Bank of the Year 2018 -- Peru: Banco de Crédito del Perú
November 8, 2018
The country’s largest financial institution maintains its leadership position and
margins as the banking field becomes more inclusive
Market-minded macroeconomic policies in Peru have helped create one of the most profitable banking systems in Latin America. Loan growth sector-wide has reached 10.1% so far in 2018 and dividend payout ratios have hovered between 20% and 40%.
The government has taken steps towards implementing Basel III, including setting short-term liquidity measures and the incremental de-dollarization of deposits, which has de-risked the foreign exchange mismatch at the borrower level. In January 2018, loans denominated in foreign currency were 32.7%, down from 42.3% in 2014.
Smaller banks have captured larger market shares, but the sector remains highly concentrated with the four largest institutions commanding more than 86% of the market.
Banco de Crédito del Perú (BCP) has remained atop the field with a 34% market share. Between June 2017 and June 2018, the bank registered a 14% increase in net income to 1.7 billion soles ($508 million) from 1.4 billion soles.
Despite these improvements, BCP’s growth has lagged in 2018 from the highs in the final quarter of 2017, and asset quality has deteriorated from increased debtor risk. Total assets over the period rose a modest 2.3% to 124 billion soles from 121 million soles, while ROA grew to 2.59% from 2.45%.
One of BCP’s most noteworthy transformations has involved its digital strategy. According to Francesca Raffo, the head of digital transformation at BCP, the project began in 2015 within a larger corporate initiative to bring efficiency ratios from above 50% to around 40%. By 2018, bank efficiency had improved to just under 34%.
The strategy evolved into a tool to improve customer satisfaction. “In more niche sectors, we were doing better [with customer satisfaction], but in the consumer pyramid,we weren’t doing as well and we knew this was where the growth was,” Raffo says.
“We began designing software under the Minimum Viable Product (MVP) technique, working with customer experiences and developing the product in an agile way without incrementing cost,” she says.
BCP first introduced self-service for customers to open accounts with a tablet at two branches. Now clients open more than half of the new accounts at self-service kiosks, resulting in a 15% increase in customer satisfaction, she says. We have a brand and we want to build on that trust,” Raffo says. LF