Credicorp Declines in Q4 Thanks to Madoff and Forex

| About: Credicorp, Ltd. (BAP)
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The Peruvian financial services company Credicorp (NYSE:BAP) reported low earnings for the last quarter of 2008, at only US$13.5 mln or US$0.17 per share. This was significantly down from 3Q'08, as well as from 4Q'07, and was in large part the result of negative effects of foreign exchange variations and a Madoff related loss of the subsidiary ASHC.

The company's Net Interest Income arrived at US$214.2 mln for the quarter. This marks a significant increase of 6.9% QoQ and 22.6% YoY, as reserve requirements eased and Net Interest Margin increased to 4.9%. Non Financial Income also lifted, up 30.6% YoY to US$159.4 mln.

As a consequence of improved spreads and loans growth the company's Income Before Non-recurring Items, Translation Results, Worker's Profit Sharing and Income Taxes was strong, arriving at US$168 mln, up 58.8% from 4Q'07.

But the picture worsens further down on the Income Statement, with a negative impact from foreign exchange variations of US$31.9 mln. In addition, the company suffered an impairment loss of US$40.9 mln during the quarter.

Finally, Credicorp's subsidiary ASHC had a strong negative impact on the result for the period, as the Atlantic US Blue Chip Fund went belly up, resulting from the collapse of Madoff Securities. As a result, the company decided to constitute provisions for US$43.5 mln, anticipating losses in its proprietary positions.

Credicorp still reported a 2% earnings growth for the year, and a ROAE of 22.3%, with an Efficiency Ratio of 41.7%. Credicorp currently has a Market Cap of US$3.04 bln, and at a price per share of US$38.07 is trading 27% above the October 2008 low of US$30.27, with a P/E of 8.2.