Stock pick - Credicorp

February 09, 2008

The technical as well as fundamental story of Credicrop (NYSE: BAP) looks quite strong. Credicrop seems to outperform the overall stock market, and can be a good stock pick at present situation from stock trading as well as stock investing perspective.

Since the starting of year 2008, the Dow Jones and NASDAQ are showing poor performance. Maximum of the index stocks are beaten down sharply, however Peru’s Credicrop has been showing strong defense and has been performing quite well as compared to other peer stocks.

Credicorp reported 4.1% increase in 4Q07 earnings reaching US$ 94 million, consolidating its outstanding performance with total earnings for the year 2007 of US$ 350.7 million.
• Loan growth of its banking business exceeded expectations again this quarter with total net loans up 10.5% QoQ and consolidating an astounding annual growth of 40.7%.
• Interest income followed this trend with a robust 20.6% QoQ growth, contributing to annual growth of 36.3% despite the persistent competition and pressure on rates.
• NII however, increased a more modest 27.2% during 2007.
• Strong non financial income growth of 8.1% QoQ and annual growth of 21% reveals further increases in bank transactional activity and the fee expansion at the pension fund business.
• Despite the competitive pressures and increased funding costs, the impact on Net Interest Margin could be contained given the better earnings structure resulting from the continuing change in loan mix showing NIM of 5.11% in 4Q07 vs. 5.16% in 3Q07. However, NIM for 2007 was better at 5.21% improving from 2006’s NIM at 5.06%.

Company’s information

Credicorp is listed in the New York Stock Exchange and fully complies with the Sarbanes Oxley Act in force in the United States since July 2002. The Sarbanes Oxley Act has become the international standard against which Corporate Governance practices are rated.

Credicorp Ltd. (NYSE: BAP) is the leading financial services holding company in Peru. It primarily operates via its four principal subsidiaries:
• Banco de Credito del Peru (BCP)
• Atlantic Security Holding Corporation (ASHC)
• El Pacífico-Peruano Suiza Compañía de Seguros y Reaseguros (PPS)
• Grupo Credito
Credicorp is engaged principally in commercial banking (including trade finance, corporate finance and leasing services), insurance (including commercial property, transportation and marine hull, automobile, life, health and pension fund underwriting insurance) and investment banking (including brokerage services, asset management, trust, custody and securitization services, trading and investment). BCP is the Company's primary subsidiary; as of the period ended December 31, 2005, it contributed 97.0% of Credicorp's total revenues.