Credicorp Ltd.’s Chief Executive Officer Gianfranco Ferrari is more optimistic than his firm’s economists are, arguing that business sentiment is improving with a more stable political situation.
(Bloomberg) — Credicorp Ltd.’s Chief Executive Officer Gianfranco Ferrari is more optimistic than his firm’s economists are, arguing that business sentiment is improving with a more stable political situation.
The official forecast from Peru’s largest financial company is for economic growth this year of 1.8%. That compares with the Peruvian central bank’s outlook for 2.2% growth.
“We don’t have the same views; I am a bit more positive,” Ferrari in an interview in New York, referring to his own economists’ forecast. “If this administration stays until 2026 and manages the government relatively well, I think a long-term vision is that it is positive.”
Economists have been reducing their estimates for growth in 2023 since even before former President Pedro Castillo was ousted last year after an attempted coup, leading to widespread protests that killed several people and disrupted the mining and agricultural industries. His replacement, Dina Boluarte, has said she plans to finish her term as president through 2026.
Ferrari said he believes she will too, despite a “very fragile” political environment. While both presidents were members of the same political party, Boluarte’s government has been an improvement from Castillo’s in terms of financial management, Ferrari said, and that has calmed investors.
Ferrari, 58, was named CEO of the bank in June 2021, in the middle of the Covid-19 pandemic, and took the post in January 2022. Previously, he served as deputy CEO of the company and CEO of Banco de Credito del Peru SA, the biggest retail bank in the country and a unit of Credicorp.
While Credicorp has operations in other parts of Latin America, its business is heavily weighted toward Peru, which generates more than two-thirds of its revenue. That means the company’s growth has traditionally tracked closely with Peru’s economic expansion — a trend Ferrari aims to change by expanding credit to lower-income clients. He calls the strategy “decoupling from GDP.”
Credicorp’s US-listed shares have risen 6.7% this year, but they’re still far from their prepandemic level of more than $200. The stock was down less than 1% on Monday.
To jumpstart its own growth, Peru needs private investment to reduce poverty, Ferrari said. Investment was negative last year and the central bank expects it to fall 2.5% this year before growing a modest 1.8% in 2024. But Ferrari said there is an upside that hasn’t yet be translated into the official figures as business sentiment is at its highest since 2021.
“In countries like Peru, to achieve growth private investment is needed,” Ferrari said.
Pension Debate
Another big concern for investors has been Peru’s pension reform, with proposals for a new system under discussion in Congress. Credicorp has presented its own proposal to the government and Ferrari said he’s encouraged by the response, with government officials agreeing they must build a plan that can support an aging population.
The Finance Ministry “has had a very positive reception because they do see the problem,” he said.
–With assistance from Marcelo Rochabrun.
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