Asbanc: Lending up 9% in Jan.

The Peruvian banking sector reported gross lending of US$11bn in January 2005, an 8.6% increase compared to the same month last year, according to a report from local banking association Asbanc. Lending has risen four straight months and is expected to continue growing based on the expanding economy and a strong flow of exports, Asbanc said. According to ratings agency Pacific Credit Rating (PCR), 2005 lending should increase some 4.9% year-on-year, only slightly above GDP growth projections of 4.5%. "Interest rates are not likely to fall in any segments and could remain stable the entire year," PCR analysts told BNamericas. Due to stagnant lending, many banks such as Banco de Crédito del Peru and Banco Financiero are looking to the micro loan segment to boost returns, according to the analysts. The sector's total deposits rose 9.9% to US$14.6bn in January this year compared to the same month 2003. The January figure marks a record high for deposits and is based on attractive interest rates due to strong competition among financial institutions, according to the report. Asbanc reported an 18.2% drop in the sector's net profits to US$17mn in January, due to an increase in costs. The system ROE fell 4 percentage points to 10.2% in the period ending January this year compared to the same period ending January 2003. Total equity rose 13.6% year-on-year to US$2bn. "In terms of growth, this year should be the same as 2004, fuelled by investment projects such as concessions for shopping centers and theatres in Lima," a PCR analyst said. The banking sector's total assets rose 12% to US$19.8bn in January, while total liabilities grew 11.8% to US$17.8bn.