Credicorp Capital profits plunge over 90%

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Credicorp Capital’s asset and wealth management units suffered a major hit to their profits in Q1 and saw their combined assets fall 9.6% to $26.87bn as a result of the coronavirus crisis.

According to the firm’s quarterly report, net profits fell a whopping 92.2% to $104.94m in Q1, and it was even worse on year-to-year basis as net profits declined by 97.7%. The profit numbers covers the group’s asset and wealth management businesses as well as its investment banking unit.

Credicorp Capital’s return on average equity also dropped significantly over the past quarter, falling to .2% from 3.1%

The report pointed to reductions in deposits as well as poor performance within its family office unit in Peru as factors contributing to the profit drop for its wealth management units. However, profits weren’t as badly hit in its Chile and Colombia offices due to ‘diversification of product portfolios,’ said Credicorp’s chief financial officer Cesar Rios in the group’s earnings call.

Commenting on its wealth management business, the report said: ‘A significant client outreach effort during the crisis attenuated the drop in assets under management. A gradual recovery is expected towards the end of Q2 2020.’

Its asset management line was also affected by withdrawals from transactional funds based in the group’s Colombian unit in March as a result of volatile market conditions. However, Rios said that much of March’s negative effects were ‘offset’ for the most part ‘given that alternative funds and distribution of third-party products income goals are both expected to be met.’

Total assets managed by Credicorp’s pension business AFP Prima also took a slight hit throughout the last quarter, though certainly not as dramatic as its asset and wealth management lines.

Between December 19 and March 20, assets managed by the unit fell 0.9% to $284.7bn, dropping 0.9% as well on a yearly basis.

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