Banking
From The Report: Peru 2016
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The Peruvian banking system continued to grow throughout 2015, with total bank credits rising by 15.26% year-on-year (y-o-y), to PEN250.8bn ($80bn) in September. The increase in bank credits in August 2015 reflected strong expansion in local currency lending, offset by a contraction in US dollar lending. Total outstanding local currency lending rose to PEN140.71bn ($44.9bn), at the end of August, up 35.2% y-o-y, while foreign currency lending was $23.67bn, down 18.6% y-o-y. Non-performing loans stood at 2.7%, representing an increase of 0.24 percentage points y-o-y, according to the Peruvian Banking Association. The upcoming national election, the risk of disruption because of the El Niño weather pattern and the possibility of a further slowdown in China are all factors to be monitored as potential downside risks to an otherwise solid and healthy outlook for the banking and financial sector. This chapter contains an interview with Julio Velarde, Governor, Central Reserve Bank of Peru.

Articles from this Chapter

Overview

Branching out: A wide range of services make the sector a regional leader
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Responsible for regulating financial flows and channelling savings and investment, banking is the single most important component of the wider financial, insurance and pensions sector, which accounts for 3.8% of Peru’s GDP. The financial sector – which includes banks, finance houses and credit cooperatives – accounts for more than 85% of that figure alone, at around 3.2% of GDP. There are 64 financial institutions operating in the country along with 17 full-service banks, operating a total…

Interview

Big steps forward: OBG talks to Julio Velarde, President, Central Reserve Bank of Peru
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Interview:Julio Velarde How will the reduction of reserve ratios in soles affect the de-dollarisation of the economy? JULIO VELARDE: We have lowered reserve requirements for sol-denominated deposits from 20% in May 2013 to 6.5% at present. Through this policy we have injected close to PEN13bn ($4.15bn) into the banking system to facilitate the expansion of credit in domestic currency. In the future we will probably continue to reduce reserve requirements in soles, even though the impact of…

Analysis

Local assets: New policies seek to reduce dollar-denominated debt
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After the hyper-inflationary shocks of the 1980s Peruvians had low levels of confidence in the national currency, as well as in government policy-making in general. Subsequent governments have sought to rebuild trust and restore macroeconomic stability. Part of achieving this was to allow free convertibility between the Peruvian nuevo sol and the US dollar. Individuals and companies were allowed to hold accounts and transact business in either currency, or in both. Initially, the markets had a strong…

Analysis

Into the fold: Government initiatives aim to increase financial inclusion
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In September 2015 a presidential decree was issued formalising a national strategy for financial inclusion. The overall aim of the strategy is to develop access to financial services and employment opportunities for the country’s low-income population, particularly those living in rural and remote areas. The strategy consists of seven main objectives, including the promotion of electronic payment systems, the promotion of better investment instruments and enabling access to funding, particularly…