Asbanc: Loans to grow faster than GDP

Peruvian banking association Asbanc expects total lending to expand above the country's projected GDP growth of 5% this year, fuelled by mortgage and SME financing, Asbanc's head Enrique Arroyo told BNamericas. Peruvian banks reported 10.6% growth in gross lending year-on-year to US$11.5bn at the end of April 2005, an Asbanc report said. Lending to micro enterprises rose 34% to US$503mn at the end of the first quarter, while mortgage loans expanded 18% to US$1.62bn. SME and mortgage loan demand is especially high outside the capital Lima due to a decentralization of industry and increased export activity in other regions of Peru, Arroyo said. "Peru is a country of SMEs and micro-enterprises, so banks are working particularly hard to penetrate those segments and incorporate clients into the formal financial system where previously there was not access," he said. Main challenges for Peru's financial system this year will be to minimize attempts to restrict the banking sector by politicians, according to Arroyo. "This is an election year, so many politicians will likely take populist stances calling for interest rate and fee controls." Asbanc is currently working with the congressional consumer protection committee to hash out a complimentary bill to the banking law that would increase bank fee transparency. "We are working closely with the committee along with the banking regulator to foment transparency and competition without the use of restrictions like interest rate or fee caps," Arroyo said. Peruvian banks reported net profits up 55% to US$103mn in April this year and total assets of US$20.1bn, according to Asbanc.