Credicorp Ltd. (USA) (NYSE: BAP) is a financial services holding company that is based in Bermuda, but its operations are in Peru and other Andean nations. Credicorp in the fourth quarter has reported the recurring net income is S/ 895.7 million, which translates into a recurring ROAE and ROAA of 18.6% and 2.3% respectively. This is after deducting the non-recurring expense for the translation loss. This represents a solid quarter, due to the given low loan growth in the banking business, which is BAP’s main business.

Moreover, in the fourth quarter the portfolio mix has reported the more significant growth in higher-margin segments such as Retail Banking, Mibanco, and BCP Bolivia. The evolution of the loan mix, and lower interest expenses led to an increase of 6.8% QoQ increase in net interest income (NII), which has led the net interest margin (NIM) to be at 5.71%.

The total loans, which is the most profitable asset, has increased their share of IEA to 64.7% in 4Q16 compared to 64.3% in 3Q16. In terms of loans by business segments, in average daily balances, the Retail Banking portfolio grew 1.7% QoQ. Due to loan expansion in LC, which was attributable to increases in loans in all segments except for Mortgage, and to a lesser extent, to the increase in FC loans in SME-Business. However, after three years of leading loan growth at Credicorp, the Wholesale Banking has reported a QoQ contraction due to a decline in the average daily balances at Corporate Banking and Middle Market Banking. Additionally, Mibanco, BCP Bolivia and ASB reported the growth of +3.4%, +2.9% and +3% QoQ respectively.

Credicorp was in 22 hedge funds’ portfolios at the end of the third quarter of 2016 and has experienced an increase in hedge fund interest recently.

Meanwhile, Credicorp continues to reorganize its subsidiaries in Peru. BAP’s subsidiary, Grupo Credito S.A. (GC), has agreed to a capital contribution in cash, for a sum up to S/4,000,000,000.00, which will be used for the purchase of up to 9% of the shares of Banco de Credito del Peru (BCP). As a result of this, the capital of GC will increase from S/17,210,013,900 up to S/21,210,013,900. Therefore Credicorp has transferred over the Bolsa de Valores de Lima to its subsidiary, Grupo Credito S.A., 269,500,000 shares of Banco de Credito del Peru (BCP) owned by Credicorp Ltd., that represent 3.81% of BCP’s share capital. The price paid per share was S/5.52.