BAP

Credicorp Ltd. Financial Summary (Form 6-K)

Business Context and Reporting Period

Credicorp Ltd. (NYSE: BAP), a diversified financial services group based in Bermuda with primary operations in Peru, reported financial results for the quarter and full year ended December 31, 2003. The filing, submitted on February 9, 2004, covers the fourth quarter of 2003 and the full fiscal year 2003. The group's principal subsidiaries include Banco de Crédito del Perú (BCP), Atlantic Security Holding Corporation (ASHC), El Pacifico-Peruano Suiza (PPS), and Banco de Crédito de Bolivia (BCB).

Key Financial Metrics

Consolidated Results (Year Ended Dec 31, 2003):

• Net Income: US$80.6 million (up 90.2% from US$42.4 million in 2002).
• Earnings Per Share (EPS): US$1.01 (up from US$0.53 in 2002).
• Net Interest Income: US$358.9 million (up from US$335.3 million in 2002).
• Non-Interest Income: US$424.7 million (up from US$374.8 million in 2002).
• Loan Loss Provisions: US$93.9 million (down from US$111.6 million in 2002).
• Total Assets: US$8.3 billion (down 3.7% from Dec 2002).
• Loan Portfolio: US$4.5 billion (down 7.0% from Dec 2002).
• Deposits: US$6.3 billion (down 7.1% from Dec 2002).
• Past Due Loans: 5.7% of total loans (improved from 8.4% in Dec 2002).
• Loan Loss Coverage Ratio: 127.4% (improved from 103.8% in Dec 2002).
• Return on Average Assets (ROA): 0.96% (up from 0.55% in 2002).
• Return on Average Equity (ROE): 9.39% (up from 5.27% in 2002).

Fourth Quarter 2003 Specifics:

• Net Income: US$23.8 million (up from US$13.5 million in Q4 2002).
• EPS: US$0.30 (up from US$0.17 in Q4 2002).
• Net Interest Margin: 5.56% (annualized).
• Efficiency Ratio (Adjusted): 51.8% (improved from 56.0% in Q4 2002).

Material Changes vs. Prior Period

The significant increase in consolidated net income for 2003 was driven by higher non-financial revenue, increased net interest income, and a substantial reduction in loan loss provisions. These gains offset increased operating expenses related to the merger of Banco Santander Central Hispano-Peru (BSCH-Peru) and Solución Financiera de Crédito. Merger costs for the full year 2003 totaled US$18.6 million, compared to US$1.7 million in 2002.

Loan quality improved markedly, with the past due ratio dropping to 5.7% from 8.4% in the prior year. This improvement allowed for lower provisions despite a slight contraction in the total loan portfolio. The Peruvian subsidiary, BCP, contributed US$91.3 million to consolidated net income in 2003, up from US$59.8 million in 2002.

Conversely, the "Credicorp and others" segment recorded a loss of US$21.9 million in 2003, primarily due to provisions for loans transferred from Banco Tequendama (Colombia) and investment reserves. The insurance subsidiary, PPS, reported a net loss in Q4 2003 due to increased technical reserves, including a non-recurrent adjustment for earthquake risks.

Outlook, Risks, and Management Commentary

Outlook and Guidance: Management expects the merger process with Solución Financiera to conclude in the first quarter of 2004. Peruvian GDP growth is estimated at 4% for 2003 and 2004. The Peruvian banking system continues to face an excess liquidity situation, with stable loan and deposit volumes in Q4 2003.

Risks and Contingencies:

• Merger Integration: Ongoing costs and integration risks associated with the BSCH-Peru and Solución Financiera mergers.
• Foreign Subsidiaries: Continued provisioning for impaired assets at Banco Tequendama (Colombia) and Banco de Crédito de Bolivia (BCB). BCB's past due ratio remains high at 20.7%.
• Insurance Reserves: PPS faces volatility in underwriting results due to regulatory changes and specific risk adjustments (e.g., earthquake reserves).
• Macroeconomic Factors: Exposure to inflation adjustments in Peru and exchange rate fluctuations in Bolivia and Colombia.

Unusual Items: The filing notes a US$2.1 million charge for investments and contingencies reserves in Q4 2003 within the "Credicorp and others" segment. Additionally, PPS recorded a US$5.6 million non-recurrent adjustment for earthquake risks.

Investor Verification Checklist

• Verify the sustainability of the reduced loan loss provisions given the historical volatility in the Peruvian market.
• Monitor the integration progress and cost realization of the BSCH-Peru and Solución Financiera mergers in Q1 2004.
• Assess the credit quality trends at Banco Tequendama (Colombia) and Banco de Crédito de Bolivia (BCB), which continue to drag on consolidated results.
• Review the impact of the "excess liquidity" environment in Peru on future net interest margins and loan growth.
• Confirm the adequacy of technical reserves at PPS following the non-recurrent earthquake risk adjustment.