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Credicorp's Q2 profit rises 12.3% on stronger interest income

Credicorp Ltd.'s attributable second-quarter profit jumped 12.3% year over year as higher interest and nonfinancial income more than offset a rise in provision expenses.

Net profit attributable to Credicorp reached about 1.10 billion Peruvian soles in the three-month period, rising from 977.8 million soles in the second quarter of 2018. EPS improved to 13.77 soles from 12.26 soles.

The company's net interest income totaled 2.26 billion soles in the second quarter, up 9.4% from 2.06 billion soles a year earlier. Its net interest margin increased to 5.48% from 5.37% in the linked quarter and 5.28% in the prior-year period.

Nonfinancial income, meanwhile, ticked 13.3% higher annually to 1.19 billion soles and the company's insurance underwriting result improved 5.2% to about 118.7 million soles.

Credicorp booked 448.3 million soles in provisions for credit losses, net of recoveries, in the second quarter, 43.1% higher than the 313.2 million soles registered a year earlier. The company attributed the rise mainly to an increase in provisions in the retail banking segment and a deterioration in unit Mibanco's micro-lending business. Credicorp said it is making adjustments in origination and collections in both areas to address the performance.

Its total loan portfolio held 109.38 billion soles at the end of the second quarter after expanding 6.4% in the 12 months through June 30. The nonperforming loan ratio, meanwhile, increased to 4.11% from 4.09% in both the linked and year-ago quarters.

The company's total expenses rose 3.6% year over year to 1.58 billion soles in the second quarter.

Credicorp's main Peruvian banking unit, Banco de Crédito del Perú, contributed 790.4 million soles to the parent's second-quarter profit, up 11.3% from 710.1 million soles a year earlier.

Credicorp's return on average equity fell to 18.0% from 18.1% a year ago, while its return on average assets increased to 2.4% from 2.3%.

As of Aug. 8, US$1 was equivalent to 3.38 Peruvian soles.