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Moody's: Rising internal demand, consumption to support loan in Peru

09:25 | New York (U.S.), Jul. 3.

A stable economy and rising internal demand will underpin banks' lending growth over the outlook horizon while growing employment levels and an expanding middle class will continue to boost consumption, Moody's Investors Service has forecast.

"During 2018, bank loan books experienced solid growth of 10.2%, up from 4.2% in 2017," it expressed.

According to the credit rating agency, growth was led primarily by loans in local currency (Peruvian Soles)—particularly personal loans, credit cards, and mortgages— following favorable rates and an improved operating environment, and also corporate lending.

"We forecast loan growth to continue expanding at an annual average rate of 10.5% during the period 2019-2020," Moody's said.

Following a flat first quarter in 2019 due to some seasonality, lending will pick up in the second quarter largely driven by consumer and mortgage lending in Peruvian Soles and —to a lesser extent— by corporate and SMEs loans, as lending rates remain low and financial intermediation continues to expand. Loan to GDP rose to 43.2% in 2018 year-end from 36.6% in 2013.

Likewise, corporate loan growth will be led by the real estate and construction sectors, partly linked to the Lima 2019 Pan American Games.

In addition, "the relatively low interest rates and declining real estate prices will help boost mortgage lending," it concluded.

Editor's note: Based on information provided by Moody's.

(END) NDP/DTK/MVB

Published: 7/3/2019

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Moody's: Rising internal demand, consumption to support loan in Peru

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