An economic boom coupled with new technologies is allowing Peruvian banks to tap consumer bases that have long been overlooked in the country. But, as the banking market advances at a breakneck speed, there are vulnerabilities to look out for – not least dollarisation.
Banco de Crédito del Peru’s headquarters, in the country's capital Lima, oozes wealth. Outside of the building, in the desert climate of the city, an artificial waterfall cascades into pools bordered by tropical flowers. Inside, the walls are dotted with pre-Columbian art, just a small part of a much larger collection.
Banks throughout the country are riding Peru's buoyant economy, trying to catch up with their counterparts in the rest of Latin America. A number of factors are in their favour: a strong gross domestic product (GDP) and investment outlook, a woefully underbanked population, a small number of large banks, and fast-growing capital markets.
Low interest rates and record employment underpin strong GDP growth, which came in at 8.8% in 2010 and has been a steady 6% to 7% since then, according to Jeanne Del Casino, group credit officer of Latin American banks at Moody's.
Standard & Poor’s also has a positive outlook on the BBB rated sovereign. According to Sergio Garibian, the senior director of banks in Latin America at Standard & Poor’s in Buenos Aires, the Peruvian economy has become substantially more diversified and the country is starting to tackle institutional weaknesses.
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