BBVA Sees Slower Peru Loan Growth as Companies Tap Bond Market

Banco Continental (CONTINC1) SA, the Peruvian unit of Banco Bilbao Vizcaya Argentaria SA (BBVA), expects loan growth to slow in 2013 as corporate clients turn more to the bond market and after policy makers took steps to stem credit demand.

The lender, the Andean nation’s second largest, sees total bank lending in Peru expanding 14 percent this year and 12 percent next year after growing 17 percent in 2011, Chief Executive Officer Eduardo Torres Llosa said in an interview in Lima today.

Banco Continental’s lending business is slowing as demand for Peruvian corporate bonds spurs customers to raise financing overseas. The bank is focusing on personal loans amid a consumer boom in Peru that’s fueling the fastest economic growth in South America. The bank’s consumer loan and credit card portfolio has grown about 23 percent in the past year versus 18 percent for the banking system as a whole, Torres-Llosa said.

“Peru is a very, very attractive market so it doesn’t make sense for banks to lend $100 million to a big client when we can connect our clients to the capital markets,” he said. Banco Continental is seeking to take advantage of a wave of small customers entering the banking system for the first time rather than focus on increasing its market share of corporate loans, he said.

Lenders will become more prudent next year as the ratio of non-performing loans rises amid signs that some lower-earning Peruvians are becoming over-indebted, Torres-Llosa said.

The central bank increased reserve requirements for a third straight month yesterday to cool credit demand. Interest rates on dollar loans will rise as new regulations require higher provisions when banks lend in U.S. currency, Oscar Rivera, the president of the country’s banking association, Asbanc, said in an interview in Lima yesterday.

“Slowing the pace of credit doesn’t hurt anyone,” Torres- Llosa said. “It’s better to grow at 15 percent for many years rather than grow only two years and then suddenly stop.”

To contact the reporter on this story: John Quigley in Lima at jquigley8@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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