BBVA Continental, Peru¹s second-largest bank, has
positioned itself well to capitalize on Peru¹s booming
A surge in output in the Andean economy has seen banking
services extend far and wide a trend that has also meant
consumer loans growth at twice the rate as that of corporate
loans over the past year.
Loans are growing at roughly 2.5-3.5 times GDP, driven by
mortgages, consumer and credit card loans.
BBVA Continental¹s CEO Eduardo Torres-Llosa tells
LatinFinance it¹s a trend he expects to continue.
³The number of debtors in the system is pretty low, and we
see a lot of opportunities in this segment of the
population.² He expects the bank to double in size over
the next five years.
Like its other large and successful domestic competitor
Banco de Crédito del Perú, the well-capitalized
Continental enjoys ready access to funds. In August, it issued
a 10-year, $500 million senior bond, which came in around 16
times oversubscribed, Torres-Llosa says.
Challenges ahead for Peru¹s banks include making sure
credit doesn¹t expand too rapidly if the economy shows
signs of overheating. Equally, banking authorities are also
expected to double up efforts to find skilled professionals to
staff the burgeoning sector.
With $12 billion in loans and another $12 billion in
deposits, BBVA Continental is the most profitable bank in Peru,
Torres-Llosa says, with ROE around 35%. Its efficiency ratio is
36%, and the bank says its past-due loans ratio, at 1.2% is the
best in the system; it also has the highest coverage ratio of
non-performing loans in the system at 350%.
Torres-Llosa points to mortgage lending as one of the
bank¹s core strengths.
The mortgage sector is growing more than 20% annually
an expansion that¹s likely to continue as more of the
population gains access to the financial system. Meanwhile, the
bank has been aggressively expanding its distribution network,
increasing the number of branches and ATMs by some 40%-50% in
the last three years.
BBVA Continential has pushed for an increased presence in
the payroll segment, where it has continued to grow its market
share with new products and services, jumping from 22% to 29%
in recent years. It is also number one in the medium enterprise
sector, where it has reinforced its market share, while it
looks to beef up its small enterprise expertise.
³That¹s a very attractive segment,²
Torres-Llosa says. ³But you have to know how to manage
that segment, because there is a lot of risk.² Though
Colombia has been the focus of internationally-driven M&A
activity this year, foreigners beyond BBVA and Scotia may be
eyeing Peru more closely. Continental expects to see more
international competitors enter the country, drawn by its
growth prospects and relatively appealing regulatory
³We have to work with a sense of urgency in terms of
getting the loyalty of our clients and increasing our presence
in Peru,² Torres-Llosa says. LF