 2.82% in June from 2.74% the previous month,Asbanc noted.

Thiswas partly offset by a drop in the delinquency rate for dollar-denominated loans,which reached 2.97% in June, or 0.14 percentage points lower than May.

Despitethe increase in the overall delinquency rate, Asbanc said a recovery in internaldemand, driven by rising levels of employment and incomes, should help reverse thistrend in the coming months.

As of July 22, US$1 was equivalentto 3.34 Peruvian soles.