Edgar Filing: CREDICORP LTD

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

¨ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE

SECURITIES EXCHANGE ACT OF 1934

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2012

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

¨ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES

EXCHANGE ACT OF 1934

Date of event requiring this shell company report ______________

For the transition period from to

Commission file number 1-14014

CREDICORP LTD.

(Exact name of registrant as specified in its

charter)

BERMUDA

(Jurisdiction of incorporation or organization)

Of our subsidiary

Banco de Crédito del Perú:

Calle Centenario 156

La Molina

Lima 12, Perú

(Address of principal executive offices)

Alvaro Correa

Chief Financial Officer

Credicorp Ltd

Banco de Crédito del Perú:

Calle Centenario 156

La Molina

Lima 12, Perú

Phone (+511) 313 2140

Facsimile (+511) 313 2121

(Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

Title of each class	Name of each exchange on which registered
Common Shares, par value $5.00 per share	New York Stock Exchange

Securities registered or to be registered pursuant to Section 12(g) of the Act. None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act. None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report. Common Shares, par value $5.00 per share 94,382,317

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes x No ¨

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes ¨ No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x

Accelerated filer ¨

Non-accelerated filer o

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP ¨	International Financial Reporting Standards as issued	Other ¨
	by the International Accounting Standards Board x

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

Item 17 ¨ Item 18 x

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨ No x

ABBREVIATIONS		3
PRESENTATION OF FINANCIAL INFORMATION		6
CAUTIONARY STATEMENT WITH RESPECT TO FORWARD-LOOKING STATEMENTS		7

PART I

ITEM 1.	IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS	8
ITEM 2.	OFFER STATISTICS AND EXPECTED TIMETABLE	8
ITEM 3.	KEY INFORMATION	8
ITEM 4.	INFORMATION ON THE COMPANY	19
ITEM 4A.	UNRESOLVED STAFF COMMENTS	91
ITEM 5.	OPERATING AND FINANCIAL REVIEW AND PROSPECTS	91
ITEM 6.	DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES	118
ITEM 7.	MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS	125
ITEM 8.	FINANCIAL INFORMATION	127
ITEM 9.	THE OFFER AND LISTING	129
ITEM 10.	ADDITIONAL INFORMATION	132
ITEM 11.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	134
ITEM 12.	DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES	145

PART II

ITEM 13.	DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES	146
ITEM 14.	MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS	146
ITEM 15.	CONTROLS AND PROCEDURES	146
ITEM 15T.	CONTROLS AND PROCEDURES	148
ITEM 16A.	AUDIT COMMITTEE FINANCIAL EXPERT	149
ITEM 16B.	CODE OF ETHICS	149
ITEM 16C.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	149
ITEM 16D.	EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES	151
ITEM 16E.	PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS	151
ITEM 16F.	CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT	151
ITEM 16G.	CORPORATE GOVERNANCE	151
ITEM 16H	MINE SAFETY DISCLOSURE	157

PART III

ITEM 17.	FINANCIAL STATEMENTS	158
ITEM 18.	FINANCIAL STATEMENTS	158
ITEM 19.	EXHIBITS	159

ABBREVIATIONS

Abbreviation		Meaning
ACII		Chartered Insurance Institute
AFM		Administradora de Fondos Mutuos or Mutual Fund Administrators
AFP		Administradora de Fondo de Pensiones or Pension funds private administrators
AGF		Administradora General de Fondos or General Funds Management
AIAF		Associate in Insurance Accounting& Finance
AIC		Associate in Claims
ALCO		Asset and Liabilities Committee
ALICO		American Life Insurance Company
ALM		Asset and Liabilities Management Service
AMIM		Associate in Marine Insurance Management
AMLCA		Anti-Money Laundering Certified Associate
AMV		Autorregulador del Mercado de Valores de Colombia or Colombia's Stock Market Self-regulator
APC		Agreement of Commercial Promotion
ARe		Associate in Reinsurance
ARM		Associated Risk Management
ASB		Atlantic Security Bank
ASBANC		Asociación de Bancos del Perú or Peruvian Banker Association
ASHC		Atlantic Security Holding Corporation
ATM		Automated Teller Machine (cash machine)
AU		Associate in Underwriting
AuMs		Assets under Management
BAH		Bachelor of Arts with Honors
BCI		Banco de Crédito e Inversiones
BCM		Business Continuity Management
BCP		Banco de Crédito del Perú
BCP Capital S.A.A.		BCP Capital
BCR		Banco Central de Reserva del Perú or Peruvian Central Bank
BIS I Accord		Basel Committee on Banking Regulations and Supervisory Practices of International Settlements
Bladex		Banco Latinoamericano de Comercio Exterior
BLMIS		Bernard L. Madoff Investment Securities LLC
BVI		British Virgin Islands
CAF		Corporación Andina de Fomento or Andean Development Corporation
CARE		Cooperative for Assistance and Relief Everywhere
CGU		Cash-Generating Unit
CID		Corporate and international Division
CIMA		Cayman Islands Monetary Authority
CITIP		Certificate in Information Technology for Insurance Professionals
CLU		Chartered Life Underwriter
COFIDE		Corporación Financiera de Desarrollo S.A. or Peruvian government-owned development bank
CONASEV		Comisión Nacional Supervisora de Empresas y Valores del Perú or National Commission for the Supervision of Corporations and Securities
COO		Chief Operating Officer

COSO		Committee of Sponsoring Organization of the Tread way Commission
CPCU		Chartered Property Casualty Underwriter
CRAC		Caja Rural de Ahorro y Crédito or Rural saving and loan institution
CRISC		Certificated in Risk and Information Systems
CRM		Customer Relationship Management
CRMA		Certificated in Risk and Management Assurance
CSI		Credicorp Securities Inc.
CTS		Severance indemnity Deposits
Edyficar		Empresa Financiera Edyficar S.A.
EPS		Entidad Prestadora de Salud or Health Care Facility
ERM		Enterprise Risk Management
GDP		Gross Domestic Product
FATCA		Foreign Account Tax Compliance Act
FATF		Financial Action Task Force
FDI		Foreign Direct investment
FEB		Federación de Empleados Bancarios or Federation of Banking Employees
FIBA		Florida International Bankers Association
FINRA		Financial Industry Regulatory Authority
FSSA		Financial System Supervisory Authority
FTA		Free Trade Agreement
IASB		International Accounting Standards Board
IBD		Introducing Broker Dealer
IBNR		Incurred but not reported
ICBC		Industrial and Commercial Bank of China
IFRS		International Financial Reporting Standards
IGBVL		Índice General de la Bolsa de Valores de Lima or General Index of the Lima Stock Exchange
IIA		Institute of Internal Auditors
IMF		International Monetary Fund
IRB		Internal Ratings-Based
IRS		Interest Rate Swap
ISACA		Information Systems Audit and Control Association
KRI		Key Risk Indicators
LIBOR		London InterBank Offered Rate
LTV		Loan to Value
M&A		Mergers and Acquisitions
MALI		Museo de Arte de Lima or Lima's Fine Arts Museum
MILA		Mercado Integrado de Latinoamericano or Integrated Latin American Market -among Chile, Colombia and Peru
MMD		Middle-Market Division
MODASA		Motores Diesel Andinos S.A.
MRCR		Minimun Regulatory Capital Required
MRTA		Movimiento Revolucionario Tupac Amaru
NEP		Net Earned Premiuns
NIM		Net Interest Margin
NYSE		New York Stock Exchange
OIS		Overnight Indexed Swap

OTC		Over-the-counter
RAM		Monthly Insurable Remuneration
RB&WM		Retail Banking Wealth Management Group
RIA		Registered Investment Advisor
RMV		Remuneración Mínima Vital or Minimum Vital Wage
ROAE		Return on Average Equity
RWA		Risk-Weighted Assets
S&P		Standard and Poor's
SAM		Standardized Approach Method
SARs		Stock Appreciation Rights
SBS		Superintendencia de Banca, Seguros y AFP or Superintendecy of Banks, Insurance and Pension Funds
SCTR		Seguro Complementario de Trabajo de Riesgo or Complementary Work Risk Insurance
SEC		U.S. Securities and Exchange Commission
SIPG		Securities Investor Protection Corporation
SME		Small and medium enterprise
SMV		Superintendencia del Mercado de Valores or Superintendence of the Securities Market
SOAT		Seguro obligatorio para accidentes de tránsito or Obligatory assurance for accidents of traffic
Solucion EAH		Solución Empresa Aseguradora Hipotecaria or Mortgage insurer company
SPP		Sistema Privado de Pensiones or Private Pension System
SUNAT		Superintendencia Nacional de Aduanas y de Administración Tributaria or Superintendence of Tributary Administration
SVS		Superintendencia de Valores y Seguros de Chile or Superintendence of Securities and Insurance from Chile
SWIFT		Society for Worldwide Interbank Financial Telecommunications
TCS		Tata Consulting Services
U.S. GAAP		United States Generally Accepted Accounting Principles
VaR		Value at Risk
VRAE		Apurimac and Ene River Valley
WBG		Wholesale Banking Group

PRESENTATION OF FINANCIAL INFORMATION

Unless otherwise specified or the context otherwise requires, references in this Form 20-F (also referred to as the Annual Report), to “$,” “US$,” “Dollars,” “foreign currency” or “U.S. Dollars” are to United States Dollars, and references to “S/.”, “Nuevo Sol” or “Nuevos Soles” are to Peruvian Nuevos Soles. Each Nuevo Sol is divided into 100 céntimos (cents).

Credicorp Ltd. is a Bermuda limited liability company (and is referred to in this Annual Report as Credicorp, the Company, we, or us, and means either Credicorp as a separate entity or as an entity together with our consolidated subsidiaries, as the context may require). We maintain our financial books and records in U.S. Dollars and present our financial statements in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB). IFRS differ in certain respects from United States Generally Accepted Accounting Principles (U.S. GAAP).

We operate primarily through our four operating segments: banking (mainly wholesale banking and retail banking), investment banking, insurance, and pension funds. See information about operating segments in “Item 4.-Information on the Company: (A) History and Development of the Company, and (B) Business Overview”.

Our five principal operating subsidiaries are: (i) Banco de Crédito del Perú (which, together with its consolidated subsidiaries, is referred to as BCP and includes wholesale and retail banking); (ii) Atlantic Security Bank, which we hold through Atlantic Security Holding Corporation (which, are referred to as ASB and ASHC, respectively); (iii) El Pacífico-Peruano Suiza Compañía de Seguros y Reaseguros (which together with its consolidated subsidiaries, is referred to as Grupo Pacífico); (iv) Prima AFP; and (v) Credicorp Investments (which eventually will consolidate the companies of our investment banking business). As of and for the year ended December 31, 2012, BCP accounted for 87.7% of our total assets, 84.3% of our net income and 65.3% of our net equity. Unless otherwise specified, the individual financial information for BCP, ASB, Grupo Pacífico, Prima AFP and Credicorp Investments included in this Annual Report has been derived from the audited consolidated financial statements of each such entity. See “Item 3. Key Information—(A) Selected Financial Data” and “Item 4. Information on the Company—(A) History and Development of the Company.” We refer to BCP, ASB, Grupo Pacífico, Prima AFP and Credicorp Investments as our main operating subsidiaries, and we refer to Grupo Crédito and ASHC as our two main holding subsidiaries.

“Item 3. Key Information—(A) Selected Financial Data” contains key information related to our performance. This information was obtained mainly from our consolidated financial statements as of December 31, 2008, 2009, 2010, 2011 and 2012.

Our management’s criteria on foreign currency translation, for the purpose of preparing the Credicorp Consolidated Financial Statements, are described in “Item 5. Operating and Financial Review and Prospects—(A) Operating Results—(1) Critical Accounting Policies—Foreign Currency Translation.”

Some of our subsidiaries maintain their operations and balances in Nuevos Soles. As a result, this Annual Report contains certain Nuevo Sol amounts translated into U.S. Dollars which is solely for the convenience of the reader. You should not construe any of these translations as representations that the Nuevo Sol amounts actually represent such equivalent U.S. Dollar amounts or could be converted into U.S. Dollars at the rate indicated as of the dates mentioned herein, or at all. Unless otherwise indicated, these U.S. Dollar amounts have been translated from Nuevos Soles at an exchange rate of S/.2.55 = US$1.00, which is the December 31, 2012 exchange rate set by the Peruvian Superintendency of Banks, Insurance and Pension Funds (SBS by its Spanish initials). The average of the bid and offered free market exchange rates published by the SBS for April 24, 2013 was S/.2.624 per US$1.00. Translating amounts expressed in Nuevos Soles on a specified date (at the prevailing exchange rate on that date) may result in the presentation of U.S. Dollar amounts that are different from the U.S. Dollar amounts that would have been obtained by translating Nuevos Soles on another specified date (at the prevailing exchange rate on that different specified date). See also “Item 3. Key Information—(A) Selected Financial Data—Exchange Rates” for information regarding the average rates of exchange between the Nuevo Sol and the U.S. Dollar for the periods specified therein. The Federal Reserve Bank of New York does not publish a noon buying rate for Nuevos Soles. Our Bolivian subsidiary operates in Bolivianos, a currency that has been maintained stable over recent years. Our Bolivian subsidiary’s financial statements are also presented in U.S. Dollars. Our recently acquired companies, Correval S.A. Sociedad Comisionista de Bolsa in Colombia (Correval) and IM Trust S.A. Corredores de Bolsa in Chile (IM Trust), operate in Colombian Pesos and Chilean Pesos, respectively, and their financial statements are converted into U.S. Dollars for consolidation purposes.

CAUTIONARY STATEMENT WITH RESPECT TO

FORWARD-LOOKING STATEMENTS

Certain statements contained in this Annual Report are not historical facts, including, without limitation, certain statements made in the sections entitled “Item 3. Key Information,” “Item 4. Information on the Company,” “Item 5. Operating and Financial Review and Prospects” and “Item 11. Quantitative and Qualitative Disclosures about Market Risk,” which are forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933 and Section 21E of the U.S. Securities Exchange Act of 1934 (or the Exchange Act). These forward-looking statements are based on our management’s current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in the forward-looking statements. Therefore, actual results, performance or events may be materially different from those in the forward-looking statements due to, without limitation:

•

general economic conditions, including in particular economic conditions in Peru;

•

performance of financial markets, including emerging markets;

•

the frequency and severity of insured loss events;

•

interest rate levels;

•

currency exchange rates, including the Nuevo Sol/U.S. Dollar exchange rate;

•

increasing levels of competition in Peru and other emerging markets;

•

changes in laws and regulations;

•

changes in the policies of central banks and/or foreign governments; and

•

general competitive factors, in each case on a global, regional and/or national basis.

See “Item 3. Key Information—(D) Risk Factors,” and “Item 5. Operating and Financial Review and Prospects.”

We are not under any obligation to, and we expressly disclaim any obligation to, update or alter any forward-looking statements contained in this Annual Report whether as a result of new information, future events or otherwise.

PART I

ITEM 1.

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable

ITEM 2.

OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3.

KEY INFORMATION

(A)

Selected Financial Data

The following table presents a summary of our consolidated financial information at the dates and for the periods indicated. This selected financial data is presented in U.S. Dollars. You should read this information in conjunction with, and qualify this information in its entirety by reference to, the Consolidated Financial Statements, which are also presented in U.S. Dollars.

The summary of our consolidated financial data as of, and for the years ended, December 31, 2008, 2009, 2010, 2011 and 2012 is derived from the Consolidated Financial Statements audited by Medina, Zaldívar, Paredes & Asociados S.C.R.L, member of Ernst & Young Global, independent registered public accountants.

The report of Medina, Zaldívar, Paredes & Asociados S.C.R.L on the Consolidated Financial Statements as of December 31, 2011 and 2012 and for the years ended December 31, 2010, 2011 and 2012 appears elsewhere in this Annual Report.

SELECTED FINANCIAL DATA

	Year ended December 31,
	2008			2009			2010			2011			2012
	(U.S. Dollars in thousands, except percentages, ratios, and per common share data)
INCOME STATEMENT DATA:
IFRS:
Interest income	US$	1,382,844		US$	1,312,925		US$	1,471,708		US$	1,837,764		US$	2,310,441
Interest expense		(561,617	)		(420,564	)		(414,121	)		(531,600	))		(693,646	)
Net Interest income		821,227			892,361			1,057,587			1,306,164			1,616,795
Provision for loan losses (1)		(48,760	)		(163,392	)		(174,682	)		(214,898	)		(377,841	)
Net interest income after provision for loan losses		772,467			728,969			882,905			1,091,266			1,238,954
Fees and commissions from banking services		394,247			436,819			524,895			607,843			737,421
Net gains (loss) from sales of securities		51,936			120,932			80,326			61,927			101,269
Net gains on foreign exchange transactions		108,709			87,944			104,169			138,492			177,472
Net premiums earned		393,903			424,682			480,293			574,423			704,205
Other income		37,672			74,936			95,145			30,374			104,972
Claims on insurance activities		(341,910	)		(286,458	)		(315,572	)		(377,759	)		(465,460	)
Operating expenses		(920,603	)		(957,110	)		(1,085,885	)		(1,230,149	)		(1,614,102	)
Merger costs		0			0			0			0			0
Income before translation result and income tax		496,421			630,714			766,276			896,417			984,731
Translation result		(17,650	)		12,222			24,120			37,881			75,079
Income tax		(109,508	)		(138,500	)		(187,081	)		(210,508	)		(251,583	)
Net income		369,263			504,436			603,315			723,790			808,227
Attributable to:
Net income attributable to Credicorp’s equity holders		357,756			469,785			571,302			709,272			788,778
Non-controlling interest		11,507			34,651			32,013			14,518			19,449
Number of shares as adjusted to reflect changes in capital		79,761,475			79,534,485			79,440,484			79,407,360			79,391,258
Net income per common share attributable to Credicorp’s equity holders (2)		4.49			5.90			7.19			8.93			9.93
Diluted net income per share		4.49			5.90			7.17			8.90			9.90
Cash dividends declared per common share		1.50			1.70			1.95			2.30			2.60
BALANCE SHEET DATA:
IFRS:
Total assets		20,821,069			22,013,632			28,391,157			30,714,397			40,797,121
Total loans (3)		10,456,284			11,505,319			14,278,064			17,320,378			21,311,928
Reserves for loan losses (1)		(248,063	)		(376,049	)		(448,597	)		(558,186	)		(744,508	)
Total deposits		13,877,028			14,032,179			17,767,714			18,643,999			23,964,953
Equity attributable to Credicorp’s equity holders		1,689,172			2,316,856			2,873,749			3,395,799			4,167,969
Minority interest		106,933			186,496			56,502			66,841			197,366
Net Equity		1,796,105			2,503,352			2,930,251			3,462,640			4,365,335

	Year ended December 31,
	2008			2009			2010			2011			2012
	(U.S. Dollars in thousands, except percentages, ratios, and per common share data)
SELECTED RATIOS
IFRS:
Net interest margin (4)		4.46	%		4.70	%		4.60	%		4.88	%		4.96	%
Return on average total assets (5)		1.86	%		2.19	%		2.27	%		2.40	%		2.21	%
Return on average equity attributable to Credicorp’s equity holders (6)		20.21	%		23.72	%		21.29	%		22.94	%		20.74	%
Operating expenses as a percentage of net interest and non-interest income (7)		40.27	%		46.18	%		45.75	%		41.68	%		44.07	%
Operating expenses as a percentage of average assets		4.78	%		4.47	%		4.31	%		4.16	%		4.51	%
Equity attributable to Credicorp’s equity holders as a percentage of period end total assets		8.11	%		10.52	%		10.12	%		11.06	%		10.22	%
Regulatory capital as a percentage of risk weighted assets (8)		12.33	%		14.32	%		12.51	%		13.53	%		13.96	%
Total past-due loan amounts as a percentage of total loans (9)		0.79	%		1.60	%		1.47	%		1.50	%		1.75	%
Reserves for loan losses as a percentage of total loans		2.15	%		3.08	%		2.91	%		3.00	%		3.28	%
Reserves for loan losses as a percentage of total loans and other contingent credits (10)		1.84	%		2.53	%		2.39	%		2.47	%		2.71	%
Reserves for loan losses as a percentage of total past-due loans (11)		270.72	%		191.99	%		198.04	%		200.62	%		187.69	%
Reserves for loan losses as a percentage of substandard loans (12)		112.26	%		99.45	%		103.80	%		110.93	%		110.46	%

(1) Provision for loan losses and reserve for loan losses include provisions and reserves with respect to total loans and contingent credits, net of write-off recoveries.

(2) We have 100 million authorized common shares. As of December 31, 2012, we had 94.4 million common shares issued and outstanding, of which 15.5 million were held by ASHC. The per common share data given considers net outstanding shares (common shares net of shares held by BCP, ASHC and Grupo Pacífico) of 79.7 million in 2002 to 2012. See Notes 17 and 26 to the Consolidated Financial Statements.

As of December 31, 2012, the Group had granted 706,000 shares of Credicorp as part of its stock awards compensation program, of which 599,000 had vested.

(3) Net of unearned interest, but prior to reserve for loan losses. In addition to loans outstanding, we had contingent loans of US$1,755.9 million, US$2,528.1 million, US$3,135.2 million, US$3,728.0 million and US$4,520.1 million, as of December 31, 2008, 2009, 2010, 2011 and 2012, respectively. See Note 20 to the Consolidated Financial Statements.

(4) Net interest income as a percentage of average interest-earning assets, computed as the average of period-beginning and period-ending balances on a monthly basis.

(5) Net income as a percentage of average total assets, computed as the average of period-beginning and period-ending balances.

(6) Net income as a percentage of average equity attributable to our equity holders, computed as the average of period-beginning and period-ending balances, and calculated on a monthly basis.

(7) Sum of the salaries and employee’s benefits, administrative expenses, depreciation and amortization, as a percentage of the sum of net interest income and non-interest income, less net gains from sales of securities and other income.

(8) Regulatory capital calculated in accordance with guidelines by the Basel Committee on Banking Regulations and Supervisory Practices of International Settlements (or the BIS I Accord) as adopted by the SBS. See “Item 5. Operating and Financial Review and Prospects—(B) Liquidity and Capital Resources—Regulatory Capital and Capital Adequacy Ratios.”

(9) Depending on the type of loan, BCP considers loans past due for corporate, large business and medium business loans after 15 days; for small and micro business loans after 30 days; and for consumer, mortgage and leasing loans after 90 days. ASB considers past due all overdue loans except for consumer loans, which are considered past due when the scheduled principal and/or interest payments are overdue for more than 90 days. For IFRS 7 disclosure requirements on past-due loans, see Note 30.1 to the Consolidated Financial Statements. See “Item 4. Information on the Company—(B) Business Overview—(12) Selected Statistical Information—(iii) Loan Portfolio—Classification of the Loan Portfolio Based on the Borrower’s Payment Performance.”

(10) Other contingent credits primarily consist of guarantees, stand-by letters and letters of credit. See Note 20 to the Consolidated Financial Statements.

(11) Reserves for loan and contingent credit losses, as a percentage of all past-due loans, with no reduction for collateral securing such loans. Reserves for loan and contingent credit losses include reserves with respect to total loans and other credits.

(12) Reserves for loan and contingent credit losses as a percentage of loans classified in categories C, D or E. See “Item 4. Information on the Company—(B) Business Overview—(12) Selected Statistical Information—(iii) Loan Portfolio—Classification of Loan Portfolio.”

Exchange Rates

The following table sets forth the high and low month-end rates and the average and end-of-period rates for the sale of Nuevos Soles for U.S. Dollars for the periods indicated.

Year ended December 31,	High (1)		Low (1)		Average (2)		Period-end (3)
	(Nominal Nuevos Soles per U.S. Dollar)
2008		3.135		2.751		2.939		3.135
2009		3.251		2.881		3.005		2.888
2010		2.857		2.786		2.825		2.806
2011		2.827		2.696		2.753		2.696
2012		2.711		2.552		2.634		2.552

Source: Bloomberg

(1)

Highest and lowest of the 12 month-end exchange rates for each year based on the offered rate.

(2)

Average of month-end exchange rates based on the offered rate.

(3)

End-of-period exchange rates based on the offered rate.

The following table sets forth the high and low rates for the sale of Nuevos Soles for U.S. Dollars for the indicated months.

	High (1)		Low (1)
	(Nominal Nuevos Soles per U.S. Dollar)
2012
December		2.581		2.548
2013
January		2.576		2.538
February		2.589		2.568
March		2.609		2.585
April (through April 24)		2.625		2.577

Source: Bloomberg

(1)

Highest and lowest of the daily closing exchange rates for each month based on the offered rate.

The average of the bid and offered free market exchange rates published by the SBS for April 24, 2013 was S/.2.624 per US$1.00.

(B)

Capitalization and Indebtedness

Not applicable.

(C)

Reasons for the Offer and Use of Proceeds

Not applicable.

(D)

Risk Factors

Our businesses are affected by many external and other factors in the markets in which we operate. Different risk factors can impact our businesses, our ability to effectively operate and our business strategies. You should consider the risk factors carefully and read them in conjunction with all the information in this document. You should note that the risk factors described below are not only risks to consider. Rather, these are the risks that we currently consider material. There may be additional risks that we consider immaterial or of which we are unaware, and any of these risks could have similar effects to those set forth below.

Our geographic location exposes us to risk related to Peruvian political, social and economic conditions.

Most of BCP’s, Grupo Pacífico’s and Prima AFP’s operations and customers are located in Peru. In addition, although ASB is based outside Peru, most of its customers are located in Peru. Accordingly, our results of operations and financial condition are dependent on the level of economic activity in Peru. Changes in economic or other policies of the Peruvian government, which has exercised and continues to exercise a substantial influence over many aspects of the private sector could affect our results of operations and financial condition. Similarly, other political, economic and social developments in Peru, including government-influenced effects on inflation, currency devaluation and economic growth could affect our operations and financial condition.

For several decades, Peru had a history of political instability that has included military coups and a succession of regimes with differing policies and programs. During the last 15 years, however, Peru has experienced a period of relative political and economic stability which has led to positive economic performance, including a GDP compounded annual growth rate of 5.2% for the last ten years (2003 to 2012). The government of Alberto Fujimori, who took office in July 1990, initiated a series of reforms aimed at: (i) stabilizing the economy, (ii) restructuring the national government (by reducing bureaucracy), (iii) privatizing state-owned companies, (iv) promoting private investment, (v) eradicating corruption and bribery in the judicial system, (vi) developing and strengthening free markets, (vii) institutionalizing democratic representation; and (viii) enacting programs designed to strengthen basic services related to education, health, housing and infrastructure. While serving his third term, President Fujimori was forced to call for general elections under extreme protest in July 2000 when corruption in his government was exposed to the public. Fujimori later resigned in favor of a transitory government. In April of 2009, following a 15-month trial in Lima, Fujimori was sentenced to 25 years in prison for violations of human rights in connection with government-linked death squads. The two administrations that followed the Fujimori administration, after the transitional government led by Valentin Paniagua (2000 - 2001), were the Toledo administration (2001 - 2006) and the García administration (2006 - 2011). Both governments followed similar economic policies, which focused on achieving sustained economic growth; increasing exports of Peruvian goods; reducing unemployment, underemployment and poverty; reforming the tax system; fostering private investment and increasing public investment in education, public health and other social programs, while reducing overall public spending.

Peru’s current president, Ollanta Humala from the Gana Perú political coalition, took office on July 28, 2011 for a five-year term through 2016, after winning a run-off election. President Humala has, since his inauguration, substantially maintained the moderate economic policies of former president Alan García, whose administration was characterized by business-friendly and open-market economic policies that sustained and fostered economic growth, while controlling the inflation rate at historically low levels. However, we cannot assure you that the current or any future administration will maintain business-friendly and open-market economic policies or policies that stimulate economic growth and social stability, in particular given President Humala’s left-leaning political history and statements made during his presidential campaigns in 2006 and 2011. Any changes in the Peruvian economy or the Peruvian government’s economic policies may have a negative effect on our business, financial condition and results of operations.

Peru also has a history of domestic terrorism and social unrest. The terrorist organizations that were particularly active in Peru during 1980s and the early 1990s were the Movimiento Revolucionario Tupac Amaru (MRTA) and the Sendero Luminoso (Shining Path). The leader of the Shining Path, Abimael Guzmán, was captured and imprisoned in 1992. In 2012, the most recent significant leader of this organization, Florindo Flores, commonly known as Artemio, was also captured. Nevertheless, terrorism, narcotrafficking and narco-terrorism remain key challenges for the Government. Remnants of the Shining Path rebel group have survived and the group is now split into two relatively independent factions; one in Peru’s Upper Huallaga Valley and one in the Apurimac and Ene River Valley (VRAE). These regions constitute the largest areas of coca cultivation and the main centers of “narco-terrorism” in Peru. Any resumption in terrorist activity by the MRTA, the Shining Path or other organizations may adversely affect our operations and financial condition.

In recent years, Peru has experienced social unrest in geographic areas that contribute to the country’s mining industry. Mining is an important sector of the Peruvian economy, representing approximately 60% of the country’s exports and 20% of its tax revenues. However, while recent governments have concentrated on increasing the revenues and profitability of the mining industry, there has been less focus on improving the social and economic conditions of local communities affected by the industry, which has increased political tension. The most recent manifestation of this tension can be seen in social conflict around Conga, a gold-copper project located in northern Peru. The project, which included investments of between US$4.2 billion and US$4.8 billion, failed to launch because of social protests led by residents concerned about its potential impact on the local water supply. In December 2011, the Peruvian government declared a state of emergency in the area, which lasted for approximately 10 days, and afterwards requested a new environmental impact study from independent consultants. The results of the study were delivered on April 16, 2012, and the Peruvian government has established a series of new conditions to improve the project that the mining company would be required to accept to continue with the project.. At the sametime, however, four new copper mine projects (in Las Bambas, Cerro Verde, Constancia, and Quellaveco) are planned, which may multiply the production of copper in next four years. A possible cancellation of major projects may have an impact on present and future foreign investment decisions and plans, which in turn could negatively affect Peru’s GDP growth and, as a result, the expansion of the Peruvian financial system.

Foreign exchange fluctuations and exchange controls may adversely affect our financial condition and results of operations.

Even though the functional currency of our financial statements is U.S. Dollars and our dividends are paid in U.S. Dollars, BCP, Grupo Pacífico and Prima AFP for local statutory purposes, prepare their financial statements and pay dividends in Nuevos Soles. The Peruvian government does not impose restrictions on a company’s ability to transfer U.S. Dollars from Peru to other countries, to convert Peruvian currency into U.S. Dollars or to pay dividends abroad. Nevertheless, Peru has implemented restrictive exchange controls in its history, and the Peruvian government might in the future consider it necessary to implement restrictions on such transfers, payments or conversions. See “Item 10. Additional Information—(D) Exchange Controls.” In addition, depreciation of the Nuevo Sol against the U.S. Dollar would decrease the U.S. Dollar value of any dividends BCP, Grupo Pacífico and Prima AFP pay us, which would have a negative impact on our ability to pay dividends to shareholders.

Peru’s foreign reserves currently compare favorably with those of many other Latin American countries. However, a reduction in the level of foreign reserves will impact the country’s ability to meet its foreign currency-denominated obligations. A decline in Peruvian foreign reserves to inadequate levels, among other economic circumstances, could lead to currency devaluation or a volatility of short-term capital inflows. We have taken steps to manage the gap between our foreign currency-denominated assets and liabilities in several ways, including closely matching the volumes and maturities of our Nuevo Sol-denominated assets against our Nuevo Sol-denominated liabilities. Nevertheless, a sudden and significant devaluation of the Nuevo Sol could have a material adverse effect on our financial condition and results of operations. See “Item 11. Quantitative and Qualitative Disclosures about Market Risk—Foreign Exchange Risk.”

Also, a significant group of BCP’s borrowers and Grupo Pacífico’s insureds generate Nuevo Sol revenues from their own clients. Devaluation of the Nuevo Sol against the U.S. Dollar could negatively impact BCP’s and Grupo Pacífico’s clients’ ability to repay loans or make premium payments. Despite any devaluation, and absent any change in foreign exchange regulations, BCP and Grupo Pacífico would be expected to continue to repay U.S. Dollar-denominated deposits and U.S. Dollar-denominated insurance benefits in U.S. Dollars. Therefore, any significant devaluation of the Nuevo Sol against the U.S. Dollar could have a material adverse effect on our results of operations and financial condition.

Finally, BCP Bolivia, Correval and IM Trust utilize the local currencies (Bolivian Pesos, Colombian Pesos and Chilean Pesos, respectively) of the countries in which they operate and therefore are also exposed to foreign exchange fluctuations and any exchange control imposed in these countries that may adversely affect their financial condition and results of operations.

It may be difficult to serve process on or enforce judgments against us or our principals residing outside of the United States.

A significant majority of our directors and officers live outside the United States (principally in Peru). All or most of our assets and those of our principals are located outside the United States. As a result, it may not be possible for investors to effect service of process within the United States upon us or our principals to bring forth a civil suit under the United States securities laws in United States courts. We have been advised by our Peruvian counsel that liability under the United States federal securities laws may not be enforceable in original actions in Peruvian courts. Also, judgments of United States courts obtained in actions under the United States federal securities laws may not be enforceable. Similarly, Bermudan counsel advised us that courts in Bermuda may not enforce judgments obtained in other jurisdictions, or entertain actions in Bermuda, against us or our directors or officers under the securities laws of those jurisdictions.

In addition, our bye-laws contain a broad waiver by shareholders of any claim or right of action, both individually and on our behalf, against any of our officers or directors. This waiver limits the rights of shareholders to assert claims against our officers and directors for any action taken by an officer or director. It also limits the rights of shareholders to assert claims against officers for the failure of an officer or director to take any action in the performance of his or her duties, except with respect to any matter involving any willful negligence, willful default, fraud or dishonesty on the part of the officer or director.

Our ability to pay dividends to shareholders and to pay corporate expenses may be adversely affected by the ability of our subsidiaries to pay dividends to us.

As a holding company, our ability to make dividend payments, if any, and to pay corporate expenses will depend upon the receipt of dividends and other distributions from our operating subsidiaries. Our principal operating subsidiaries are BCP, Grupo Pacífico, ASB and Prima AFP. If our subsidiaries do not have funds available, or are otherwise restricted from paying us dividends, we may be limited in our ability to pay dividends to shareholders. Currently, there are no restrictions on the ability of BCP, ASB, Grupo Pacífico or Prima AFP to pay dividends abroad. In addition, our right to participate in the distribution of assets of any subsidiary, upon any subsidiary’s liquidation or reorganization (and thus the ability of holders of our securities to benefit indirectly from such distribution), is subject to the prior claims of creditors of that subsidiary, except where we are considered an unsubordinated creditor of the subsidiary. Accordingly, our securities will effectively be subordinated to all existing and future liabilities of our subsidiaries, and holders of our securities should look only to our assets for payments.

Also, we depend upon the receipt of dividends and other distributions from entities in which we, directly or indirectly, have an ownership interest. Any restriction on dividends applicable to Correval or IM Trust (our recently acquired companies in Colombia and Chile, respectively) may adversely affect our ability to make distributions.

Changes to banking regulations may adversely affect our operating performance and financial condition.

Because we are subject to regulation and supervision in Peru, Bolivia, Colombia, Chile, the Cayman Islands, the United States of America, and Panama, changes to the regulatory framework in any of these countries or changes in tax laws could adversely affect our business.

We are mainly subject to extensive supervision and regulation through the SBS’s consolidated supervision regulations, which regulate all of our subsidiaries and offices including those located outside Peru. The SBS and the Banco Central de Reserva del Perú (BCR), or the Central Bank, supervise and regulate BCP’s operations. Peru’s constitution and the SBS’s statutory charter grant the SBS the authority to oversee and control banks and other financial institutions including pension funds and insurance companies. The SBS and the Central Bank have general administrative responsibilities over BCP, including designation of capitalization and reserve requirements. In past years, the Central Bank has, on numerous occasions, changed the deposit reserve requirements applicable to Peruvian commercial banks as well as the rate of interest paid on deposit reserves and the amount of deposit reserves on which no interest is payable by the Central Bank. Such changes in the supervision and regulation of BCP may adversely affect our results of operations and financial condition. See “Item 4. Information on the Company—(B) Business Overview—(11) Supervision and Regulation—(ii) BCP.” Furthermore, changes in regulation related to consumer protection may also affect our business.

In Colombia, we are subject to supervision and regulation through the Superintendencia Financiera de Colombia and the Autorregulador del Mercado de Valores de Colombia In Chile, we are subject to supervision and regulation through the Superintendencia de Valores y Seguros. See “Item 4. Information on the Company—(B) Business Overview—(11) Supervision and Regulation—(v) Investment Banking.”

We are also regulated by the United States Federal Reserve System, which shares its regulatory responsibility with the State of Florida Department of Banking and Finance - Office of Financial Regulation, with respect to BCP’s Miami agency, and by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority, Inc. (FINRA), with respect to Credicorp Securities, a U.S. broker dealer. Similarly, we are regulated by other governmental entities in other jurisdictions. In the Cayman Islands, we are subject to the supervision and regulation of the Cayman Islands Monetary Authority, or CIMA, while in Bolivia, we are subject to the supervision of the Financial System Supervisory Authority (FSSA) that has assumed all regulatory functions held previously by the Superintendency of Banks and Financial Entities and the Superintendency of Pensions, Securities and Insurance. In Panama, we are subject to the supervision of the Superintendency of Banks and the regulatory framework set forth in the Decree Law 9 of February 25, 1998. Changes in the supervision and regulation of our subsidiaries in other countries may adversely affect our results of operations and financial condition.

In mid-2011, politicians outside of Peru's governing coalition introduced a bill in Congress that, if enacted, would set a cap on interest rates charged by the country's financial institutions. However, the SBS recently indicated that such a cap should only be used as a last resort for lowering rates if the SBS doesn’t succeed in getting Peru’s banks to voluntarily reduce interest rates in the next two to four years, the period in which several foreign banks are likely to establish or expand operations in Peru. Congress may nevertheless impose a cap, and an interest rate ceiling may adversely affect our Net Interest Margin (NIM) and consequently our operating performance.

On February 15, 2011, the Peruvian government enacted Law 29663. On July 21, 2011 Law 29663 was amended by Law 29757. This new Law partially modifies the country’s income tax regime by subjecting to taxation in Peru capital gains derived from an indirect transfer of shares and expanding the type of income that will qualify as Peruvian-source income. Under the new law, any transfer of shares issued by a non-resident entity will be subject to taxation in Peru (30% or 5%) if at any point during the 12 prior months to such transfer:

a. 50% or more of the fair market value of the foreign shares –to be transferred—is derived from shares or participation rights representing the equity capital of one or more Peruvian entities. There is a rebuttable presumption that the threshold is met if the non-resident entity is a resident in a tax heaven.

b. The shares to be transferred represent at least 10% or more of the equity capital of the non-resident entity.

At the same time, two new obligations were imposed on Peruvian domiciled companies:

(1) Each Peruvian domiciled company is now required to report to the Superintendency of Tributary Administration (SUNAT by its Spanish initials) transfers of its own shares or transfers of the shares of the non-Peruvian domiciled company that is the owner of its shares; and

(2) Each Peruvian domiciled company is jointly liable for the income tax not paid by a non-Peruvian domiciled transferor that is directly or indirectly linked to the domiciled company (whether by means of control, management or equity participation) in connection with the transfer of the domiciled company’s shares, except in the event that the purchaser or acquirer of the shares is a Peruvian individual or entity.

The effectiveness of the obligations mentioned in (1) and (2) above is subject to additional regulations which have not been enacted yet by the Peruvian government. Until definitive regulations are enacted by the Peruvian government, which may clarify any obligation by Credicorp to withhold income tax for non-Peruvian domiciled transferors, we do not know what impact, if any, this new law will have on our company, subsidiaries or shareholders.

A deterioration in the quality of our loan portfolio may adversely affect our results of operations.

Given that a significant percentage of our revenues are related to banking activities, a deterioration of loan quality may have an adverse impact on our financial condition and results of operations. On the one hand, loan portfolio risk associated with lending to certain economic sectors or clients in certain market segments can be mitigated through adequate diversification policies. On the other hand, our pursuit of opportunities in which we can charge higher interest rates, thereby increasing revenues, may reduce diversification of our loan portfolio and expose us to greater credit risk. We believe that significant opportunities exist in middle market, consumer lending and microfinance in Peru. We also believe that we can, on average, charge higher interest rates on such loans as compared with interest charged on loans in our core corporate banking business, which primarily consists of clients that operate in industrial and commercial economic sectors.

Accordingly, our strategy includes a greater emphasis on middle market, consumer loans and microfinance, as well as continued growth of our loan portfolio in general. An increase in our portfolio’s exposure to these areas could be accompanied by greater credit risk. Such a greater credit risk would not only be affected by the speed and magnitude of the increase, but also by the shift to lending to these sectors, which have higher risk profiles compared with loans to large corporate customers. Given the changing composition of our loan portfolio, historical loss experience may not be indicative of future loan loss experience.

Our banking and capital market operations in neighboring countries expose us to risk related to political and economic conditions.

Banco de Crédito de Bolivia is BCP’s commercial bank in Bolivia, and most of its operations and customers are located there. Accordingly, our results of operations and financial condition depend on economic activity in Bolivia. Bolivia´s macroeconomic indicators have been generally positive over the last several years, including steady growth rates, positive fiscal balances, and increasing international reserves. Inflation for 2012 was 4.54%, below the Central Bank´s target of 5%. However, Bolivia continues to lag other countries in the region in terms of foreign direct investment (FDI), despite an increase in FDI in 2012. The political environment in Bolivia also continues to be unstable and the country’s legal framework is weak. During 2013 we expect an increase in Bolivia’s consumer price index as a result of imported inflation due to a recovery in global economic activity, mainly in Brazil, and in China. Also, we expect the Bolivian government to enact new banking laws in 2013 and increase regulations throughout Bolivia’s banking industry. New banking laws could lead to instability in Bolivia’s financial system and adversely affect our results of operations.

Our recently acquired companies Correval and IM Trust expose us to risk related to Colombian and Chilean political and economic conditions, respectively.

Changes to insurance regulations in Peru may impact the ability of our insurance subsidiary to underwrite and price risk effectively, and may adversely affect our operating performance and financial condition.

Our insurance business is carried out by Pacífico Seguros and Pacífico Vida which together with Pacífico Salud are part of Grupo Pacífico. The insurance business is subject to regulation by the SBS. New legislation or regulations may adversely affect Grupo Pacífico’s ability to underwrite and price risks accurately, which in turn would affect underwriting results and business profitability. Grupo Pacífico is unable to predict whether and to what extent new laws and regulations that would affect its business will be adopted in the future. Grupo Pacífico is also unable to predict the timing of any such adoption and the effects any new laws or regulations would have on its operations, profitability and financial condition.

The Group also assumes reinsurance risk in the normal course of business for non-life insurance contracts when applicable. Premiums and claims on assumed reinsurance are recognized as revenue or expenses in the same manner as they would be if the reinsurance were considered direct business, taking into account the product classification of the reinsured business.

Our operating performance and financial condition depend on Grupo Pacífico’s ability to underwrite and set premium rates accurately across a full spectrum of risks. Grupo Pacífico must generate sufficient premiums to offset losses, loss adjustment expenses and underwriting expenses in order to be profitable.

To price premium rates accurately, Grupo Pacífico must:

•

collect and analyze a substantial volume of data;

•

develop, test and apply appropriate rating formulae;

•

closely monitor changes in trends in a timely fashion; and

•

predict both severity and frequency with reasonable accuracy.

If Grupo Pacífico fails to assess accurately the risks that it assumes or does not accurately estimate its retention, it may fail to establish adequate premium rates. Failure to establish adequate premium rates could reduce income and have a materially adverse effect on its operating results or financial condition. Moreover, there is inherent uncertainty in the process of establishing property and casualty loss reserves. Reserves are estimates based on actuarial and statistical projections at a given point in time of what Grupo Pacífico ultimately expects to pay out on claims and the cost of adjusting those claims, based on the facts and circumstances then known. Factors affecting these projections include, among others, changes in medical costs, repair costs and regulation. Any negative effect on Grupo Pacífico could have a material adverse effect on our results of operations and financial condition.

Natural disasters in Peru could disrupt our businesses and affect our results of operations and financial conditions

We are exposed to natural disasters in Peru, such as earthquakes and mudslides. Earthquakes in Peru are common occurrences as the country is located in a seismic zone: the interface between the Nazca and South American tectonic plates. Peru has been adversely affected by earthquakes in the past, including an 8.0 magnitude earthquake that struck the central coast of Peru in 2007.

A natural disaster of this nature or any other type of disaster could impair. Our operational capacity, our business continuity plans, which are designed to sustain Credicorp’s critical operations, include emergency response, disaster recovery, operations continuity, crisis management, data protection and recovery, and critical systems redundancy. Although we test our business continuity plans annually these plans may prove to be ineffective which could have a material adverse effect on our ability to carry out our businesses, especially if incidence disaster affects computer-based data systems or destroys customer or other data. In addition, if a significant number of our employees were affected by the natural disaster, our ability to conduct business could be impaired.

Our subsidiary Grupo Pacífico is further exposed to risks associated with natural disasters in Peru as an insurance business. To protect Grupo Pacífico’s solvency and liquidity, our insurance business historically has obtained reinsurance for a substantial portion of its earthquake-related risks through automatic excess loss treaties; however, there can be no assurance that a major catastrophe would not have a material adverse impact on our results of operations or financial condition or that our reinsurance policies will be an effective hedge against our exposure to risks resulting from natural disasters.

Regulatory changes to the private pension fund and banking system in Peru could impact our earnings and adversely affect our operating performance.

Prima AFP manages our Pension Fund Administration business. In Peru, private pension fund managers are closely regulated by the SBS. In 2012, the Peruvian Government adopted the Law to Reform the Private Pension System, which modifies the commissions that fund managers, may collect from pension fund participants. Prior to the adoption of the Law to Reform the Private Pension System, Peruvian pension fund participants, known as “affiliates”, were charged commissions based on their salaries. Under the Law to Reform the Private Pension System, pension fund managers, known as AFPs, will apply a mixed fee to manage funds. This new fee structure will be calculated based on monthly remuneration of the affiliate plus a fee on the fund that is set up with new contributions. By May 31, 2013, affiliates that are already in the private pension fund system must choose between (i) continuing to be subject to the fee structure based on remuneration that was in place prior to the adoption of the Law to Reform the Private Pension System; and (ii) changing to the new fee structure (mixed commission). All new affiliates will be subject to the mixed fee structure. The mixed fee structure will be in place for a 10-year transitional period after which an AFP´s fees will be based sole on its funds under management. These changes in the fee structure of Peru’s pension funds are designed, to align the interest of AFPs and their clients.

Other regulatory changes from the Law to Reform the Private Pension System include: (i) the establishment of an auction process to determine which AFP will manage the accounts of new affiliates; (ii) the packaging of insurance for survivors, disability and burial costs; (iii) the creation of a capital protection fund designed to establish a stable source of funds for seniors; and (iv) other measures designed to expand coverage. It also contemplates changes related to employers, outside service contracts and the operating processes. These regulatory changes may reduce the fees that we collect and adversely affect our results of operations. The Law to Reform the Private Pension System will be implemented in phases. Changes in 2013 will be focused on modifying processes and systems. See “Item 4. Information on the Company—(B) Business Overview—(11) Supervision and Regulation—(vii) Prima AFP.”

In the case of the banking system, the last main changes in regulation were the elimination of fees related to our Retail Banking Business and higher standards in transparency regarding information offered to clients about interest rates and features of financial products. Although the impact on our banking business’ fee income was not material, pressure from Congress may continue and the regulator could persist on increasing the regulation of fees.

Recent legislation regarding the financial services industry may subject us to significant and extensive regulation, which may have an impact on our operations.

Government measures to regulate the financial industry, including the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) and the Foreign Account Tax Compliance Act (FATCA) of the United States are likely to increase our regulatory compliance burden and related costs. These and other regulatory developments are likely to impact Credicorp, and may require us to change certain aspects of our business practices and impose additional costs on us, ultimately having an impact on our operations. With respect to FATCA and Dodd Frank, Credicorp has hired outside consultants to help determine the impact that the implementation of these two laws will have on our institution. Based on our analysis to date, we do not expect the implementation of FATCA to have a material impact on our business given our limited number of U.S. accountholders. Also, we do not expect that the implementation of the Dodd-Frank Act, including the Volcker Rule and regulations related to swap transactions, will materially impact our business or cause us to incur material costs. However, until final implementations of the regulations under these new laws are issued, we cannot assure you of the extent of the impact these new laws will have on Credicorp.

We operate in a competitive banking environment that may limit our potential to grow, particularly in the medium term as more foreign banks establish or expand operations in Peru.

BCP has experienced increased competition, including increased pressure on margins. This is primarily a result of the presence of the following:

•

Highly liquid commercial banks in the market;

•

Local and foreign investment banks with substantial capital, technology, and marketing resources; and

•

Local pension funds that lend to BCP’s corporate customers through participation in those customers’ securities issues.

Larger Peruvian companies have gained access to new sources of capital through the local and international capital markets, and BCP’s existing and new competitors have increasingly made inroads into the higher margin, middle market and retail banking sectors. Such increased competition, with entrants who may have greater access to capital at lower costs, has affected BCP’s loan growth as well as reduced the average interest rates that BCP can charge its customers.

Competitors may also dedicate greater resources to, and be more successful in, the development of technologically advanced products and services that may compete directly with BCP’s products and services. Such competition would adversely affect the acceptance of BCP’s products and/or lead to adverse changes in the spending and saving habits of BCP’s customer base. If competing entities are successful in developing products and services that are more effective or less costly than the products and services developed by BCP, BCP’s products and services may be unable to compete successfully. BCP may not be able to maintain its market share if it is not able to match its competitors’ loan pricing or keep pace with their development of new products and services. Even if BCP’s products and services prove to be more effective than those developed by other entities, such other entities may be more successful in marketing their products and services than BCP because of their greater financial resources, higher sales and marketing capacity or other similar factors.

As a result of strong Peru’s economic growth, which has outpaced growth by nearby countries, several banks have sought and obtained authorization to open representative offices in Peru. Itaú Unibanco, Banco Latinoamericano de Comercio Exterior (Bladex), Morgan Stanley Bank, Bank of Tokyo and the Industrial and Commercial Bank of China are among those banks receiving authorization. With the increased competition, more individuals will have access to credit, and the percentage of the population using baking services will likely climb. This will eventually put downward pressure on interest rates. Any negative impact on BCP could have a materially adverse effect on our results of operations and financial condition.

Economic and market conditions in other countries may affect the Peruvian economy and the market price of Peruvian securities.

Economic conditions in other countries may impact Peru’s GDP growth. Peru’s exports are highly concentrated in the oil and mining industry. This industry represents almost 25% of Peru’s total income tax revenues, and gold and copper alone constitute around 45% of Peru’s total exports. Therefore, an economic downturn in Peru’s major importers of mining goods may adversely affect Peru’s economic growth.

Nearly one quarter of the expected growth in Peru’s economy over the next year depends on economic conditions in China, which generates considerable demand for basic metals mined in Peru. An economic slowdown in China over the next several years may adversely affect the growth of the Peruvian economy as a result of lower exports, lower levels of foreign investment and lower tax revenues. The aforementioned could affect the growth of our business as these reflect on the Peruvian economy.

Fluctuation and volatility of capital markets and interest rates may decrease our net income.

We may suffer losses related to the investments by BCP, ASHC, Grupo Pacífico and other subsidiaries in fixed income and equity securities, and to their respective positions in currency markets, because of changes in market prices, defaults, fluctuations in market interest rates or exchange rates or other reasons. A downturn in capital markets may result in a decline in the value of our positions and lead us to register net losses. In addition, a downturn in capital markets could also lead to volatile prices and negative net revenues from trading positions, even in the absence of a general economic downturn.

Fluctuations in market interest rates, or changes in the relative structure between short-term interest rates and long-term interest rates, could cause a decrease in interest rates charged on interest-earning assets, relative to interest rates paid on interest-bearing liabilities. Such an occurrence could adversely affect our financial condition by causing a decrease in net interest income.

A failure in, or breach of, our operational or security systems could temporarily interrupt our businesses, increasing our costs and causing losses.

Although we have a strong IT infrastructure and high-skilled professionals managing IT operations, we are still vulnerable to failure of our operational systems. This could temporarily interrupt our business, increasing our costs and causing losses. Temporary interruptions or failures in hardware and software that support our business and customer’s transactions could result mainly in regulatory fines, penalties, and reputational loss.

Acquisitions and strategic partnerships may not perform as expected, which could have an adverse effect on our business, financial condition and results of operation.

Acquisitions and strategic partnerships, as those made in our investment banking and insurance businesses, may not perform as expected since our assessment could be based on assumptions with respect to operations, profitability and other matters that may subsequently prove to be incorrect. Future acquisitions, investments and alliances may not produce the anticipated synergies or perform in accordance with our expectations, which could have an adverse effect on our business, financial condition and results of operation.

ITEM 4.

INFORMATION ON THE COMPANY

(A)

History and Development of the Company

We are a limited liability company that was incorporated in Bermuda on October 20, 1995 to act as a holding company, coordinate the policy and administration of our subsidiaries, and engage in investing activities. Our principal activity is to coordinate and manage the business plans of our subsidiaries in an effort to implement universal banking services and develop our insurance business, focusing on Peru and Bolivia along with limited investments in other countries of the region. Our registered address is Clarendon House, 2 Church Street, Bermuda. The management and administrative office (i.e., principal place of business) in Peru of our subsidiary, Banco de Crédito del Perú, is located at Calle Centenario 156, La Molina, Lima 12, Peru, and the phone number is 51-1-313-2000.

As of December 31, 2012, our total assets were US$40.8 billion and our net equity was US$4.4 billion. Our net income attributable to our equity holders in 2010, 2011 and 2012 was US$571.3 million, US$709.3 million and US$788.8 million, respectively. See “Item 3. Key Information—(A) Selected Financial Data” and “Item 5. Operating and Financial Review and Prospects.”

We were formed in 1995 for the purpose of acquiring, through an exchange offer, the common shares of BCP, ASHC and Grupo Pacífico. We currently hold 97.7% of BCP, 97.8% of Grupo Pacífico and 100% of ASHC. See “Item 4. Information on the Company—(C) Organizational Structure.”

In February 2005, we were authorized by Peruvian regulatory authorities to establish Prima AFP, of which Grupo Crédito is the main shareholder. Prima AFP started operations in August 2005.

In August 2006, Prima AFP acquired Unión Vida AFP, which is a pension fund operating in the Peruvian market. Prima AFP’s acquisition of Unión Vida AFP, which was formerly held by Grupo Santander Perú S.A., was a strategic move toward consolidation as part of its efforts to gain a leading position in the pension fund market. As of the date of the acquisition, Prima AFP was the second largest pension fund company in terms of market share terms (defined as the amount of affiliates and assets under corporate management), with the second highest returns and the lowest commission for affiliates (who invest a portion of their salary each month). Today, Prima AFP is the largest pension fund manager in Peru. The merger between Prima AFP and Unión Vida AFP was consummated in December 2006.

In October 2009, BCP acquired from the Cooperative for Assistance and Relief Everywhere Inc. (CARE) – Perú, all the shares that this entity owned of Empresa Financiera Edyficar S.A. (Edyficar), representing 77.12% of Edyficar’s capital stock. In accordance with Peruvian legal requirements in effect at the time, BCP made a public offering to Edyficar’s minority shareholders to acquire the remaining 22.67% of the company’s stock. The total purchase price for the acquisition was US$96.1 million, including related direct acquisition costs. As of December 31, 2012 BCP owned 99.79% of Edyficar.

In October 2010, the Credicorp group acquired American Life Insurance Company (ALICO)’s 20.1% and 38% stakes in Pacífico Seguros and Pacífico Vida, respectively. Pacífico Vida’s shares were acquired through Credicorp Ltd. and its subsidiary, Grupo Crédito, acquired Pacífico Seguros´s shares. Consequently, at the conclusion of this transaction, Credicorp and its subsidiary Grupo Crédito held 97.68% of Pacífico Seguros, and jointly controlled 100% of Pacífico Vida. The total investment amounted to approximately US$174 million, making it the largest transaction ever completed in the Peruvian insurance market. We expect the acquisition to permit the Credicorp group to realize synergies in its decision making process and through the integration of all its insurance business lines. The closer proximity between companies will also allow Grupo Pacífico to improve its value proposition to customers, who seek integral insurance solutions. On April 28, 2011, Credicorp transferred its 24% stake in Pacífico Vida to Pacífico Seguros. As a result of that transfer, Pacífico Seguros now directly owns 86% of the shares of Pacífico Vida and Credicorp owns the remaining 14%. This transfer did not affect Credicorp’s consolidated financial statements.

In November 2010, Credicorp’s Board of Directors approved the transfer of 84.9% of BCP’s total shares to Grupo Crédito S.A. (its Peruvian wholly owned subsidiary) through a capital contribution, in order to facilitate Credicorp’s future investments in Peru without modifying the controlling structure of BCP. Under the new structure, Credicorp directly holds 12.7% of BCP’s total shares and, in conjunction with its subsidiary Grupo Crédito, continues to control the same 97.7% of such shares without modifying the internal governance structure. Before this change in ownership structure, dividends to Credicorp from its Peruvian subsidiaries, such as BCP, were remitted abroad and had to be remitted back to Peru when capital for new investments in the country were required. With the new structure, Grupo Crédito, which acts as the local holding company for some of Credicorp’s investments in Peru (Prima AFP, Grupo Pacífico and others), will manage Credicorp’s future Peruvian investments, and directly transfer the dividends to Credicorp when it is required to do so under Credicorp’s dividend policy. This modified organizational structure will not affect the way Credicorp and BCP manage their day-to-day operations, and Credicorp’s dividend policy has not changed as a result of this transaction.

In the second half of 2011, Pacífico Salud invested approximately US$ 82.7 million to create the largest private medical services network in Peru by acquiring majority shares to directly manage: (i) the El Golf, San Borja and Oncocare clinics in Lima, (ii) the Galeno clinic in Arequipa, (iii) Laboratorios ML, a clinical laboratory, and (iv) Doctor+, which is a house call/ambulance service. In 2012, Pacífico Salud invested US$ 38.6 million to increase its integrated insurance and health providing services by acquiring: (i) Clínica Belén S.A., (ii) Centro Odontológico Americano, (iii) Prosemedic S.A., (iv) Clínica Sánchez Ferrer S.A. and Inversiones Marsfe S.R.L., and (v) Bio Pap Service S.A.C. We believe that these acquisitions enable Pacífico Salud to directly benefit from this sector’s growth and to strategically defend against potential changes in the healthcare service supply chain, where vertical integration in the insurance business is becoming more frequent.

During 2012, Credicorp, as part of the strategic plan, initiated the creation of a regional investment bank. On April 27, 2012, Credicorp, through its subsidiary BCP, acquired a 51 percent stake in Correval S.A. Sociedad Comisionista de Bolsa, a brokerage entity established in Bogota, Colombia, for approximately US$72.3 million. This entity will be transferred to Credicorp Investments Ltd.. On July 31, 2012, Credicorp, through its subsidiary BCP, acquired 60.6 percent of IM Trust S.A. Corredores de Bolsa (IM Trust), an investment banking entity established in Santiago, Chile, for approximately US$131.5 million, of which US$110.9 million were paid in cash consideration at the acquisitions date and US$20.6 million will be paid in cash in August 2013. In November 2012, IM Trust was transferred to Credicorp Investments without any impact on Credicorp’s financial statements. For the investment banking operations in Peru, we created BCP Capital S.A.A. (BCP Capital), a company incorporated in Peru that was established in April 2012 through the split of an equity block of BCP. This split resulted in a reduction of BCP’s assets, liabilities and net equity in an amount of US$71.2 million, US$18.0 million and US$53.2 million, respectively. Assets transferred included Credibolsa S.A.B., Creditítulos S.T., Credifondos S.A.F.M. and BCP’s investment banking activities. The equity block split had no effect in Credicorp’s consolidated financial statements; no gains or losses arose from it.

Finally, we established Credicorp Investments Ltd. (Credicorp Investments) in Bermuda to hold the Group’s investment banking activities in Chile, Colombia and Peru and as of December 31, 2012, the consolidated financial statements of this subsidiary only include IM Trust operations from November to December 2012. We will also transfer Correval (at book value) to Credicorp Investments as soon as we obtain the approval from Colombian supervisors.

(B)

Business Overview

(1)

Introduction – Review of 2012

General

We are the largest financial services holding company in Peru. For management purposes, the Group is organized into four operating segments based on our products and services. According to IFRS, an operating segment is a component of an entity that engages in business activities from which it may earn revenues and incur expenses; whose operating results are regularly reviewed by the entity’s chief who makes decisions about resources allocated for the segment and assesses its performance; and for which discrete financial information is available. We conduct our financial services business through our operating segments as follows:

Banking: principally handling loans, credit facilities, deposits and current accounts. Banking also includes handling deposits, consumer loans and credit cards products for individual customers.

Insurance: including commercial property, transportation and marine hull, automobile, life, health and pension fund underwriting insurance. Private hospital services are also included under this operating segment.

Pension funds: providing private pension fund management services to customers.

Investment Banking: including corporate finance (structured lending, capital markets and M&A), sales & trading (equity, fixed income, and derivatives), and asset management (investment funds, mutual funds, advisory and mandates).

The following table provides certain financial information about our principal business segments as of and for the year ended December 31, 2012 (See Note 27 to the Consolidated Financial Statements):

	As of and for the Year ended December 31, 2012
	Total Revenues		Operating Income*		Total Assets
	(U.S. Dollars in millions)
Banking	US$	3,062	US$	1,558	US$	36,227
Insurance		827		261		2,616
Pension fund		118		-		249
Investment Banking		128		37		1,705
Credicorp	US$	4,135	US$	1,856	US$	40,797
Assets Under Management		-		-	US$	22,146

* Operating income includes the net interest income from banking activities and the amount of the net premiums earned, less insurance claims.

We conduct our wholesale banking, treasury and retail banking and wealth management activities primarily through BCP, the largest (in terms of total assets, loans, deposits, net equity and net income) full-service Peruvian commercial bank, and our ASB private banking and asset management firm. We conduct our pension fund business through Prima AFP (the largest pension fund in terms of funds under management) and our insurance activities through Grupo Pacífico, which is the second largest Peruvian insurance company in terms of premiums, fees and net income. We conduct our investment banking business primarily through BCP Capital S.A.A. in Peru, Correval S.A. in Colombia, and IM Trust S.A. in Chile, each of which is a leading company in its respective market. It should be noted that the term “Peruvian commercial bank,” “Peruvian insurance company” and other similar terms used in this Annual Report do not include the assets, results or operations of any foreign parent company or foreign subsidiary of such Peruvian company.

Primarily as a result of the strong microeconomic environment in Peru in 2012, we recorded net income after minority interest of US$ 788.8 million in 2012, US$709.3 million in 2011 and US$571.3 million in 2010. The 2012 result reflected an increase of 11.2% in our net income, primary as a consequence of the strong performance of all our subsidiaries.

Our total assets amounted to US$28.4 billion in 2010, US$30.7 billion in 2011 and US$40.8 billion in 2012. The 32.8% increase in total assets in 2012 was primarily a result of the continued growth of our loan portfolio, which grew by 23.1% in 2012 (compared to a growth of 21.3% in 2011 and 24.2% in 2010), in line with the expansion of the Peruvian economy, which had GDP growth rate of 6.3% in 2012. Our past-due loan ratio (which includes loans under legal collection) was 1.70% at the end of 2012 (compared to a ratio of 1.46% at the end of 2011 and 1.44% at the end of 2010). We had a coverage ratio (i.e., reserves for loans as a percentage of past-due loans) of 187.7% (compared to a ratio of 200.6% at the end of 2011 and 198% at the end of 2010), and our return on average net equity (ROAE) reached 20.2% in 2012 (compared to 22.2% in 2011 and 21.3% in 2010).

Banking segment

BCP

BCP’s year-end 2012 net income totaled US$660.8 million, which resulted in a contribution to Credicorp of US$645.8 million. This earnings contribution was 13.8% higher than the 2011 contribution (US$564.1 million) and higher than the 2010 contribution of US$464.4 million. This was mainly a product of our improved net interest income which was in turn attributable to a 22.5% increase in gross loans. As a result, BCP registered a ROAE of 25.6% in 2012.

Performance in 2012 was primarily a result of:

•

a 25.7% growth in net interest income, which was primarily due to the 22.5% expansion posted in gross loans (led by Retail Banking), which offset the significant increase in net provisions for loan losses (+75.7%) and interest expenses (+24.6%);

•

a 20.7% increase in non-financial income due to growth in banking service commissions (+17.5%) and higher net gains on sales of securities (+82.3%), which occurred as a result of the Bank’s ability to take advantage of market opportunities, primarily in government and BCR instruments;

•

an increase in earnings on foreign exchange transactions (+25.3%) due to higher trading volumes; and

•

high translation gains (US$ 63.1 million vs US$ 34.5 million in 2011) due to the fact that the Nuevo Sol appreciated more in 2012 (5.4% vs. 4% in 2011).

Performance in these areas enabled BCP to offset the company’s 75.7% increase in provisions for loan losses and 21.6% increase in operating expenses. The increase in provisions did not indicate a deterioration of portfolio quality and instead reflected the relative growth of retail banking as a percentage of our total loan portfolio. Retail banking segments have historically had higher levels of past-due loans and higher margins than other banking segments.

BCP’s higher operating expenses were a result of BCP’s higher salary expenses and employee benefits and higher administrative and general expenses. These higher operating expenses were exacerbated by the 5.4% appreciation of the Nuevo Sol against the U.S. Dollar over the course of 2012, as a significant portion of BCP’s operating expenses are denominated in local currency.

BCP’s total assets reached US$34.2 billion at the end of 2012 a 32.6% increase from the US$26.8 billion of total assets that BCP had as of December 31, 2011. As of December 31, 2010 BCP’s total assets were US$25.3 billion. The increase in total assets in 2012 was a result of the 22.2% expansion of BCP’s loans net of provisions, which totaled US$20.1 billion at the end of 2012.

The loan portfolio constituted 58.5% of BCP’s total assets at the end of 2012 (61.2% in 2011 and 55% in 2010). BCP’s total past-due loans reached US$370.4 million from US$258.3 million registered in 2011 (a 43.4% increase from the previous year) and US$209.1 million in 2010 while refinanced and restructured loans increased by 48.1%, from US$96 million in 2011 to US$142.2 million at the end of 2012 (US$76.7 million in 2010). The composition of BCP’s loan portfolio in 2012 changed significantly. As of December 2012, the average daily balances in our retail banking business accounted for 51.2% (compared to 46.9% in December 2011 and 42% at the end of 2010) and wholesale banking business accounted for 48.8% of BCP’s total portfolio (compared to 53.1% in December 2011 and 58% at the end of 2010). This outcome is a result of BCP’s strategic focus on increased market penetration in middle and lower segments, which are generally characterized by higher margins.

The average daily balances of BCP’s wholesale banking loans grew by 12.1% in 2012 (8.1% in 2011) as a result of the financing provided for large investments, inventories and working capital to keep pace with Peru’s dynamic economy. As a result, BCP continued to lead the Peruvian financial system with a market share of 47.2% for the corporate segment (44.3% in 2011) and 33.2% for the middle market (34.3% in 2011).

BCP’s retail banking portfolio continued its upward trend and grew 32.8% in 2012 (average daily balance). In terms of growth and yields, BCP’s small and medium enterprise (SME) loans were its best performing product, growing by 35.4% (measured in average daily balances) to a total volume of US$4.1 billion, followed by credit cards which grew 27.7% to US$1 billion, in each case as of December 31, 2012. Consumer loans grew 35.4% to US$1.8 billion, while mortgages expanded 29.8%, totaling US$3.2 billion.

On the liabilities side, BCP’s deposits reached US$22.8 billion on December 31, 2012 from US$17.6 billion in 2011 (a 30% increase from the previous year) and US$ 16.8 billion in 2010. This increase in deposits not only continues to reinforce BCP’s funding structure, as deposits account for 72.3% of all funding sources, but also serves to maintain BCP’s status as an industry leader with a market share of 33.7%. BCP’s time deposits grew 58.7%. Demand deposits were BCP’s largest deposit type, totaling US$7.6 billion as of December 31, 2012. Savings deposits, BCP’s second-largest deposit type, reached US$6.1 billion. Time deposits totaled US$6.7 billion while Severance Indemnity Deposits (CTS by its Spanish initials) totaled US$2.2 billion.

BCP’s issuance of bonds gained greater relevance within the funding structure. In April 2012, BCP completed a subordinated bond issuance for US$350 million. This transaction was entered into to fully align BCP with new capital requirements established by local regulators. As of December 31, 2012, the aggregate outstanding principal amount of BCP’s bonds totaled US$3,605 million (15.5% higher than the level registered in 2011).

BCP maintains adequate provisioning and long-term risk management policies. Its coverage ratio decreased to 188.6% in 2012 from 200.8% in 2011, which in turn was higher than the coverage ratio of 198.5% in 2010. Total cumulative provisions reached US$705.5 million as of December 31, 2012, which is 34.6% higher than provisions in the previous year.

In 2012, BCP continued expanding its channel network as part of its customer service focus. By providing quality and widespread customer access to BCP’s financial services, BCP sought to increase its penetration of the Peruvian market. In 2012, the network expansion plan focused on cost-efficient channels, by opening ATMs and Agentes BCP locations, which grew by 24.2% and 22.2%, respectively. At the end of 2012, BCP had a total of 1,844 ATMs (1,485 in 2011 and 1,159 in 2010) and 5,713 Agentes BCP (4,674 in 2011 and 3,513 in 2010). Agentes BCP are BCP representatives located in retail establishments, such as grocery and drug stores. As a result of this strategy, BCP’s average number of transactions in 2012 increased 17.8% compared to 2011 and its transactional business was therefore able to generate higher income from fees and commissions.

Overall, BCP’s results met our expectations and remained profitable in line with the growth of Peruvian economy, which posted a 6.3% GDP growth in 2012 despite uncertainty about the global economy.

BCP Bolivia

BCP Bolivia’s year-end 2012 net income totaled US$20.6 million, a 7.7% decrease from its 2011 net income (US$22.3 million). The decrease from 2011 to 2012 was attributable to a 363.4% increase in income tax expense associated with new taxes enacted in 2012. In 2011, net income was US$ 22.3 million, a 41% increase from 2010 net income (US$15.8 million). The increase in 2011 was primarily due to growth in interest income driven by growth in BCP Bolivia’s loan portfolio, and a 38% increase in gains on foreign exchange transactions.

In 2012, 2011 and 2010 BCP Bolivia maintained its position as one of the leading banks in Bolivia. In 2012, BCP Bolivia reported a return on average assets of 1.6%, a past-due loan ratio of 1.2%, and a coverage ratio of 301.3%, compared to industry averages of 1.5%, 1.5% and 291.2% respectively. In 2011, the bank either outperformed or equaled industry average in the following ratios, return on average assets (1.7%), past-due loan ratio (1.2%) and coverage ratio (314%) compared to industry averages of 1.7%, 1.7% and 281.1%, respectively. In 2010, return on average assets (1.4%), past-due loan ratio (1.5%) and coverage ratio (272.6%) were also on par with or exceeded industry averages of 1.4%, 2.2% and 220.7%, respectively

BCP Bolivia’s loan portfolio grew from US$ 602 million in December 2010 to US$ 758 million in December 2011 and US$ 901 million in 2012. The increase in 2011 was driven primarily by a 33% increase in wholesale banking loans while the increase in 2012 was driven by a 25% increase in retail banking loans.

Although BCP Bolivia made a positive contribution to our results in each of the last three years, the bank´s earnings generation capacity is increasingly under pressure due to a more stringent regulatory environment and a significantly higher tax burden.

Edyficar

Edyficar focuses on SME lending and, together with BCP, it held a 23.3%, 21.4% and 19.6% market share in terms of loans at year-ended 2012, 2011 and 2010, respectively. Edyficar closest competitor has a market share of 14.3% at the end of 2012. The consolidation of Edyficar’s results into BCP’s financial statements resulted in a total contribution to BCP of US$36.5 million in 2012, compared to US$26.2 million in 2011 and US$22.1 million in 2010.

Edyficar registered total assets of US$1,064.4 million, US$591 million and US$465.9 million at year-end 2012, 2011 and 2010, respectively; which consisted of US$708.6 million, US$479.1 million, US$336.2 million from the company’s net loan portfolio, its main asset, at year-end 2012, 2011 and 2010, respectively. Total liabilities increased to US$966 million in 2012 (compared to US$515.2 million in 2011 and US$413.5 million in 2010), which included US$301.6 million from banks. Net shareholders’ equity reached US$98.4 million, US$75.8 million and US$52.4 million at year-end 2012, 2011 and 2010, respectively.

As of December 31, 2012, Edyficar had a client base of 443,406 clients, representing an increase of 24.6 % compared to the client base reported in 2011. In 2011, Edyficar had a client base of 356,000 clients which represented an increase of 24.5% compared to the 286,000 clients reported in 2010. The average amount of an Edyficar loan was S/. 4,411 (approximately US$1,730) in 2012, S/. 3,837 (approximately US$ 1,423) in 2011, and S/.3,502 (approximately US$1,247) in 2010. Edyficar registered a past-due loan ratio of 3.9% at the end of 2012, a reflection of its portfolio quality (compared to 4.0% obtained in 2011 and 2010). Edyficar reached a ROAE of 26.5%, 22.9% and 25.2% in 2012, 2011 and 2010, respectively (including goodwill of US$ 50.7 million for each of the last three years) and an efficiency ratio of 54.2%, 55% and 56.1% in 2012, 2011 and 2010, respectively.

The acquisition of Edyficar was part of BCP’s strategy to capture a significant portion of the growth of the Peruvian SME segment, which is expected to expand significantly over the next several years. BCP intends to support Edyficar’s growth and development by improving its funding cost and structure and providing necessary capital and technology.

Atlantic Security Bank (ASB)

Despite low economic performance in the global economy, in 2012 ASB achieved an increase in net profit due to strategic allocation in its investment portfolio and an increase the volume of interest earning assets. ASB’s net earnings for 2012 were US$48.4 million, an increase of 17.8% compared to the US$41.1 million reported in 2011 and US$48.9 million reported in 2010. Credicorp received a contribution of US$48.4 million from ASB in 2012.

Net interest and dividend income in 2012 totaled US$38.6 million, which represented an increase of 21.0% compared to the US$ 31.9 million reported in 2011, which in turn represented a 13.1% decline compared to the US$36.7 million reported in 2010. This increase was primarily due to the ASB’s investment strategies, and increasing volume of interest earning assets. ASB also benefited from lower funding cost, as a result of changing LIBOR in 2012. Short-term customer deposits, which have interest rates that reset frequently, permitted ASB to pay low rates on deposits accounts while earning higher interest income on assets engaged for middle and longer terms. ASB’s financial income, which includes income from fees, the sale of securities, and foreign exchange operations, was US$18.6 million in 2012.

ASB’s total assets were US$1,768.5 million as of December 31, 2012, an increase of 16.1% compared to 2011. ASB’s total assets were US$1,523.5 million in 2011 and US$1,337.8 million in 2010. The increase in total assets from 2011 to 2012 was mainly a result of significant growth in the funds that ASB managed on behalf of its clients, which in turn is related to the positive performance of the Peruvian economy.

At the end of 2012, ASB’s assets under management totaled US$3,961 million, compared to US$3,194 million in 2011 and US$3,178 million in 2010. This growth was primarily a result of increases in the global positions of ASB’s customers and the market value of ASB’s portfolio.

Insurance segment

Grupo Pacífico

In 2012, Grupo Pacífico, which encompasses Pacífico Seguros, Pacífico Vida and Pacífico Salud , reported net income, after deducting minority interests, of US$58.9 million (compared to US$57.1 million of net income in 2011 and US$ 55.4 million in 2010). The contribution we received from Grupo Pacífico increased, from a gain of US$ 47.4 million in 2010 to US$ 65.6 million in 2011 and US$ 66.0 million in 2012. This contribution includes net income, after minority interest, as well as the participation of Grupo Crédito (a subsidiary of Credicorp) in the minority interest.

This increase in net income was primarily a consequence of Grupo Pacífico’s total premiums, which increased 17% in 2012 (from US$ 872.4 million to US$ 1,019.9 million) and 16% in 2011 (from US$ 751.9 million to US$ 872.4 million). A 23% increase in net earned premiums (NEP) and a 17.2% increase in financial income also contributed to the increase in net income.

We believe that there is substantial growth potential in Peru’s insurance market, given the industry’s weak market penetration. Efficiency and risk management will continue to be key indicators in measuring Grupo Pacífico’s performance, as we believe that capitalizing on synergies between the insurance business and the distribution channels will lead Grupo Pacífico to greater penetration in the insurance market. Developing alternative sales channels, efficiently utilizing BCP’s network, maintaining relationships and market share through traditional brokerage channels, and expanding services in underserved regions of Peru are essential components of Grupo Pacífico’s growth strategy for 2013.

Additionally, during 2012, Pacifico Salud continued its initiative (which launched in 2011) to create the largest private medical services network in Peru by investing an additional US$ 38.6 million to acquire entities that specialized in providing health and wellness programs, primary and specialized ambulatory services, and comprehensive acute care services, Entities acquired by Pacífico Salud as a part of this initiative include: (i) Clínica Belén S.A., (ii) Centro Odontológico Americano, (iii) Prosemedic S.A., (iv) Clínica Sánchez Ferrer S.A. and Inversiones Marsfe S.R.L., and (v) Bio Pap Service S.A.C. We believe that these acquisitions enable Pacífico Salud to directly benefit from this sector’s growth and to strategically defend against potential changes in the healthcare service supply chain, where vertical integration in the insurance business is becoming more frequent.

Pension fund segment

Prima AFP

During 2012, the growth of the Peruvian economy resulted in positive results for the Private Pension System (SPP by its Spanish initials), which experienced growth in new affiliates, contributors and collections during the year.

These economic conditions led to an increase in the value of funds under management by the SPP during 2012, which reached US$ 38.0 billion as of December 31, 2012 and represented a 25.1% year-over-year increase compared to December 31, 2011 (US$30.4 billion). As of December 31, 2010, SPP had US$31.1 billion in funds under management.

Prima AFP was able to strengthen its position in the market by adjusting its processes and organization to provide high-quality services and timely and transparent information to its clients. As a result, the contribution we received from Prima AFP in 2012 was US$ 35.0 million as compared to US$ 32.4 million in 2011. In 2010, Prima AFP’s contribution was US$25.5 million.

Funds under management at Prima AFP increased from US$ 9.5 billion in 2011 to US$ 12.0 billion as of December 2012. In 2010, this indicator reached US$ 9.8 billion. By year-end 2012, Prima AFP’s market share of total funds under management was 31.5%, representing a year-over-year increase. Prima AFP is the largest pension fund management company in Peru by funds under management.

Prima AFP’s revenues from commissions in 2012 totaled US$ 117.2 million, a 12.2% increase from 2011 when revenues from commissions totaled US$104.4 million. In 2010, revenues from commissions reached US$ 85.2 million. This improvement was a result of a stable and high-quality portfolio of contributing members.

To improve its operating results, Prima AFP will continue to focus on increasing efficiency and reducing costs. Emphasis will also be placed on improving Prima AFP’s long-term stability through improved risk management, which is one of the company’s highest priorities.

In 2012, a series of reforms to the SPP were implemented. These reforms are discussed in “Item 4. Information on the Company — (B) Business Overview— (11) Supervision and Regulation— (vii) Prima AFP.”

Investment banking segment

A strategic focus for Credicorp involves the regionalization of Latin American markets. This has been reflected in the creation of the MILA (by its Spanish initials), a Latin American integrated market -among Chile, Colombia and Peru. The MILA opens up opportunities to further integrate asset management, brokerage and corporate finance operations which can offer benefits for companies that have a significant presence in these markets. Since the formation of the MILA, Credicorp’s investment banking business is carried out through BCP Capital, Correval and IM Trust, which hold considerable market shares in the Peruvian, Colombian and Chilean markets, respectively. These three companies perform operations in three business lines: Asset Management, Sales & Trading and Corporate Finance.

Asset Management

In terms of asset management, BCP Capital posted a total of US$ 4,593 million in assets under management in 2012, which represented a market share of 39% at the end of 2012. This figure includes US$2,749 million of assets managed by BCP Capital’s mutual funds, Correval posted a total of US$ 1,534 million in assets under management, including mutual funds and investment funds managed. Correval’s assets under management represented market share of 4.3% at the end of 2012. Finally, as of December 31, 2012 IM Trust had a total of US$ 2,126 million in assets under management, including US$ 460 million in mutual funds and investment funds managed.

Sales & Trading

In 2012, BCP Capital traded a total of US$ 2,073 million in equity securities and US$ 511 million in fixed income securities, which represented a market share of 16.8%, Correval traded a total of US$ 9,505 million in equity securities and US$ 139,748 million in fixed income securities, which represented market shares of 12.9% and 11.6% respectively. IM Trust traded a total of US$ 5,620 million in variable income instruments and US$ 31,599 million in fixed income instruments, which represented market shares of 7.13% and 11.3% respectively.

Corporate Finance

In 2012, BCP Capital’s corporate finance business structured mid-term transactions totaling US$ 1,660 million. The primary transactions were:

a US$ 595 million syndicated financing (where BCP’s share was US$ 67 million) for Cerro del Águila S.A. to build a 500 MW hydroelectric station;

a US$ 240 million syndicated financing (where BCP’s share was US$ 60 million) for Shougang Hierro Perú S.A.A. to expand its plant; and

a US$ 150 million syndicated financing (where BCP’s share was US$ 60 million) for Tecpetrol del Perú S.A.C. to refinance debt.

Consolidated Contributions

The following table sets forth the contribution to the consolidated net income attributable to our equity holders by each of our principal subsidiaries:

	2010		2011		2012		Variation 2012/2011
	(U.S. Dollars in millions, except percentages)
BCP (1)		464.4		564.0		645.8		15	%
ASHC		48.8		42.5		48.4		14	%
Grupo Pacífico		47.5		65.6		66.0		1	%
PRIMA AFP and others (2)		10.6		37.2		28.6		-23	%
Total		571.3		709.3		788.8		11	%

(1) Includes Banco de Crédito de Bolivia, which contributed US$20.6 million in 2012, US$22.3 million in 2011 and US$15.8 million in 2010; and Edyficar, which contributed US$36.5 million in 2012, US$26.2 million in 2011 and US$21.5 million in 2010. This amount also includes BCP Colombia, Inversiones BCP Ltda., Inmobiliaria BCP, and Credifondo, Credibolsa and Creditítulos, as of October 2012.

(2) Includes Prima AFP (which recorded a net income of US$38.2 million in 2012, US$32.4 million in 2011 and US$25.5 million in 2010), BCP Capital (which includes Credifondo, Credibolsa, Creditítulos and BCP Financial Services, for November and December, 2012), Credicorp Securities, Credicorp Investments (which includes IM Trust), Credicorp Ltd. (which mainly includes expenses and the tax withheld in connection with the estimation of the dividends to be distributed to us by our Peruvian subsidiaries (BCP and Grupo Pacífico) and others.

(2)

Strategy

Credicorp was established to create a financial group that would benefit from synergies among the group’s companies and would become a leader within each business market in which the companies operate. In moving steadily toward achieving these strategic goals, we have become a leading financial group. However, we do not operate in a static environment, and the last four years have demonstrated how quickly and dramatically the world can change. Peru’s economic growth slowed significantly in 2009 as a result of the international financial crisis. In response to this, we took steps toward improving our long-term sustainability and worked to position our companies for growth as the Peruvian market continues to evolve. In 2010, Peru’s economy returned to the dynamism it showed in the pre-crisis period, and we continued, and completed in many cases, the implementation of various initiatives that were designed to ensure the sustainability of Credicorp’s business segments.

The Peruvian market offers one of the strongest growth opportunities in South America. In the banking, insurance and pension fund industries, market penetration by service providers remains low. Accordingly, our business plans incorporate strategies that will enable us to reach underserved segments of the Peruvian population and achieve higher returns on our capital. As our businesses expand, it becomes increasingly important for us to maximize efficiencies and control risk. Our strength in these areas is the cornerstone of our strategy to achieve healthy, sustained and profitable growth.

The growth strategies we have adopted for each of our companies include a focus on retail markets. Our strategy provides a launching pad for two points of financial inclusion: our Agente BCP covers the liabilities’ side by promoting banking penetration and providing access to credit, which gives low income sectors the opportunity to improve standards of living and become part of the country’s economic model for growth. Using our collective resources, we are developing information systems that can collect commercial sales information and provide us with the data we need to process scoring models by segment. This will enhance our ability to assess and control risk, as well as cross-sell our products between our business segments. In addition, mobile banking, which is a combined effort of BCP, Movistar and Mastercard, is concentrating on reaching new clients by offering them a transactional platform that introduces them to the financial system through a technology that has become widely used: the mobile phone. There are considerable opportunities to expand these initiatives and their ability to reach underserved segments of the Peruvian population positions us for growth.

Another strategic focus for Credicorp involves the regionalization of Latin American market, which has picked recently increased in relevance due to problem in developed markets. This has been reflected in the creation of the MILA, which we believe provides strong possibilities for growth. The integration of equity trading in Chile, Colombia and Peru has created the largest exchange in Latin America by number of issuers and the second-largest exchange in Latin America by market capitalization after the Brazilian BM&F Bovespa. Credicorp has seized this opportunity by acquiring Correval and IM Trust, which together with BCP Capital reflect our commitment to concretize our regional presence in the investment banking and capital markets sectors. We also continue to make strides toward greater integration of our companies by more extensively sharing our talents and experience.

(3)

Credicorp Operating Segments

Banking

The majority of our banking business is carried out through BCP, which is our largest subsidiary, BCP that held 30.4% of the Peruvian market share in loans as of December 31, 2012. A portion of our banking business is also carried out by ASB, which principally serves Peruvian private banking customers through offices in Panama. We conduct banking activities in Bolivia through BCP Bolivia, a full service commercial bank which maintained an 11.2% market share of current loans and a 11.1% market share of total deposits as of December 2012. BCP Bolivia is third with respect to loan market share and fifth with respect to deposit market share in the Bolivian banking system.

Our banking business is organized into (i) wholesale banking activities, which are carried out by BCP’s Wholesale Banking Group, and (ii) retail banking activities, which are carried out by BCP’s Retail Banking Wealth Management Group (RB&WM)

To increase our visibility and raise our market share in the retail banking industry, BCP bought Edyficar, which is a scaled, high-growth and highly profitable microfinance business. Edyficar has a solid risk management strategy and a proven track record in both loan portfolio growth and social impact. Edyficar provides financial services for low-income micro-entrepreneurs and unbanked communities.

We apply uniform credit policies and approval and review procedures, which are based on conservative criteria adopted by BCP, to all of BCP’s subsidiaries. Our Chief Operating Officer (COO) is in charge of setting the general credit policies for our different business areas. These policies are set within the guidelines established by Peruvian financial sector laws and SBS regulations (See “(11) Supervision and Regulation—(ii) BCP”) and the guidelines set forth by our Board of Directors.

We also conduct our banking business through Atlantic Security Bank (ASB), which is a Cayman Islands licensed bank that engages in private banking, asset management and proprietary investment.

Our deposit-taking operations are principally managed by BCP’s RB&WM group and ASB’s private banking group. See “(12) Selected Statistical Information—(iv) Deposits.”

Insurance

We conduct our insurance operations exclusively through Grupo Pacífico and its subsidiaries, which provide a broad range of insurance products. Grupo Pacífico focuses on three business areas, property and casualty insurance through Pacífico Seguros, life and pension insurance through Pacífico Vida, and health care insurance through Pacífico Salud. Grupo Pacífico, like other major Peruvian insurance companies, sells its products both directly and through independent brokers and agents. Directly written policies tend to be for large commercial clients, as well as for life and health insurance business lines.

Pension funds

Credicorp conducts all of its pension fund activities through its private pension fund administrator Prima AFP. During 2012, Credicorp through its subsidiary Prima AFP was able to strengthen its position in the market by adjusting its processes and organization to provide high-quality services, with timely and transparent information to its clients.

In early 2012, the pension fund market developed at a stable competitive level. Later in the year the adoption of a new law, the Law Reform the Private Pension, dominated the market. The Law to Reform the Private Pension System establishes a new process for integrating new affiliates into the SPP. See “Item 4. Information on the Company— (B) Business Overview— (11) Supervision and Regulation— (vii) Prima AFP.”

Growth in the Peruvian economy and emerging markets resulted in an increase of Prima AFP’s funds under management. Funds under management grew from US$9.8 billion as of December 2010 to US$9.5 billion as of December 2011 and US$12.0 billion as of December 2012. Prima AFP’s RAM indicator (monthly insurable remuneration), increased from 32.2% in 2011 to 32.4%, achieving (31.6% in 2010). By RAM, Prima AFP has the largest market share in Peru.

Investment Banking

Credicorp’s regional investment banking platform is built mainly around three business units: Asset Management, Sales & Trading and Corporate Finance Investment Banking Business. These platforms are present in each of the companies through which we operate, BCP Capital, Correval and IM Trust (Peru, Chile and Colombia, respectively).

The following chart shows our organizational structure as of December 31, 2012:

(1)

The brand is Credicorp Capital.

(2)

BCP Chile owns 60.6% of IM Trust (Chile).

(3)

Investment bank business split from BCP.

(4)

BCP Colombia owns 51% of Correval S.A. (Colombia). This entity will be transferred to Credicorp Investments after obtaining the approval from the Colombian supervisor.

The following chart shows our future organizational structure once the regional investment banking platform is consolidated under Credicorp Investments, a subsidiary of Credicorp:

BCP Capital

BCP Capital conducts our investment banking business in Peru and was established through the split of an equity block of BCP. This split resulted in a reduction of BCP’s assets, liabilities and net equity in an amount of US$71.2 million, US$18.0 million and US$53.2 million, respectively. Assets transferred included Credibolsa S.A.B., Creditítulos S.T., Credifondos S.A.F.M. and BCP’s investment banking activities. Through each of these businesses, BCP Capital is a market leader in the investment banking segment and it offers a wide range of products and services to corporate and retail clients.

Correval

Correval is a brokerage firm formed in 1987. Over the last 25 years the Company has retained its leadership in the Colombian brokerage market, with all of its products accounting for almost 12% market share in Colombian brokerage industry over the last four years. Correval has a nationwide presence through its offices in Bogota, Medellin, Cali and Barranquilla. Correval also opened an office in Panama in early 2011.

The firm offers a wide array of products and services, including asset management (mutual and discretionary funds), sales and trading (foreign exchange, fixed income, stock, derivatives and hedging products, e-trading) and corporate finance (M&A and advisory, among others).

IM Trust

IM Trust is one of the leading financial corporations in Chile, with over 25 years of experience in the Chilean market. Since 2005, it has placed over US$ 17 billion in transactions in capital markets, advising on complex operations such as M&A and on domestic and international investments. In early 2008, IM Trust expanded operations to Peru and Colombia.

The firm provides services in corporate finance (capital markets and M&A), sales & trading (equity, fixed income, and derivatives), and asset management (investment funds, mutual funds, advisory and mandates), servicing the retail, corporate, institutional and private segments.

Credicorp Securities Inc. (CSI)

CSI is a broker dealer which operates in the state of Florida in the United States and provides access to the global securities markets by providing a wide spectrum of brokerage services.

CSI began operations in March 2003 as an Introducing Broker Dealer (IBD) and Registered Investment Advisor (RIA). Its RIA license was canceled in July 2009, as CSI transferred the functions formerly performed under this license to the Asset Management Division at BCP. The objectives of CSI are to (i) canalize its affiliate’s brokerage activities and those of its customers and products and (ii) new customers into the brokerage business. As an IBD, CSI can open custodial accounts on behalf of its customers only with a clearing broker. Pershing LLC, a subsidiary of The Bank of New York Mellon Corporation serves as CSI’s clearing broker

CSI’s core business includes purchasing and selling stocks, fixed income and money markets instruments. Its brokerage services involve corporate debt securities, U.S. Treasury bonds, equities, exchange-listed over-the-counter (OTC) securities, mutual funds (both domestic and international), hedge funds, options and structured products. Mutual fund sales are not actively solicited.

CSI also is approved to engage in trading for its own account in fixed income instruments. It is subject to a $100,000 minimum net capital requirement and files a Focus Report on a monthly basis.

(4)

BCP and Subsidiaries

4.1

General

BCP’s activities include wholesale banking, retail banking and wealth management and treasury. As of December 31, 2012, the consolidated operations of BCP ranked first among Peruvian banks in terms of total assets (US$35.5 billion), total loans (US$20.0 billion), deposits (US$22.8 billion) and net equity (US$2.8 billion). At the end of 2012, BCP’s loans, on an unconsolidated basis, represented approximately 34.1% of total loans in the Peruvian banking system. BCP’s loans represented 33% and 33.6% of total loans in the Peruvian banking system at the end of 2011 and 2010, respectively. BCP’s deposits represented approximately 37.3% of total deposits in the Peruvian banking system (higher than the 34% and 36.3% registered at the end of 2011 and 2010, respectively).

As of December 31, 2012, BCP had the largest branch network of any commercial bank in Peru with 365 branches. BCP also operates an agency in Miami and a branch in Panama. In addition, as of December 31, 2012, BCP Bolivia and Edyficar had 41 and 162 offices, respectively, through which they serve their clients.

As of and for the year ended December 31, 2012, BCP accounted for 87.7% of our total assets, 84.3% of our net income and 65.3% of our net equity. BCP’s operations are supervised and regulated by the SBS and the Central Bank.

BCP groups its client base according to the following criteria:

	Client Segmentation
Business	Group	Income/Sales (US$MM)
	Corporate	Higher than 50
Wholesale Banking Group (WBG)
	Middle-Market	From 8 to 50
	Affluent	At least an individual monthly income of S/. 5,000

Retail Banking Wealth Management Group (RB&WM)	Consumer	Focus on medium-low income individuals who receive their payroll through BCP

	Small Business	From 0.5 to 8 or total debt from 0.2 to 1.5

	Micro-Business	Up to 0.5 or total debt up to 0.2

The grouping was a result of an analysis which addressed factors beyond the simple size and volume of activity for each client, such as clients’ affiliation with other companies or groups, the degree of follow-up required, and their credit ratings.

4.2

Subsidiaries

BCP’s corporate structure consists of a group of local subsidiaries offering specialized financial services, which complement BCP’s commercial banking activities. In addition to its local subsidiaries, BCP has an agency in Miami, a branch in Panama and a subsidiary in Bolivia.

BCP and its principal subsidiaries as of December 31, 2012 are as follows:

•

Banco de Crédito de Bolivia, or BCP Bolivia, is BCP’s commercial bank in Bolivia. BCP owns 95.92% of BCP Bolivia (directly and indirectly) and we hold the remaining interest. BCP Bolivia maintained an 11.2% market share of current loans and 11.1% of total deposits, and has a network of 41 offices located throughout Bolivia. BCP Bolivia owns one of Bolivia’s largest brokerage houses, Credibolsa S.A. Agente de Bolsa, and this subsidiary owns Credifondo SAFI Bolivia, a mutual fund administrator company. BCP Bolivia targets middle- and small-sized clients and offers a broad range of corporate, personal banking and leasing products. BCP Bolivia’s results are consolidated in BCP’s financial statements.

•

Empresa Financiera Edyficar S.A. was acquired in October 2009 and is 99.79 % owned by BCP. It is engaged in micro finance in Peru.

•

Solución Empresa Administradora Hipotecaria S.A. was established in 1979 under the name Solución Financiera de Crédito del Perú S.A. and is 100% owned by BCP. Its business included mortgage lending, consumer lending and SME financing. In the company’s shareholders meeting on November 19, 2009, Solución Financiera de Crédito del Perú S.A.’s shareholders decided to change the company from a finance company to a mortgage administrator company and to change the company’s name to Solución Empresa Administradora Hipotecaria S.A. These changes were necessary because, according to Peruvian Law, no person is allowed to be the owner of two financial institutions of the same type. As a result, the company will primarily engage in the administration of mortgage portfolios. These changes were approved by the SBS through resolution SBS 47-2010 on May 21, 2010.

•

BCP Colombia is 100% owned by BCP. BCP Colombia, in turn, owns 51% of Correval (brokerage entity established in Bogota, Colombia). We intend to transfer this subsidiary to Credicorp Investments after obtaining approval from Colombian regulatory authorities.

•

Inmobiliaria BCP is the real estate subsidiary of BCP. It manages the sale of real estate that has been foreclosed or received in payment by BCP. Inmobiliaria BCP is 100% owned by BCP.

•

Inversiones BCP was incorporated in Chile in 1997, with the special purpose of investing in the stocks of Banco de Crédito e Inversiones (BCI) Chile. Inversiones BCP is 99.99% owned by BCP.

4.3

Business Lines

(i)

Wholesale Banking Group (WBG)

BCP’s WBG competes with local and foreign banks. BCP’s traditional long term relationships with medium-sized and large corporate companies provide its WBG with a competitive advantage.

BCP’s WBG maintained a positive trend in loan placements, posting average portfolio levels of US$6,982 million in 2010 (a 18.7% year-over-year increase), US$8,391 million in 2011 (a 20% year-over-year increase) and US$9,225 million in 2012 (a 10% year-over-year increase). It also maintained its leadership in the wholesale banking market with a 39.1% market share in loans. BCP has established longstanding client relationships with virtually all of the major industrial and commercial groups in Peru. The WBG provides its customers with cash management solutions, short- and medium-term loans in local and foreign currencies, foreign trade-related financing and lease and project financing.

The WBG is divided into the following two divisions:

•

Corporate and International Division (CID):

WGB’s corporate banking subdivision, which provides loans and other credit and financial services, focuses on serving large-sized companies that have an annual turnover of over US$50 million, audited financial statements and dominant market positions in their particular brands or product areas. Even if clients do not meet all of these criteria, BCP may service firms under category if they belong to large economic groups from industries that are important to Peru’s economy.

WGB’s international banking and leasing subdivision manages BCP’s relationship with financial institutions (locally and abroad), trade products, international operational services and financial leasing products.

WGB’s cash management and transactional services subdivision develops products and services to support clients’ daily activities of cash management, collections, payments, and investments, among others.

•

Middle-Market Division (MMD):

WGB’s middle-market banking subdivision serves mid-sized companies. In determining which clients are best served by this subdivision, WBG considers a mix of different characteristics, such as annual revenues, financial leverage, overall debt and product penetration and complexity. BCP’s middle-market clients’ annual revenues generally vary from US$8 million to US$50 million, and are serviced nationwide by 13 BCP regional managers.

WGB’s institutional banking subdivision focuses principally on serving profit and non-profit organizations, state-owned companies and other major institutions.

Net interest income from BCP’s WBG reached US$187.5 million in 2010, US$260 million in 2011 and US$284 million in 2012. Fee income was US$141.5 million in 2010, US$165.6 million in 2011 and US$192.5 million in 2012.

Corporate and International Division (CID)

BCP continues to meet the needs of its corporate clients, assisting them with financial services, cash management solutions and short and medium-term financing through the CID. As a result, BCP’s corporate banking loans grew from US$5,155 million in 2010 to US$5,477 million in 2011 and US$5,870 million in 2012. These increases, coupled with a very low PDL ratio (less than 0.1%), enabled the CID to obtain a net interest and fee income of US$ 217.3 million in 2012, which represents 45.6% of the total net income of the WBG. The CID obtained a net interest and fee income of US$ 204.3 million in 2011 and US$ 151.7 million in 2010.

The moderate pace of the CID’s growth is due to (i) intense competition from foreign banks, which finance their operations at lower costs due primarily to the fact that the BCR has high reserve requirements for foreign currency for banks that operate locally, and (ii) the availability of alternative financing through capital markets. Nevertheless, BCP has an industry leading 46.24% of the market share for loans.

The CID offers a broad range of products and tailors its product offerings to meet each client’s unique requirements. In general, this division is expected to offer high-value-added products and services, particularly cash management services, at competitive prices.

The majority of the CID’s financing is provided to fund capital expenditures and investments, sales, international trade and inventories. The CID also offers medium and long term financing (in almost all cases backed by real guarantees), financial leasing, factoring, domestic collections and nationwide fund transfers.

Guarantees received by this division consist of (i) receivables in the case of sales financing, (ii) warrants or pledges over inventory, in the case of inventory financing and (iii) collateral, in the case of financing for fixed asset acquisitions and improvements to infrastructure.

International Banking Unit

The International Banking Unit focuses on obtaining and providing short-term funding for international trade. Medium-term lines of credit funded by international commercial banks and other countries’ governmental institutions are also provided to clients. In addition, this unit earns fees by confirming guarantees issued by international banks and other fees as a result of the international payment business. The International Banking Unit also promotes international trade activities with its local clients by structuring trade products and services, organizing and sponsoring conferences and advising customers through a wide range of trade products.

Since September 2008, the International Banking Unit has also been supervising our trade back-office unit (International Operations). BCP maintains business relationship with correspondent banks, development banks, multilateral and export credit agencies in countries around the world. At present, BCP manages credit lines for foreign trade transactions, working capital and medium and long-term investment projects.

BCP’s import letters of credit, collections and transfers amounted to US$ 9.4 billion in 2010, US$12.4 billion in 2011 and US$14.3 billion in 2012, which represented 34.0% of total Peruvian imports. The growth in our import letters of credit corresponded with the growth in total Peruvian imports. According to SUNAT, total Peruvian imports grew from US$29.9 billion in 2010, to US$ 37.9 billion in 2011 and US$ 41.9 billion in 2012. This trend was primarily due to higher demand for raw materials and capital goods.

BCP provided foreign trade financing for exports of a volume that reached US$18.1 billion in 2012, a figure that represented 40.1% of total Peruvian exports and that increased from US$ 19.8 billion in 2011 and US$ 16.6 billion in 2010.

BCP has access to a wide network of foreign correspondent banks and can offer several internationally competitive products to its customers. It has correspondent banking relationships and uncommitted credit lines with more than 80 banks for foreign trade operations and financing of working capital as well as medium and long-term investment projects. BCP also has a direct presence abroad through its agency in Miami and its branch in Panama.

During 2012, Peru had a very active leasing market, which increased from US$ 6.4 billion in 2010 to US$7.7 billion in 2011 and US$9.1 billion in 2012. Following this trend, BCP has consolidated its leadership in the leasing business by slightly increasing its market share from 38.8% in 2010 to 37.5% in 2011 and 39.2% in 2012.

Cash Management and Transactional Services Unit

Our Cash Management and Transactional Services Unit is in charge of developing transactional services that handle the exchange of information and money transfers among corporations, midsize companies, institutions and micro-business companies. This unit is responsible for both, the development and marketing of transactional (or “cash management”) services for our corporate and institutional clients. We offer more than 30 products aimed at strengthening ties with clients and assuring their loyalty. Our electronic channels allow us to reduce costs and increase fee income. Services managed by this unit include collections (automated trade bill collection), automated payments (loans to personnel and suppliers’ accounts, reverse factoring and money transfers), electronic office banking, electronic lending solutions and cash management through checking accounts with special features.

In 2012, our transactional services accounted for 15.5% of the BCP’s overall earnings. The monthly average number of checking accounts increased by 4% during two consecutive years and fee revenue increased 7% in 2011 and 30.4% in 2012, due to an increase in commissions from our checking accounts. Other sources of income, such as bills of exchange and collection services have increased by 8.6% and 37.1%, respectively, compared to 2011, due to performance across all market segments. Additionally, the acquisition of new clients, together with the number of established clients in our office banking service (Telecredito), has generated a growth of 58.7% in the number of transactions (compared to 36.3% in 2011). Tax collections grew 35.1% in 2012 and 12.3% in 2011. We continue to introduce electronic products that will eventually replace the conventional promissory notes. Likewise, the transaction volume generated by reverse factoring increased 10% in 2012 and 16% in 2011.

Middle-Market Division (MMD)

BCP’s MMD provides banking services targeted to medium-sized companies from various economic sectors. The products offered to middle-market clients are similar to those offered to corporate banking clients. The three major types of products are:

•

Revolving credit lines to finance working capital needs and international trade financing;

•

Stand-by letters of credit and bond guarantees; and

•

Structured long-term and medium-term financing, through loans or financial leasing.

BCP has identified several opportunities to engage middle-market companies, particularly in Peru’s manufacturing, wholesale, retail, fishing, agribusiness and construction industries. BCP has created dedicated areas which focus on attending to the needs of these specific economic groups. BCP has a middle-market client portfolio of approximately 6,855 companies, including 1,180 economic groups. Generally, these clients are not listed on any stock exchange; however in certain cases they have accessed capital markets either for bonds or commercial paper. These companies are typically family-controlled but professionally managed, and their financial information is audited.

Since 2009, the MMD has revised its customer segmentation policies. The division includes mature companies that will eventually become part of our corporate segment, traditional mid-size companies and a group of growing small cap companies.

The MMD has continued to make progress toward implementing its strategic goals by:

•

Creating dedicated points of contact to meet the needs of its customers more efficiently;

•

Streamlining its lending processes to provide middle-market customers with prompt service;

•

Introducing new electronic financial products to make its services more accessible to customers;

•

Incorporating sophisticated technical tools in order to implement a risk-based pricing model;

•

Focusing on fee income, and loan portfolio growth;

•

Introducing a new commercial planning model that employs an efficient and standardized methodology; and

•

Maintaining risk controls using sophisticated tools created by BCP’s Risk Management Unit.

According to internal reports, net interest income and fee income from the MMD reached US$177.3 million in 2010, US$221.7 million in 2011 and US$259.3 million in 2012. This trend was consistent with the performance of the MMD loan portfolio, which reached US$2,398 million in 2010, US$3,032 million in 2011 and US$3,601 million in 2012. As of December 31, 2012 BCP had a market share of 35% in this segment.

We believe that middle-market companies have benefited from the overall economic improvements in Peru over the past few years. Loan quality problems have been addressed through procedures and organizational changes that have focused on improving the loan approval and credit-risk assessment processes.

Institutional Banking Unit

BCP’s Institutional Banking Unit, which operates within the MMD, serves 1,310 clients throughout Peru. In Lima, a specialized team in wholesale banking serves governmental entities, educational institutions, religious organizations, international bodies, non-governmental organizations, and microfinance institutions. In other provinces, a specialized remote wholesale banking team partners with BCP’s retail banking area to serve clients.

The annual average deposit amount in BCP’s Institutional Banking Unit (Lima and provinces) increased 7% reaching US$2.4 billion in 2012 (compared to 5.9% from the previous year). The Institutional Banking Unit is important because its clients offer great potential for generating fee income and other cross-selling opportunities. BCP’s strategy in this unit is focused on building customer loyalty by offering customized services at competitive rates and providing outstanding service quality. Our institutional banking typically requires remote office banking, collections and automated payroll payment services.

(ii)

Retail Banking and Wealth Management (RB&WM) Group

At the end of 2012, RB&WM - related loans represented 45% of BCP’s total loans, while deposits accounted for 60% of BCP’s total deposits. Net income from RB&WM lending constituted 37.8% of BCP’s net income, while income from related fees constituted 62.5% of BCP’s total fee income.

In 2012, the RB&WM Group’s loan volumes increased to US$ 9,351 million in 2012from US$ 7,093 million in 2011 and US$5,322 million in 2010. This 31.8% growth in 2012 is a result of sound increases in all lending businesses, which include home mortgages, installment loans and credit cards, and small and micro business loans. With respect to deposits, RB&WM - related deposits have also shown consistent growth. Deposits increased 27.8% in 2012, and totaled US$13,342 million as of December31, 2012. Deposits totaled US$10,443 million as of December31, 2011 and US$ 9,061 million as of December 31, 2010.

With the segmentation of its retail client base, BCP is able to focus on cross-selling its products and improving per-client profitability. The RB&WM Group has undertaken several projects to improve one-on-one marketing techniques and tools for the sale of its products to all market segments. BCP’s management expects the RB&WM businesses to continue being one of the principal growth areas for BCP’s activities.

BCP’s RB&WM serves high net worth individuals and small-sized companies with annual sales levels of up to US$8 million. BCP’s objective is to establish profitable long-term relationships with its broad client base, using segmentation strategies that satisfy the specific needs of each type of client. BCP’s retail distribution strategy changed at the beginning of 2007, when BCP started using the branch network as the center for all transactional and commercial activities. BCP now has a commercial division, in charge of most direct sales forces and branches, which in turn are organized on a geographic level. Each branch is responsible for servicing and selling products to three customers groups: affluent, small business and consumer. In addition, each branch manager is responsible for overseeing the different channels offered within the branch, such as account managers, customer service representatives and tellers. Telemarketing, mid-size business banking and real estate developer financing are not managed directly by local branches because of the specialty level and high growth potential associated with these products.

Since 2008, BCP has made an unprecedented investment in infrastructure and human resources to support its “banking the unbanked” market penetration strategy in Peru. As a result, between 2010 and 2012, BCP experienced substantial growth in its various channels, including 2,926 new customer contact locations (33 branches, 694 ATMs and 2,199 Agentes BCP). Demonstrating its leadership in attracting new customers, BCP now services over four million clients with its network of 365 branch offices, 1,844 ATMs and 5,713 Agentes BCP (these figures do not include the customer contact locations under Edyficar’s management, which we account for separately).

Affluent Banking

BCP is constantly improving the value proposition it offers to affluent customers to increase their loyalty and ultimately their profitability. In May 2012, BCP created a new super affluent segment called BCP Enalta. This segment and the Private Banking segment operate under the Wealth Management Group.

Private Banking is a segment composed of customers that have over US$ 400,000 available for investment. Customers in private banking receive not only local but also global investment advice. Its value plan is composed of (i) high quality standards in client service by expert account managers, (ii) close and personalized service, (iii) special interest rates, and (iv) exclusive branches. Customers in this segment total approximately 3,000.

Customers served by the BCP Enalta segment must have monthly incomes in excess of US$ 10,000 or have at least US$200,000 available for investment. BCP Enalta customers have access to six exclusive branches in Lima, where they may perform financial transactions and obtain personalized advice from investment, insurance and loan experts based on their risk profiles and financial needs. BCP Enalta also offers customers: (i) access to exclusive products, (ii) specialized account managers and/or expert phone banking, (iii) preferential service by tellers at branches, and (iv) preferential interest rates on loans. BCP Enalta has approximately 12,000 customers. The Wealth Management Group generates 15% of the RB&WM Group’s revenue, 10% of the RB&WM Group’s loan volume and 18% of its deposit volume.

BCP’s mass affluent customers must have a positive credit record and a monthly income of at least US$2,000. They receive a differentiated value plan which includes: (i) access to innovative products, (ii) dedicated customer services channels such as specialized account managers and/or expert phone banking, (iii) preferential service by tellers at branches and (iv) preferential interest rates on loans. Approximately 102,000 of the mass affluent clients are serviced through specialized account managers responsible for improving per-client profitability and achieving long-term relationships through personalized service, cross-selling and share of wallet strategies. Account managers are also responsible for new customer acquisition. BCP has approximately 206,000 mass affluent customers. The mass affluent banking segment generates 25% of the RB&WM Group’s revenue while managing 4% of the RB&WM Group’s total customer base, 30% of its loan volume and 23% of its deposit volume.

Small Business Banking

BCP’s Small Business Banking Segment accounts for approximately 514,000 clients. Customers are divided into two groups with different business models, services levels, and product access. The first group is top-end small business banking, which serves approximately 13,200 clients with debts between US$0.2 million and US$1.5 million and/or annual sales between US$0.5 million and US$8 million. The next group serves approximately 500,700 small business clients, which have debts up to $0.2 million and/or annual sales up to US$0.5 million.

According to BCP’s internal reports, the Small Business Banking loan portfolio grew from US$1,707 million in 2010 to US$2,310 million in 2011, and by the end of 2012 the loan portfolio was US$3,092 million. In terms of deposits, this group increased deposits from US$1,860 million in 2010 to US$1,885 million in 2011 and US$2,237 million by the end of 2012.

Through Edyficar, BCP also serves the microfinance market, and as of December 31, 2012, it registered 433,406 clients with a total loan portfolio equivalent to US$750 million, which represented an increase of 48% compared to the level registered at the end of 2011. Comparing year end 2010 to 2011, loan balances also grew 47% from US$345 million to US$ 507 million. As of December 31, 2012, Edyficar had a client market share of 12%, making it second in terms of loans within the microfinance segment. The aggregate market share of Edyficar and BCP in the microfinance segment totaled 23.3% at the end of 2012, and combined, they have the highest market share in the microfinance segment (BCP’s micro-finance operations are part of the Small Business Segment).

Consumer Banking

Our Consumer Banking Area is in charge of developing strategies for the retail customers who are not included in affluent banking or small business banking. Its customer base consists of approximately 4.1 million medium to low income individuals. Consumer Banking focuses on customers who receive their payroll through BCP (which represent slightly more than 1.1 million clients). Its strategies vary from basic acquisition of new accounts for wage-earners with special terms regarding fees and interest rates, to more sophisticated, aggressive cross-sell and retention programs that expand benefits to non-banking products (i.e., access to discounted products) and access to payroll advances.

Mortgage Lending

As of December 31, 2012, BCP was the largest mortgage lender in Peru with a market share of 33.7% of total mortgage loans in the Peruvian banking system. This was largely the result of BCP’s extensive marketing campaigns and its improvements procedures for extending credit and establishing guarantees.

BCP expects the mortgage lending business to continue to grow because of:

•

low levels of penetration in the financial market;

•

increasing demand for housing;

•

availability of funds for the Peruvian government’s MiVivienda low-income housing program; and

•

the current economic outlook for controlled inflation and economic growth in Peru.

BCP had US$3,182 million in outstanding mortgage loans as of December 31, 2012 (as compared to US$2,530 million at year-end 2011 and US$2,012 million at year-end 2010).

All of our mortgage-financing programs are available to customers with minimum monthly income of US$400. In the past, the Peruvian government sponsored a home ownership program known as the MiVivienda program, which provided assistance to purchasers of homes valued at up to US$60,000. Under the program, BCP financed up to 90% of the appraised value of a property (in either U.S. Dollars or in local currency) where monthly mortgage payments did not exceed 30% of the client’s stable net income. The maximum maturity of the mortgage loans BCP offered under the program was 25 years.

In May 2006, the original MiVivienda program was terminated. However, local banks (with government approval) launched a similar project, known as MiVivienda2, to which proprietary funds contribute. In addition, in March 2007, BCP created a new program financed by the government called Mi Hogar, which targeted people with a lower income profile. The conditions of the new program are almost identical to those of the first MiVivienda program, except that all financing is in local currency. In June 2009, the Peruvian government re-launched the MiVivienda program with the objective of financing mortgages between US$17,000 and US$60,000 using government funds (the government offers guarantees to the lending bank or financial institution through Corporación Financiera de Desarrollo S.A., COFIDE). Simultaneously, they re-launched their product, Techo Propio, to finance mortgages between US$7,000 and US$17,000. Both programs are intended to develop affordable housing in the country. In 2012, nearly 9,926 MiVivienda loans were sold, 33.6% of which were sold through BCP.

In 2011, BCP stopped offering variable and LIBOR-based home mortgages. BCP now only offers fixed interest rates on home mortgage loans denominated in both U.S. Dollars and Nuevos Soles. BCP’s mortgage portfolio is predominantly fixed rate and U.S. Dollar-denominated.

As of December 31, 2012, mortgage loans in the Peruvian banking systems totaled approximately US$ 9,432 million, representing 14.8% of total loans in the Peruvian banking system and only 4.8% of the Peruvian GDP. Comparatively, as of December 31, 2012, mortgage loans accounted for 16.4% of Credicorp’s total loan portfolio, with an average LTV (loan-to-value) of 66% and past-due-loan ratio of 1.3%. Through its subsidiary BCP, Credicorp has increased lending to lower socio-economic segments of the population in Peru through programs sponsored by the government (Mi Vivienda and Mi Hogar). Mortgage loans to this sector represent approximately 13.9% of Credicorp’s total mortgage loans and 1.53% of total loans. The Company’s total portfolio also includes mortgage loans granted in Bolivia, which represent 1% of its total loans and have an average LTV of 55.4%.

The real estate markets in Peru have been more active than markets in Bolivia in recent years, as a result of the shortage of housing in both countries and continued growth in GDP per capita. Along with this growth, Credicorp has experienced an increase in the volume of mortgage loans it grants per year. Mortgage loans are associated with low losses because of their high LTV, and they have the added benefit of generating opportunities for cross selling other banking products, which has had a positive impact on Credicorp’s results of operations.

Consumer Lending (Credit Cards and Installment Loans)

Consumer lending, credit cards and installment loans have grown significantly as improving economic conditions have led to increased consumer spending in Peru. BCP expects the strong demand for these products to continue. In addition to interest income, BCP derives income from customer application, maintenance, retailer transaction merchant processing, finance and credit card penalty fees.

Peru’s economic growth has had a major impact on the consumer credit market, which grew by a total of 15% in 2010, 22% in 2011 and 15% in 2012. The outstanding balance of consumer loans (monthly average) in Peru is slightly under US$12 billion, consisting of US$4.5 billion in credit card loans and US$7.3 billion in installment loans. BCP’s market share in consumer lending has consistently increased since 2010, growing from 19.6% to 21.8% by year-end 2012. This growth in consumer lending was achieved while maintaining a PDL ratio (for over 30 days) of below 5%.

During 2010 and 2011 installment loans grew 12% and 27%, respectively. In 2012, these loans grew by another 23%. This result was due, in part, to a strategic change by BCP, which was designed to broaden its customer base.

In the credit card business, BCP continued to apply segmented strategies. BCP continues to offer value to its high-end customers through partnerships with the airline LAN and with Primax, a related chain of gas stations. These programs, coupled with BCP’s own travel program, enabled BCP to reach record levels, both in points that clients gained for using their credit cards and in points that clients spent to obtain products or services available under loyalty plans. To attract customers in the lower income segment, BCP is streamlining its risk assessment and card delivery processes and generating partnerships with other retailers.

In 2011, the RB&WM Group launched a new product called Movistar BCP MasterCard Credit Card, in partnership with Movistar, a global leader in the telecom business. The product is designed to strengthen BCP’s position in Peru’s low income market and it will be the first MasterCard credit card offered by BCP. In addition, the Movistar BCP MasterCard Credit Card will complement our existing AMEX and VISA products.

BCP has been improving its credit monitoring systems and optimizing its scoring models, which include, among others, behavior, payments and income forecasting. As a result, BCP achieved an increase of over US$340 million in outstanding balances form credit cards from December 31, 2010 through December 31, 2012. According to BCP’s internal records, the number of active credit cards has constantly increased from 510,000 in 2010, to 763,000 in 2011 and 910,000 in 2012.

In addition, BCP has developed sales capacities in alternative channels, such as sales through telephone contact centers, which now represent 40% of total credit card sales (compared to 23% in 2010).

(iii)

Treasury

Treasury, Foreign Exchange, Derivatives and Proprietary Trading

BCP’s Treasury and Foreign Exchange Groups are active participants in money market and foreign exchange trading. These groups manage BCP’s foreign exchange positions and reserves and are also involved in analyzing liquidity and other asset/liability matters. The trading desk plays an important role in short-term money markets denominated in Nuevos Soles and in other currencies. It has also been active in the auctions of certificates of deposit by Peru’s central bank as well as in financings through certificates of deposit, interbank transactions and guaranteed negotiable notes, among other instruments.

BCP’s derivative group helps companies, ranging from SME to large corporations, hedge their market risks. This group offers forwards, FX options, interest rate swaps, cross currency swaps as well as tailor-made derivatives for its clients. The group also offers Overnight Indexed Swap (OIS) in local currency for local institutional clients. In addition to its local presence, the derivative group has a regional presence, serving clients in the Andean region. BCP’s derivative group is closely supervised by BCP’s treasury risk unit, which includes professionals trained in best risk practices in international markets. This allows BCP to minimize risk and provide competitive prices to its clients.

BCP adheres to international best practices in terms of cash management. In 2007, BCP created the Assets and Liabilities Management Service (or ALM) which is responsible for managing its balance sheet under the Asset and Liabilities Committee (or ALCO) oversight. ALM is responsible for managing BCP’s balance sheet and for accepting reasonable interest rate and liquidity risks through management of the short- and long-term transfer rates.

BCP’s proprietary trading consists of trading and short-term investments in securities, which includes instruments from various countries. These short-term investments are primarily made to facilitate BCP’s treasury management and corporate finance efforts.

Additionally, as of December 31, 2012, investments available-for-sale and held-to-maturity totaled US$7,671 million, which represented 18.8% of Credicorp’s total assets. Approximately US$4,207 million are financial instruments rated in Peru, of which nearly 70% are instruments from the Peruvian Central Bank (the Peruvian Government’s current rating is BBB in both domestic and foreign currency, according to Moody’s) and approximately 16% have local ratings equal to or above A-. Approximately US$3,464 million of Credicorp’s investments available-for-sale and held-to-maturity are financial instruments rated abroad, of which 74.7% hold international ratings equal to or above BBB-. Approximately 68.0% of Credicorp’s total investments available-for-sale and held-to maturity are exposed to Peru country risk; and 11.8% are exposed to United States country risk.

4.4

Lending Policies and Procedures

The Bank has adopted a risk appetite framework and established objective metrics and thresholds to periodically monitor the Bank´s evolving risk profile. The framework was approved by the Board of Directors, and will be managed and monitored by the Risk Management Unit within the Bank’s Central Risk Management Group. The adoption of a risk appetite framework reflects the Bank´s commitment to aligning its forward-looking business strategy with its corporate risk vision.

BCP’s uniform credit policies and approval and review procedures are based upon conservative criteria and are uniformly applied to all of its subsidiaries. These policies are administered in accordance with guidelines established by Peruvian financial sector laws and SBS regulations. (See “—(11) Supervision and Regulation—(ii) BCP,” and the guidelines set forth by our board of directors.)

BCP’s credit approval process is based primarily on an evaluation of each borrower’s repayment capacity and commercial and banking references. BCP determines a corporate borrower’s repayment capacity by analyzing the historical and projected financial condition of the company and of the industry in which it operates. Other important factors that BCP analyzes include the company’s current management, banking references, past experiences in similar transactions, and the quality of any collateral to be provided.

For the evaluation of BCP’s corporate borrowers, credit officers analyze the client’s ability to repay obligations, determine the probability of default of the client using an internal risk rating model, and define the maximum credit exposure that BCP wants to hold with the client.

BCP’s individual and small business borrowers are evaluated by considering the client’s repayment capacity, a documented set of policies (including, among other issues, the client’s financial track record), and, in most cases, credit scores, which assign loan-loss probabilities relative to the expected return of each market segment. In BCP, about 80% of credit-card and consumer-loan application decisions are made through automatic means. Mortgage and small business loan applications decisions are made by credit officers who use credit scores and profitability models as inputs for their evaluations and report to a centralized unit.

Our success in small business and personal lending areas depends largely on BCP’s ability to obtain reliable credit information about prospective borrowers. The SBS has an extensive credit bureau which has expanded its credit exposure database service to cover businesses and individuals that have borrowed any amounts from Peruvian financial institutions. This database includes risk classifications for each borrower: “Normal,” “Potential Problem,” “Substandard,” “Doubtful” and “Loss.”

BCP has a strictly enforced policy that limits the lending authority of its loan officers. It also has procedures to ensure that these limits are adhered to before a loan is disbursed. Under BCP’s credit approval process, the lending authority for middle market, small business, and personal loans is centralized into a specialized credit risk analysis area, which is operated by officers that have specific lending limits. In addition to the controls built into the loan approval workflow systems, the credit department and BCP’s internal auditors regularly examine credit approvals to ensure that loan officers and credit analysis officers are complying with lending policies.

The following table briefly summarizes BCP’s policy on lending limits for loan officers and credit risk analysis officers. Requests for credit facilities in excess of the limits set forth below are reviewed by BCP’s COO, executive committee or, if the amount of the proposed facility is sufficiently large, board of directors.

In US$ thousands	Risk without collateral or with only personal collateral or guarantee		Risk with preferred Guarantees (1)
Board of Directors		Regulatory limit		Regulatory limit
Executive Committee		US$ 350,166		US$ 350,166
Chief Operating Officer		US$ 60,000		US$ 60,000
Risk Division Manager/ Credit Division Manager		US$ 13,500		US$ 27,000
Credit Risk Manager		US$ 4,500		US$ 14,400
Credit Risk Chiefs		US$ 1,800		US$ 5,400
Retail Credit Risk Manager		US$ 1,200		US$ 2,000

(1)

Preferred guarantees include deposits in cash, stand-by letters, securities and other liquid assets with market price, mortgages, non-real estate property guarantees and assets generated by leasing operations. The limit for the Executive Committee is 10% of the Regulatory Capital of BCP as of December 2012.

BCP believes that an important factor in maintaining the quality of its loan portfolio is the selection and training of its loan and risk officers. BCP requires loan officers to have degrees in economics, accounting or business administration from competitive local or foreign universities. In addition, training is based on a three-month “Bank Specialization Program”. Trainees in this program are taught all aspects of banking and finance. After the training program finishes, trainees are hired as loans officers and receive specialized training in credit risk. Loan officers also receive training in specific matters throughout their careers at BCP. Laterally-hired officers generally are required to have prior experience as loan officers.

BCP operates in substantial part as a secured lender. As of December 31, 2012, approximately US$11.6 billion of our loan portfolio and contingent credits were secured by collateral, which represents 49.6% of the total loan portfolio based upon our unconsolidated figures, as compared to 48.9% in 2011 and 45.4% in 2010.

Liquid collateral is a small portion of BCP’s total collateral. In general, when BCP requires collateral for the extension of credit, it requires collateral valued at between 110% and 150% of the principal amount of the credit facility granted. The appraisal of illiquid collateral, in particular real estate assets, machinery and equipment, is performed by independent experts when required for specific reasons.

Pursuant to a Peruvian regulation (Article 222° under Law 26702) that become effective in December 1998, the existence of collateral does not affect the loan classification process. For Peruvian accounting purposes, secured loans (or the portion of any loans covered by collateral) that are classified in Class “B,” “C,” or “D” risk categories considered as substandard loans (See “Item 4. Information on the Company- (B) Business Overview -(12) Selected Statistical Information -(iii) Loan Portfolio - Classification of the Loan Portfolio”) have a lower loan loss provision requirement than similar unsecured loans. If a borrower is classified as substandard or below, then BCP’s entire credit exposure to that borrower is so classified.

BCP conducts unannounced internal audits on borrowers’ financial statements, consistent with the local banking regulations of the jurisdictions in which it operates.

4.5

Deposits

Deposits are principally managed by BCP’s Retail Banking Group. The main objective of BCP’s Retail Banking Group operations has historically been to develop a diversified and stable deposit base in order to provide a low-cost source of funding. This deposit base has traditionally been one of BCP’s greatest strengths. BCP has historically relied on the more traditional, stable, low cost deposit sources, which it considers to be its core deposits: demand deposits, savings and CTS deposits. CTS deposits, or Severance Indemnity Deposits, are funded by companies in the name of their employees. CTS deposits amount to one month’s salary per year and may be withdrawn by the employee upon termination of employment, subject to certain exceptions. Exceptions include disposing of 40% of the CTS deposit made in May 2010 and 30% of CTS deposit made in November 2010. Since the year 2011, employees have been able to dispose 70% of the excess of six gross monthly remunerations.

As of December 31, 2012, deposits represented 69.8% of BCP’s total source funding. BCP’s extensive branch network facilitates access to this source of stable and low-cost funding. BCP’s corporate clients are also an important source of funding for BCP.

4.6

Support Areas

BCP’s commercial banking operations are supported by its Risk Unit, which evaluates and helps administer credit relationships, establishes credit policies and monitors credit risk. See “—(4) BCP and Subsidiaries—(v) Lending Policies and Procedures.”

BCP’s Planning and Finance Unit is in charge of planning, accounting and investor relations functions and is also responsible for analyzing the economic, business and competitive environment in order to provide the information necessary to support senior management’s decision-making.

In addition to the above, BCP’s Administration Group is generally responsible for information technology, quality control, institutional and public relations, human resources, the legal department, security, maintenance and supplies.

Information Technology (IT)

BCP believes its technology platform as one of its main competitive strengths and continues to invest in this area to maintain its competitive position in the banking sector. During 2012, to continue improving efficiency, reduce time-to-market and strengthen our contingency and business continuity plan, BCP entered into agreements with strong technology companies such as IBM, Tata Consulting Services (Subsidiary of Peru - TCS) and Everis Peru S.A.C. (Everis). IBM supports the administration and operation of BCP’s hardware and servers, IBM also supports BCP’s continuity plan through the IBM IT center in Sao Paulo, Brasil. TCS and Everis provide services for the maintenance and development of some of BCP’s applications.

BCP’s expenses on IT totaled US$136.2 million in 2010, US$152 million in 2011 and US$190.2 million, in 2012. The 25.1% increase in 2012 was primarily due to an expansion in the channel network and the related increased transactional activity. BCP’s investments in IT totaled US$51.9 million in 2010, US$75.1 million in 2011 and US$58.7 million in 2012.

Marketing

BCP continually works to protect and strengthen the BCP brand. BCP has a proactive attitude towards competition and is focused on change and innovation. The company promotes its products and services by constantly improving them. In this manner, BCP aims to grow and be a leader in every retail financial market by offering the highest possible value for its clients and shareholders. During 2012, BCP continued its strategy which was based on generating value.

BCP also continues to develop strategies to approach different retail customer groups through our customized outreach strategy know as Customer Relationship Management (CRM). This has enabled BCP to reach customers proactively and provide them with personalized offers and terms, in a timely manner while using cost effective channels and maximizing efficiency.

Another key element for BCP in creating value is innovation. BCP has launched several innovative products, including new service products for wealthy customers and new benefits for customers whose wages are paid directly into their BCP accounts. BCP is also constantly evaluating and improving its internal systems, operations and organizational structure in order to achieve leaner and more efficient processes which enhance the banking experience for our customers. Since 2009, BCP has streamlined processes by making adjustments to branch layouts, tellers, ATM cash management and mortgage lending practices. We have also implemented more standardized and sustainable commercial practices.

Quality service is a permanent goal for BCP and the company aims to proactively meet or exceed regulations promulgated under the Consumer Protection Law. BCP has made significant investments in improving service and keeping customers informed about its products and services, with a special focus on reducing claims.

4.7

Anti-Money Laundering Policies

BCP has a Compliance System that consists of specific policies, processes and programs. Its objective is to ensure that the organization complies with and consistently applies local and international regulations while guaranteeing that the highest standards for ethics, integrity and professional conduct are observed at all times in all of its companies.

One of the programs in the Compliance System is the Anti-Money Laundering and Financing of Terrorism Effort, which aims to prevent and detect instances in which the bank’s products and services are used to commit these types of crimes. The program also monitors compliance with legal regulations and best practices established by the Financial Action Task Force (FATF), an inter-governmental body that promulgates standards for combating money laundering, terrorist financing and other related threats to the integrity of international financial systems.

The Compliance System also includes a Regulatory Compliance Program, which identifies new regulations and evaluates current norms to ensure that they are implemented within the deadlines established by BCP. Most recently, the Normative Compliance Program has focused on the Foreign Account Tax Compliance Act (FATCA) and the Dodd Frank Act.

In addition, the Compliance System includes a risk focus that monitors BCP’s capacity to address fines or other situations that may adversely affect the corporation’s reputation. This focus allows us to identify possible compliance risks, determine relevant control mechanisms and levels of criticality, and determine the appropriate course of action.

Given that BCP’s employees play a fundamental role in promoting a compliance culture across the organization, we hold specialized and on-going courses in both in-situ and virtual formats. These programs provide our employees with the tools they need to conduct operations in a manner consistent with BCP’s policies.

BCP’s Compliance System is constantly reviewed and updated. BCP has a Code of Ethics and good practices, which are complemented by guidelines for conduct and anti-corruption policies in the case of conflicts of interest. This helps guarantee that the Corporation’s policies are in step with the best international standards, which generates a positive effect on the organization’s reputation and increases client confidence.

4.8

Employees

As of December 31, 2012, BCP had 22,538 employees (including 1,536 employees from BCP Bolivia, and 3,129 employees from Edyficar) compared to 18,616 employees as of December 31, 2011 and 16,148 employees as of December 31, 2010.

(5)

Atlantic Security Bank (ASB)

ASB is a Cayman Islands licensed bank that engages in private banking, asset management and proprietary investment. It was incorporated in September 1984, in the Cayman Islands and principally serves Peruvian-based customers. ASB has an international licensee branch in Panama, through which it conducts all commercial business.

As of December 31, 2012, ASB had total assets of US$1,768.5 million and shareholders’ equity of US$219.8 million. As of December 31, 2011, ASB total assets and shareholders’ equity reached US$1,523.5 million and US$189.2 million, respectively (compared with US$1,337.8 million and US$205 million, respectively, as of December 31, 2010). ASB reported a net income of US$48.4 million in 2012, compared with US$41.1 million in 2011 and US$48.9 million in 2010.

ASB’s clients have traditionally provided a stable funding source, as many are long-time clients who roll-over deposits on a permanent basis. As of December 31, 2012, ASB had approximately 3,400 clients, 91% of whom were Peruvian. ASB deposits reached US$1,117.7 million in 2010, US$1,320.6 million in 2011 and US$1,396.8 million in 2012.

ASB trades on its own account primarily by making medium-term investments in investment grade fixed-income securities and sovereign debt. Non-investment grade fixed-income securities represent a distant second in terms of portfolio allocation, while equity and hedge-fund positions, though present, are less relevant. As of December 31, 2012, ASB’s investment portfolio was US$802.5 million, compared to US$811.6 million in 2011 and US$751.6 million in 2010.

Third-party asset management is an important activity for ASB. Total AuMs (Assets under Management) reached US$3,961 million as of December 31, 2012, compared to US$3,193.6 million as of December 31, 2011 and US$3,177.7 million as of December 31, 2010. These assets range from direct unsolicited securities to ASB managed mutual funds.

ASB also maintains a sizable loan portfolio. Total loans outstanding were US$801.1 million, US$606.1 million and US$468.1 million at year-ended 2012, 2011 and 2010, respectively. Between 94% and 96% of these loans were guaranteed by client’s deposits or investments. At the year-end 2012, for example, only US$36.9 million of this total represented unsecured loans. This level of securitization is reflected in ASB’s level of non-performing loans, which is consistently less than 1% of its total loan portfolio. The majority of ASB’s loans are granted to Peruvian individuals and companies, while those that are not are otherwise directed exclusively to Latin American borrowers.

ASB’s overall investment strategy, the general profile of its investment portfolio and its specific investment decisions are reviewed on a weekly basis by an investment committee. Its credit risk by counterparty, including direct and indirect risk, is evaluated on a consolidated basis and covers all activities that generate credit exposure such as interbank placements, commercial loans and securities investment. Market, liquidity and operational risks are monitored by ASB’s Risk Management Unit, which in turn reports to and is supervised by a Corporate Risk Committee, an Asset-Liability Committee and the Board of Directors.

(6)

Grupo Pacífico

We conduct our insurance activities through Pacífico Seguros and its subsidiaries, Pacífico Vida and Pacífico Salud, which we collectively refer to as Grupo Pacífico. We provide a broad range of insurance products (including property and casualty, life and health). In 2012, the eight most significant business lines collectively generated 85 % of total premiums written by Grupo Pacífico compared to 83.2% in 2011and 82.7% in 2010 (see table below).

US$ Dollars in Thousands	2012		2011		2010
TOTAL WRITTEN PREMIUMS(*)		1,023,373		874,957		756,534
Health Insurance (**)		315,691		253,067		219,757
Individual Annuity Line		106,234		99,228		92,018
Automobile		104,539		91,167		79,827
Disability and Surv.		79,096		57,338		45,785
Fire and Allied Lines		77,180		74,809		60,846
Individual Life		74,339		64,866		56,250
Credit Life		60,816		43,328		32,445
Group Life		53,610		43,746		38,525
Others		151,868		147,408		131,081
* Without eliminations.
** Includes Medical Assistance

Grupo Pacífico is the second leading Peruvian insurance company, with a market share of 28.5% based on direct premiums earned in 2012. This market share calculation includes premiums from Pacífico Seguros, PacíficoVida and Pacífico Salud and represents our total market share in the insurance market and the healthcare sector.

Pacífico Seguros total written premiums increased 10.8% in 2012 (from US$ 378.6 million in 2011 to US$ 419.5 million in 2012) and 13.5% in 2011 (from US$ 333.5 million in 2010 to US$ 378.6 million in 2011). NEP (written premiums net of reinsurance and of technical reserves) were US$ 269.6 million in 2012, US$ 228.9 million in 2011 and US$ 201.6 million in 2010.

In 2012 Pacifico Seguros net income amounted to US$ 13.7 million, compared to US$ 14.2 million in 2011 and US$ 28.2 million in 2010. The result observed in 2012 was due to an increase in the loss ratio from 54.4% in 2011 to 56.1% in 2012. This increase was mainly attributable to three severe claims in the first quarter of the year for a total of US$ 11.1 million. Nevertheless, the effect of those claims was mitigated by an increase in NEP (+17.8%) and the company’s excellent financial income, which increased 25.4% compared to 2011.

Pacífico Seguros
US$ Dollars in Million	2012		2011		2010
Total written premiums		419.5		378.6		333.5
Net earned premiums (NEP)		269.6		228.9		201.6
Financial Income		33.8		27.0		24.5
Net Income		13.7		14.2		28.2

Grupo Pacífico property insurance lines are sold through agents, brokers and Grupo Pacífico’s own sales force, while life insurance is sold exclusively by Grupo Pacífico’s sales force. The 10 largest brokers in the property and casualty as well as in the private health segment accounted for approximately 45.5% of total written premiums as of December 31, 2012 (compared to 44.7% as of December 31, 2011 and 44.4% as of December 31, 2010).

Pacífico Vida is Grupo Pacífico’s life insurance subsidiary. In 2012, Pacífico Vida recorded total written premiums of US$392.7 million a 21% increase in comparison with 2011. In 2011, Pacífico Vida total premiums increased 17.4% compared to 2010.

The change in total premiums during 2012 was primarily a result of higher premiums reported in Pacífico Vida’s Credit Life (40.4%), Obligatory Insurance for Disability and Survivorship (37.9%), and Group Life (22.5%) lines. Pacífico Vida performance in these areas was consistent with the improved performance of the Peruvian life insurance market overall.

Pacífico Vida reported a 27.8 % market share based on direct premiums earned in 2012.

Credit Life written premiums, which involve credit cards and mortgage loans (through the obligatory credit life insurance that accompanies these type of credit products pursuant to corporate risk policies), increased by 39.8% in 2012 (compared to a 33.5% in 2011). The strong gains from these premiums are attributable to Pacífico Vida’s partnership with Banco de Crédito as well as the opening of new sales channels like Edyficar and Cencosud.

Disability and survivorship written premiums increased by 37.9% in 2012 (compared to a 25.2% increase in 2011). The result observed in 2012 was due to: (i) higher insurance rates from January 2012 and (ii) an increase in monthly insurable amounts. We currently have the highest market share in this sector of the insurance industry with 30%.

Group Life total written premiums increased by 22.5% in 2012 (compared to an increase of 13.6% in 2011), mainly through increases in the premiums collected from our Complementary Work Risk Insurance (SCTR by its Spanish initials) which rose 31%, and our Vida Ley insurance product, which rose 18.6%. Employers in high-risk industries (SCTR) and employers whose personnel work over four years (Vida Ley) are required by law to purchase these types of insurance. This growth was primarily the result of microeconomic gains experienced across the country, the higher number of formal businesses in Peru and the strong development of Peru’s mining and construction industries.

Individual Life written premiums increased by 14.6% in 2012 (compared to an increase of 15.3% in 2011), above the market growth. This result was mainly due to the increase in sales of Seguro de Vida Inversion Oro and Seguro de Vida Inversión, our improved quality of sales service and the steady development of our distribution channels, which include our main channel, our agencies, our Bancassurance unit, brokers, sponsors and part time channels. As a result, we had a 39.1% market share, leading this sector of the insurance industry.

Pacífico Vida’s Individual Annuity line increased by 7.1% in 2012 compared to an increase of 7.8% in 2011), exceeding the market growth rate of -0.6%. This result was mainly due to our decision to increase our direct sales force in Lima and in other provinces throughout Peru.

Pacífico Vida generated a net income of US$ 33.9 million in 2010, US$ 50.0 million in 2011 and US$59.6 million in 2012.

Total Written Premiums	Pacífico Vida
US$ Dollars in Thousands	2012		2011		2010
Personal Accident		18,611		16,285		11,528
Individual Life		74,339		64,866		56,250
Group Life		53,610		43,746		38,525
Credit Life		60,816		43,328		32,445
Individual annuity		106,234		99,228		92,018
Disability and Surv.		79,096		57,338		45,785
Net Income		59,645		50,009		33,875

Total written premiums in Health Insurance amounted to US$315.7 million during 2012. This line is classified into the following contracts: (i) Medical Assistance policies whose written premiums amounted to US$ 104.6 million and (ii) collective health policies whose written premiums amounted to US$ 211.1 million as described the paragraph below.

Pacífico Salud reported total written premiums of US$211.1 million in 2012, a 21.3% increase in comparison with 2011. In 2011, the total premiums of Pacífico Salud increased 17.2% compared to 2010. Nevertheless, the company registered a net loss of US$5.7 million in 2012, compared to the gain of US$ 2.8 million in 2011 and US$ 6.4 million in 2010. This decline in 2012 was mainly due to the increase in the loss ratio from 80.4% in 2011 to 83.5%, which was a consequence of several factors, including (i) the increase in competition that exerted downward pressure premium on fees, (ii) the increase cost, driven by the economic growth, associated with client demand for health services more frequently and of a more complex nature and (iii) the increase in cost attributable to service providers that was generated the higher investment in the health sector. The necessary steps had been taken to control the net loss ratio going forward.

Pacífico Salud
US$ Dollars in Million	2012			2011			2010
Total Premiuns		211.1			171.6			146.4
Net Loss Ratio		83.60	%		80.40	%		78.80	%
Net (Loss) / Income		-5.7			2.8			6.4

One of the main strategies of Grupo Pacifico is to benefit from the fact that demand for health services in Peru has been growing in line with higher income per capita during recent years; while existing health service providers have been largely unable to keep pace as a result of the limitations implicit in their corporate and organizational structures. Through this strategy, we also seek to benefit in the long term from inflationary trends in the health services sector. To accomplish this, we invested approximately US$82.7 million in the second half of 2011 to create the largest private medical services network in the country by acquiring majority shares to directly manage: (i) El Golf, San Borja and OncoCare in Lima; (ii) the Galeno clinics in Arequipa; (iii) Laboratorios ML, a clinical laboratory; and (iv) Doctor+, which is a house call/ambulance service.

In 2012, Grupo Pacífico has ended the first phase of the integration of its health service providers network, by the acquisition of controlling shares in the following entities: (i) Clínica Sánchez Ferrer, (ii) Clínica Belén, (iii) Centro Odontológico Americano, and (iv) Laboratorio Arias Stella.

Another reason for the decline in net income in 2012 was the increase in general expenses related to our newly acquired medical subsidiaries as described in the paragraph above. These expenses were related to improving infrastructure, attracting the required human talent employees and reorganizing current operations under Credicorp’s standards. Expenses needed to consolidate the vertical integration process that started in 2011 and ended in 2012.

In 2012, Grupo Pacífico’s collaboration agreement with John Hopkins took effect. This relationship has enabled Grupo Pacífico to advance in the implementation of processes, protocols and medical indicators added to its investment in infrastructure under the supervision of HKS (a leader in the design of medical facilities). This agreement also will enable Grupo Pacífico to develop the best network of health and medical services in Peru.

(i)

Underwriting, Clients and Reinsurance

Underwriting decisions for substantially all of Pacífico Seguros property & casualty, and health insurance risks are made through its central underwriting office. Pacífico Seguros own risk management staff inspects most medium and medium-to-large commercial risks prior to underwriting, whereas third party surveyors are employed to inspect smaller risks. Underwriting guidelines are approved by Pacífico Seguro’s Board of Directors on a yearly basis.

Pacífico Seguros transfers risks to reinsurers in order to limit its maximum aggregate potential losses and minimize exposures on large individual risks. Reinsurance is placed with reinsurance companies based on the evaluation of the credit quality of the reinsurer, terms of coverage and price. Pacífico Seguros’s main reinsurers in 2012 were, among others, Lloyd’s, Munich Re, Swiss Re, Hannover Re, Gen Re and Everest Re. Premiums ceded to reinsurers represented 17.8% of gross premiums in 2012. Pacífico Seguros acts as a reinsurer on a very limited basis, providing excess facultative reinsurance capacity to other Peruvian insurers that are unable to satisfy their reinsurance requirements.

Pacífico Seguros historically has obtained reinsurance for a substantial portion of its earthquake-related insurance portfolio through excess loss reinsurance treaties. In addition, in 2012 Pacífico negotiated proportional reinsurance support for this portfolio. Pacífico has property catastrophe reinsurance coverage in place that covers its probable maximum loss under local regulatory requirements. However, there can be no assurance that a major catastrophe would not have a material adverse impact on Pacífico’s financial condition and/or its operations.

In respect of life insurance, underwriting decisions are made with the support of the subsidiary Pacífico Vida’s Suscription Management and its technical staff. Underwriting guidelines are approved by reinsurer’s policies if it is necessary. Pacifico Vida mainly holds excess of loss reinsurance contracts for Individual Life, Personnal Accident, Group Life and Credit Life products; for the case of Work Compensation Risk Insurance holds a quota share contract. Catastrophic reinsurance contracts covers all company’s lines (Individual Life, Personnel Accident, Group Life, Credit Life, Complementary Work Risk Insurance (SCTR) and Disability and Survivorship), except Individual Annuity Pacifico Vida’s reinsurers in 2012 were: Swiss Re, Hannover Re, Gen Re and Scor Vie. Premiums ceded to reinsurers represented 4.3% of gross premiums in 2012.

(ii)

Claims and Reserves

Net claims paid by Grupo Pacífico as a percentage of net premiums written (i.e., the net loss ratio) in 2012 reached 63% a decrease compared to the net loss ratio of 64.2% and 63.6% recorded in 2011 and 2010, respectively.

Pacífico Seguros’s net loss ratio increased from 54.4% in 2011 to 56.1% in 2012 (50.5% in 2010). This increase was mainly attributable to three severe claims in the first quarter of the year for a total of US$ 11.1 million.

The net loss ratio in the life insurance lines increased from 62.3% in 2011 to 64.9% in 2012 (66.6% in 2010). The net loss ratio in the health businesses also increased from 80.4% in 2011 to 83.6% in 2012 (78.8% in 2010).

Grupo Pacífico is required to establish (i) claims reserves related to pending claims in its property-casualty business, (ii) reserves for future benefit obligations under its in-force life and accident insurance policies, and (iii) unearned premium reserves related to that portion of premiums written that is allocated to the unexpired portion of the related policy periods (collectively, “Technical Reserves”). Grupo Pacífico establishes claims reserves with regard to claims when reported, as well as for incurred but not reported (IBNR) claims. Such reserves are reflected as liabilities in Grupo Pacífico financial statements.

Grupo Pacífico records as liabilities in its financial statements actuarially determined reserves calculated to meet its obligations under its life and accident policies and its pension fund underwriting business. These reserves are determined using mortality tables, morbidity assumptions, interest rates and methods of calculation in accordance with international practices.

Pursuant to SBS regulations, Grupo Pacífico establishes pre-event reserves for catastrophic risks with respect to earthquake coverage. See “—(11) Supervision and Regulation—(v) Grupo Pacífico—Reserve Requirements”. In accordance with IFRS principles, the pre-event reserves and income charges for these catastrophic reserves are not considered in Credicorp’s consolidated financial statements.

Even though Grupo Pacífico maintains reserves to reduce its exposure, there is always some risk that claims might exceed Grupo Pacífico’s reserves. To address this issue we evaluate our reserves estimates on a periodic basis, by means of sensitivity analysis, IBNR´s sufficiency analysis and explanation of variations.

(iii)

Investment Portfolio

Grupo Pacífico’s investments are made primarily to meet its solvency equity ratio and to provide reserves for its claims. Grupo Pacífico manages its investments under three distinct portfolios, designed to contain sufficient assets to match the liabilities of the group’s property and casualty (Pacífico Seguros), life and annuities lines (Pacífico Vida), and health care lines (Pacífico Salud). Each portfolio is managed under the authority of its own committee, which reviews portfolio strategy on a monthly basis. Grupo Pacífico’s invests in local and international markets, emphasizing investments in Peru, the U.S. and Latin America. Grupo Pacífico’s has adopted strict policies related to investment decisions. Its investment strategies and policies are reviewed and approved by Grupo Pacífico’s Board of Directors. Senior management also takes a leading role in devising investment strategies.

Grupo Pacífico’s investment strategy also considers an appropriate match of currencies related to its assets and liabilities. A significant portion of Grupo Pacífico’s premiums is denominated in U.S. Dollars and most of the group’s assets are also invested in this currency. In 2012, 73.5% of the gross premiums received by Pacífico Seguros were denominated in U.S Dollars, compared to 77.3% in 2011 and 78.4% in 2010.

As part of its improvement process, Grupo Pacífico has been adjusting its investment policy in order to apply best international risk management practices and tools. Grupo Pacífico also has incorporated into its investment policy recommendations of Solvency II and Basel II, with a view to developing better hedges against the group’s liabilities; especially in connection with obligations vis-à-vis Grupo Pacífico’s insured customers.

As of December 31, 2012, the market value of Grupo Pacífico’s portfolio (which includes Pacífico Seguros, Pacífico Vida and Pacífico Salud) was US$1,834.25 million, which included mainly US$135.6 million in equity securities and US$1,660.7 million in fixed income instruments. The portfolio is well diversified and it follows an asset-liability management general strategy which is based on the assets (portfolio) regarding liabilities (reserves): (i) cash flow and duration matching (ii) currency matching and (iii) to improve the capital structure of the company.

Grupo Pacífico’s consolidated financial income increased 17.3% in 2012 (from US$ 103.4 million in 2011 to US$121.3 million) and 24.1% in 2011 (from US$ 83.3 million in 2010 to US$ 103.4 million). These amounts are net of eliminations of transactions between entities that belong to Grupo Pacífico. The increase observed in 2012 is mainly attributed to the growth of Pacífico Vida’s business lines (especially the life insurance business) and Pacífico Seguros’s property and casualty businesses.

Pacífico Seguros had a market value portfolio of US$135.6 million at year-end 2012 which included equity investments and fixed income instruments. Pacífico Vida’s market value at year-end 2012 was US$1,594.9 million and mainly consisted of high grade long-term debt instruments. Pacífico Salud had a small portfolio with a market value of US$17.1 million.

Pacifico Seguros’ 2012 financial income grew to US$33.8 million, an increase of 25.2% compared to US$27.0 million in 2011; a year earlier in 2010 financial income was US$24.5 million. This improved performance was mainly due to US$20.7 million in capital gains earned on investments mainly in equity and fixed income markets, which reflected our strategy of maximizing capital appreciation.

Pacífico Vida’s 2012 financial income (before eliminations) grew to US$89.0 million, an increase of 24.0% compared to US$ 71.8 million in 2011; a year earlier in 2010 financial income was US$ 66.9 million. This increase was mainly due to (i) growth in the annuities business line, (ii) growth of US$ 10.8 million in capital gains earned on investments in equity and (iii) fixed income markets and the fact that the Peruvian consumer price index grew in 2012, which had a positive effect of US$7.9 million on inflation adjusted bonds.

(7)

Prima AFP

In early 2012, Peru’s pension fund market developed at a stable competitive level. Later that year, the Peruvian Government published the Law to Reform the Private Pension System. The law sets forth a new process by which individuals, which are called affiliates, may become beneficiaries affiliated with the SPP. Under the new law, auctions are held every 24 month to determine which company will have the exclusive right to manage the accounts of new SPP affiliates for a two year period, the first such period beginning in February 2013 and ending in January 2015. A competitive bidding process took place in September 2012 to determine which company would manage the accounts during a transitional period from September 2012 through the end of January 2013.

Prima AFP won the September auction and managed the accounts during the transitional period. In December 2012, Peru held its first auction to determine who would manage the accounts for the first full two year period. A new participant in the system won the tender, but the new participant did not have the operational capacity to manage new affiliate accounts as of February 1, 2013. As a result, Prima AFP will continue to manage the accounts of new affiliates until the new company is ready to begin operations. In the commercial field, Prima AFP is focused on recruiting new affiliates and maintaining its existing affiliate portfolio. When Prima AFP was awarded to the new affiliates in the fourth quarter of 2012 it reduced the commission fee applicable to all affiliates from 1.75% to 1.60%. In relations with the RAM indicator (Prima AFP’s basis remuneration for revenues), Prima AFP obtained an increase from 32.2% to 32.4%, achieving, once again, the leadership in the market share.

Productivity by Prima AFP’s sales management helped Prima AFP preserve a quality portfolio and increase its monthly insurable remuneration, which is the basis of its revenues.

In 2012, Prima AFP managed 1.3 million SPP affiliate accounts, an increase of 11.3% compared to and the number of accounts Prima AFP managed 2011. This represented 25.4% of market share. In 2010, Prima AFP managed accounts for 1.1 million affiliates.

Productivity also contributed to Prima AFP’s market share. With regard to the collection of contributions, Prima AFP has the largest market share in Peru, at 32.8% as of December 2012.

In 2012, Prima AFP’s pension fund investment portfolio increased as a result of solid improvements in key economic indicators from Peru and other emerging countries. The positive performance of local financial markets was reflected in the value of funds under management, which increased from US$9.5 billion as of December 2011 to US$12.0 billion as of December 2012. Given that pension funds are long-term investments, it is best to observe their returns over a long period. Over the last 60 months, Prima AFP’s annual return on its three funds was 6.71%, 5.75% and 2.36%, respectively. In 2012, Prima AFP registered total revenues of US$117.2 million and profits of US$38.2 million, a 17.9% year-over-year increase. This was accomplished by expanding Prima AFP’s revenue base and controlling its operating expenses.

(8)

Competition

(i)

Banking

Overview

In recent years, several foreign companies have showed interest in entering the Peruvian market while financial companies already in Peru have taken steps to expand operations and develop new business. In 2006, the Canadian bank with the largest international presence formed Scotiabank Peru pursuant to a merger between Banco Wiese Sudameris and Banco Sudamericano. In addition, in 2006, one of the largest financial organizations worldwide entered the Peruvian market for the first time by forming HSBC Bank Peru.

In 2007, a financial corporation with ten years of operating history received authorization to convert into a bank. That same year, Banco Santander re-joined the Peruvian banking segment and started operations in October. In 2008, two foreign-owned banks initiated operations in Peru: Banco Azteca and Deutsche Bank (Peru), a subsidiary of the German bank of the same name. In 2009, Banco del Trabajo, a subsidiary of Scotiabank, started operations as a finance corporation (Crediscotia Financiera). In 2010 and 2011 no major commercial banks entered the Peruvian financial system. Finally, in 2012, Banco Cencosud from the Chilean group of the same name in alliance with the Peruvian group Wong, started operations in the first semester of the year.

While new entries into the Peruvian banking system over the last two years have not been as pronounced as entries in previous years, there is evidence that foreign-owned banks are taking steps to begin operations in the Peruvian market. For example, Itaú Unibanco, Banco Latinoamericano de Comercio Exterior (Bladex), Morgan Stanley Bank, Bank of Tokyo Mitsubishi and Sumitomo Mitsui Banking opened representative offices in Peru. In addition, a merger is expected between the rural savings and loan institution, Nuestra Gente (CRAC by its Spanish initials), and the finance corporation Confianza. In connection with the merger, the surviving entity is expected to begin operations as a Bank (Banconfianza), in early 2013. Banconfianza will become the second bank focus on the micro and small enterprises, in addition to Mi Banco.

Peruvian Financial System Evolution (2012)

According to the SBS, as of December 31, 2012, there were 65 financial institutions, including 16 commercial banks, 13 municipal and 10 rural savings and loan associations, 10 small-business development non-bank institutions, 11 financial companies, two leasing companies and three state-owned banks (not including the Central Bank): Banco de la Nación, COFIDE and Banco Agropecuario. In 2010, the opening of representative offices of four foreign banks (Banco Itaú, Banco Latinoamericano de Comercio Exterior – Bladex, Morgan Stanley Bank N.A., and Bank of Tokyo – Mitsubishi UFJ) was authorized by the SBS. Finally, in 2011, the SBS authorized Industrial and Commercial Bank of China – ICBC to establish a banking subsidiary in Peru denominated ICBC Perú Bank.

Major Peruvian Banks as of December 31, 2012	Assets			Deposits			Loans
BCP		36.8	%		37.4	%		34.6	%
BBVA Banco Continental		22.2	%		22.9	%		23.3	%
Scotiabank Perú		14.1	%		12.5	%		14.5	%
Interbank		10.6	%		10.2	%		11.0	%
Banco Interamericano de Finanzas		2.7	%		2.9	%		2.9	%

Source: SBS

As of December 31, 2012, BCP ranked first among all Peruvian banks in terms of assets, deposits and loans with a market share of 36.8% of assets, 37.4% of deposits and 34.6% of loans.

The Peruvian banking system reported a balance of loans of S/.72,530 million and US$28,092 million. These figures represented an annual expansion of 15.3% and 15.7%, respectively; as compared to 2011 (these balances expanded 20.3% and 18.8%, respectively, from December 31, 2010 to December 31, 2011). As a result, the dollarization of loans reached 49.7% at the end of 2012 (compared to 51% in 2011 and 52.3% in 2010). Nevertheless, as of December 31, 2012, the total amount of deposits was S/.140,325 million, which represented a dollarization rate of 41.6% (compared to47.3% in 2011 and 47.8% in 2010).

The capital ratio (regulatory capital/risk-weighted assets) reached 14.1% as of December 2012, which was above 10% legal minimum that became effective in July 2011. This represented an increase of 5.7% from the capital ratio reported at the end of December 2011 (13.4%), when the ratio reduced 1.8% as compared to December 2010 (13.6%).

Peru’s loan portfolio quality indicators deteriorated in 2012. Past due loans over total loans reached 1.75%, 28 basis points more than the ratio reported as of December 31, 2011 (1.47%). At the end of 2011, the ratio had improved 2 basis points compared to December 31, 2010 (1.49%). Also, the past-due refinanced and re-structured loans over total loans remained unchanged at 1% in 2012, as compared to the ratio reported in 2011, but it was nine basis points lower than the figure reported as of December 31, 2010 (1.09%). Similarly, coverage ratio of the past-due loan portfolio was 223.56% as of December 31, 2012 (compared to 251.14% as of December 31, 2011 and 245.62% as of December 31, 2010).

Finally, the liquidity of the banking system remained at high and comfortable levels. The local currency liquidity ratio and foreign currency liquidity ratio closed 2012 at 46.29% and 46.24% (39.23% and 45.02% in 2011 and 54.62% and 41.11% in 2010), respectively. These ratio levels were well above the minimums required by SBS regulations (8% in local currency and 20% in foreign currency).

(ii)

Capital Markets

In BCP’s Wholesale Banking Group, its corporate banking area has experienced increased competition and pressure on margins over the last few years. This is primarily the result of new entrants into the market, including foreign and privatized commercial banks, as well as local and foreign investment banks and non-bank credit providers, such as pension fund administrators (or AFPs) and mutual fund companies.

In addition, Peruvian companies have gained access to new sources of capital through the local and international capital markets. In recent years, AFPs’ funds under management and mutual fund assets have increased at rates over those experienced by the banking system. The private pension fund reached US$38 billion as of December 31, 2012 (representing 25.1% increase) from US$30.4 billion in 2011 and US$31.1 billion in 2010. Total mutual funds reached US$7 billion in 2012, compared to US$5.1 billion in 2011 (an increase of 39.2%) and in 2010 mutual funds reached US$5.6 billion due to the outflow of funds that occurred in the first half of 2011 and the uncertainty surrounding Peru’s 2011 presidential elections.

(iii)

Other Financial Institutions

Other institutions in the Peruvian financial system tend to specialize in a given market sector. These institutions include: 11 financial companies, 13 municipal savings and loans institutions, 10 rural savings and loans institutions and 10 small and microenterprise development agencies. They mainly issue retail loans to small and micro-businesses and consumer and mortgage loans to individuals. These markets have shown substantial increases in recent years.

BCP is facing strong competition from these credit providers, primarily with respect to consumer loans and small and micro-business loans. Small and micro-business loan providers lent US$5.7 billion in 2012, compared to the US$4.7 billion lent in 2011 (a 21.3%). In 2011, loans from small and micro-business loan providers increased 27.2% compared to the US$ 3.7 billion lent in 2010. In 2012, small and micro-business loans represented 48.3% of the total in the financial system (compared to 48.1% in 2011 and 47.9% in 2010). Consumer loan providers lent US$2.1 billion as of December 2012 (21.5% higher than 2011). In 2011, consumer loan providers lent US$1.8 billion (a 26% growth compared to the US$1.4 billion lent in 2010). In 2012, loans to consumers represented 17.1% of the total in the financial system (compared to 17.3% in 2011 and 17.4% in 2010).

BCP also faces strong competition from credit cards issued by retail stores.

(iv) Investment Banking

As mentioned above, Credicorp´s Investment Banking Platform, which integrates BCP Capital (including the investment banking division that was in BCP), Chilean IM Trust, Colombian Correval and CSI, was formed to take advantage of the growing opportunities in the MILA. This market had the largest amount of issuers in Latin America (according to the World Federation of Exchanges there were 604 issuers as of December 31, 2011), and a market capitalization of US$685 billion as of December 31, 2012.

Credicorp’s Investment Banking Platform is a regional platform that is divided into 3 business units: Asset Management (over 43% of the business share in terms of operational income), Sales & Trading (over 37% of operational income) and Corporate Finance (over 13% of operational income), as well as the local fiduciaries (roughly 6% of operational income). As of December 2012, the Investment Banking Platform managed approximately US$ 10 billion, and had more than 80 companies under coverage. In addition, and as of December 2011, it had over US$ 8,400 million in advisory transaction value. In the MILA market Credicorp’s Investment Banking Platform ranked first in Initial Public Offerings, Corporate Bond Issuance, and Fixed Income Trading, as well as third in Share Trading. We will seek to replicate this success throughout Latin America by consolidating operations in this market, and by looking for opportunities to expand into additional geographic areas.

(v)

Insurance

The Peruvian insurance market is highly concentrated. As of December 2012, four companies commanded 85.1% of the market share by premiums, and the leading two have a combined market share of 62.8%. Pacífico Seguros and Pacífico Vida together are the second largest insurance company in Peru with a 28.5% market share. Peruvian insurance companies compete principally on the basis of price, as well as on the basis of brand recognition, customer service and product features. Grupo Pacífico’s insurance businesses believe that their competitive pricing, strong and positive image, and quality of customer service are significant aspects of their overall competitiveness. While increased foreign entry into the Peruvian insurance market may put additional pressure on premium rates, particularly for commercial coverage, Grupo Pacífico believes that in the long-term foreign competition will increase the quality and strength of the industry. Grupo Pacífico believes that its size and its extensive experience in the Peruvian insurance market provide it with a competitive advantage over foreign competitors.

However, competition in the Peruvian insurance industry has increased substantially since the industry was deregulated in 1991, with particularly strong competition in the area of large commercial policies, for which rates and coverage typically are negotiated individually. The loss by Grupo Pacífico to competitors of even a small number of major customers or brokers could have a material impact on Grupo Pacífico’s premium levels and market share.

(9)

Peruvian Government and Economy

While we are incorporated in Bermuda, substantially all of BCP’s and Grupo Pacífico’s operations and customers are located in Peru. Although ASHC is based outside of Peru, a substantial number of its customers are also located in Peru. Accordingly, our results of operations and financial condition could be affected by changes in economic or other policies of the Peruvian government, which has exercised and continues to exercise a substantial influence over many aspects of the private sector. Also, our results of operations and financial condition may be affected by other political or economic developments in Peru, such as a devaluation of the Nuevo Sol relative to the U.S. Dollar or the imposition of exchange controls by the Peruvian government. See “Item 10. Additional Information—(D) Exchange Controls.” Our results of operations and financial condition are dependent on the level of economic activity in Peru.

(i)

Peruvian Government

During the past several decades, Peru has had a history of political instability that has included military coups d’état and different governmental regimes, which in the past have frequently intervened in the nation’s economy and social structure. See “Item 3. Key Information—(D) Risk Factors.”. In 1987, the administration of President Alan García attempted to nationalize the banking system. Facing an attempt by the state to control BCP, the majority shareholders of BCP at that time sold a controlling interest in BCP to its employees, which prevented the government from gaining control of BCP. See “—(C) Organizational Structure.”

Between 1990 and 2000, President Fujimori implemented a broad-based reform of Peru’s political system, economy and social conditions. See “Item 3. Key Information—(D) Risk Factors.” President Fujimori resigned in 2000 in favor of a transitory government due to an outbreak of corruption scandals. President Toledo then assumed the presidency in 2001 after a period of political turmoil, facing high unemployment and underemployment, an economic recession and social need. In 2006, Alan García was elected for a five year-term, during which remained the main outlines of the economic model, promoting private investment to stimulate the economy.

Presidential elections were initially held in Peru on April 10, 2011 and a second round of elections was held on June 5, 2011. The winner of the elections was Ollanta Humala, who defeated Keiko Fujimori. While President Humala’s initial proposals as a candidate were designed to radically change the economic model that was already in effect, his signing of a "road map", which promised to be moderate, was important for his electoral victory. Among his first acts as president-elect were the ratification of the Central Bank’s president and the appointment of Luis Castilla, who served as Deputy Minister under the previous government, as Minister of Finance. Both of these appointees contributed to recover the investment climate that deteriorated during presidential campaigns period. However, the recovery has been affected by perceived risks abroad, where the Eurozone is under pressure. Despite the uncertainty generated during the first half of 2011 (due to the radical changes proposed by Humala) and the global economic slowdown in the second half of 2011, the Peruvian economy managed to close the year with an economic growth of 6.9%. In 2012, concerns about the health of the Chinese economy created a new source of uncertainty but China ultimately returned to more sustainable growth. During 2012, Peru grew 6.3%, mainly as a result of non-primary sectors highly linked with domestic demand, particularly construction and services.

Despite the economic strides achieved since 1990 and the high rate at which Peruvian economy has expanded in the last decade, poverty remains a persistent problem, with 30% of the population living below the poverty line, which the World Bank defines as monthly income of less than US$60 per capita, adjusted to reflect differences in purchasing power. A significant number of Peruvians live on an income of less than US$30 per capita per month.

(ii)

Peruvian Economy

During his second term (2006 - 2011), President Alan Garcia continued the market-oriented policies that started in the 1990s with President Fujimori’s structural reforms. Nevertheless, some interventionist measures were passed due to surge of populist initiatives from Congress and social pressures from unions and regional movements. In 2011, presidential elections outcome (Ollanta Humala’s victory) anticipated a shift in government political orientation, which had a negative impact on business confidence and growth perspectives. Although initial concerns on Humala’s government have been mitigated in part by cabinet appointments and political arrangements aimed to reassure investor’s confidence and reaffirm economy’s direction, political risks have not disappeared entirely.

In addition to political changes and the application of sound macroeconomic policies, the positive external outlook allowed Peru to grow at an average of 5.7% in the last decade, reaching a positive growth rate even during the global financial crisis in 2009. In that year, within a global comparison, Peru was among the countries with the highest GDP-growth rates: 0.9% in a year when global production decreased 1.1%. In the following years of recovery Peru continued outperforming global economy and even developed regions, growing 8.8% in 2010, 6.9% in 2011, and 6.3% in 2012.

The Peruvian economy grew 6.3% in 2012, despite higher uncertainty about the Eurozone and a concerns about Chinese manufacturing production and exports. Private consumption and investment grew in the second half of the year. In addition, exports unexpectedly rose in the first quarter of 2012 and increased overall during 2011.

During 2007, the Free Trade Agreement (FTA) with the United States was signed and the trade deal was put into effect on February 1, 2009, concluding a long process of trade negotiations and goodwill. The FTA made permanent the special access to the U.S. market enjoyed under the Andean Trade Promotion and Drug Eradication Act. The current trade between these countries is around US$13 billion annually (15.7% of total trade). The FTA is expected to encourage higher export growth and diversification, as well as accelerate reforms that will further enhance the investment climate in Peru, which is already benefiting from high flows of foreign direct investment. Progress was made toward reaching more trade agreements with Peru’s most important trade partners like China (the FTA started in march 2010), which currently stands as the principal destination of Peruvian exports, mainly commodities and primary goods. In 2012, trade between both countries reached US$15.5 billion (17.7% of Peru’s total trade). Also, Peru concluded trade agreement negotiations with the European Union, Japan and Mexico. It is expected, these agreements will help boost growth in the export sector, which has been relatively flat since 2008 compared to the growth in domestic demand. These agreements have improved the competitive position of Peruvian exporters relative to exporters in other global markets.

Peru’s trade surplus in 2012 was US$3.1 billion, a lower result than in 2010 and 2011. This trade surplus was the result of lower prices for export products (particularly mineral products) and a strong domestic demand combined with higher prices for imports and food (soybean, corn, wheat). Although the trade surplus in 2012 was not as high as the surplus in 2011, relative to historical levels, trade remained high and produced a sizeable net surplus.

Peru has had a history of high and persistent current account deficits. Nevertheless, a process of gradual correction of external imbalances started in recent years. Between 2007 and 2010, Peru’s current account balance reached an average deficit of US$2.1 billion, which is equivalent to 1.3% of Peru’s GDP. After a brief interruption in 2008, when the deficit again reached high levels (US$5.3 billion, or 4.2% of GDP), and a small surplus in 2009 (0.2% of GDP) due to a decrease in imports and in investment income (during period of slow global economic growth), the correction resumed. In 2011 and 2012, Peru again recorded current account deficits, which were linked to a process of capital accumulation. These recent deficits (close to 2.5% of GDP in 2011 and 4.0% of GDP in 2012) were not a source of concern because they were completely financed by the financial account, which derives more than 70% of its total inflows from long-term capital.

Peru’s financial account had an average surplus of US$9.6 billion between 2008 and 2012, resulting largely from higher foreign direct investment and long-term loans that accompanied improved investor sentiment about the Peruvian economy. A notable exception to the sizeable surpluses Peru recorded during this period occurred in 2009. That year the financial account surplus declined to US$1.5 billion, due to lower capital inflows and global economic uncertainty, mainly in the first half of the year. Surpluses during the second half of 2009 were sizeable enough to create a surplus for the year. Between 2010 and 2012, despite some volatility, growth in capital inflows gradually lead to the return of high financial account surpluses, as investors adjusted their risk appetite and became more comfortable with investments in emerging countries. Nevertheless, stress associated with the ongoing Eurozone fiscal crisis, has had short-term negative effects on investment inflows into Peru.

Inflation in Peru, as measured by the Lima consumer price index, was 3.3% on average over the past five years. After reducing the Peruvian Central Bank's target of 2.5% to 2.0%, with a +/-1% range, inflation was above the target range in 2008, registering at 6.65%. The inflation rate during this period was influenced by higher international commodity prices. As of December 31, 2010 the inflation rate was 2.1%, compared to a 0.25% inflation rate at the end of 2009. Inflation in 2011 was 4.7%, significantly above the Central Bank’s inflation range, driven by external supply shocks (higher commodity prices) as well as local supply shocks (less local food supply). In 2012, inflation was 2.65%, with a sharp correction, driven by a reduction in prices of imported food (especially grains) and oil, occurring in the last quarter of the year.

The exchange rate for Nuevos Soles in Peru has appreciated 18.8% over the past five years, from S /. 3.141 per US$1.00 on December 31, 2007 to S /. 2.551 per US$ 1.00 on December 31, 2012. The Nuevo Sol posted gains of 2.8% in 2010, 3.9% in 2011, and 5.4% in 2012. Appreciation of the Nuevo Sol was substantially due to capital inflows received by emerging economies as a result of economic troubles in the European Union (EU). In 2012, the Nuevo Sol strengthened overall, but underwent periods of depreciation as a result of political uncertainty associated with international markets, both developed and emerging.

A sound policy framework put in place in recent years and an increase in Peru’s international reserves have improved the business environment and contributed to the reduction of economic vulnerabilities and poverty in Peru (even though poverty still affects to over 30% of the population). Although Peru recorded a fiscal deficit of 0.3% of GDP in 2010, Peru recorded strong fiscal surpluses in subsequent years (around 2.0% of GDP in each in 2011 and 2012), which have supported a significant reduction in public debt and improved the maturity schedule of Peru’s overall debt profile. In an uncertain global economy, these are important fiscal buffers. A sound monetary policy that targets inflation has also been instrumental in helping to Peru maintain macroeconomic stability and reduce dollarization. Other structural reforms also have reduced Peru’s fiscal and financial vulnerabilities. Free trade agreements and demand for new trade markets, lower informality, and improvement in its business climate have helped Peru improve its long-term growth outlook, which is reflected in more investments in the Peruvian economy.

These achievements are believed to have strengthened Peru’s ability to weather economic pressures originating outside of Peru. Building on Peru’s strong fundamentals, including a resilient financial system, several measures have been implemented by the authorities that will help to, preserve adequate liquidity conditions in the domestic markets, and bolster domestic confidence. The Peruvian financial system has proven to be strong, despite the impact of the global financial crisis. Banking credit, which averaged 31.8% growth in 2007 and 2008, lost momentum, closing 2009 with only a 9.5% growth. The economic recovery in Peru has increased demand for banking credit, which grew by 14.3% in 2010, 18.5% in 2011, and 13.0% in 2012. Peru’s Central Bank has indicated that continuous credit growth over 15% has eventually led to a financial crisis, in several countries, and the Central Bank is trying to avoid; such a crisis in Peru. In particular, the Central Bank’s concerns are focused on foreign currency credit, and it has gradually increased reserve requirements over the course of the last year. As a consequence, average requirements have increased to 19.0% from 14.3% in local currency and to 41.7% from 38.7% in foreign currency during 2012.

Peruvian authorities have been implementing reforms to strengthen Peru’s financial system and improve the country’s international liquidity position. Peru’s Central Bank is focused on maintaining healthy foreign currency credit levels, and therefore reserve requirements have continuously increased during 2012. Average reserve requirements increased to 19% from 14.3% in local currency and to41.7% from 38.7% in foreign currency during 2012.

In periods of economic contraction, the Peruvian Central Bank could use its considerable foreign reserves, which have risen from 28.6% of GDP in December 2010 to approximately 32.0% in December 2012, and other mechanisms to provide liquidity to Peru’s domestic financial system. Also, the increase in the capital ratio of Peru’s banking system from 13.6% in December, 2010 to 14.1% in December 2012 indicates that solvency has improved.

Peru’s short term domestic economic outlook continues to appear to be favorable, despite lingering uncertainty about the global economy. The Peruvian economy grew 6.3% in 2012, reflecting a strong domestic demand and sharp increase in mining investments. Inflation is expected to remain close to 2% (+/- 1%), at the center of Central Bank’s target range.

The main risks to the Peruvian economy appear to be external and largely related to the results of the continued economic recovery in developed countries. We consider that Peru’s current fiscal position, including the 2012 surplus, the amount of funds accumulated by the public sector (US$ 7.2 billion as of December 31, 2012), and the fact that the country is now rated investment grade (BBB according to S&P and Fitch; Baa2 according to Moody's), have strengthened Peru’s ability to face future crises. Peru’s medium-term prospects are considered to be favorable, provided that the country continues to follow prudent macroeconomic policies and deal with longstanding structural challenges.

(10)

The Peruvian Financial System

As our activities are conducted primarily through banking and insurance subsidiaries operating in Peru, a summary of the Peruvian financial system is set forth below.

(i)

General

On December 31, 2012, the Peruvian financial system consisted of the following principal participants: the Central Bank, the SBS, 16 banking institutions (not including Banco de la Nación, a Peruvian state-owned bank), 11 finance companies, and 2 leasing companies. In addition, Peru has various mutual mortgage associations, municipal and rural savings and credit associations, municipal public credit associations and savings and credit cooperatives, which totaled 33 entities as of December 31, 2012.

Law 26702 regulates Peruvian financial and insurance companies. In general, it provides for tighter loan loss reserve standards, brings asset risk weighting in line with Basel Committee on Banking Regulations and Supervisory Practices of International Settlements (or the Basel Accord) guidelines, broadens supervision of financial institutions by the SBS to include holding companies, and includes specific treatment of a series of recently developed products in the capital markets and derivatives areas.

(ii)

Central Bank

The Central Reserve Bank (or the Central Bank) was established in 1922. Pursuant to the Peruvian Constitution, its primary role is to ensure the stability of the Peruvian monetary system. The Central Bank regulates Peru’s money supply, administers international reserves, issues currency, determines Peru’s balance of payments and other monetary accounts, and furnishes information regarding the country’s financial situation. It also represents the government of Peru before the International Monetary Fund (IMF) and the Latin American Reserve Fund (a financial institution whose purpose is to provide balance of payments assistance to its member countries by granting credits or guaranteeing loans to third parties).

The highest decision-making authority within the Central Bank is its seven-member board of directors. Each director serves a five-year term. Of the seven directors, four are selected by the executive branch and three are selected by the Congress. The Chairman of the Central Bank is one of the executive branch nominees but must be approved by Peru’s Congress.

The Central Bank’s board of directors develops and oversees monetary policy, establishes reserve requirements for entities within the financial system, and approves guidelines for the management of international reserves. All entities within the financial system are required to comply with the decisions of the Central Bank.

(iii)

The Superintendency of Banks, Insurance and Pension Funds (SBS)

The SBS, whose authority and activities are discussed in “—(11) Supervision and Regulation,” is the regulatory authority in charge of implementing and enforcing Law 26702 and, more generally, supervising and regulating all financial, insurance and pension fund institutions in Peru.

In June 2008, Legislative Decree 1028 and 1052 were approved modifying Law 26702 with the following objectives: (i) to strengthen and to increase competitiveness, (ii) to implement Basel II and (iii) to adapt the current regulatory framework to the FTA signed between Peru and the United States.

The main amendments defined in Law 1028 were designed to promote the development of Peruvian capital markets by extending the range of financial services that could be offered by microfinance institutions (i.e., non-banks) without requiring SBS authorization. Law 1028 also modified the framework in which the Peruvian financial system is to be harmonized with the new international standards established by the Basel II Accord (which aims to minimize the issues regarding regulatory arbitrage). Since July 2009, Peruvian financial institutions generally have applied a standardized method to calculate their capital requirement related to credit, market and operational risk. As an alternative to the standardized method, financial institutions may request authorization from the SBS to use different models for calculating the reserve amount associated with any of these three risks. In July 2009, the SBS started receiving applications to use alternative models, referred to as Internal Models Methods. If the amount of an institution’s reserve requirements would be higher using the standard model than it would be using the an approved Internal Models Method, then the institution will have to maintain between 80% and 95% of the standard amount during a phase in period, Even after the phase in period, institutions using an Internal Models Method will be subject to regulatory capital floors.

Law 1052 aims to include and synchronize Law 26702 and the FTA’s framework, particularly regarding insurance services. The amendments allow offering cross-border services and have simplified the process for international institutions to enter into the Peruvian market by establishing subsidiaries.

(iv)

Financial System Institutions

Under Peruvian law, financial institutions are classified as banks, financing companies, other non-banking institutions, specialized companies and investment banks. BCP is classified as a bank.

Banks

A bank is defined by Law 26702 as an enterprise whose principal business consists of (i) receiving money from the public, whether by deposits or by any other form of contract, and (ii) using such money (together with the bank’s own capital and funds obtained from other sources) to grant loans or discount documents, or in operations that are subject to market risks.

Banks are permitted to carry out various types of financial operations, including the following: (i) receiving demand deposits, time deposits, savings deposits and deposits in trust; (ii) granting direct loans; (iii) discounting or advancing funds against bills of exchange, promissory notes and other credit instruments; (iv) granting mortgage loans and accepting bills of exchange in connection with the mortgage loans; (v) granting conditional and unconditional guaranties; (vi) issuing, confirming, receiving and discounting letters of credit; (vii) acquiring and discounting certificates of deposit, warehouse receipts, bills of exchange and invoices of commercial transactions; (viii) performing credit operations with local and foreign banks, as well as making deposits in those institutions; (ix) issuing and placing local currency and foreign currency bonds, as well as promissory notes and negotiable certificates of deposits; (x) issuing certificates in foreign currency and entering into foreign exchange transactions; (xi) purchasing banks and non-Peruvian institutions which conduct financial intermediation or securities exchange transactions in order to maintain an international presence; (xii) purchasing, holding and selling gold and silver as well as stocks and bonds listed on one of the Peruvian stock exchanges and issued by companies incorporated in Peru; (xiii) acting as financial agent for investments in Peru for external parties; (xiv) purchasing, holding and selling instruments evidencing public debt, whether internal or external, as well as obligations of the Central Bank; (xv) making collections, payments and transfers of funds; (xvi) receiving securities and other assets in trust and leasing safety deposit boxes; and (xvii) issuing and administering credit cards and accepting and performing trust functions.

In addition, banks may carry out financial leasing operations by forming separate departments or subsidiaries. Banks may also promote and direct operations in foreign commerce, underwrite initial public offerings, and provide financial advisory services apart from the administration of their clients’ investment portfolios. By forming a separate department within the bank, banks may also act as trustees in trust agreements.

Law 26702 authorizes banks to operate, through their subsidiaries, warehouse companies, securities brokerage companies, and to establish and administer mutual funds.

Branches of foreign banks enjoy the same rights and are subject to the same obligations as Peruvian banks. Multinational banks, with operations in various countries, may perform the same activities as Peruvian banks, although their foreign activities are not subject to Peruvian regulations. To carry out banking operations in the local market, multinational banks must maintain a certain portion of their capital in Peru, in at least the minimum amount that is required for Peruvian banks.

Finance Companies

Under Law 26702, finance companies are authorized to carry out the same operations as banks, with the exception of (i) issuing loans as overdrafts in checking accounts and (ii) participating in derivative operations. These operations can be carried out by finance companies only if they fulfill the requirements stated by the SBS.

Other Financial Institutions

The Peruvian financial system has a number of less significant entities which may provide credit, accept deposits or otherwise act as financial intermediaries on a limited basis. Leasing companies specialize in financial leasing operations where goods are leased over the term of the contract and in which one party has the option of purchasing the goods at a predetermined price. Savings and loans associations or cooperatives may accept certain types of savings deposits and provide other similar financial services.

Peru also has numerous mutual housing associations, municipal savings and credit associations, savings and credit cooperatives and municipal credit bureaus. Over the past five years the entry of new participants, including foreign banks and non-bank financial institutions, has increased the level of competition in Peru.

Insurance Companies

Since the Peruvian insurance industry was deregulated in 1991, insurance companies have been authorized to conduct all types of operations and to enter into all forms of agreements that are needed to offer risk coverage to customers. Insurance companies may also invest in financial and non-financial assets, although they are subject to the regulations on investments and reserves established in Law 26702 and the regulations issued by the SBS.

Law 26702 is the principal law governing insurance companies in Peru. The SBS is charged with the supervision and regulation of all insurance companies. The formation of an insurance company requires prior authorization of the SBS.

The insurance industry has experienced consolidation in recent years with the number of companies decreasing from 19 in 1991 to 14 in 2012.

(11)

Supervision and Regulation

(i)

Credicorp

Currently there are no applicable regulations under Bermuda law that are likely to materially impact our operations as they are currently structured. Under Bermuda law, there is no regulation applicable to us, as a holding company that would require that we separate the operations of our subsidiaries incorporated and existing outside Bermuda. Since our activities are conducted primarily through our subsidiaries in Peru, the Cayman Islands, Bolivia, Chile, Colombia and Panama, a summary of the main regulations governing our businesses is set forth below.

Our common shares are listed on the New York Stock Exchange (NYSE). We are therefore subject to regulation by the NYSE and the SEC as a “foreign private issuer.” We also must comply with the Sarbanes-Oxley Act of 2002.

We are, along with BCP, subject to certain requirements set forth in Peruvian Law 26702 (“Peruvian Banking Law” or “Law 26702”) as well as certain banking statutes issued by the Peruvian banking regulator, SBS, including SBS Resolution No. 11823-2010, enacted in September 2010 and which approved the “Regulation of the Consolidated Supervision of Financial and Mixed Conglomerates.” These regulations affect BCP and us primarily in the areas of reporting, risk control guidelines, limitations, ratios and capital requirements.

Since our common shares are listed on the Lima Stock Exchange in addition to the New York Stock Exchange, we are subject to certain reporting requirements to Superintendencia del Mercado de Valores, the Peruvian securities market regulator, and the Lima Stock Exchange. See “Item 9. The Offer and Listing—(C) Markets—The Lima Stock Exchange—(ii) Market Regulation.”

(ii)

BCP

Overview

BCP’s operations are regulated by Peruvian law. The regulations for the operation of the Peruvian financial sector are stated in Law 26702. The SBS periodically issues resolutions that cause Law 26702 to be developed. See “—(10) The Peruvian Financial System.” The SBS supervises and regulates entities that Law 26702 classifies as financial institutions. These entities include commercial banks, finance companies, small business finance companies, savings and loan corporations, financial services companies such as trust companies and investment banks, and insurance companies. Financial institutions must seek the SBS’s authorization before beginning operations.

BCP’s operations are supervised and regulated by the SBS and the Central Bank. Those who violate Law 26702 and its underlying regulations are subject to administrative sanctions and criminal penalties. Additionally, the SBS and the Central Bank have the authority to issue fines to financial institutions and their directors and officers if they violate the laws or regulations of Peru, or their own institutions’ bye-laws.

The Superintendencia del Mercado de Valores (SMV), formerly known as CONASEV, is the Peruvian government institution in charge of (i) promoting the securities market, (ii) making sure fair competition takes place in the securities markets, (iii) supervising the management of businesses that trade in the securities markets and (iv) regulating their activities and accounting practices. BCP must inform SMV of significant events that affect its business and is required to provide financial statements to it and the Lima Stock Exchange each quarter. BCP is also regulated by SMV when it conducts operations in the local Peruvian securities market.

Under Peruvian law, banks may conduct brokerage operations and administer mutual funds but must do so through subsidiaries. However, bank employees may market the financial products of the bank’s brokerage and mutual fund subsidiaries. Banks are prohibited from issuing insurance policies, but are not prohibited from distributing insurance policies issued by insurance companies.

Authority of the SBS

Peru’s Constitution and Law 26702 (which contains the statutory charter of the SBS) grant the SBS the authority to oversee and control banks and financial institutions (with the exception of brokerage firms, which are regulated by SMV), insurance and reinsurance companies, companies that receive deposits from the general public, AFPs and other similar entities as defined by the law. The SBS is also responsible for supervising the Central Bank to ensure that it abides by its statutory charter and bye-laws.

The SBS has administrative, financial and operating autonomy. Its objectives include protecting the public interest, ensuring the financial stability of the institutions over which it has authority and punishing violators of its regulations. Its responsibilities include: (i) reviewing and approving, with the assistance of the Central Bank, the establishment and organization of subsidiaries of the institutions it regulates; (ii) overseeing mergers, dissolutions and reorganization of banks, financial institutions and insurance companies; (iii) supervising financial, insurance and related companies from which information on an individual or consolidated basis is required, through changes in ownership and management control (this supervision also applies to non-bank holding companies, such as us); (iv) reviewing the bye-laws and amendments of bye-laws of these companies; (v) issuing criteria governing the transfer of bank shares, when permitted by law, for valuation of assets and liabilities and for minimum capital requirements; and (vi) controlling the Central de Riesgos (Bank Risk Assessment Center), to which all banks are legally required to provide information regarding all businesses and individuals with whom they deal without regard to the amount of credit risk (the information provided is made available to all banks to allow them to monitor individual borrowers’ overall exposure to Peru’s banks). In addition to them, the SBS is also responsible for stating the criteria relating to the existence of financial or mixed conglomerates in Peru and their supervision. As a result of it, despite its supervision of BCP, the SBS also supervises Credicorp Ltd. on the basis that we are a financial conglomerate conducting the majority of our operations in Peru.

Management of Operational Risk

SBS Resolutions No. 37-2008, which encompasses the guidelines for enterprises risk management (ERM) frameworks, and 2116-2009 established guidelines for operational risk management, which includes a broad range of risks and defines operational risks as those resulting from the possibility of suffering financial losses due to inadequate or failed internal processes, people and systems, or from adverse external events. It also establishes responsibilities for developing policies and procedures to identify, measure, control and report such risks. Banks are required to adequately manage risks involved in the performance and continuity of their operations and services in order to minimize possible financial losses and reputation damage due to inadequate or non-existent policies or procedures. Banks also are required to develop an information security model to guarantee physical and logical information integrity, confidentiality and availability.

Credicorp, following these SBS guidelines, as well as the guidelines issued by the Basel Committee on Banking Supervision, and the advice of international consultants, has appointed a specialized team responsible for operational risk management across our organization. This team reports regularly to our risk committee, top managers and Board of Directors.

In evaluating operational risks and potential consequences, we mainly assess risks related to critical processes, new products, critical suppliers, critical information assets and technological components. To support the operational risk management process we have developed a Business Continuity Management (BCM) discipline, which involves the implementation of continuity plans for critical business processes, incident management, and training and testing. In addition, our methodology and data processing team has developed procedures to register, collect, analyze and report operational risk losses, looking forward to the implementation of advanced models for operational risk capital allocation. Lastly, we have monitoring and reporting procedures, designed to monitor Key Risk Indicators (KRI) and other performance metrics.

We intend to be guided by the risk control standards of international financial institutions that are noted for their leadership in this field. Our overall objective is to implement an efficient and permanent monitoring system to control operational risks, while the actual management of risk control procedures is conducted by the areas that carry out critical activities.

Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, we are required to make certain certifications regarding our internal controls over financial reporting as of December 31, 2012. We have developed internal methods to identify and evaluate risk and controls over our critical processes to determinate how effective internal controls are over financial reporting.

BCP Capital Adequacy Requirements

Capital adequacy requirements applicable to us are set forth in the Peruvian Banking Law (Law 26702), as amended, and monitored and regulated by the SBS. Law 26702 was enacted in December 1996 and amended in June 2008 through Legislative Decree 1028. The amendment became effective in July 2009 and was aimed at adapting the Peruvian Banking Law to the capital guidelines and standards established by the second Basel Accord (Basel II).

Basel II standards modified the methodology to measure credit, market and operational risks to allow the use of standardized and internal model-based methods. Basel II standards also allow Peruvian financial institutions to request authorization from the SBS to implement an internal ratings-based (IRB) methodology.

Financial institutions that receive approval from the SBS to use the IRB methodology are subject to regulatory capital floors. The amount of capital required may not be less than the percentage of capital required under an alternative methodology.

	First Year			Second Year			Third Year
Basic IRB and Internal Models of Credit Risk		95	%		90	%		80	%
Advanced Models of Credit Risk and/or Operational Risk		90	%		80	%		—

Prior to June 2009, the capital requirements were based upon the guidelines established by the first Basel Accord (Basel I). Financial institutions were required to limit risk-weighted assets to 11 times their regulatory capital, which is equivalent to a minimum capital ratio of 9.09% of risk-weighted assets. Risk-weighted assets were calculated based upon five risk categories depending on the perceived risk of each asset class.

Pursuant to the Basel II guidelines, financial institutions are required to hold regulatory capital that is greater than or equal to the sum of (i) 10% of credit risk-weighted assets, and (ii) 10 times the amount required to cover market and operational risks. The new minimum capital requirements were implemented as follows.

Implementation date	Regulatory capital (% of total weighted assets)	Total risk-weighted assets
July 1st, 2009	9.5%	10.5 times the regulatory capital needed to cover market risks; plus 10.5 times regulatory capital needed to cover operational risks; plus Total amount of credit risk-weighted assets.
July 1st, 2010	9.8%	10.2 times the regulatory capital needed to cover market risks; plus 10.2 times the regulatory capital needed to cover operational risks; plus Total amount of credit risk-weighted assets.
July 1st, 2011	10%	10 times the regulatory capital needed to cover market risks; plus 10 times the regulatory capital needed to cover operational risks; plus Total amount of credit risk-weighted assets.

In November 2010, the SBS released a consultative document, which established the proposed methodologies for calculating additional capital requirements consistent with Pilar 2 of Basel II and certain aspects of Basel III. Comments on this document were due February 18, 2011. On July 20, 2011, the SBS issued SBS Resolution 8425-2011, establishing the final methodologies and the implementation schedule of the aforementioned additional capital requirements. The new capital requirements, which are aimed at covering risks not contemplated in Pilar I of Basel II, include requirements to cover concentration, interest rate and systemic risk. Additionally, pro-cyclical capital requirements were also established. These new requirements will be implemented over a period of five years starting in July 2012.

Article 184 of Law 26702, as amended by Legislative Decree 1028, provides that regulatory capital may be used to cover credit risk, market risk and operational risk. Regulatory capital is comprised of the sum of basic capital and supplementary capital, and is calculated as follows:

•

Basic Capital: Basic Capital or Tier 1 capital is comprised of: (i) paid-in-capital (which includes common stock and perpetual non-cumulative preferred stock), legal reserves, supplementary capital premiums, voluntary reserves distributable only with prior SBS approval, and retained earnings with capitalization agreements (earnings that the shareholders or the Board of Directors, as the case may be, have committed to capitalize as common stock); (ii) other elements that have characteristics of permanence and loss absorption that are in compliance with regulations enacted by the SBS, such as hybrid securities; and (iii) unrealized gains and retained earnings in Subsidiaries. Items deducted from Tier 1 capital include: (i) current and past years’ unrealized losses; (ii) deficits of loan loss provisions; (iii) goodwill resulting from corporate reorganizations or acquisitions; and (iv) half of the amount referred to in “Deductions” below. Absent any Tier 2 capital, 100% of the amount referred to in “Deductions” below must be deducted from Tier 1 capital. The elements referred to in item (ii) above should not exceed 17.65% of the amount resulting from adding components (i) and (iii) of Tier 1 capital net of the deductions in (i), (ii) and (iii) in this paragraph.

•

Supplementary Capital: Supplementary capital is comprised of the sum of Tier 2 and Tier 3 capital. Tier 2 capital elements include: (i) voluntary reserves that may be reduced without prior consent from the SBS; (ii) the eligible portion of redeemable subordinated debt and of any other components that have characteristics of debt and equity as provided by the SBS; (iii) for banks using the Standardized Approach Method (SAM), the generic loan loss provision up to 1.25% of credit risk-weighted assets; or, alternatively, for banks using the IRB Method, the generic loan loss provision up to 0.6% of total credit risk-weighted assets (pursuant to article 189 of the Law); and (iv) half of the amount referred to in “Deductions” below. Tier 3 capital is comprised of redeemable subordinated debt that is incurred with the exclusive purpose of covering market risk, as referred to in Article 233 of the Law.

•

Deductions: The following elements are deducted from Tier 1 and Tier 2 capital: (i) all investments in shares and subordinated debt issued by other local or foreign financial institutions and insurance companies; (ii) all investments in shares and subordinated debt issued by an affiliate with which the bank consolidates its financial statements, including its holding company and such subsidiaries referred to in Articles 34 and 224 of the Law; (iii) the amount in which an investment in shares issued by a company with which the bank does not consolidate its financial statements and which is not part of the bank’s negotiable portfolio, exceeds 15% of the bank’s regulatory capital; (iv) the aggregate amount of all investments in shares issued by companies with which the bank does not consolidate its financial statements and which are not part of the bank’s negotiable portfolio, exceeds 60% of the regulatory capital; (v) when applicable, the amount resulting from the formula prescribed in Article 189 of the Law. For the purposes herein, “regulatory capital” excludes the amounts referred to in (iii), (iv) and (v) of this paragraph.

Article 185 of the Law 26702 also provides that the following limits apply when calculating regulatory capital: (i) the aggregate amount of supplementary capital must not exceed the aggregate amount of basic capital; (ii) the amount of redeemable Tier 2 subordinated instruments must be limited to 50% of the amount resulting from the sum of Tier 1 elements net of the deductions in (i), (ii), and (iii) in “Basic Capital” above; (iii) the amount of Tier 3 capital must be limited to 250% of the amount resulting from the sum of Tier 1 elements net of the deductions (i), (ii), and (iii) in “Basic Capital” above in the amounts assigned to cover market risk.

SBS Resolution 8548-2012, adopted in 2012, modified the regulatory capital requirements for credit risk weighted assets in SBS Resolution 14354-2009 and established a schedule for implementing the modifications.

As of December 31, 2012, BCP’s regulatory capital was 14.72% of its unconsolidated risk-weighted assets, indicating that BCP had risk-weighted assets that were 6.79 times the amount of regulatory capital. As of December 31, 2011 and December 31, 2010, BCP’s regulatory capital was 14.53% and 12.84% of its unconsolidated risk-weighted assets, respectively.

Legal Reserve Requirements

In accordance with Peruvian regulation - article 67 of Law 26702-, a reserve of up to at least 35 percent of paid-in capital of the Group’s subsidiaries operating in Peru is required to be established through annual transfers of at least 10 percent of their net income. In accordance with Bolivian regulation, a reserve of up to at least 50 percent of paid-in capital of the Group’s subsidiaries operating in Bolivia is required to be established through annual transfers of at least 10 percent of their net income. As of December 31, 2012, 2011 and 2010, these reserves amounted to approximately US$620.3 million, US$461.9 million and US$441.5 million, respectively.

Provisions for Loan Losses

Credicorp’s allowance model is an IFRS compliant loss estimation model that comprises a number of methodologies which estimate losses per client for Wholesale Banking and losses per segment (pool) for Retail Banking, in line with IASC39. Depending on the portfolio analyzed, each methodology takes into consideration collateral recovery projections, outstanding debt, maturity and qualitative aspects that reinforce the estimate. Some examples of qualitative aspects are the complexity of the recovery processes, sector trends, and officers’ judgment of the estimated recovery values.

The methodology includes three estimation scenarios: base, upper threshold and lower threshold. These scenarios are generated by modifying some assumptions, such as collateral recovery values and adverse effects due to changes in the political and economic environments. The process to select the best estimate within the range is based on management´s best judgment, complemented by historical loss experience and the Company’s strategy (e.g. penetration in new segments).

Central Bank Reserve Requirements

Under Law 26702, banks and financial institutions are required to maintain legal reserve requirements for certain obligations. The changes in the reserve requirement regulations were made in the second half of 2010 in accordance with the monetary policy adopted by the Central Bank.

The Central Bank requires financial instructions to maintain marginal reserve requirements for local and foreign currency obligations. The exact level and method of calculation of the reserve requirement is established by the Central Bank. The reserve requirements in Peru apply to obligations such as demand and time deposits, savings accounts, securities, certain bonds and funds administered by the bank. Additionally, the Central Bank requires reserves on amounts due to foreign banks and other foreign financial institutions. Furthermore, as of January 2011, obligations of foreign subsidiaries and affiliates are also subject to the reserve requirement. Among other exemptions, funding from the public sector directed to the microfinance sector and foreign credits with periods of 2 years or more are not subject to the regulation.

In 2011, the Central Bank, as a part of its monetary policy to restrict internal demand and the risk of inflation, maintained the minimum level of reserves for banks at 9%. Bank obligations are subject to a marginal reserve ratio of 55% in foreign currency and 25% in local currency. The reserve funds can be constituted by cash and deposits, with a minimum of 3% held in deposits in current accounts in the Central Bank. Additionally, the marginal reserve requirement on foreign credits with a tenor of less than 2 years has remained at 60% since January 2011.

The Central Bank establishes a remuneration rate on marginal reserves that exceeds the minimum legal requirement of 9% but only in the instance that such reserves are deposited in the Central Bank’s current account. Foreign currency cannot be used to comply with reserve requirements for liabilities in domestic currency, and vice versa. The Central Bank oversees compliance with the reserve requirements.

The reference interest rate is periodically revised by the Central Bank in accordance with its monetary policy objectives. Once a month the board of directors of the Central Bank approves and announces the monetary program through a press release. In the mid-2010 the Central Bank changed its monetary policy to a more restrictive position to account for the rapid growth of domestic demand and the potential for dangerous levels of inflation. Since then, there have been consecutive increases in the reference interest rate, which was raised most recently in May 2011 from 4.00% to 4.25%. As of December 2012, the reference interest rate remained at that level.

In the past few years, the Central Bank has been actively changing the reserve requirement applicable to Peruvian financial institutions as part of its monetary policy, something that is not usual in other LatAm countries, with the notorious exception of Brazil. Regulations put in place during 2012 -in a context of avoiding a higher rate of appreciation- have increased the amount of reserves required in S/.3,859 million and US$1,555 million in local and foreign currency respectively. This new environment has led to an increase in the funding cost of the bank. Changes in the reserve requirement regulation may adversely affect the bank´s business, financial conditions and results of operations. Marginal requirement rates in Nuevos Soles and Dollars increased during 2012 four times, and as a consequence, the average rate increased to 18.8% from 14.3% in local currency and to 41.2% from 38.7% in foreign currency. In December 2012, the estimated reserve position of commercial banks was S/. 15,500 million and US$ 10,500 million in local and foreign currency, respectively.

Lending Activities

Law 26702 sets the maximum amount of credit that a financial institution may extend to a single borrower. A single borrower includes an individual or an economic group. An economic group constituting a single or common risk includes a person, such person’s close relatives and the companies in which such person or close relatives have significant share ownership or decision-making capability. Significant decision-making capability is deemed to be present when, among other factors, a person or group can exercise material and continuous influence upon the decisions of a company, when a person or company holds seats on the board of directors or has principal officers in another company, or when it can be assumed that one company or person is the beneficial recipient of credit facilities granted to another company.

The limit on credit that may be extended to one borrower varies according to the type of borrower and the collateral received. The limit applicable to credit for any Peruvian borrower is 10% of the bank’s regulatory capital, applied to both unconsolidated and consolidated records, which may be increased to up to 30% if the loan is collateralized in a manner acceptable under Law 26702. If a financial institution exceeds these limits, the SBS may impose a fine on the institution. As of December 31, 2012, 2011 and 2010, the 10.0% credit limit per borrower of BCP, unconsolidated, was US$350.1 million, US$267.1 million and US$197.4 million, respectively, for unsecured loans, and the 30.0% limit for secured loans was US$1,050.5, US$801.3 million and US$592.2 million, respectively, for the last three years.

Pursuant to Article 52 of the organic law of the Central Bank, in certain circumstances, the Central Bank has the authority to establish limits on interest rates charged by commercial banks and other financial institutions. No such limits are currently in place; however, there can be no assurance that the Central Bank will not establish such limits on interest rates in the future.

Related Party Transactions

Law 26702 regulates transactions between financial institutions on the one hand and related parties and or affiliates on the other. SBS and SMV have also enacted regulations that define indirect ownership, related parties and economic groups, in order to limit transactions with related parties and affiliates. These regulations also provide standards for the supervision of financial and mixed conglomerates formed by financial institutions.

The total amount of loans to directors, employees or close relatives of any such persons may not exceed 7% of a bank’s regulatory capital. All loans made to any single director or employee borrower, considering his/her close relatives may not exceed 0.35% of such regulatory capital (i.e., 5% of the overall 7% limit).

Pursuant to Law 26702, as amended by Law 27102, the aggregate amount of loans to related party borrowers considered to be part of an economic group (as defined above) may not exceed 30% (previously 75%) of a bank’s regulatory capital. For purposes of this test, related party borrowers include (i) any person holding, directly or indirectly, 4% or more of a bank’s shares, (ii) directors, (iii) certain principal executive officers of a bank or (iv) persons affiliated with the administrators of the bank. Loans to individual related party borrowers are also subject to the limits on lending to a single borrower described under “—Lending Activities” above. All loans to related parties must be made on terms no more favorable than the best terms that BCP offers to the public.

Ownership Restrictions

Law 26702 establishes certain restrictions on the ownership of a bank’s shares. Banks must have a minimum of two shareholders. Among other restrictions, those convicted of drug trafficking, asset laundering, terrorism and other felonies, or those who are directors, employees and advisors of public entities that regulate and supervise the activities of banks, are subject to ownership limitations. All transfers of shares in a bank must be recorded at the SBS. Transfers involving the acquisition by any individual or corporation, whether directly or indirectly, of more than 10% of a bank’s capital stock require prior authorization from the SBS. The SBS may deny authorization to such transfer of shares if the purchasers (or their shareholders, directors or employees in the case of juridical persons) are legally disabled, have engaged in illegal activity in the area of banking, finance, insurance or reinsurance, or if objections are raised on the basis of the purchaser’s moral fitness or economic solvency, among others. The decision of the SBS is final, and cannot be overturned by the courts. If a transfer is made without obtaining the prior approval of the SBS, the purchaser shall be fined with an amount equivalent to the value of the transferred shares and is obligated to sell the shares within 30 days, or the fine is doubled. In addition, the purchaser is not allowed to exercise its voting rights at the shareholders’ meetings. Foreign investors receive the same treatment as Peruvian nationals and are subject to the limitations described above.

Finally, under Peruvian law, individuals or corporations that acquire, directly or indirectly, 1% of the capital stock of a bank in a period of 12 months or acquire a 3% or more share participation, have the obligation to provide the information that the SBS may require to identify such individuals’ or corporations’ main economic activities and assets structure.

Risk Rating

Law 26702 and SBS Resolutions No. 672 and 18400-2010, require that all financial companies be rated by at least two risk rating companies on a semi-annual basis, in addition to the SBS’s assessment. Criteria to be considered in the rating include risk management and control procedures, loan quality, financial strength, profitability, liquidity and financial efficiency. Five risk categories are assigned, from “A” (lowest risk) to “E” (highest risk), allowing for sub-categories within each category. As of September 2012, BCP was assigned the “A+” risk category by its two rating agencies, Equilibrium Clasificadora de Riesgo and Apoyo and Associates International. As of December 2012, BCP maintained the risk category of “A+”.

Deposit Fund

Law 26702 provides for mandatory deposit insurance to protect the deposits of financial institutions by establishing the Fondo de Seguro de Depósitos (Deposit Insurance Fund or the Fund) for individuals, associations, not-for-profit companies, and demand deposits of non-financial companies. Financial institutions must pay an annual premium calculated on the basis of the type of deposits accepted by the entity and the risk classification of such entity, made by the SBS and at least two independent risk-rating agencies. The annual premium begins at 0.65% of total funds on deposit under the coverage of the Fund and increases to 1.45% applicable to banks in the highest risk category. BCP is currently classified in the lowest risk category. The maximum amount (defined on a monthly basis) that a customer is entitled to recover from the Fund is S/. 91,216 as of December 31, 2012.

Intervention by the SBS

Pursuant to Law 26702, as amended by Law 27102, the SBS has the authority to seize the operations and assets of a bank. These laws provide for three levels of action by the SBS: a supervisory regime, an intervention regime and the liquidation of the bank. Any of these actions may be taken if certain events occur, including if the bank: (i) interrupts payments on its liabilities, (ii) repeatedly fails to comply with the regulations of the SBS or the Central Bank, (iii) repeatedly violates the law or the provisions of the bank’s bye-laws, (iv) repeatedly manages its operations in an unauthorized or unsound manner or (v) has its regulatory capital fall or be reduced by more than 50%.

During the intervention regime, rather than seizing the operations and assets of a bank, the SBS may adopt other measures, including (i) placing additional requirements on the bank, (ii) ordering it to increase its capital stock or divest certain or all of its assets, or (iii) imposing a special supervision regime during which BCP must adhere to a financial restructuring plan.

The SBS intervention regime stops a bank’s operations for up to 45 days and may be extended for an additional 45 days. During this time, the SBS may institute measures such as: (i) canceling losses by reducing reserves, capital and subordinated debt, (ii) segregating certain assets and liabilities for transfer to another financial institution and (iii) merging the intervened bank with an acquiring institution according to the program established by Urgent Decree No. 108-2000, enacted in November 2000. After the intervention, the SBS will liquidate the bank unless it is merged with an acquiring institution, as described in (iii) above.

Regulation from the United States Federal Reserve Bank and from the State of Florida Department of Banking and Finance

Banco de Crédito del Perú Miami Agency (“BCP Miami Agency”) is licensed to operate as an International Agency in the State of Florida and was authorized to transact business by the Comptroller of Florida on September 3, 2002. The Office of Financial Regulation of the State of Florida shares regulatory responsibility with the Federal Reserve Bank of Atlanta.

Regulation from the Superintendency of Banks in Panama

BCP Panama is a branch of BCP that is registered in the Republic of Panama. It began operating in June 2002 under an International License issued by the Panamanian Superintendence of Banks, in accordance with Law Decree No. 9 of February 26, 1998, as amended. BCP Panama is subject to an inspection every two (2) years made by auditors and inspectors of the Panamanian Superintendence of Banks, to determine, among other things, its compliance with the Decree Law No. 2 and No. 42 Law on the Prevention of Money Laundering.

(iii)

Atlantic Security Bank (ASB)

General

ASB, a subsidiary of ASHC, is a Cayman Islands bank with a branch in Panama. ASB is regulated by the regulatory authorities of the Cayman Islands while its Panama branch is regulated by the banking authorities of Panama.

ASB is registered as an exempt company and is licensed in the Cayman Islands pursuant to the Banks and Trust Companies Law. ASB holds an unrestricted Category B Banking and Trust License, as well as a Mutual Fund Administrator License. As a holder of a Category B License, ASB may not take deposits from any person residing in the Cayman Islands other than another licensee, an exempt company or an ordinary non-resident company which is not carrying on business in the Cayman Islands.

ASB may not invest in any asset which represents a claim on any person residing in the Cayman Islands, except a claim resulting from: (i) a loan to an exempt or an ordinary non-resident company not carrying on business in the Cayman Islands; (ii) a loan by way of mortgage to a member of its staff or to a person possessing or being deemed to possess Caymanian status under the immigration law, for the purchase or construction of a residence in the Cayman Islands to be owner-occupied; (iii) a transaction with another licensee or (iv) the purchase of bonds or other securities issued by the government of the Cayman Islands, a body incorporated by statute, or a company in which the government is the sole or majority beneficial owner. In addition, ASB may not, without the written approval of the Cayman Islands Monetary Authority (the “Authority”), carry on any business in the Cayman Islands other than business permitted by the Category B License.

There are no ratio or liquidity requirements under the Cayman Banking Law, but the Authority expects observance of prudent banking practices. As a matter of general practice, the ratio of liabilities to capital and surplus should not exceed 40-to-1 and the ratio of risk-weighted assets to capital and surplus should not exceed 8.33-to-1 (approximately 12%). There is a statutory minimum net worth requirement of US$480,000, but the Authority generally requires a bank or trust company to maintain a higher paid-in capital appropriate to its business. The Authority requires compliance with the guidelines promulgated by the Basel Accord on Banking Regulations and Supervisory Practices although, in special circumstances, different gearing and/or capital risk asset ratios may be negotiated. Compliance with the Cayman Banking Law is monitored by the Authority.

Continuing Requirements

Under the law of the Cayman Islands, ASB is subject to the following continuing requirements: (i) to remain in good standing under the Cayman Islands Companies Law, including the filing of annual and other returns and the payment of annual fees; (ii) to file with the Registrar of Companies any change in the information or documents required to be provided and to pay annual fees; (iii) to file certain prescribed forms with the Authority on a quarterly basis; (iv) to file with the Authority audited accounts within three months of each financial year (in the case of a locally incorporated bank which is not part of a substantial international banking group, a senior officer or board member discusses these accounts each year at a meeting with the Authority) and (v) to file an annual questionnaire.

ASB is required by the Cayman Banking Law to have at least two directors. Additionally, ASB must receive prior approval from the Authority (i) for any proposed change in the directors or senior officers, though in exceptional cases a waiver can be obtained enabling changes to be reported after the event or annually in the case of a branch of a substantial international bank; (ii) for the issue, transfer or other disposal of shares (it is rare for a waiver to be granted with respect to shares except in the case of a branch of a substantial international bank and where the shares are widely held and publicly traded); (iii) for any significant change in the business plan filed on the original license application or (iv) to open a subsidiary, branch, agency or representative office outside the Cayman Islands. Finally, ASB must obtain the prior approval of the Authority to change its name and must notify the Authority of any change in its principal office or its authorized agent in the Cayman Islands.

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BCP Bolivia

Until March 2010, the Bolivian banking system operated under the Law of Banks and Financial Entities No. 1488, enacted on April 14, 1993, which was modified by Law 3076 of June 20, 2005, which granted supervisory powers to the Superintendency of Banks and Financial Entities (pursuant to Supreme Decree 29894, now referred to as the FSSA. In addition, the law established that the Central Bank of Bolivia (BCB by its Spanish initials) would regulate financial intermediation and deposit activities, determine monetary and foreign exchange policy, and establish reserve requirements on deposits and capital adequacy, which banks and financial companies were required to follow. Also, the Financial System Supervisory Authority has the mandate to supervise brokerage activities and mutual fund management that is conducted through BCP Bolivia’s subsidiaries, Credibolsa S.A. and Credifondo S.A. These subsidiaries operate under the Securities Markets Law No. 1834, enacted on March 31, 1998.

Also Bolivia’s new constitution, which was approved by referendum in February 2009, established that the Bolivian financial system is to be regulated as follows:

•

The Central Bank of Bolivia is responsible for maintaining the stability of the internal monetary value and has authority to regulate monetary policy, control foreign exchange policies, regulate the payment system, authorize the issuance of money and administrate international reserves in coordination with the Economic Policy stated by the Public Sector.

•

All financial entities (banks, mutual funds, securities, insurance and others) are regulated by the Financial System Supervisory Authority which has assumed all regulatory functions held previously by the Superintendency of Banks and Financial Entities and the Superintendency of Pensions, Securities and Insurance.

The changes to existing laws by the new Bolivian constitution have not materially impacted BCP Bolivia’s business.

In 2012, the Bolivian government sanctioned an additional income tax of 12.5% of earnings before taxes applicable to all financial institutions with a ratio of earnings before taxes to equity in excess of 13%. Additionally, in November 2012, the government approved a new tax on sales of foreign exchange. This new tax levies all sales of foreign exchange with a 0.70% rate applicable on the amount of foreign currency sold.

Finally, in November 2012, the government announced the conversion of Banco Unión (formerly a private bank majority owned by the government) into a public bank. As of December 2012, Banco Unión ranked fifth when measured by gross loans.

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Investment banking

BCP Capital

The company falls under the supervision of the SMV, a specialized technical body attached to the Ministry of Finance, aimed to ensure the protection of investors, efficiency and transparency of the markets, as well as the diffusion of the information required for such purposes. It enjoys functional, administrative, economic, technical and budgetary autonomy.

The Securities Market Law as amended, approved by Legislative Decree Nº 861, governs the public offering and trading of securities, listed in the SMV and Lima Stock Exchange. The latter institution, as the only stock exchange in Peru, also provides internal regulations which form part of the regulations and administrative rulings that govern the offering and trading of securities.

Correval

Correval S.A. falls under the supervision of the Superintendencia Financiera de Colombia, an entity whose main function is to oversee the financial and insurance sectors. Although it has an important role monitoring and surveillance, it also has certain regulatory powers which permit it to issue laws and decrees.

Additionally, the Autorregulador del Mercado de Valores de Colombia (AMV) supervises and regulates the conduct of security intermediaries, as well as the certification of those who carry out such activities. AMV is a private entity, and is the product of a self-regulation scheme established after the termination of Law 964 of 2005.

Correval Panama S.A., is regulated and supervised by the Superintendencia del Mercado de Valores de Panama S.A.

IM Trust

IM Trust’s principal legal framework comes from Law 18,046. All companies involved in the stock market are supervised directly by the Superintendencia de Valores y Seguros (SVS). The SVS ensures that persons or supervised institutions, from formation until liquidation, comply with laws, regulations, statutes and other provisions governing the functioning of these markets. The SVS also authorizes companies to manage mutual funds (AFM and AGF) and oversees these companies and funds to ensure compliance with laws and regulations by monitoring their legal, financial and accounting information.

In Chile, there are laws, regulations and rules that govern the various sectors of the stock market. One such law is the Securities Market Law, which governs the functioning of the Chilean market and the laws relating to corporations, management of third-party funds (investment funds, mutual funds, pension funds and others) and the deposit and custody of securities.

Credicorp Securities

The CSI operates from one location in Coral Gables, Florida, United States of America. All new accounts and all securities transactions are reviewed and approved at the Coral Gables office. All representatives are assigned to and supervised from the Coral Gables main office.

CSI is registered with the SEC and is a member of FINRA and the Securities Investor Protection Corporation (SIPC). As a member of SIPC, CSI protects customers’ investment accounts up to $500,000 of which $100,000 may be in cash and $400,000 may be in securities.

There are three principals at CSI all of which are Series 7 and Series 24 licensed (General Securities Principal). At the trading desk employees are Series 7 licensed (Registered Representative), Series 55 licensed (Equity Trader), and Series 4 licensed (Registered Options and Security Futures Principal). We also have an in-house Series 27 (Financial and Operations Principal). Members of CSI’s back-office staff are either Series 99 licensed (Operations Professional) or Series 7 licensed.

(vi)

Grupo Pacífico

Overview

Grupo Pacífico’s operations are regulated by Law 26702 and the SBS. Peruvian insurance companies must submit regular reports to the SBS concerning their operations. In addition, the SBS conducts on-sight reviews on an annual basis. The SBS conducts these reviews primarily to evaluate a company’s compliance with solvency margin and reserve requirements, investment requirements and rules governing the recognition of premium income. If the SBS determines that a company is unable to meet the solvency margin or technical reserve requirements, or is unable to pay claims as they come due, it may either liquidate the company or permit it to merge with another insurance company.

Under Peruvian law, insurance companies may engage in certain credit risk operations, such as guarantees, bonds and trusteeships, but are prohibited from offering other banking services, operating mutual funds or offering portfolio management services. In addition, insurance companies may not conduct brokerage operations for third parties.

Peruvian insurance companies are also prohibited from having an ownership interest in other insurance or reinsurance companies of the same class or in private pension funds.

Establishment of an Insurance Company

Insurance companies must be authorized by the SBS to commence operations. Peruvian law establishes certain minimum capital requirements for insurance and reinsurance companies, which must be satisfied by cash investments in the company. The statutory amounts are expressed in constant value.

Solvency Requirements

Pursuant to Law 26702, the SBS regulates the solvency margin of Peruvian insurance companies. The solvency margin calculations take into account the amount of premiums written and losses incurred during a specified period prior to the date of the calculation.

Insurance companies must also maintain solvency equity, which must be the greater of (i) the solvency margin and (ii) the minimum capital requirement, as established by law. The required amount of solvency equity is recalculated at least quarterly. If an insurance company has outstanding credit risk operations, part of the solvency equity must be set aside for its coverage.

Legal Reserve Requirements

Peruvian law also requires that all insurance companies establish a legal guarantee reserve for policyholders by setting aside 10% of income before taxes until the reserve reaches at least 35% of paid-in capital.

Reserve Requirements

Pursuant to Law 26702 and regulations issued by the SBS, Peruvian insurance companies must establish technical reserves. See “—(6) Pacífico Seguros Generales—(ii) Claims and Reserves”. Law 26702 also requires insurance companies to create a reserve for IBNR claims that are reflected as a liability, net of recoveries and reinsurance, in our consolidated financial statements. Reserves for IBNR claims are estimated by using generally accepted actuarial reserving methods. See Note 3(e) to our consolidated financial statements. Finally, Grupo Pacífico is required by the SBS to establish pre-event reserves for risk of catastrophes, which, in accordance with IFRS principles, are not considered in our financial statements. See “—(6) Pacífico Seguros Generales—(ii) Claims and Reserves”.

Investment Requirements

Pursuant to Law 26702, the total amount of an insurance company’s solvency equity and technical reserves must be permanently supported by diversified assets, which may not be pledged or otherwise encumbered. The investment regulations further state that deposits in and bonds of one financial institution together cannot exceed 10% of the total of an insurer’s solvency equity and technical reserves combined. In general, no more than 20% of an insurance company’s combined solvency equity and technical reserves may be invested in instruments (including stocks and bonds) issued by a company or group of companies. In order for an insurance company to invest in non-Peruvian securities, the securities must be rated by an internationally recognized credit rating company and the asset class must be authorized by Peruvian SBS regulations. Securities owned by insurance companies must be registered in the Public Registry of Securities of Peru or the comparable registry of their respective country.

Related Party Transactions

Law 26702 generally provides that insurance companies may not extend credit to or guarantee the obligations of employees or members of the board of directors, except for certain home mortgage loans to employees.

Ownership Restrictions

Law 26702 sets forth the same types of restrictions regarding the ownership and transfer of insurance company shares as it does regarding the ownership and transfer of shares in banks. See “—(11) Supervision and Regulation—(ii) BCP—Overview”.

(vii)

Prima AFP

Prima AFP’s operations are regulated in Peru by the Unified Text of the Private System for the Administration of Funds Act, approved by Supreme Decree No. 054-97-EF. Operations are controlled and supervised by the SBS. In addition, AFPs are under the supervision of the SMV. AFPs must submit reports to the SBS, members and beneficiaries in general, with regard to the administration of pension funds and any information linked to the AFP’s operations.

Under Peruvian legislation, AFPs can only have one type of business activity; they can only offer services linked to the administration of pension funds under the category of individual capital accounts. Also, AFPs must pay benefits provided by Law and administer retirement, disability, death benefit and funeral expense risks. AFPs must submit audited financial information, in accordance with SBS regulations. There are certain limitations on the ownership and transfer of AFP shares.

SBS authorization is required for an AFP to begin operations. Peruvian law establishes a minimum capital requirement, paid in cash by the shareholders.

SBS has put in place many investment limits, which, among others, restrict investments in certain asset classes, economic groups, and issuers. In addition, some of these limits vary according to the risk profile of the fund. Among these limits, the most general are as follows:

The total amount invested in instruments issued or guaranteed by the Peruvian State cannot exceed 30% of the fund value;

The total amount invested in instruments issued or guaranteed by BCR cannot exceed 30% of the fund value;

The total amount jointly invested under the two aforementioned points cannot exceed 40% of the fund value and;

The total amount invested in instruments issued by the government, financial institutions, and non-financial institutions whose commercial activities are mostly abroad, cannot exceed 50% of the fund value. The Central Bank has set a maximum operating sub-limit at 32%.

As mentioned before, the Central Bank can set maximum operating percentages and/or sub-limits to the aforementioned investment limits.

SBS requires a guaranteed minimum profitability for funds under management. Part of the guarantee is an obligatory reserve, which must be funded by the AFP. The amount will depend on the instruments in the portfolio, but is, on average, 1% of funds under management. In addition, Peruvian law establishes that companies must set up a legal reserve equivalent to 10% of net income, until the reserve is at least 20% of the capital.

Private Pension System Reform:

Recent reforms have resulted in the following changes to Peru’s private pension system:

Auctions for management of new affiliates:

Peru’s Law to Reform the Private Pension System sets forth a new process by which individuals, which are called affiliates, may become affiliated with the SPP. Under the law, auctions are held every 24 months to determine which company will have the exclusive right to manage the accounts of new SPP affiliates for a two year period, the first such period beginning on February 1, 2013 and ending in January 31, 2015. Bid awards will be made to the AFP that offers the lowest administration fees. New affiliates to the SPP are required to affiliate with the AFP that obtains the bid award, and the new affiliates must remain with this fund manager for 24 months.

A competitive bidding process took place in September 2012 to determine which company would manage new affiliate accounts during a transitional period from September 2012 through the end of January 2013; Prima AFP won the September auction and managed new accounts during the transitional period. In December 2012, Peru held its first auction to determine who would manage the accounts for the first full two year period. A new participant in the system won the auction, but that participant did not have the operational capacity to manage new affiliate accounts as of February 1, 2013. As a result, Prima AFP continues to manage the accounts of new affiliates until the new company is ready to begin operations. This has allowed Prima AFP to temporarily continue to capture new affiliates, and thereby increase its client base.

Changes in the administration fees:

Prior to the adoption of the Law to Reform the Private Pension System, pension fund affiliates were charged commissions based on their salaries. Under the Law to Reform the Private Pension System, AFPs will receive a mixed commission for managing the accounts of affiliates. This commission will be calculated based on the monthly remuneration of the affiliates plus a commission on the total funds managed by the AFP for the affiliate. By May 31, 2013, affiliates that are already in the private pension system must choose between (i) continuing to be subject to the fee structure based on remuneration that was in place prior to the adoption of the Law to Reform the Private Pension System; and (ii) changing to the new fee structure (mixed commission). All new affiliates will be subject to the mixed fee structure. The mixed fee structure will be in place for a 10-year transitional period, after which an AFP’s fee will be based sole on its funds under management. These changes in the fee structure of Peru’s pension funds are designed to align the interest of AFPs and their clients.

At the end of December 2012, Prima AFP published its new commission’s structure. Affiliates will be able to choose either of the following commission fee structures:

Commission by flow: 1.60% applied to the affiliates’ monthly remuneration. This commission is currently in effect.

ii)

Mixed commission: composed of 1.51% commission on the affiliates’ monthly remuneration, plus a 1.90% annual commission, which is applied to the total account balance of the affiliate (as of February 2013 for new affiliates and June 2013 for current clients).

Current affiliates must choose between the commission based solely on remuneration and the mixed commission. The deadline for making this choice is May 31, 2013.

An auction process will be held to determine which company may offer insurance for survivors, disability and burial costs in a single package for all AFPs via a collective policy. The right to sell the insurance package will be awarded to the insurance company that presents the best economic proposal.

The Law to Reform the Private Pension System provides for the creation of capital protection funds. These funds are designed to ensure that monies belonging to persons over the age of 65 maintain value. As a result, capital protection funds will offer stable growth and very low volatility. As of January 2013, capital protection funds were unregulated.

Measures are established to expand coverage, including:

Obligatory affiliation with a pension system for independent workers under the age of 40.

ii)

Creation of a Social Pension System for employees and owners of micro businesses under the age of 40 who receive monthly income up to 1.5 times Peru’s minimum wage (RMV by its Spanish initials). Under this system, workers will receive a contribution from the state of up to a certain rate or for an amount equivalent to the contributions made by the affiliate.

Other changes modified laws governing employers, the management of outside service contracts and the efficiency of the AFPs’ operating process. Noteworthy aspects of these reforms include those that aim to expand coverage and promote operating efficiencies to ensure that benefits are provided to the appropriate stakeholders.

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Selected Statistical Information

In the following tables, we have set forth certain selected statistical information and ratios regarding our business for the periods indicated. You should read the selected statistical information in conjunction with the information included in “Item 5. Operating and Financial Review and Prospects—(A) Operating Results” and the Consolidated Financial Statements (and the notes that accompany the financial statements). The statistical information and discussion and analysis given below for the years 2008, 2009, 2010, 2011 and 2012 reflect our consolidated financial position as well as that of our subsidiaries, as of December 31, 2008, 2009, 2010, 2011 and 2012 and our results of operations for 2008, 2009, 2010, 2011 and 2012.

(i)

Average Balance Sheets and Income from Interest-Earning Assets

The tables below set forth selected statistical information based on our average balance sheets prepared on a consolidated basis. Except as otherwise indicated, we have classified average balances by currency (Nuevos Soles or foreign currency, primarily U.S. Dollars) rather than by the domestic or international nature of the balance. In addition, except where noted, the average balances are based on the quarterly ending balances in each year. Any of these quarter-end balances that were denominated in Nuevos Soles have been converted into U.S. Dollars using the applicable SBS exchange rate as of the date of such balance. Our management does not believe that the stated averages present trends materially different from those that would be presented by daily averages.

Average Balance Sheets

Assets, Interest Earned and Average Interest Rates

	Year ended December 31,
	2010								2011								2012
ASSETS:	Average Balance			Interest Earned		Nominal Avg. Rate			Average Balance			Interest Earned		Nominal Avg. Rate			Average Balance			Interest Earned		Nominal Avg. Rate
	(U.S. Dollars in thousands, except percentages)
Interest-earning assets:
Deposits in Central Bank
Nuevos Soles	US$	1,056,389		US$	25,351		2.40	%	US$	962,291		US$	33,041		3.43	%	US$	1,487,104		US$	28,351		1.91	%
Foreign Currency		2,147,576			3,319		0.15			2,804,304			3,277		0.12			3,180,717			3,576		0.11
Total		3,203,965			28,670		0.89			3,766,595			36,318		0.96			4,667,821			31,927		0.68
Deposits in other banks
Nuevos Soles		54,525			1,135		2.08			80,058			4,004		5.00			95,376			4,470		4.69
Foreign Currency		855,555			2,532		0.30			894,865			2,564		0.29			800,635			4,447		0.56
Total		910,080			3,667		0.40			974,923			6,568		0.67			896,011			8,917		1.00
Investment securities
Nuevos Soles		2,223,416			64,732		2.91			2,607,309			126,683		4.86			3,933,321			172,486		4.39
Foreign Currency		3,314,529			132,063		3.98			2,853,192			101,026		3.54			3,152,744			102,300		3.24
Total		5,537,945			196,795		3.55			5,460,501			227,709		4.17			7,086,065			274,786		3.88
Total loans (1)
Nuevos Soles		4,957,672			698,995		14.10			6,325,230			1,069,628		16.91			8,031,968			1,342,190		16.71
Foreign Currency		7,967,501			519,733		6.52			9,749,989			463,723		4.76			11,327,777			606,282		5.35
Total		12,925,173			1,218,728		9.43			16,075,219			1,533,351		9.54			19,359,745			1,948,472		10.06
Total dividend-earning assets
Nuevos Soles		228,216			6,810		2.98			254,027			8,347		3.29			288,259			8,889		3.08
Foreign Currency		208,061			4,805		2.31			256,661			6,974		2.72			283,773			7,465		2.63
Total		436,277			11,615		2.66			510,688			15,321		3.00			572,032			16,354		2.86
Total interest-earning assets
Nuevos Soles		8,520,218			797,023		9.35			10,228,915			1,241,703		12.14			13,836,028			1,556,386		11.25
Foreign Currency		14,493,222			662,452		4.57			16,559,011			577,564		3.49			18,745,646			724,070		3.86
Total		23,013,440			1,459,475		6.34			26,787,926			1,819,267		6.79			32,581,674			2,280,456		7.00
Noninterest-earning assets:
Cash and due from banks
Nuevos Soles		362,846								478,035								647,822
Foreign Currency		317,649								368,180								328,425
Total		680,495								846,215								976,247
Reserves for loan losses
Nuevos Soles		(211,053	)							(257,621	)							(364,017	)
Foreign Currency		(184,307	)							(212,862	)							(263,098	)
Total		(395,360	)							(470,483	)							(627,115	)
Premises and equipment
Nuevos Soles		338,817								383,131								487,679
Foreign Currency		15,518								15,112								44,779
Total		354,335								398,243								532,458
Other non-interest-earning assets and gain from derivatives instruments and other interest income
Nuevos Soles		1,100,346			3,531					1,130,516			14,993					1,038,642			4,207
Foreign Currency		669,910			8,702					755,903			3,504					1,386,872			25,778
Total		1,770,256			12,233					1,886,419			18,497					2,425,514			29,985
Total non-interest-earning assets
Nuevos Soles		1,590,956			3,531					1,734,061			14,993					1,810,126			4,207
Foreign Currency		818,770			8,702					926,333			3,504					1,496,978			25,778
Total		2,409,726			12,233					2,660,394			18,497					3,307,104			29,985
Total average assets
Nuevos Soles		10,111,174			800,554		7.92			11,962,976			1,256,696		10.5			15,646,154			1,560,593		9.97
Foreign Currency		15,311,992			671,154		4.38			17,485,344			581,068		3.32			20,242,624			749,848		3.7
Total		25,423,166			1,471,708		5.79			29,448,320			1,837,764		6.24			35,888,778			2,310,441		6.44

(1)

Figures for total loans include past-due loans, but do not include accrued but unpaid interest on such past-due loans in the year in which such loans became past due. Accrued interest is included.

Average Balance Sheets

Liabilities, Interest Paid and Average Interest Rates

	Year ended December 31,
	2010							2011							2012
LIABILITIES	Average Balance		Interest Paid		Nominal Avg. Rate			Average Balance		Interest Paid		Nominal Avg. Rate			Average Balance		Interest Paid		Nominal Avg. Rate
	(U.S. Dollars in thousands, except percentages)
Interest-bearing liabilities:
Demand deposits
Nuevos Soles (1)	US$	2,251,493	US$	9,140		0.41	%	US$	2,503,311	US$	11,586		0.46	%	US$	3,038,002	US$	14,760		0.49	%
Foreign Currency (1)		3,018,009		4,510		0.15			3,773,232		5,544		0.15			4,555,943		7,142		0.16
Total		5,269,502		13,650		0.26			6,276,543		17,130		0.27			7,593,945		21,902		0.29
Savings deposits
Nuevos Soles (1)		1,719,869		4,086		0.24			2,271,029		8,079		0.36			2,980,838		15,430		0.52
Foreign Currency (1)		2,104,084		4,733		0.22			2,367,401		5,462		0.23			2,533,566		6,054		0.24
Total		3,823,953		8,820		0.23			4,638,430		13,541		0.29			5,514,404		21,485		0.39
Time deposits
Nuevos Soles (1)		2,890,800		69,275		2.40			3,361,966		136,932		4.07			4,710,953		184,820		3.92
Foreign Currency (1)		3,980,428		84,655		2.13			3,806,928		74,400		1.95			4,031,361		86,925		2.16
Total		6,871,228		153,929		2.24			7,168,894		211,332		2.95			8,742,314		271,745		3.11
Due to banks and correspondents
Nuevos Soles		201,360		11,973		5.95			365,769		49,295		13.48			587,129		54,243		9.24
Foreign Currency		1,632,526		31,559		1.93			1,640,407		15,074		0.92			1,338,586		28,533		2.13
Total		1,833,886		43,532		2.37			2,006,176		64,369		3.21			1,925,715		82,776		4.30
Bonds
Nuevos Soles		561,228		34,451		6.14			383,271		24,479		6.39			533,682		33,643		6.30
Foreign Currency		1,995,499		89,860		4.50			3,234,863		162,264		5.02			3,860,167		208,623		5.40
Total		2,556,727		124,311		4.86			3,618,134		186,743		5.16			4,393,849		242,266		5.51
Total interest-bearing liabilities
Nuevos Soles		7,624,750		128,925		1.69			8,885,346		230,370		2.59			11,850,604		302,896		2.56
Foreign Currency		12,730,546		215,317		1.69			14,822,831		262,744		1.77			16,319,623		337,278		2.07
Total		20,355,296		344,242		1.69			23,708,177		493,115		2.08			28,170,227		640,173		2.27
Non-interest-bearing liabilities and net equity:
Other liabilities and loss from derivatives instruments and other interest expenses
Nuevos Soles		805,690		1,859					847,862		2,035					955,441		2,507
Foreign Currency		1,416,339		68,020					1,740,041		36,450					2,856,381		50,966
Total		2,222,029		69,879					2,587,903		38,485					3,811,822		53,473
Equity attributable to Credicorp equity holders
Nuevos Soles
Foreign Currency		2,683,778							3,092,282							3,803,381
Total		2,683,778							3,092,282							3,803,381
Minority Interest
Nuevos Soles
Foreign Currency		162,063							59,958							103,348
Total		162,063							59,958							103,348
Total non-interest-bearing liabilities and equity
Nuevos Soles		805,690		1,859					847,862		2,035					955,441		2,507
Foreign Currency		4,262,180		68,020					4,892,281		36,450					6,763,110		50,966
Total		5,067,870		69,879					5,740,143		38,485					7,718,551		53,473
Total average liabilities and equity
Nuevos Soles		8,430,440		130,784		1.55			9,733,208		232,405		2.39			12,806,045		305,403		2.38
Foreign Currency		16,992,726		283,337		1.67			19,715,112		299,194		1.52			23,082,733		388,244		1.68
Total		25,423,166		414,121		1.63			29,448,320		531,600		1.81			35,888,778		693,646		1.93

(1)

Includes the amount paid - for the deposit insurance fund.

Changes in Net Interest Income and Expense: Volume and Rate Analysis

	2011/2010									2012/2011
	Increase/(Decrease) due to changes in:									Increase/(Decrease) due to changes in:
	Volume			Rate			Net Change			Volume			Rate			Net Change
	(U.S. Dollars in thousands)
Interest Income:
Interest-earning deposits in Central Bank
Nuevos Soles		(2,745	)		10,435			7,690			14,013			(18,703	)		(4,690	)
Foreign Currency		891			(933	)		(42	)		432			(133	)		299
Total		(1,854	)		9,502			7,648			14,444			(18,835	)		(4,391	)
Deposits in other banks
Nuevos Soles		904			1,965			2,869			742			(276	)		466
Foreign Currency		114			(82	)		32			(397	)		2,280			1,883
Total		1,018			1,883			2,901			345			2,004			2,349
Investment securities
Nuevos Soles		14,915			47,036			61,951			61,288			(15,485	)		45,803
Foreign Currency		(17,358	)		(13,679	)		(31,037	)		10,163			(8,889	)		1,274
Total		(2,443	)		33,357			30,914			71,452			(24,375	)		47,077
Total loans(1)
Nuevos Soles		212,038			158,595			370,633			286,912			(14,350	)		272,562
Foreign Currency		100,526			(156,536	)		(56,010	)		79,744			62,815			142,559
Total		312,564			2,059			314,623			366,656			48,465			415,121
Total dividend-earning assets
Nuevos Soles		809			728			1,537			1,090			(548	)		542
Foreign Currency		1,221			948			2,169			725			(234	)		491
Total		2,030			1,676			3,706			1,815			(782	)		1,033
Total interest-earning assets
Nuevos Soles		183,631			261,049			444,680			421,815			(107,132	)		314,683
Foreign Currency		83,238			(168,126	)		(84,888	)		80,364			66,142			146,506
Total		266,869			92,923			359,792			502,179			(40,990	)		461,189
Interest Expense:
Demand deposits
Nuevos Soles		1,094			1,352			2,446			2,536			638			3,174
Foreign Currency		1,119			(85	)		1,034			1,189			409			1,597
Total		2,213			1,267			3,480			3,725			1,047			4,771
Savings deposits
Nuevos Soles		1,635			2,357			3,992			3,100			4,252			7,351
Foreign Currency		600			129			729			390			202			593
Total		2,235			2,486			4,721			3,490			4,454			7,944
Time deposits
Nuevos Soles		15,241			52,417			67,658			53,934			(6,046	)		47,888
Foreign Currency		(3,540	)		(6,714	)		(10,254	)		4,613			7,912			12,525
Total		11,701			45,703			57,403			58,546			1,867			60,413
Due to banks and correspondents and issued bonds
Nuevos Soles		15,967			21,355			37,322			25,142			(20,194	)		4,948
Foreign Currency		112			(16,597	)		(16,485	)		(4,604	)		18,063			13,459
Total		16,079			4,758			20,837			20,538			(2,131	)		18,407
Bonds
Nuevos Soles		(11,145	)		1,173			(9,972	)		9,544			(380	)		9,164
Foreign Currency		58,989			13,415			72,404			32,580			13,779			46,359
Total		47,844			14,588			62,432			42,124			13,399			55,523
Total interest-bearing liabilities
Nuevos Soles		26,999			74,447			101,446			76,335			(3,810	)		72,525
Foreign Currency		36,237			11,190			47,427			28,733			45,800			74,533
Total		63,236			85,637			148,873			105,068			41,990			147,058

(1)

Figures for total loans include past-due loans, but do not include accrued but unpaid interest on such past-due loans in the year in which such loans became past due. Accrued interest is included.

Interest-Earning Assets, Net Interest Margin and Yield Spread

The following table shows for each of the periods indicated, by currency, the levels of average interest-earning assets, net interest income, gross yield, net interest margin and yield spread, all on a nominal basis:

	Year ended December 31,
	2010			2011			2012
	(U.S. Dollars in thousands, except percentages)
Average interest-earning assets
Nuevos Soles		8,520,218			10,228,915			13,836,028
Foreign Currency		14,493,222			16,559,011			18,745,646
Total		23,013,440			26,787,926			32,581,674
Net interest income
Nuevos Soles		668,098			1,011,333			1,253,490
Foreign Currency		447,135			314,820			386,792
Total		1,115,233			1,326,153			1,640,282
Gross yield (1)
Nuevos Soles		9.35	%		12.14	%		11.25	%
Foreign Currency		4.57	%		3.49	%		3.86	%
Weighted-average rate		6.34	%		6.79	%		7.00	%
Net interest margin (2)
Nuevos Soles		7.84	%		9.89	%		9.06	%
Foreign Currency		3.09	%		1.90	%		2.06	%
Weighted-average rate		4.85	%		4.95	%		5.03	%
Yield spread (3)
Nuevos Soles		7.66	%		9.55	%		8.69	%
Foreign Currency		2.88	%		1.72	%		1.80	%
Weighted-average rate		4.65	%		4.71	%		4.73	%

(1) Gross yield is interest income divided by average interest-earning assets.

(2) Net interest margin represents net interest income divided by average interest-earning assets.

(3) Yield spread, on a nominal basis, represents the difference between gross yield on average interest-earning assets and average cost of interest-bearing liabilities.

Interest-Earning Deposits With Other Banks

The following table shows the short-term funds deposited with other banks. These deposits are denominated by currency as of the dates indicated. Deposits held in countries other than Peru are denominated in several currencies; however, the majority of these deposits are denominated in U.S. Dollars. All currencies were converted to U.S. Dollars using the applicable SBS exchange rate as of the dates indicated.

	Year ended December 31,
	2010		2011		2012
	(U.S. Dollars in thousands)

Nuevo Sol-denominated:
Peruvian Central Bank	US$	3,649,809	US$	825,975	US$	2,105,972
Commercial banks		82,970		93,389		30,996
Total Nuevo Sol-denominated	US$	3,732,779	US$	919,364	US$	2,136,968
Foreign Currency-denominated:
Peruvian Central Bank (U.S. Dollars)	US$	2,094,251	US$	2,958,540	US$	4,099,640
Commercial banks (U.S. Dollars)		1,092,662		530,327		463,951
Other Commercial banks (other currencies)		346		63		1,589
Total Foreign Currency-denominated	US$	3,187,259	US$	3,488,930	US$	4,565,180
Total	US$	6,920,038	US$	4,408,294	US$	6,702,148

(ii) Investment Portfolio

The following table shows the fair value of our trading, available-for-sale and held to maturity investment securities without interest designated by type of security at the dates indicated (see Note 6 to the Consolidated Financial Statements):

	On December 31,
	2010		2011		2012
	(U.S. Dollars in thousands)

Nuevo Sol-denominated:
Peruvian government bonds	US$	299,043	US$	473,868	US$	481,784
Equity securities		256,931		251,032		325,485
Bonds		231,514		232,330		380,549
Peruvian Central Bank certif. notes		314,999		2,059,780		2,965,313
Other investments		158,241		180,258		282,593
Total Nuevo Sol-denominated		1,260,728		3,197,268		4,435,724
Foreign Currency-denominated:
Equity securities	US$	285,270	US$	228,527	US$	339,018
Bonds		1,609,443		1,795,614		2,004,864
Peruvian Government Bonds		252,043		210,776		264,743
Peruvian Central Bank certif. notes		48,851		-		-
Other investment		387,304		517,913		748,407
Total Foreign Currency-denominated	US$	2,582,911	US$	2,752,830	US$	3,357,032
Total securities holdings:	US$	3,843,639	US$	5,950,098	US$	7,792,756

The allowance for decline in value of marketable securities is debited from the value of each individual security.

The weighted-average yield on our Nuevo Sol-denominated interest-earning investment securities was 2.9% in 2010, 4.9% in 2011 and 4.4% in 2012. The weighted-average yield on our foreign currency-denominated portfolio was 4.0% in 2010, 3.5% in 2011 and 3.2% in 2012. The total weighted-average yield of our investment securities was 3.6% in 2010, 4.2% in 2011 and 3.9% in 2012.

The weighted-average yield on our Nuevo Sol-denominated dividend-earning assets was 3.0% in 2010, 3.3% in 2011 and 3.1% in 2012. The weighted-average yield on our foreign currency-denominated portfolio was 2.3% in 2010, 2.7% in 2011 and 2.6% in 2012. The total weighted-average yield of our dividend-earning assets was 2.7% in 2010, 3.0% in 2011 and 2.9% in 2012.

As of December 31, 2012, the investments available for sale and held to maturity pledged as collateral amounted to US$760.5 million (see note 6 to the Consolidated Financial Statements).

The following table shows the maturities of our trading, available-for-sale and held to maturity investment securities designated by type of security on December 31, 2012:

	Within 1 year		After 1 year but within 3 years		Maturing After 3 years but within 5 years		Maturing After 5 years but within 10 years		After 10 years		Total
	(U.S. Dollars in thousands)
Nuevo Sol-denominated:
Peruvian government bonds	US$	8,323	US$	33,933	US$	10,821	US$	208,537	US$	220,170	US$	481,784
Equity securities (1)		325,485		-		-		-		-		325,485
Bonds and debentures		34,276		41,134		48,982		111,991		144,166		380,549
Peruvian Central Bank certif. notes		2,519,447		445,866		-		-		-		2,965,313
Other investments		186,789		9,457		3,108		5,834		77,405		282,593
Total Nuevo Sol-denominated	US$	3,074,320	US$	530,390	US$	62,911	US$	326,362	US$	441,741	US$	4,435,724
Foreign Currency-denominated:
Peruvian government bonds		-		48,302		28,935		43,944		143,562		264,743
Equity securities (1)		339,018		-		-		-		-		339,018
Bonds		253,933		380,366		344,673		490,320		535,572		2,004,864
Peruvian Central Bank certif. notes		-		-		-		-		-		-
Other investments		367,667		50,847		21,210		126,764		181,919		748,407
Total Foreign Currency-denominated	US$	960,618	US$	479,515	US$	394,818	US$	661,028	US$	861,053	US$	3,357,032
Total securities holdings:	US$	4,034,938	US$	1,009,905	US$	457,729	US$	987,390	US$	1,302,794	US$	7,792,756
Weighted-average yield												3.22	%

(1) Equity securities in our account are categorized as maturing within one year.

The maturities of our investment securities classified by trading and available-for-sale, as of December 31, 2012, are described in “Item 11. Quantitative and Qualitative Disclosures about Market Risk.”

Pursuant to the criteria described below, our management has determined that the unrealized losses as of December 31, 2012 and 2011 were temporary and intends to hold each investment for a sufficient period of time to allow for a potential recovery in fair value. This holding period will last until the earlier of the investment’s recovery or maturity.

For equity investments (shares), management considers the following criteria to determine whether a loss is temporary:

•

The length of time and the extent to which fair value has been below cost;

•

The severity of the impairment;

•

The cause of the impairment and the financial condition and near-term prospects of the issuer; and

•

Activity in the market of the issuer which may indicate adverse credit conditions.

For debt investments (fixed maturity), management considers the following criteria to determine whether a loss is temporary:

•

Management assesses the probability that the company will receive all amounts due (principal and interest) under the contract of the security. It considers a number of factors in identifying a credit-impaired security, including: (i) the nature of the security and the underlying collateral, (ii) the amount of subordination or credit enhancement supporting the security, (iii) the published credit rating and (iv) other analyses of the probable cash flows from the security. If recovery of all amounts due is not likely, management may determine that credit impairment exists and record unrealized losses in our consolidated income statement. The unrealized loss recorded in income represents the security’s decline in fair value, which includes the decline due to forecasted cash flow shortfalls as well as widening market spread.

•

For a security with an unrealized loss not identified as a credit impairment, management determines whether it is desirable to hold the security for a period of time to allow for a potential recovery in the security’s amortized cost. Management estimates a security’s forecasted recovery period using current estimates of volatility in market interest rates (including liquidity and risk premiums). Management considers a number of factors to determine whether to hold an investment, including (i) a quantitative estimate of the expected recovery period (which may extend to maturity), (ii) the severity of the impairment and (iii) its strategy with respect to the security or portfolio. If management determines it is not desirable to hold the security for a sufficient period of time to allow for a potential recovery in the security’s amortized cost, we record the unrealized loss in our consolidated income statement.

(iii)

Loan Portfolio

Loans by Type of Loan

The following table shows our loans by type of loan, at the dates indicated:

	On December 31,
	2008			2009			2010			2011			2012
	(U.S. Dollars in thousands)
Loans	US$	8,179,453		US$	8,986,884		US$	11,142,038		US$	13,793,797		US$	16,905,278
Leasing transactions		1,792,827			1,997,562			2,359,236			2,786,129			3,487,351
Discounted notes		368,648			349,126			477,709			552,233			557,328
Factoring		124,537			163,443			250,974			254,516			326,497
Advances and overdrafts		102,687			47,147			104,495			25,130			55,881
Refinanced loans		55,179			59,459			76,707			96,031			142,207
Past-due loans		82,867			184,567			209,908			259,050			372,431
Unearned interest		(249,914	)		(282,869	)		(343,003	)		(446,508	)		(535,045	)
Total loans, net of unearned income and without accrued interest	US$	10,456,284		US$	11,505,319		US$	14,278,064		US$	17,320,378		US$	21,311,928
Total past-due loans amounts		(82,867	)		(184,567	)		(209,908	)		(259,050	)		(372,431	)
Total performing loans	US$	10,373,417		US$	11,320,752		US$	14,068,156		US$	17,061,328		US$	20,939,497

The loan portfolio categories set forth in the table above are based on SBS regulations, which apply to loans generated by BCP and ASHC. Pursuant to SBS guidelines, we categorize loans as follows:

•

Loans: Basic term loans documented by promissory notes and other extensions of credit, such as mortgage loans, credit cards and other consumer loans in various forms, including trade finance loans to importers and exporters on specialized terms adapted to the needs of the international trade transaction.

•

Leasing Transactions: Transactions that involve our acquisition of an asset and the financial leasing of that asset to a client.

•

Discounted Notes: Loans discounted at the outset (the client signs a promissory note or other evidence of indebtedness for the principal amount payable at a future date). Discounted loans also include discounting of drafts, where we make a loan supported by a draft signed by one party and discounted by another party, with recourse to both parties.

•

Factoring: The sale of title to a company’s accounts receivables to a bank (or financial company). The receivables are sold without recourse, and the bank cannot recover from the seller in the event that the accounts are uncollectible. Under factoring loans, the seller receives funds from the bank prior to the average maturity date based on the invoice amount of the receivable, less cash discounts and allowances for estimated claims and returns, among other items.

•

Advances and Overdrafts: Extensions of credit to clients by way of an overdraft facility in the client’s checking account. This category also includes secured short-term advances.

•

Refinanced Loans: Loans that were refinanced because the client was unable to pay at maturity. A loan is categorized as a refinanced loan when a debtor is experiencing payment problems, unless the debtor is current on all interest payments and pays down at least 20% of the principal amount of the original loan. We have distinguished a sub-group titled “Restructured Loans,” which is defined as loans extended under the bankruptcy protection procedures established in the Equity Restructuring Law.

•

Past-Due Loans: Includes overdue loans. See “—Past-Due Loan Portfolio” for further detail.

Loans by Economic Activity

The following table shows our total loan portfolio composition, net of unearned interest, based on the borrower’s principal economic activity:

	At December 31,
	2008						2009						2010
	(U.S. Dollars in thousands, except percentages)
	Amount			% Total			Amount			% Total			Amount			% Total
Economic Activity
Manufacturing	US$	2,535,326			24.25	%	US$	2,557,847			22.23	%	US$	3,003,465			21.04	%
Consumer Loans (1)		2,540,530			24.30			3,224,292			28.03			3,805,813			26.65
Small Business		606,168			5.80			739,157			6.42			953,394			6.68
Commerce		1,344,921			12.86			1,330,023			11.56			1,931,441			13.53
Realty Business and Leasing Services		488,202			4.67			489,614			4.26			712,330			4.99
Mining		675,460			6.46			692,579			6.02			893,145			6.26
Communication, Storage and Transportation		515,412			4.93			559,025			4.86			720,749			5.05
Electricity, Gas and Water		546,014			5.22			782,289			6.80			969,437			6.79
Agriculture		228,623			2.19			271,912			2.36			293,685			2.06
Fishing		77,060			0.74			121,162			1.05			134,811			0.94
Financial Services		439,234			4.20			175,071			1.52			252,869			1.77
Education, Health and Other Services		128,527			1.23			156,496			1.36			177,206			1.24
Construction		229,667			2.20			175,508			1.53			132,517			0.93
Others (2)		351,054			3.36			513,213			4.46			640,205			4.48
Sub total		10,706,198			102.39			11,788,188			102.46			14,621,067			102.40
Unearned interest		(249,914	)		(2.39	)	US$	(282,869	)		(2.46	)%	US$	(343,003	)		(2.40	)%
Total	US$	10,456,284			100.00	%	US$	11,505,319			100.00	%		14,278,064			100.00	%

	At December 31,
	2011						2012
	(U.S. Dollars in thousands, except percentages)
	Amount			% Total			Amount			% Total
Economic Activity
Manufacturing	US$	3,319,821			19.17	%	US$	3,579,385			16.80	%
Consumer Loans (1)		5,003,353			28.88			6,452,922			30.27
Small Business		1,129,119			6.52			1,490,879			7.00
Commerce		2,503,810			14.46			3,108,662			14.59
Realty Business and Leasing Services		968,952			5.59			1,268,692			5.95
Mining		855,774			4.94			753,668			3.54
Communication, Storage and Transportation		713,947			4.12			733,939			3.44
Electricity, Gas and Water		1,114,788			6.44			1,365,188			6.41
Agriculture		329,408			1.90			451,309			2.12
Fishing		164,741			0.95			201,357			0.94
Financial Services		297,612			1.72			404,080			1.90
Education, Health and Other Services		226,055			1.31			326,019			1.53
Construction		255,555			1.48			490,470			2.30
Others (2)		883,951			5.10			1,220,403			5.73
Sub total		17,766,886			102,58			21,846,973			102,51
Unearned interest		(446,508	)		(2.58	)		(535,045	)		(2.51	)
Total	US$	17,320,378			100.00	%	US$	21,311,928			100.00	%

(1)

These amounts comprise:

	2008		2009		2010		2011		2012
	(U.S. Dollars in thousands)

Personal Loans		666,661		976,499		1,147,274		1,455,200		1,929,476
Mortgage Loans		1,484,495		1,752,460		2,058,403		2,723,830		3,487,648
Credit card		389,374		495,333		600,136		824,323		1,035,798
		2,540,530		3,224,292		3,805,813		5,003,353		6,452,922

(2)

Includes community services, hotels and restaurants and other sector.

As of December 31, 2012, 74.7% of the loan portfolio was concentrated in Lima, 89.3% was concentrated in Peru, and 4.1% of the loan portfolio was concentrated in Bolivia.

Concentrations of Loan Portfolio and Lending Limits

As of December 31, 2012, loans and other contingent credits to our 20 largest customers (considered economic groups),equaled US$4,115.3 million, and represented 18.84% of our total loan portfolio. See “—(11) Supervision and Regulation—(ii) BCP—Lending Activities” for the definition of “economic group.” Our total loans and other contingent credits outstanding to each of these customers ranged from US$344.7 million to US$111.6 million, including 18 customers with over US$139.4 million. Total loans and other contingent credits outstanding to our 20 largest customers were ranked in the following risk categories as of December 31, 2012: Class A (normal)—98.8%; Class B (potential problems)—1.2%; Class C (substandard)—0%; Class D (doubtful)—0%; and Class E (loss)—__0%. See “—Classification of the Loan Portfolio.”

BCP’s loans to a single borrower are subject to lending limits imposed by Law 26702. See “—(11) Supervision and Regulation—(ii) BCP—Lending Activities.” The lending limits depend on the nature of the borrower involved and the type of collateral received. The sum of BCP’s loans to and deposits in either another Peruvian universal bank or Peruvian financial institution, plus any guarantees of third party performance received by BCP from such institution, may not exceed 30% of BCP’s regulatory capital (as defined by the SBS). The sum of BCP’s loans to and deposits in non-Peruvian financial institutions, plus any guarantees of third party performance received by BCP from such institutions, are limited to 5%, 10% or 30% of BCP’s regulatory capital, depending upon the level of government supervision of the institution and whether the institution is recognized by the Central Bank as an international bank of prime credit quality. The limits on lending to non-Peruvian financial institutions increases to 50% of BCP’s regulatory capital if the amount by which such loans exceed the 5%, 10% or 30% limits is backed by certain letters of credit.

BCP’s loans to directors and employees and their relatives have a global limit of 7% of regulatory capital and an individual limit of 5% of such global limit.

Loans to non-Peruvian individuals or companies that are not financial institutions have a limit of 5% of BCP’s regulatory capital. However, this limit increases to 10% if the additional 5% is guaranteed by a mortgage or certain publicly-traded securities. The limit rises to 30% if the additional amount is guaranteed by certain banks or by cash deposits in BCP. Lending on an unsecured basis to individuals or companies residing in Peru that are not financial institutions is limited to 10% of BCP’s regulatory capital. This limit rises to 15% if the additional 5% is guaranteed by a mortgage, certain securities, equipment or other collateral, and to 20% if the additional amount is either backed by certain debt instruments guaranteed by other local banks or a foreign bank determined by the Central Bank to be of prime credit quality, or by other highly liquid securities at market value. The single borrower lending limit for loans backed by a cash deposit at BCP or by debt obligations of the Central Bank is 30% of BCP’s regulatory capital.

With an unconsolidated regulatory capital of S/.8,929.2 million (US$3,501.7 million) on December 31, 2012, BCP’s legal lending limits varied from S/.892.9 million (US$350.1 million) to S/.4,464.6 million (US$1,750.9 million). Our consolidated lending limits, based on our regulatory capital on a consolidated basis of US$3,975.6 million on December 31, 2012, ranged from US$397.6 million to US$1,987.8 million. As of December 31, 2012, BCP was in compliance with the lending limits of Law 26702.

As of December 31, 2012, we complied with the applicable legal lending limits in each of the jurisdictions in which we operate. These limits are calculated quarterly based upon our consolidated equity plus reserves for impaired loans not specifically identified at quarter-end. We have also set internal lending limits, which are more restrictive than those imposed by law. A limited number of exceptions to our internal limits have been authorized by our board of directors based on the credit quality of the borrower, the term of the loan, and the amount and quality of collateral provided. We may, in appropriate and limited circumstances, increase or choose to exceed these internal limits as long as our credit exposure does not exceed the legal lending limits.

We may experience an adverse impact on our financial condition and results of operations if (i) customers to which we have significant credit exposure are not able to satisfy their obligations to us, and any related collateral is not sufficient to cover these obligations, or (ii) a reclassification of one or more of these loans or other contingent credits results in an increase in provisions for loan losses.

Loan Portfolio Denomination

The following table presents our Nuevo Sol and foreign currency-denominated loan portfolio at the dates indicated:

	At December 31,
	2008				2009				2010
	(U.S. Dollars in thousands, except percentages)
Total loan portfolio:
Nuevo Sol-denominated	US$	3,351,720	32.05	%	US$	4,385,965	38.12	%	US$	5,415,352	37.93	%
Foreign Currency-denominated		7,104,564	67.95	%		7,119,354	61.88	%		8,862,712	62.07	%
Total loans (1)	US$	10,456,284	100.00	%	US$	11,505,319	100.00	%	US$	14,278,064	100.00	%

	At December 31,
	2011				2012
	(U.S. Dollars in thousands, except percentages)
Total loan portfolio:
Nuevo Sol-denominated	US$	6,982,086	40.31	%	US$	9,054,734	42.49	%
Foreign Currency-denominated		10,338,292	59.69	%		12,257,194	57.51	%
Total loans (1)	US$	17,320,378	100.00	%	US$	21,311,928	100.00	%

(1)

Net of unearned interest and without accrued interest.

Maturity Composition of the Performing Loan Portfolio

The following table sets forth an analysis of our performing loan portfolio on December 31, 2012, by type and by time remaining to maturity. Loans are stated before deduction of the reserves for loan losses.

	Maturing
	Amount at December 31, 2012			Within 3 months			After 3 months but within 12 months			After 1 year but within 3 years			After 3 years but within 5 years			After 5 years
	(U.S. Dollars in thousands, except percentages)
Loans	US$	16,905,277		US$	3,139,152		US$	3,177,597		US$	4,092,588		US$	2,287,472		US$	4,208,468
Leasing transactions		3,487,351			611,839			1,440,352			641,844			470,746			322,570
Discounted notes		557,329			515,294			39,493			2,506			36			-
Refinanced loans		142,206			45,022			24,821			24,979			20,080			27,304
Factoring		326,497			326,417			80			-			-			-
Advances and overdrafts		55,882			55,881			-			-			-			-
Total	US$	21,474,542		US$	4,693,606		US$	4,682,343		US$	4,761,917		US$	2,778,334		US$	4,558,342
Past due Loans		372,431
Unearned interest		(535,045	)
Total Loans (1)	US$	21,311,928
% of total performing loan portfolio		100.00	%		21.86	%		21.80	%		22.17	%		12.94	%		21.23	%

(1)

Net of unearned interest and without accrued interest.

Interest Rate Sensitivity of the Loan Portfolio

The following table sets forth the interest rate sensitivity of our loan portfolio on December 31, 2012, by currency and by the time remaining to maturity over one year:

	Amount at December 31, 2012		Maturing After 1 year
	(U.S. Dollars in thousands)
Variable Rate
Nuevo Sol-denominated	US$	290,825	US$	276,138
Foreign Currency-denominated		3,053,021		1,311,103
Total		3,343,846		1,587,241

Fixed Rate (2)
Nuevo Sol-denominated		8,763,909		5,776,350
Foreign Currency-denominated		9,204,173		4,951,303
Total		17,968,082		10,727,653

Total (1)	US$	21,311,928	US$	12,314,894

(1) Net of unearned interest and without accrued interest.

(2) Most of the financial products with fixed rates can be switched to variable rates according to market conditions as specified on the contracts with clients.

Classification of the Loan Portfolio

We classify BCP’s loan portfolio (which includes the loan portfolio of BCP Bolivia, Edyficar and Solucion EAH) and ASB’s loan portfolio in accordance with internal practices. According to these criteria, all loans and other credits are classified into one of four categories based upon the purpose of the loan. These categories are commercial, micro-business, consumer and residential mortgage. Commercial loans are generally those that finance the production and sale of goods and services, including commercial leases, as well as credit card debt on cards held by business entities. Micro-business loans, which are exclusively targeted for the production and sale of goods and services, are made to individuals or companies with no more than S/.300,000 in total loans received from the financial system (excluding mortgage loans). Consumer loans are generally loans granted to individuals, including credit card transactions, overdrafts on personal demand deposit accounts, leases, and financing goods or services not related to a business activity. Residential mortgage loans are all loans to individuals for the purchase, construction, remodeling, subdivision or improvement of the individual’s home, in each case backed by a mortgage. Mortgage loans made to directors and employees of a company are also considered residential mortgage loans. Mortgage-backed loans are considered commercial loans. The classification of the loan determines the amount to reserve should the borrower fail to make payments as they become due.

The following table sets forth our loan portfolio by class at the date indicated.

	At December 31,
	2008		2009		2010		2011		2012
	(U.S. Dollars in thousands) (1)
Commercial loans (which includes micro-business)	US$	7,808,671	US$	8,283,790	US$	10,417,764	US$	12,360,362	US$	14,861,164
Consumer loans		1,162,399		1,467,793		1,715,207		2,234,871		2,965,277
Residential mortgage loans		1,485,214		1,753,736		2,145,093		2,725,145		3,485,487
Total loans	US$	10,456,284	US$	11,505,319	US$	14,278,064	US$	17,320,378	US$	21,311,928

(1)

Net of unearned interest and without accrued interest.

We employ a range of policies and practices to mitigate credit risk. Our most traditional practice is taking security for fund advances. We implement guidelines on the acceptability of specific classes of collateral or credit risk mitigation. The principal collateral types for loans and advances are mortgages over residential properties, liens over business assets (such as premises, inventory and accounts receivable), and liens over financial instruments (such as debt securities and equities).

Long term finance and lending to corporate entities are generally secured, while revolving individual credit facilities are generally unsecured. In order to minimize credit loss, we seek additional collateral as soon as impairment indicators become apparent.

We determine the appropriate collateral to hold as security for financial assets (other than loans) according to the nature of the instrument. Debt securities, treasury and other eligible bills are generally unsecured, with the exception of asset-backed securities and other similar instruments, which are secured by portfolios of financial instruments.

Our management monitors the market value of collateral, requests additional collateral in accordance with the underlying agreement, and monitors the market value of the additional collateral obtained during its review of the allowance for impairment losses. Our policy is to dispose of repossessed properties in an orderly manner. We use the proceeds to reduce or repay the outstanding claim. In general, we do not use repossessed properties for our own business.

We classify all loans into one of five categories depending upon each loan’s degree of risk of non-payment. We review our loan portfolio on a continuing basis. We classify our loans based upon risk of nonpayment by assessing the following factors: (i) the payment history of the particular loans, (ii) the history of our dealings with the borrower, (iii) the borrower’s management, (iv) the borrower’s operating history, (v) the borrower’s repayment capability, (vi) the borrower’s availability of funds, (vii) the status of any collateral or guarantee, (viii) the borrower’s financial statements, (iv) the general risk of the sector in which the borrower operates, (x) the borrower’s risk classification made by other financial institutions and (xi) other relevant factors. The classification of the loan determines the amount of the required loan loss provision.

We classify our loan portfolio into one of five risk categories, depending upon the degree of risk of non-payment of each debtor. These categories are: (i) normal, (ii) potential problems, (iii) substandard, (iv) doubtful and (v) loss. The categories have the following characteristics:

Normal (Class A): Debtors with commercial loans in this category have complied on a timely basis with their obligations under the loan. At the time of evaluation, there is no reason to doubt the debtor’s ability to repay interest and principal on the agreed dates, and there is no reason to believe that the status will change before the next evaluation. Before we place a loan in Class A, we must have a clear understanding of the use of the funds and the origin of the cash flows to be used by the debtor to repay the loan. Consumer loans are categorized as Class A when payments are current or up to eight days past due. Residential mortgage loans are categorized as Class A when payments are current or up to 30 days past due.

Potential problems (Class B): Debtors with commercial loans in this category demonstrate certain deficiencies at the time of evaluation, which, if not corrected in a timely manner, imply risks regarding recovery of the loan. Common characteristics of loans or credits in this category include: (i) delays in loan payments which are promptly covered, (ii) a general lack of information required to analyze the credit, (iii) out-of-date financial information, (iv) temporary economic or financial imbalances on the part of the debtor which could affect its ability to repay the loan, (v) market conditions that could affect the economic sector in which the debtor is active. Consumer loans are categorized as Class B when payments are between nine and 30 days past due. Residential mortgage loans are categorized as Class B when payments are between 31 and 90 days past due.

Substandard (Class C): Debtors with commercial loans in this category demonstrate serious financial weakness. They often do not have sufficient operating results or available income to cover their financial obligations, and do not have reasonable short-term prospects for strengthening their financial capacity. Debtors demonstrating the same deficiencies that warrant Class B classification will warrant Class C classification if those deficiencies are such that if not corrected in the near term, they could impede the recovery of principal and interest on the loan on the agreed-upon terms. Commercial loans are classified in this category when payments are between 61 and 120 days past due. Consumer loans are categorized as Class C when payments are between 31 and 60 days past due. Residential mortgage loans are categorized as Class C when payments are between 91 and 120 days past due.

Doubtful (Class D): Debtors with commercial loans in this category demonstrate characteristics that make it doubtful that the loan will be recovered. Although recovery is doubtful, if there is a reasonable possibility that the creditworthiness of the debtor might improve in the near future, it is appropriate to categorize the loan as Class D. These loans are distinguished from Class E loans by the requirement that the debtor remain in operation, generate cash flow, and make payments on the loan, even if the payments are less than those required by the contract. Commercial loans are categorized as Class D if payments are between 121 and 365 days past due. Consumer loans are categorized as Class D when payments are between 61 and 120 days past due. Residential mortgage loans are categorized as Class D when payments are between 121 and 365 days past due.

Loss credits (Class E): Commercial loans or credits are categorized as Class E if the loans are considered unrecoverable or for any other reason the loans should not appear on our books as an asset based on the originally contracted terms. Commercial loans are categorized as Class E when payments are more than 365 days past due. Consumer loans are categorized as Class E when payments are more than 120 days past due. Residential mortgage loans are categorized as Class E when payments are more than 365 days past due.

We continually review our loan portfolio to assess the completion and accuracy of our loan classifications.

All loans considered impaired (those classified as substandard, doubtful or loss) are analyzed by management. Management will address the impairment in two areas, individually assessed allowances and collectively assessed allowances, as follows:

Individually Assessed Allowance

We determine the appropriate allowances for each individually significant loan or advance on an individual basis. In determining the allowance, we consider items such as (i) the sustainability of the party’s business plan, (ii) its ability to improve performance once a financial difficulty has arisen, (iii) projected receipts and the expected dividend payout should bankruptcy ensue, (iv) the availability of other financial support and the potential realized value of collateral, and (v) the timing of expected cash flows. Impairment losses are evaluated at each reporting date, unless unforeseen circumstances require more attention.

Collectively Assessed Allowance

We assess allowances collectively for (i) losses on loans and advances that are not individually significant (including consumer and residential mortgages) and (ii) individually significant loans and advances where there is not yet objective evidence of individual impairment (the Class A and B loans). We evaluate allowances on each reporting date, and each portfolio receives a separate review.

Our collective assessment takes into account an impairment that is likely to be present in the portfolio even though there is no objective evidence of the impairment in an individual assessment. We estimate impairment losses by considering the following information: (i) historical losses on the portfolio, (ii) current economic conditions, (iii) the approximate delay between the time a loss is likely to be incurred and the time it will be identified as requiring an individually assessed impairment allowance and (iv) expected receipts and recoveries once the impairment occurs. Local management is responsible for deciding the appropriate length of time, which can extend as long as one year. The impairment allowance is then reviewed by credit management to ensure it aligns with our overall policy.

We assess financial guarantees and letters of credit in the same way we assess loans.

When a borrower is located in a country where there is an increased risk of difficulty servicing external debt, we assess the political and economic conditions in that country, and factor additional country risk into our assessment.

When we determine that a loan is uncollectible, it is written off against the provision for loan impairment. We write off these loans after all necessary procedures are completed and the amount of the loss is determined. Subsequent recoveries of amounts previously written off decrease the amount of the provision for loan impairment in our consolidated income statements.

The following table shows our direct loan portfolio at the dates indicated:

	At December 31,
	2008					2009					2010
	(U.S. Dollars in thousands, except percentages)
Level of Risk
Classification	Amount		% Total			Amount		% Total			Amount		% Total
A: Normal	US$	9,991,559		95.6	%	US$	10,717,658		93.2	%	US$	13,564,435		95.0	%
B: Potential Problems	US$	264,890		2.5	%	US$	431,356		3.7	%	US$	313,148		2.2	%
C: Substandard	US$	70,268		0.7	%	US$	115,629		1.0	%	US$	128,445		0.9	%
D: Doubtful	US$	79,394		0.8	%	US$	139,389		1.2	%	US$	121,345		0.8	%
E: Loss	US$	50,173		0.5	%	US$	101,287		0.9	%	US$	150,691		1.1	%
Total (1)	US$	10,456,284		100.0	%	US$	11,505,319		100.0	%	US$	14,278,064		100.0	%
C+D+E	US$	199,835		1.9	%	US$	356,305		3.1	%	US$	400,481		2.8	%

	At December 31,
	2011					2012
	(U.S. Dollars in thousands, except percentages)
Level of Risk
Classification	Amount		% Total			Amount		% Total
A: Normal	US$	16,461,546		95.0	%	US$	20,227,427		94.9	%
B: Potential Problems	US$	390,329		2.3	%	US$	451,660		2.1	%
C: Substandard	US$	140,821		0.8	%	US$	192,544		0.9	%
D: Doubtful	US$	156,525		0.9	%	US$	232,168		0.9	%
E: Loss	US$	171,157		1.0	%	US$	208,129		1.1	%
Total (1)	US$	17,320,378		100.0	%	US$	21,311,928		100.0	%
C+D+E	US$	468,503		2.7	%	US$	632,841		3.0	%

(1)

Net of unearned interest and without accrued interest. – The unearned interest from impaired classifications (C+D+E) amounted to approximately US$250,000 in 2008, US$44,000 in 2009, US$159,000 in 2010, US$12,000 in 2011 and US$69,000 in 2012.

All of our Class E loans and substantially all of our Class D loans are past due. Class C loans, although generally not past due, have demonstrated credit deterioration such that management has serious doubts as to the ability of the borrower to comply with the loan repayment terms. Our manufacturing sector loans are primarily secured by warrants and liens on goods or by mortgages, and our agricultural loans tend to be secured by trade bills and marketable securities. The Class C loans reflect the financial weakness of the individual borrower rather than any trend in the Peruvian manufacturing or agricultural industries in general.

Classification of the Loan Portfolio Based on the Borrower’s Payment Performance

Past due and impaired loans are disclosed in accordance with SBS rules. Under SBS rules, the time periods used to determine whether an installment or an entire loan balance is past due depends on their type. BCP considers loans past due for corporate, large business and medium business loans after 15 days; for small and micro business loans after 30 days; for and overdrafts after 30 days; and for consumer, mortgage and leasing loans after 90 days. In the case of consumer, mortgage and leasing loans, which have installments, from 30 to 90 days only the past due installments are considered past due, but after 90 days the outstanding balance of the loan is considered past due. ASHC considers all overdue loans past due, except for consumer loans, which are considered past due when the scheduled principal and/or interest payments are overdue for more than 90 days. BCP Bolivia considers loans past due after 30 days. The entire loan balance under IFRS 7 is considered past due when debtors have failed to make a payment when contractually due. For more detail, see note 30.1 of the consolidated financial statements.

As of December 31, 2012, Credicorp did not have any loans that were overdue by more than 90 days but that were still accruing interest. Interest income is suspended when the collection of loans is doubtful, such as when overdue by more than 90 days. When a borrower or securities issuer defaults earlier than 90 days, the income is excluded from interest income until it is received. Uncollected income on these loans is applied against income. When management determines that the debtor’s financial condition has improved (a debtor’s financial condition is only considered improved once the debtor has paid the principal and interest due on its loans), we continue recording interest on an accrual basis. Therefore, we do not accrue interest on past-due loans, but interest on past-due loans is recognized only if and to the extent received.

Over the past five years, we have recognized interest income on these loans of US$5.2 million in 2008, US$7.2 million in 2009, US$14.2 million in 2010, US$15.4 million in 2011 and US$21.0 million in 2012. With the exception of discounted notes and overdrafts, accrued but unpaid interest is reversed for past-due loans.

The following table sets forth the repayment status of our loan portfolio as of the date indicated.

	At December 31,
	2008			2009			2010			2011			2012
	(U.S. Dollars in thousands, except percentages)
Current	US$	10,373,417		US$	11,320,752		US$	14,068,156		US$	17,061,328		US$	20,939,497
Past due:
Overdue 16 - 90 days (2)		26,235			51,701			46,087			64,362			106,495
Overdue 90 days or more		56,632			132,865			163,821			194,688			265,936
Subtotal	US$	82,867		US$	184,567		US$	209,908		US$	259,050		US$	372,431
Total loans	US$	10,456,284		US$	11,505,319		US$	14,278,064		US$	17,320,378		US$	21,311,928
Past-due loan amounts as % of total loans		0.79	%		1.60	%		1.47	%		1.50	%		1.75	%

(1)

Net of unearned interest and without accrued interest.

(2)

The amount in 2012 would increase to US$179,500 approximately, if the outstanding balance of consumer, mortgage and leasing loans overdue to 90 days or less are included.

With respect to consumer, mortgage and leasing loans, BCP (in accordance with SBS regulations) only recognizes payments as past-due installments if the loan is less than 90 days past due. The entire amount of the loans is considered past due if any amount is past due more than 90 days. For IFRS 7 disclosure requirements on past-due loans, see Note 30.1 to the Consolidated Financial Statements.

Past-Due Loan Portfolio

The following table analyzes our past-due loan portfolio by the type of loan at the dates indicated.

	At December 31,
	2008			2009			2010			2011			2012
	(U.S. Dollars in thousands)
Past-due loan amounts:
Loans	US$	65,947		US$	153,112		US$	183,058		US$	222,133		US$	324,670
Discounted notes		1,242			2,151			2,906			2,944			2,672
Advances and overdrafts in demand deposits		2,112			4,015			3,717			2,576			3,271
Leasing transactions		3,468			9,653			1,443			8,127			8,814
Refinanced loans		10,098			15,636			18,784			23,270			22,003
Total past-due portfolio	US$	82,867		US$	184,567		US$	209,908		US$	259,050		US$	372,431
Less: Reserves for loan losses (1)	US$	248,063		US$	376,049		US$	448,597		US$	558,186		US$	744,508
Total past-due portfolio net of reserves	US$	(165,196	)	US$	(191,482	)	US$	(238,689	)	US$	(299,136	)	US$	(372,077	)

(1)

Includes reserves for indirect credits (see “—Loan Loss Reserves”).

As of December 31, 2012 total past-due loans were US$ 372.4 million and refinanced and restructured loans were US$ 142.2 million. Therefore, non-performing loans (past-due and refinanced and restructured loans) amounted to US$ 514.6 million.

We recognize interest on past-due loans and loans in legal collection when the loans are collected. The interest income that would have been recorded for these credits in accordance with the terms of the original contract is approximately US$72.2 million and US$49.8 million as of December 31, 2012 and 2011, respectively.

Total Nonperforming Loans

Nonperforming loans include past due loans as well as refinanced and restructured loans. As of December 31, 2012, total past due loans were US$372.4 million and refinanced and restructured loans were US$142.2 million. Therefore, total nonperforming loans equaled US$514.6 million. As of December 31, 2012 our delinquency ratio (past due loan ratio) was 1.75% and our nonperforming loan ratio (including past due, refinanced and restructured loans was 1%. See “Item 4, Information on the Company — (B) Business Overview — (1) Introduction – Review of 2012 —Banking Segment—BCP.

Loan Loss Reserves

The following table shows the changes in our reserves for loan losses and movements at the dates indicated.

	Year ended December 31,
	2008			2009			2010			2011			2012
	(U.S. Dollars in thousands)
Reserves for loan losses at the beginning of the year	US$	229,700		US$	248,063		US$	376,049		US$	448,597		US$	558,186
Additional provisions (reversals)		48,760			163,392			174,682			214,898			377,841
Acquisitions and transfers		-			20,905			-			-			-
Recoveries of write-offs		31,279			23,928			34,605			41,442			46,301
Write-offs		(59,308	)		(87,927	)		(142,736	)		(155,409	)		(245,789	)
Monetary correction and other		(2,368	)		7,688			5,997			8,658			7,969
Total reserves for loan losses at the end of the year	US$	248,063		US$	376,049		US$	448,597		US$	558,186		US$	744,508

For a discussion of the risk elements in the loan portfolio and the factors considered in determining the amount of specific reserves, see “—Classification of the Loan Portfolio.” The balance of the reserve for loan losses for the years 2009, 2010 and 2011 are included in Note 7(d) to the Consolidated Financial Statements.

Our reserves for loan losses, as of December 31, 2012, included US$699.0 million for credit losses and US$45.5 million for indirect or contingent credit losses (US$519.7 million and US$38.5 million, respectively, as of December 31, 2011). Our reserves for indirect credit losses are included in the “Other liabilities” caption of our consolidated balance sheet. See Notes 7(d) and 12(a) to the Consolidated Financial Statements.

The charge-off process is performed with prior approval of our board of directors and the SBS. Potential charge-offs are considered by the board of directors and the SBS on a case-by-case basis.

Allocation of Loan Loss Reserves

The following table sets forth the amounts of our reserves for loan losses attributable to commercial, consumer and residential mortgage loans at the dates indicated (see also Note 7(d) to the Consolidated Financial Statements):

	At December 31,
	2008		2009		2010		2011		2012
	(U.S. Dollars in thousands)
Commercial loans	US$	161,170	US$	243,796	US$	289,564	US$	357,422	US$	467,654
Consumer loans		56,061		90,782		106,709		135,335		196,417
Residential mortgage loans		30,832		41,471		52,324		65,429		80,437
Total reserves	US$	248,063	US$	376,049	US$	448,597	US$	558,186	US$	744,508

(iv)

Deposits

The following table presents the components of our deposit base at the dates indicated:

	At December 31,
	2010		2011		2012
	(U.S. Dollars in thousands)
Demand deposits:
Nuevo Sol-denominated	US$	2,330,559	US$	2,717,017	US$	3,554,403
Foreign Currency-denominated		3,250,833		3,897,470		4,510,728
Total	US$	5,581,392	US$	6,614,487	US$	8,065,131
Savings deposits:
Nuevo Sol-denominated	US$	2,050,136	US$	2,616,314	US$	3,466,742
Foreign Currency-denominated		2,194,614		2,480,195		2,617,336
Total	US$	4,244,750	US$	5,096,509	US$	6,084,078
Time deposits:
Nuevo Sol-denominated	US$	3,230,374	US$	2,626,015	US$	4,101,121
Foreign Currency-denominated		3,234,395		2,413,526		3,314,589
Total	US$	6,464,769	US$	5,039,541	US$	7,415,710
Foreign Currency Bank Certificates
Foreign Currency-denominated	US$	163,681	US$	136,338	US$	167,542
Severance Indemnity Deposits (CTS):
Nuevo Sol-denominated	US$	421,240	US$	729,009	US$	1,132,573
Foreign Currency-denominated		891,882		1,028,115		1,099,919
Total	US$	1,313,122	US$	1,757,124	US$	2,232,492
Total deposits:
Nuevo Sol-denominated	US$	8,032,309	US$	8,688,355	US$	12,254,839
Foreign Currency-denominated		9,735,405		9,955,644		11,710,114
Total deposits and obligations without interest payable	US$	17,767,714	US$	18,643,999	US$	23,964,953

The following table sets forth information regarding the maturity of our time deposits in denominations of US$100,000 or more on December 31, 2012:

	At December 31, 2012
	(U.S. Dollars in thousands)
Certificates of deposit:
Maturing within 30 days	US$	1,054
Maturing after 30 but within 60 days		3,408
Maturing after 60 but within 90 days		8,675
Maturing after 90 but within 180 days		2,662
Maturing after 180 but within 360 days		7,270
Maturing after 360 days		25,914
Total certificates of deposits	US$	48,983
Time deposits:
Maturing within 30 days	US$	4,031,844
Maturing after 30 but within 60 days		467,885
Maturing after 60 but within 90 days		355,610
Maturing after 90 but within 180 days		684,121
Maturing after 180 but within 360 days		751,521
Maturing after 360 days		431,917
Total time deposits		6,722,898
Total	US$	6,771,881

(v)

Return on Equity and Assets

	At December 31,
	2010			2011			2012

Return on assets (1)		2.27	%		2.40	%		2.21	%

Return on equity (2)		21.29	%		22.94	%		20.74	%

Dividend payout ratio (3)		27.12	%		25.75	%		26.18	%

Equity to assets ratio (4)		11.19	%		10.70	%		10.89	%

Shareholders’ equity to assets ratio (5)		10.56	%		10.50	%		10.60	%

(1)

Net income attributable to our equity holders as a percentage of average total assets, computed as the average of period beginning and period ending balances.

(2)

Net income attributable to our equity holders as a percentage of average net equity attributable to our equity holders, computed as the average of monthly balances.

(3)

Dividends declared per share divided by net income attributable to our equity holders per share.

(4)

Average equity attributable to our equity holders divided by average total assets, both averages computed as the average of month-ending balances.

(5)

Average equity attributable to our equity shareholders divided by average total assets, both averages computed as the average of month-ending balances.

(vi)

Short-Term Borrowing

Our short-term borrowing, other than deposits, equaled US$351.8 million, US$762.9 million and US$1,766.4 million as of December 31, 2010, 2011 and 2012, respectively. Our average balances of borrowed amounts increased in 2012 and 2011 due to growth in foreign trade transactions. As of December 31, 2010, 2011 and 2012, no repurchase transactions by Peru´s Central Bank were included in the outstanding balance.

The following table sets forth our short-term borrowing:

	At December 31,
	2010			2011			2012
	(U.S. Dollars in thousands, except percentages)

Year-end balance	US$	351,816		US$	762,910		US$	1,766,429
Average balance		808,548			1,076,989			1,210,410
Maximum quarter-end balance		1,202,594			1,701,877			1,766,429
Weighted-average nominal year-end interest rate		1.43	%		1.68	%		2.09	%
Weighted-average nominal interest rate		1.14	%		1.51	%		2.00	%

(C)

Organizational Structure

The following tables show our organizational structure and the organization of our principal subsidiaries as of December 31, 2012 and their relative percentage contribution to our total assets, total revenues, net income and net equity at the same date:

(1)

Credicorp Investments owns 61% of IM Trust through its subsidiary BCP Chile.

(2)

BCP owns 51% of Correval through its subsidiary BCP Colombia.

(3)

BCP Capital includes Credibolsa, Credifondo and Creditítulos.

	As of and for the Year ended December 31, 2012 (1)
	Total Assets			Total Revenue			Net Income (Loss)			Net Equity
Banco de Crédito del Perú (2)		86.5	%		71.8	%		77.4	%		66.6	%
Atlantic Security Holding Corporation		3.9	%		3.0	%		9.3	%		5.9	%
El Pacífico-Peruano Suiza Compañía de Seguros y Reaseguros (3)		6.3	%		20.3	%		10.7	%		15.0	%
Prima AFP		0.6	%		3.0	%		5.3	%		3.7	%
Others (4)		2.7	%		1.9	%		-2.7	%		8.8	%

(1) Percentages determined based on the Consolidated Financial Statements.

(2) Includes Correval.

(3) Includes Grupo Pacífico, Pacífico Vida, Pacífico EPS Consolidated and Private Hospitals.

(4) Includes Credicorp Ltd., BCP Capital (which includes Credifondo, Credibolsa, Creditítulos and BCP Financial Services, for November and December, 2012), Credicorp Investments (which includes IM Trust), CCR Inc., Credicorp Securities Inc. and others.

The following tables show the organizational structure of BCP and its principal subsidiaries as of December 31, 2012:

(1)

This subsidiary owns 51% of Correval, which we expect to transfer to Credicorp Investments (a subsidiary of Credicorp) after obtaining approval from the Colombian regulator.

We hold an additional 4.08% stake of BCP Bolivia directly through Credicorp Ltd.

	As of and for the Year ended December 31, 2012 (1)
	Total Assets			Total Revenue			Net Income (Loss)			Net Equity
Banco de Crédito del Perú		91.8	%		87.6	%		87.1	%		82.3	%
Banco de Crédito de Bolivia		4.1	%		3.3	%		4.1	%		4.9	%
Empresa Financiera Edyficar S.A.		3.1	%		6.5	%		6.9	%		4.0	%
Solución Empresa Administradora Hipotecaria S.A.		0.3	%		0.2	%		0.8	%		0.7	%
Others (2)		0.7	%		2.3	%		1.4	%		8.1	%

(1)

Percentages determined based on BCP’s consolidated financial statements as of and for the year ended December 31, 2012.

(2)

Includes, Inmobiliaria BCP, Inversiones BCP Ltd and BCP Colombia.

(D)

Property, Plants and Equipment

As of December 31, 2012, we owned 434 properties (421 throughout Peru, 7 in Bolivia and 6 in Chile) and rented 460 properties (405 throughout Peru, 46 in Bolivia, 1 in Miami – United States, 6 in Colombia and 2 in Panama), all of which we used for the operation of our network of branches and our business. We own the buildings where our headquarters are located in Lima, Peru and La Paz, Bolivia. We do not hold any lease agreements for these purposes. As of December 2012, we had 727 branches, of which 365 were branches of BCP in Peru. There are no material encumbrances on any of our properties.

ITEM 4A.

UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 5.

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

(A)

Operating Results

(1)

Critical Accounting Policies

Consolidation

(i)

Subsidiaries

Our subsidiaries are entities (including special purpose entities) for which the Group has the power to govern financial and operating policies. Such power is generally evidenced by our control of more than one half of the voting rights.

The financial statements of our subsidiaries are fully consolidated from the date on which effective control is transferred to the Group and are no longer consolidated from the date control ceases. The consolidated financial statements include the assets, liabilities, income and expenses of Credicorp and its Subsidiaries. Transactions between the Group’s entities, including balances, gains or losses are eliminated.

Business combinations made after January 1, 2010 are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the fair value of consideration transferred (measured at the acquisition date) and the amount of any non-controlling interest in the acquiree. For each business combination, the acquirer measures the non-controlling interest in the acquiree at fair value. Acquisition costs incurred are expensed and included in the caption “Administrative expenses” of the consolidated statement of income.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

Any contingent consideration to be transferred by the acquirer is recognized at fair value at the acquisition date. Subsequent changes to the fair value of any contingent consideration, which is deemed to be an asset or liability, will be recognized either in profit or loss or as a change to other comprehensive income. If the contingent consideration is classified as equity, it will not be re-measured until it is finally settled.

Starting January 1, 2010, acquisition of non-controlling interest is recorded directly in equity; the difference between the amount paid and the share of the net assets acquired is a debit or credit to equity. Therefore, no additional goodwill is recorded upon purchase of non-controlling interest; neither a gain nor a loss is recognized upon disposal of a non-controlling interest.

Business combinations and acquisitions of non-controlling interest prior to January 1, 2010, in comparison to the above-mentioned requirements, were accounted for using the purchase method and the parent entity extension method, respectively.

Assets in custody or managed by the Group, such as investment funds and private pension funds (AFP funds), are not part of the Group’s consolidated financial statements.

Net equity attributable to the non-controlling interest is presented in the consolidated statements of financial position. Income attributable to the non-controlling interest is presented separately in the consolidated income statements and the consolidated statements of comprehensive income.

(ii)

Associates

An associate is an entity over which the Group has significant influence but not control. Investments in these entities represent holdings of between 20 and 50 percent of the voting rights; and are recognized initially at cost and then are accounted for by the “equity method”. The Group does not have significant investments in associates; therefore, they are included in the caption “Other assets” in the consolidated statements of financial position; gains resulting from the use of the equity method of accounting are included in the caption “Other income” of the consolidated income statement.

Foreign currency translation

Credicorp’s functional and presentation currency is the U.S. Dollar because it reflects the economic substance of the underlying events and circumstances relevant to the Company. In addition, Credicorp’s main operations and transactions in the different countries where it operates are established and settled in U.S. Dollars.

Subsidiaries that have a functional currency different from the U.S. Dollar were translated for consolidating purposes using the methodology established by IAS 21, “The Effects of Changes in Foreign Exchanges Rates”, as follows:

•

Assets and liabilities, at the closing rate at the date of each statement of financial position presented.

•

Income and expense, at the average exchange rate for each month of the year.

All resulting translation differences were recognized in the caption “Exchange differences on translation of foreign operations” of the consolidated statement of other comprehensive income.

Foreign currency transactions or balances are those realized in currencies different from functional currency. Transactions in foreign currencies are initially recorded in the functional currency rate at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are adjusted at the functional currency exchange rate ruling at the reporting date. Differences between the closing rate at the date of each consolidated statement of financial position presented and the exchange rate initially used to record the transactions are recognized in the consolidated statements of income in the period in which they arise, in the caption “Translation result”. Non-monetary assets and liabilities acquired in a foreign currency are recorded at the exchange rate as at the dates of the initial transaction.

Income and expense recognition from banking activities

Interest income and expense for all interest-bearing financial instruments, including those related to financial instruments classified as held for trading or designated at fair value through profit or loss, are recognized within “Interest and dividend income” and “Interest expense” in our consolidated income statement using the effective interest rate, which is the rate that discounts estimated future cash payments or receipts through the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or financial liability.

Interest income is suspended when collection of loans becomes doubtful, when loans are overdue more than 90 days or when the borrower or securities issuer defaults; if earlier than 90 days, such income is excluded from interest income until collected. Uncollected income on such loans is provisioned. When management determines that the debtor’s financial condition has improved, the recording of interest thereon is reestablished on an accrual basis. A debtor’s financial condition is only considered improved once the debtor has paid the principal and interest due on its loans.

Interest income includes coupons earned on fixed income investment and trading securities and the accrued discount and premium on financial instruments. Dividends are recognized as income when they are declared.

Fees and commission income are recognized on an accrual basis when earned. Contingent credit fees for loans that are likely to be drawn down and other credit related fees are deferred (together with any direct incremental costs) and recognized as an adjustment to the effective interest rate on the loan.

All other revenues and expenses are recognized on an accrual basis.

Insurance activities

Insurance contracts are those contracts where the Group (the insurer) has accepted significant insurance risk from another party (the policyholder) by agreeing to compensate the policyholder if a specified uncertain future event (the insured event) adversely affects the policyholder. This definition also includes reinsurance contracts that the Group holds. As a general guideline, the Group determines whether it has significant insurance risk by comparing benefits paid with benefits payable if the insured event did not occur. Insurance contracts can also transfer financial risk.

Once a contract has been classified as an insurance contract, it remains an insurance contract for the remainder of its lifetime, even if the insurance risk reduces significantly during this period, unless all rights and obligations extinguish or expire.

Life insurance contracts offered by the Group include retirement, disability and survival insurance, annuities and individual life which includes unit linked insurance contracts. The non-life insurance contracts mainly include automobile, fire and allied and technical lines and healthcare.

The Group cedes insurance risk in the normal course of business for all of its operations. Reinsurance assets represent balances due from reinsurance companies. Reinsurance ceded is placed on both a proportional and non–proportional basis.

Amounts recoverable from reinsurers are estimated in a manner consistent with the outstanding claims provision or settled claims and ceded premiums associated with the reinsurer’s policies and are in accordance with the related reinsurance contract.

Reinsurance assets are reviewed for impairment at each reporting date or more frequently when an indication of impairment arises during the reporting year. Impairment occurs when there is objective evidence as a result of an event that occurred after initial recognition of the reinsurance asset that the Group may not receive all outstanding amounts due under the terms of the contract and the event has a reliably measureable impact on the amounts that the Group will receive from the reinsurer. The impairment loss is recorded in the consolidated income statement.

Ceded reinsurance arrangements do not relieve the Group from its obligations to a policyholder.

Reinsurance liabilities represent balances due to reinsurance companies. Amounts payable are estimated in a manner consistent with the related reinsurance contract

Financial Instruments: Initial recognition and subsequent measurement:

The Group classifies its financial instruments in one of the categories defined by IAS 39: financial assets and financial liabilities at fair value through profit or loss; loans and receivables; available-for-sale financial investments; held-to-maturity financial investments and other financial liabilities. The Group determines the classification of its financial instruments at initial recognition.

The classification of financial instruments at initial recognition depends on the purpose and the Management intention for which the financial instruments were acquired and their characteristics. All financial instruments are measured initially at their fair value plus any directly attributable incremental cost of acquisition or issue, except in the case of financial assets and financial liabilities recorded at fair value through profit or loss.

Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way trades) are recognized on the trade date, for example the date that the Group commits to purchase or sell the asset. Derivatives are recognized on a trade date basis.

(i)

Financial assets and financial liabilities at fair value through profit or loss

Financial assets at fair value through profit or loss includes financial assets held for trading and financial assets designated at fair value through profit or loss, which designation is upon initial recognition and in an instrument by instrument basis. Derivatives financial instrument are also categorized as held for trading unless they are designated as hedging instruments.

Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term, and are presented in the caption “Trading securities” of the consolidated statements of financial position.

Management may only designate an instrument at fair value through profit or loss upon initial recognition when the following criteria are met:

•

the designation eliminates or significantly reduces the inconsistent treatment that would otherwise arise from measuring assets or liabilities or recognizing gains or losses on them on a different basis; or

•

the assets and liabilities are part of a group of financial assets, financial liabilities or both which are managed and their performance evaluated on a fair value basis, in accordance with a documented risk management or investment strategy; or

•

the financial instrument contains one or more embedded derivatives, which significantly modify the cash flows that otherwise would be required by the contract.

Changes in fair value of designated financial assets through profit or loss are recorded in the consolidated income statement caption “Net gain on financial assets and liabilities designated at fair value through profit and loss”. Interest earned or incurred is accrued in the consolidated income statement in the captions “Interest and dividend income” or “Interest expense”, respectively, according to the terms of the contract.

Dividend income is recorded when the collection right has been established.

(ii)

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market, other than those that the entity intend to sell immediately or in the short term, those that the entity upon initial recognition designates as available for sale, or those for which the holder may not recover substantially all of its initial investment, other than because of credit deterioration.

After initial measurement, loans and receivables are subsequently measured at amortized cost using the effective interest rate method, less any allowance for impairment. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees and costs that are an integral part of the effective interest rate. The effective interest rate amortization is recognized in the consolidated income statement in the caption “Interest and dividend income”. Losses from impairment are recognized in the consolidated income statement in the caption “Provision for loan losses”.

Direct loans are recorded when disbursement of funds to the clients are made. Indirect (off-balance sheet) loans are recorded when documents supporting such facilities are issued. Likewise, Credicorp considers as refinanced or restructured those loans that change their payment schedules due to difficulties in the debtor’s ability to repay the loan.

An allowance for loan losses is established if there is objective evidence that the Group will not be able to collect all amounts due according to the original contractual terms of the loans. The allowance for loan losses is established based on an internal risk classification, with consideration given to any guarantees and collaterals received. See Note 3(i) and 30.1 to the Consolidated Financial Statements.

(iii)

Available-for-sale financial investments

Available-for-sale financial investments include equity investments and debt securities. Equity investments classified as available-for-sale are those that are neither classified as held for trading nor designated at a fair value through profit or loss. Debt securities in this category are those that are intended to be held for an indefinite period of time and that may be sold in response to needs for liquidity or in response to changes in the market conditions.

After initial recognition, available-for-sale financial investments are measured at fair value with unrealized gains or losses recognized as other comprehensive income in the available-for-sale reserve, net of its corresponding deferred tax and non-controlling interest, until the investment is derecognized, at which time the cumulative gain or loss is recognized in the consolidated income statement in the caption “Net gain on sale of securities”, or determined to be impaired, at which time the impaired amount is recognized in the consolidated income statement in the caption “Impairment loss on available–for–sale investments” and removed from the available-for-sale reserve.

Interest and dividends earned are recognized in the consolidated income statement in the caption “Interest and dividend income”. Interest earned is reported as interest income using the effective interest rate and dividends earned are recognized when collection rights are established. Estimated fair values are based primarily on quoted prices or, if quoted market prices are not available, discounted expected cash flows using market rates commensurate with the credit quality and maturity of the investment.

The Group may elect to reclassify these financial assets only in rare circumstances, such as when the Group is unable to sell the assets due to markets inactivity and management’s intent to sell the assets in the foreseeable future has changed significantly. Reclassification to loans and receivables is permitted when the financial asset meets the definition of loans and receivables and management has the intent and the ability to hold these assets for the foreseeable future or until maturity. The reclassification to held-to-maturity category is permitted only when the entity has the ability and intent to hold the financial asset until maturity.

As of December, 31, 2012 and 2011, we did not reclassify any of our available-for-sale financial investments.

(iv)

Held-to-maturity financial investments

Held-to-maturity financial investments are non–derivative financial assets with fixed or determinable payments and fixed maturities, which Credicorp has the intention and ability to hold to maturity. After initial measurement, held-to-maturity financial investments are subsequently measured at amortized cost using the effective interest rate less impairment. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees that are an integral part of the effective interest rate. The amortization is included in the caption “Interest and dividend income” of the consolidated statements of income. The losses arising from impairment of such investments are recognized in the consolidated statements of income.

As of December, 31, 2012, the Group has not recognized any impairment loss on held-to-maturity investments.

If the Group were to sell or reclassify more than an insignificant amount of held-to-maturity investments before maturity (other than in certain specific circumstances), the entire category would be tainted and would have to be reclassified as available-for-sale. Furthermore, the Group would be prohibited from classifying any financial asset as held-to-maturity during the following two years.

As of December, 31, 2012, the Group did not sell or reclassify any of its held-to-maturity investments.

(v)

Repurchase and reverse repurchase agreements and security lending and borrowing transactions

Securities sold under agreements to repurchase at a specified future date are not derecognized from the consolidated statements of financial position as the Group retains substantially all of the risks and rewards of ownership. The cash received is recognized as an asset with a corresponding obligation to return it, including accrued interest, as a liability within “Payables from repurchase agreements and security lending”, reflecting the transaction’s economic substance as a loan to the Group. The difference between the sale and repurchase price is treated as interest expense and is accrued over the life of the agreement using the effective interest rate. When the counterparty has the right to sell or repledge the securities, the Group reclassifies those securities in its consolidated statement of financial position to Investments available-for-sale pledged as collateral or Investments held-to-maturity pledged as collateral, as appropriate.

Conversely, securities purchased under agreements to resell at a specified future date are not recognized in the consolidated statements of financial position. The consideration paid, including accrued interest, is recorded in the consolidated statements of financial position caption “Receivables from reverse repurchase agreements and security borrowing”, reflecting the transaction’s economic substance as a loan by the Group. The difference between the purchase and resale price is recorded in the caption “Financial income” of the consolidated statements of income and is accrued over the life of the agreement using the effective interest rate.

If securities purchased under agreement to resell are subsequently sold to third parties, the obligation to return the securities is recorded as a short sale in the consolidated statements of financial position caption “Financial liabilities designated at fair value through profit or loss” and measured at fair value, with any gains or losses included in the consolidated statements of income caption “Net gain on sale of securities”.

Securities lending and borrowing transactions are usually collateralized by securities. The transfer of the securities to counterparties is only reflected on the consolidated statements of financial position if the risks and rewards of ownership are also transferred.

(vi)

Put and call options over non-controlling interest

Put and call options do not give the Group present access to the benefits associated with the ownership interest.

Put options granted to non-controlling interests give rise to a financial liability for the present value of the redemption amount. When the financial liability is recognized initially, the present value of the amount payable upon exercise of the option is reclassified from equity. All subsequent changes in the carrying amount of the liability, due to a re-measurement of the present value of the amount payable on exercise, are recognized in the consolidated statements of income.

Call options are initially recognized as a financial asset at their fair value, with any subsequent changes in their fair value recognized in profit or loss. If the call options are exercised, the fair value of the option at that date is included as part of the cost of the acquisition of the non-controlling interest. If the call options lap unexercised, any carrying amount for the call option is expensed in profit or loss. Management has determined that the call had an insignificant fair value.

(vii)

Other financial liabilities

After initial measurement, other financial liabilities are subsequently measured at amortized cost using the effective interest rate method. Amortized cost includes any issuance discount or premium and costs that are an integral part of the effective interest rate.

De-recognition of financial assets and financial liabilities

Financial assets:

A financial asset (or, where applicable a part of a financial asset or a part of a group of similar financial assets) is derecognized when: (i) the rights to receive cash flows from the asset have expired; or (ii) the Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a “pass-through” arrangement; and either the Group has transferred substantially all the risks and rewards of the asset, or the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

Financial liabilities:

A financial liability is derecognized when the obligation under the liability is discharged, cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, any resulting difference in the respective carrying amount is recognized as profit or loss.

Offsetting financial instruments:

Financial assets and liabilities are offset and the net amount is reported in the consolidated statements of financial position when there is a legally enforceable right to offset the recognized amounts and management has the intention to settle on a net basis, or realize the assets and settle the liability simultaneously.

Impairment of financial assets:

We assess at each date of the consolidated statements of financial position whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that have occurred after the initial recognition of the asset (an incurred loss event) and such loss event(s) has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the borrower or a group of borrowers is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will go bankrupt or other legal financial reorganization process and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults. Criteria used for each category of financial assets are as follows:

(i)

Loans and receivables

For loans, receivables and held-to-maturity investments that are carried at amortized cost, the Group first assesses whether objective evidence of impairment exists for financial assets that are individually significant, or collectively, for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognized are not included in a collective assessment of impairment.

If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the asset carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred). The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognized in the consolidated statements of income. Interest income, if applicable, is accrued on the reduced carrying amount based on the original effective interest rate of the asset. A loan, together with the associated allowance, is written off when classified as loss, is fully provisioned and there is real and verifiable evidence that the loan is irrecoverable and collection efforts concluded without success, impossibility of foreclosures or all collateral has been realized or has been transferred to the Group. If in any subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognized, the previously recognized impairment loss is increased or reduced by adjusting the allowance account.

If in the future a write-off loan is later recovered, the recovery is recognized in the consolidated statements of income, as a credit to the caption “Provision for loan losses, net of recoveries”.

The present value of the estimated future cash flows is discounted at the financial asset’s original effective interest rate. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate. The calculation of the present value of the estimated future cash flows of a collateralized financial asset reflects the cash flows that may result from foreclosure less costs for obtaining and selling the collateral, whether or not foreclosure is probable.

For collective evaluation impairment, financial assets are grouped considering the Group’s internal credit grading system, which considers credit risk characteristics for example: asset type, industry, geographical location, collateral type, past-due status and other relevant factors.

Future cash flows from a group of financial assets that are collectively evaluated for impairment are estimated on the basis of historical loss experience for assets with similar credit risk characteristics to those in the group. Historical loss experience is adjusted on the basis of current observable data to reflect the effects of current conditions that did not affect the years on which the historical loss experience is based and to remove the effects of conditions in the historical period that do not currently exists. The methodology and assumptions used are reviewed regularly to reduce any differences between loss estimates and actual loss experience.

(ii)

Available-for-sale financial investments

For available-for-sale financial investments, the Group assesses, at each date of the consolidated statements of financial position, whether there is objective evidence that an investment or a group of investments is impaired.

In the case of equity investments, objective evidence would include a significant or prolonged decline in the fair value of the investment below its cost. “Significant” is evaluated against the original cost of the investment and “prolonged” against the period in which the fair value has been below its original cost. Where there is evidence of impairment, the cumulative loss (measured as the difference between the acquisition cost and the current fair value, less any previously recognized impairment loss) is removed from the investments available-for-sale reserve of the consolidated statement of changes in equity and recognized in the consolidated income statement. Impairment losses on equity investments are not reversed through the consolidated income statement; increases in their fair value after impairment are recognized directly in the consolidated statements of comprehensive income.

In the case of debt instruments, impairment is assessed based on the same criteria as financial assets carried at amortized cost (loans and receivables). However, the amount recorded for impairment is the cumulative loss measured as the difference between the amortized cost and the current fair value, less any impairment loss on that investment previously recognized in the consolidated income statement. Future interest income is based on the reduced carrying amount and is accrued using the interest rate used to discount the future cash flows for the purpose of measuring the impairment loss. Interest income is recorded as part of the “Interest and dividend income” portion of the consolidated income statement. If in a subsequent year, the fair value of a debt instrument increases and the increase is objectively related to an event occurring after the impairment loss was recognized in the consolidated income statement, the impairment loss will be reversed through the consolidated income statement.

(iii)

Renegotiated loans

When a loan is modified, it is no longer considered as past due but it maintains its previous classification as impaired or not impaired. If the debtor complies with the new agreement during the following six months, and an analysis of its payment capacity supports a new improved risk classification, it is classified as not impaired. If subsequent to the loan modification the debtor fails to comply with the new agreement, it will be considered impaired and past due.

Goodwill:

Goodwill is initially measured at cost being the excess of the aggregate of the consideration transferred and the amount recognized for non-controlling interest over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognized in profit or. Goodwill is tested annually for impairment to assess whether the carrying amount is fully recoverable. An impairment loss is recognized if the carrying amount exceeds the recoverable amount. Goodwill is allocated to cash-generating units for impairment testing purposes.

Impairment of non-financial assets:

The Group assesses at each reporting date, or more frequently if events or changes in circumstances warrant, whether the carrying value of non-financial assets may be impaired. If any indication of impairment exists, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash generating unit’s (CGU) fair value less costs to sell and its value in use. Goodwill is tested annually for impairment. Where the carrying amount of an asset (or CGU) exceeds its recoverable amount, the asset (or CGU) is considered impaired and is written down to its recoverable amount.

For non-financial assets, excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognized impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognized; if that is the case, the reversal is limited so that the carrying amount of the asset neither exceeds its recoverable amount, nor exceeds the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in the income statement.

Impairment losses relating to goodwill cannot be reversed for subsequent increases in its recoverable amount in future periods.

Due from customers on acceptances:

Due from customers on acceptances corresponds to accounts receivable from customers for import and export transactions, whose obligations have been accepted by the Group. The obligations that must be assumed by the Group for such transactions are recorded as liabilities

Financial guarantees:

In the ordinary course of business, the Group grants financial guarantees, such as letters of credit, guarantees and acceptances. Financial guarantees are initially recognized at fair value (which is equivalent at that moment to the fee received) as “Other liabilities” in the consolidated statements of financial position. Subsequent to initial recognition, the Group’s liability under each guarantee is measured as the higher of the amortized fee and the best estimate of expenditure required to settle any financial obligation arising as a result of the financial guarantee.

Any increase in the liability relating to a financial guarantee is included in the consolidated statement of income. The fee received is recognized in the consolidated statement of income in the caption “Banking services”.

Provisions:

Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow or resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The expense relating to any provision is presented in the consolidated income statement net of any reimbursement. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the specific risks of the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.

Contingencies:

Contingent liabilities are not recognized in the consolidated financial statements. They are disclosed in notes, unless the probability of an outflow of resources is remote. Contingent assets are not recorded in the financial statements; they are disclosed if it is probable that an inflow of economic benefits will be realized.

Share-based payment transactions

(i)

Cash-settled transactions

As explained in note 19(a) to the Consolidated Financial Statements, until 2008 we granted a supplementary remuneration plan to certain employees who had at least one year of service with Credicorp or any of its Subsidiaries, in the form of stock appreciation rights (SARs) over a certain number of Credicorp shares. SARs were granted at a fixed price and are exercisable at that price, allowing the employee to obtain a gain in cash (“cash-settled transaction”) arising from the difference between the fixed exercise price and the market price at the date the SARs are executed.

The SARs fair value is expensed over the period up to the vesting date, with recognition of a corresponding liability. The liability is rerecorded to fair value at each reporting date up to and including the settlement date, with changes in fair value are recognized in the consolidated income statement under the caption “Salaries and employee benefits”. When the price or terms of the SARs are modified, any additional expense is also recorded in the consolidated income statement. See Note 19 to the Consolidated Financial Statements.

(ii)

Equity-settled transactions

As explain in note 19(b) to the Consolidated Financial Statements, since April 2009, a new supplementary remuneration plan was implemented to replace the SARs plan.

The cost of this equity-settled plan is recognized, together with a corresponding increase in equity, over the period in which the service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (“the vesting date”). The cumulative expense recognized for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of equity instruments that will ultimately vest.

100

The expense is recorded in the consolidated income statement under the caption “Salaries and employees benefits”. When the terms of an equity-settled award are modified, the minimum expense recognized under the “Salaries and employees benefits” caption in the consolidated income statement is the expense as if the terms had not been modified. An additional expense is recognized for any modification which increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee as measured at the date of modification.

The dilutive effect of outstanding stock awards is reflected as a share dilution in the computation of diluted earnings per share.

Derivative financial instruments:

Trading:

The Group negotiates derivative financial instruments in order to satisfy client’s needs. The Group may also take positions with the expectation of profiting from favorable movements in prices, rates or indexes.

Part of transactions with derivatives while providing effective economic hedges under Group’s risk management positions, do not qualify for hedge accounting under the specific rules of IAS 39 and are, therefore, treated as trading derivatives.

Derivative financial instruments are initially recognized in the consolidated statements of financial position at cost and subsequently are re-measured at their fair value. Fair values are estimated based on the market exchange and interest rates. All derivatives are carried as assets when fair value is positive and as liabilities when fair value is negative. Gain and losses for changes in their fair value are recorded in the consolidated income statement.

Hedge:

We use derivative instruments to manage exposures to interest rate and foreign currency. In order to manage particular risks, the Group applies hedge accounting for transactions which meet the specified criteria.

Also, at the inception of the hedge relationship, a formal assessment is undertaken to ensure the hedging instrument is expected to be highly effective in offsetting the designated risk in the hedged item. Hedges are formally assessed at each reporting date. A hedge is regarded as highly effective if changes in fair value or cash flows attributable to the hedged risk during the period for which the hedge is designated is expected to offset in a range between 80 percent and 125 percent.

The accounting treatment is established according to the nature of the hedged item and compliance with the hedge criteria.

(i)

Cash flow hedges

The effective portion of the gain or loss on the hedging instrument is recognized directly as other comprehensive income in the cash flow hedge reserve, while any ineffective portion is recognized immediately in the consolidated income statement as finance costs.

Amounts recognized as other comprehensive income are transferred to the consolidated income statement when the hedged transaction affects profit or loss, such as when the hedged financial income or financial expense is recognized or when a forecast sale occurs.

101

If the forecast transaction or firm commitment is no longer expected to occur, the cumulative gain or loss previously recognized in the cash flow hedge reserve are transferred to the consolidated income statement. If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover, or if its designation as a hedge is revoked, any cumulative gain or loss previously recognized in the cash flow hedge reserve remains in the cash flow hedge reserve until the forecast transaction or firm commitment affects profit or loss.

(ii)

Fair value hedges

The change in the fair value of an interest rate hedging derivative is recognized in the consolidated income statement in finance costs. The change in the fair value of the hedged item attributable to the risk hedged is recorded as a part of the carrying value of the hedged item and is also recognized in the consolidated income statement in finance costs.

For fair value hedges relating to consolidated items carried at amortized cost, the adjustment to carrying value is amortized through the consolidated income statement over the remaining maturity term. Effective interest rate amortization may begin as soon as an adjustment exists and shall begin no later than when the hedged item ceases to be adjusted for changes in its fair value attributable to the risk being hedged.

If the hedged item is derecognized, the unamortized fair value is recognized immediately in the consolidated income statement.

When an unrecognized firm commitment is designated as a hedged item, the subsequent cumulative change in the fair value of the firm commitment attributable to the hedged risk is recognized as an asset or liability with a corresponding gain or loss recognized in the consolidated income statement.

Embedded derivatives:

Derivatives embedded in host contracts are accounted for as separate derivatives and recorded at fair value if their economic characteristics and risks are not closely related to those of the host contracts, and the host contracts are not held for trading or designated at fair value through profit or loss.

The Group has certificates indexed to the price of Credicorp Ltd. shares that will be settled in cash, and investments indexed to certain life insurance contracts liabilities, denominated “Unit Linked”. These instruments were classified at inception by the Group as “Financial instruments at fair value though profit or loss”. See 3(f)(i), and note 8 to the Consolidated Financial Statements.

Fiduciary activities, management of funds and pension funds:

The Group provides custody, trustee, investment management and advisory services to third parties that result in the holding of assets on their behalf. These assets and income arising thereon are excluded from these consolidated financial statements, as they are not assets of the Group.

Commissions generated for these activities are included in the caption “Other income” of the consolidated income statements.

102

(2)

Historical Discussion and Analysis

The Group monitors the results of its operating segments separately for the purpose of making decisions about resource allocation and performance assessment. Regarding the Group’s segments, total revenues from banking segment amounted to 74.8% or more of the Group’s total revenue in 2012, 2011, and 2010; therefore, the following historical discussion and analysis is presented principally for banking segment, except when otherwise indicated, and is based upon information contained in our Consolidated Financial Statements and should be read in conjunction therewith. The discussion in this section regarding interest rates is based on nominal interest rates.

The financial information and discussion and analysis presented below for 2010, 2011 and 2012 reflect the financial position and results of operations for 2010, 2011 and 2012 of our subsidiaries. See “Item 3. Key Information—(A) Selected Financial Data.”

On December 31, 2012, approximately 45.1% of our deposits and 54.6% of our loans were U.S. Dollar-denominated. Despite these high proportions, U.S. Dollar-denominated deposits have decreased from the previous year (49.6% in 2011) due to the appreciation of the Nuevo Sol, which encourages clients to maintain deposits in domestic currency.

Results of Operations for the Three Years Ended December 31, 2012

The following table sets forth, for the years 2010, 2011 and 2012, the principal components of our net income:

	Year ended December 31,
	2010			2011			2012
	(U.S. Dollars in thousands)
Interest income	US$	1,471,708		US$	1,837,764		US$	2,310,441
Interest expense		(414,121	)		(531,600	)		(693,646	)
Net interest income	US$	1,057,587		US$	1,306,164		US$	1,616,795
Provision for loan losses		(174,682	)		(214,898	)		(377,841	)
Net interest income after Provision	US$	882,905		US$	1,091,266		US$	1,238,954
Noninterest income		804,535			838,636			1,121,134
Insurance premiums earned net of claims on insurance activities		164,721			196,664			238,745
Other expenses		(1,085,885	)		(1,230,149	)		(1,614,102	)
Income before translation result and income tax	US$	766,276		US$	896,417		US$	984,731
Translation result (loss) gain	US$	24,120		US$	37,881		US$	75,079
Income tax		(187,081	)		(210,508	)		(251,583	)
Net income	US$	603,315		US$	723,790		US$	808,227
Net income attributable to:
Equity holders		571,302			709,272			788,778
Minority interests		32,013			14,518			19,449
Net income	US$	603,315		US$	723,790		US$	808,227

Our net income increased from 2011 to 2012 primarily due to increased interest income of approximately US$472.7 million, net of an increase in interest expense of US$162.0 million and other expenses of US$384.0 million.

Net income attributable to our equity holders increased from US$709.3 million in 2011 to US$788.8 million in 2012, which represented an increase of 11.2% from 2011 to 2012, primarily due to an increase in interest income.

On the other hand, other expenses increased 31.2% in 2012 to US$1,614.1 million, primarily due to an increase in administrative cost of US$131.4 million, or 32.4%, and an increase in Salaries and benefits of US$185.0 million, or 31.1%.

Net Interest Income

Net interest income represents the difference between interest income on interest-earning assets and the interest paid on interest-bearing liabilities. The following table sets forth the components of net interest income:

103

	Year ended December 31,
	2010		2011		2012
	(U.S. Dollars in thousands)
Interest income:
Loans	US$	1,218,728	US$	1,533,351	US$	1,948,472
Deposits in banks		3,667		6,568		8,917
Deposits in Central Bank		28,670		36,318		31,927
Investment securities and others		196,795		227,709		274,786
Dividends		11,615		15,321		16,354
Gain from derivatives instruments and other interest income		12,233		18,497		29,985
Total interest income	US$	1,471,708	US$	1,837,764	US$	2,310,441

Interest expenses:
Deposits and obligations	US$	156,106	US$	217,322	US$	284,827
Bonds and notes issued		124,311		186,743		242,266
Due to banks and correspondents		43,532		64,369		82,776
Loss from hedging derivatives instruments		25,692		34,922		27,666
Other interest expenses		64,480		28,244		56,111
Total interest expense	US$	414,121	US$	531,600	US$	693,646
Net interest income	US$	1,057,587	US$	1,306,164	US$	1,616,795

Our net interest income increased by 23.8% in 2012 over 2011, and increased by 23.5% in 2011 over 2010.

Interest income increased by 25.7% in 2012 compared to 2011, after increasing by 24.7% in 2011 compared to 2010. The increase in 2012 was primarily due to higher average volume and higher interest rates on loans and higher average volume on investment securities. The increase in 2011 was primarily due to higher average volume and higher interest rates on loans and higher interest rates on investment securities.

Our average nominal interest rates earned on loans increased to 10.1% in 2012 from 9.5% in 2011 and 9.4% in 2010. The average nominal interest rate for foreign currency-denominated loans increased from 4.8% in 2011 to 5.4% in 2012. Interest rates for Nuevo Sol-denominated loans increased from 14.1% in 2010 to 16.9% in 2011 and decreased to 16.7% in 2012.

The average balance of foreign currency denominated loan portfolio increased by 16.2% to US$11,328.0 million in 2012, as compared to US$9,750.0 million in 2011. In 2011, the average balance increased by 18.3% over the US$7,967.5 million average balance recorded in 2010. The average balance of our Nuevo Sol denominated loan portfolio increased by 27.6% from US$4,957.7 million in 2010 to US$6,325.2 million in 2011, and by 34.4% to US$8,032.0 million in 2012. The average balance increase from 2011 to 2012 was in line with the 6.3% GDP growth of the Peruvian economy and was driven by internal demand that was reflected mainly in the expansion of our Retail Banking portfolio, especially consumer and SME.

In 2012, the increase in the average balance was comparable with the growth rate registered in 2011, despite the smaller growth rate of the overall Peruvian economy (6.9% in 2011 vs. 6.3% in 2012). The average balance in 2011 and 2012 was much higher than it was in 2010.

Interest expense increased in 2012 by 30.5% over 2011 and increased by 28.4% in 2011 over 2010. The increase in interest expense during 2012 was principally due to higher average volume and higher interest rates on deposits and bonds issued.

Average nominal interest rates paid on foreign currency-denominated deposits decreased from 1.0% in 2010 to 0.9% in 2011 and in 2012. Average nominal interest paid on Nuevo Sol-denominated deposits increased from 1.2% in 2010 to 1.92% in 2011 and to 2.0% in 2012. This increase was also a product of the monetary policy discussed above. See “Item 4. Information on the Company—(B) Business Overview—(8) Competition” and “—(12) Selected Statistical Information.”

Our average foreign currency denominated deposits increased 11.8% to US$11,120.9 million in 2012 from US$9,947.6 million in 2011. This followed a 9.3% increase in 2011 from US$9,102.5 million in 2010. Our average Nuevo Sol-denominated deposits increased by 31.9% in 2012 to US$10,729.8 million from US$8,136.3 million in 2011, and increased by 18.6% from US$6,862.2 million in 2010. See “Item 4. Information on the Company—(B) Business Overview—(12) Selected Statistical Information.”

104

Our net interest margin (net interest income divided by average interest-earning assets) was 5.0% in 2012 and did not change significantly compared to 2011 and 2010, when the margin was in 4.9% and 4.6 % respectively. See “Item 4. Information on the Company—(B) Business Overview—(12) Selected Statistical Information.”

Provision for Loan Losses

We classify all of our loans and other credits by risk category. We establish our loan loss reserves based on criteria established by IAS 39 (see “Item 4. Information on the Company—(B) Business Overview—(12) Selected Statistical Information—(iii) Loan Portfolio—Classification of the Loan Portfolio”). We do not anticipate that the expansion of our loan portfolio or the development of our subsidiaries’ activities will require a change in our reserve policy.

The following table sets forth the changes in our reserve for loan losses:

	Year ended December 31,
	2010			2011			2012
	(U.S. Dollars in thousands)
Reserves for loan losses at the beginning of the year	US$	376,049		US$	448,597		US$	558,186
Additional provisions		174,682			214,898			377,841
Acquisitions of Edyficar		-			-			-
Recoveries of written-offs		34,605			41,442			46,301
Writte-offs		(142,736	)		(155,409	)		(245,789	)
Monetary correction and Other		5,997			8,658			7,969
Reserves for loan losses at the end of the year	US$	448,597		US$	558,186		US$	744,508

We recorded a US$377.8 million loan loss provision in 2012 and a US$214.9 million provision in 2011. Total write-offs amounted to US$245.8 million in 2012 and US$155.4 million in 2011. Total recoveries of write-offs reached US$46.3 million in 2012 and US$41.4 million in 2011, constituting an 11.8% increase. Provision expense in 2012 included US$8.6 million required by BCP Bolivia (compared to US$5.3 million in 2011). Recoveries of previously charged-off accounts in 2012 amounted to US$46.3 million (compared to US$41.4 million in 2011).

Total reserves, which amounted to US$744.5 million in 2012, include the allowance for direct and indirect credits of approximately US$699.0 million and US$45.5 million, respectively.

Non-Interest Income

The following table reflects the components of our non-interest income:

	Year ended December 31,
	2010		2011		2012
	(U.S. Dollars in thousands)
Fees and commissions from banking services	US$	524,895	US$	607,843	US$	737,421
Net gains from sales of securities		80,326		61,927		101,269
Net gains on foreign exchange transactions		104,169		138,492		177,472
Other income		95,145		30,374		104,972
Total non-interest income	US$	804,535	US$	838,636	US$	1,121,134

Our non-interest income, without including net premiums earned, increased by 33.7% to US$1,121.1 million in 2012. Non-interest income increased by 4.2% in 2011, from US$804.5 million in 2010 to US$838.6 million in 2011. The revenue increase in 2012 was primarily due to an increase in fees and commissions from banking services, net gain from sales of securities, net gains on foreign exchange transactions and other income.

105

Fees and commissions income from banking services increased by 21.3% to US$737.4 million in 2012. In 2011, fees and commissions income from banking services were US$607.8 million, a 15.8% increase from the US$524.9 million in income in 2010. The increases in fees and commissions income from banking services from 2010 to 2012 were primarily due to an increase in account maintenance, banking transfers commissions, credit/debit card services and fund management fees.

Net gains from sales of securities increased 63.5% to US$101.3 million in 2012 as compared to US$61.9 million in 2011. This followed a decrease of 22.9% from the US$80.3 million of net gains from sales of securities in 2010. The increase in 2012 was primarily due to the increased volatility observed in capital markets, which caused the appreciation of stock prices in our investment portfolio. The decrease in 2011 was primarily due to the increased volatility observed in capital markets, which caused the depreciation of stock prices in our investment portfolio.

Net gains on foreign exchange transactions increased 28.1% to US$177.5 million in 2012 as compared to US$138.5 million in 2011, following an increase of 32.9% from US$104.2 million in 2010. Higher gains in 2012 compared to 2011 were primarily due to the strong volatility in the exchange rate. This led to higher volumes and improved the spread in our currency exchange positions.

Other income increased by 245.6% to US$104.9 million in 2012, as compared to US$30.4 million in 2011. Other income decreased by 68.1% in 2011 from US$95.1 million in 2010. Other income principally consists of income from medical services and sales of medicines, valuation of assets and liabilities designated at fair value, sales of seized assets, leasing income, recoveries of other accounts receivable and other assets and other income. The increase in other income in 2012 was primarily due to an increase in income from medical services and sales of medicines, which rose 493.6% from US$11.4 million in 2011 to US$ 67.9 million in 2012. This increase was caused by acquisitions of private hospitals that took place from July 2011 to October 2012.

Insurance Premiums and Claims on Insurance Activities

The following table reflects the premiums earned and claims incurred in connection with our insurance activities:

	Year ended December 31,
	2010			2011			2012
	(U.S. Dollars in thousands)
Gross premiums		564,482			695,254			852,301
Premiums ceded to reinsurers, net		(95,296	)		(129,803	)		(152,598	)
Assumed from other companies		11,107			8,972			4,502
Net premiums earned	US$	480,293		US$	574,423		US$	704,205
Net claims incurred		(54,914	)		(70,712	)		(85,744	)
Increase in costs for future benefits for life and health policies		(260,658	)		(307,047	)		(379,716	)
Total net premiums and claims	US$	164,721		US$	196,664		US$	238,745

NEP amounted to US$480.3 million in 2010, US$574.4 million in 2011 and US$ 704.2 million in 2012. Total premiums (excluding eliminations) increased by 17% in 2012 compared to 2011.

	2012				2011				2010
	US Dollars in Thousands
	Written Premiums		Earned Premiums (*)		Written Premiums		Earned Premiums (*)		Written Premiums		Earned Premiums (*)
Automobile		104,539		95,847		91,167		85,567		79,827		73,753
Fire and Allied L.		77,180		72,624		74,809		50,490		60,846		45,136
Theft and R.		18,164		17,258		13,860		13,054		10,859		11,136
Transport		17,914		16,736		15,145		14,217		13,393		12,916
SOAT		11,442		11,303		11,063		11,160		10,341		9,716
Marine hull		8,221		7,306		7,420		6,684		6,272		6,228
Others		77,516		81,178		83,635		77,102		78,688		45,351
Life Insurance		392,706		255,938		324,791		200,468		276,551		156,611
Health Line		315,691		294,111		253,067		236,512		219,757		203,635
Total		1,023,373		852,301		874,957		695,254		756,534		564,482

(*) Net of annual variation of unearned premiums and other technical reserves

106

Total premiums for general insurance lines, which accounted for 30.8% of total premiums, increased by 6% in 2012, mainly due to automobile premiums, which represented 33.2% of general insurance premiums in 2012 (30.7% in 2011 and 2010) and which increased 14.7% (14.2% in 2011 compared to 2010). Other property and casualty premiums, which represented 66.8% of the premiums of this business line (69.3% in 2011 and 2010), increased 2.2% in 2012 (14.2% in 2011 compared to 2010).

In our Life Insurance lines, total direct premiums increased by 20.9% in 2012 (17.4 % in 2011 compared to 2010), reaching a market share of 27.8%. This growth exceeded the average growth of the life insurance industry.

	2012				2011				2010
	US Dollars in Thousands
	Written Premiums		Earned Premiums (*)		Written Premiums		Earned Premiums (*)		Written Premiums		Earned Premiums (*)
Individual life and personal accident		92,950		58,672		81,151		54,853		67,778		35,064
Disability and Survivorship		79,096		79,814		57,338		54,746		45,785		47,083
Group Life		53,610		51,465		43,746		42,382		38,525		35,078
Credit Life		60,816		60,364		43,328		43,328		32,445		32,445
Annuities		106,234		5,623		99,228		5,159		92,018		6,941
Total		392,706		255,938		324,791		200,468		276,551		156,611

(*) Net of annual variation of unearned premiums and other technical reserves

The 20.9% increase in total direct premiums in 2012 was mainly due to better performance in our Credit Life (+39.8%), Disability and Survivor (+37.9%) and Individual Life (+14.6%) lines. Group Life products increased premiums by 22.5% from 2011 to 2012 (13.6% in 2011 compared to 2010), and represented 13.7% (13.5% in 2011) of total premiums in 2012. Individual Annuities increased by 7.1% in 2012 as compared to 2011 (7.8% in 2011 compared to 2010) and represented 27.1% of total premiums in 2012 and 30.5% in 2011. All business lines showed positive trends in 2012 as compared to 2011.

Health business lines (30.8% of total premiums in 2012) increased by 24.7% in 2012 (15.2% in 2011 compared to 2010). This increase was primarily due to a 23.3% (16.6% increase in 2011 compared to 2010) increase in regular insurance premiums, which represented 59.0% of health insurance premiums in 2012 (59.7% in 2011, 59% in 2010).

During 2012, net claims on insurance activities increased by 21% from US$377.7 million in 2011 to US$455.8 million (20% increase in 2011 compared to 2010). This increase was mainly caused by three severe claims in the first quarter affecting general insurance lines for a total amount of US$ 11.1 million and a greater number of claims in the health business lines. The latter can be explained by: (i) the increase in competition mainly in the broker channel that exerted downward pressure on fees, affecting our loss ratio, (ii) the increase in demand for health services, affecting both frequency and cost, and (iii) the higher cost of service providers caused by increased investment in the health sector. Steps have been taken to control the net loss ratio in the future.

Other Expenses

The following table reflects the components of our other expenses:

	Year ended December 31,
	2010		2011		2012
	(U.S. Dollars in thousands)
Salaries and employee benefits	US$	568,004	US$	595,705	US$	780,734
General and administrative		341,123		405,357		536,727
Depreciation and amortization		82,289		93,882		108,510
Other		94,469		135,205		188,131
Total other expenses and merger costs	US$	1,085,885	US$	1,230,149	US$	1,614,102

107

Personnel expenses increased by 31.1% in 2012 as compared to 2011, after a 4.9% increase in 2011 over 2010. The number of our personnel increased to 26,541 employees in 2012 from 22,276 in 2011 and 19,644 in 2010. This increase was originated by the acquisition of various Peruvian entities specialized in providing health care service, and Correval and IM Trust.

Considering only BCP and its subsidiaries, the number of personnel increased to 22,330 employees in 2012 from 18,616 in 2011 and 16,151 in 2010.

Our general and administrative expenses (which include taxes other than income taxes), produced mainly by higher marketing expenses, increased by 32.4% in 2012 compared to 2011, after increasing 18.8% from 2010 through 2011. The increase in 2012 was related to contracts with IBM, TCS and Everis to support the administration and operation of BCP hardware and servers and to obtain services for the maintenance & development of some BCP’s applications. The expense that arose from this service amounted to US$23.6 million. In addition, BCP recorded higher marketing expenses, whose main variation was related to Lan Pass provisions. Other expenses that contributed to our general and administrative expenses increase were leasing, transportation and commissions for BCP agents.

Depreciation and Amortization increased by 15.6% to US$108.5 million in 2012 from US$93.9 million in 2011.

Other expenses increased 39.1% to US$188.1 million in 2012, after an increasing 43.1% compared to 2011. This increase was mainly due to medical services expenses, which amounted to US$70.1 million, and the net loss of US$24.6 million on our sale of financial assets at fair value in 2011.

Translation Result

The translation result reflects exposure to depreciation of net monetary positions in Nuevos Soles. We recognized a US$75.1 million translation gain in 2012, a US$37.9 million translation gain in 2011, and a US$24.1 million translation loss in 2010.

Income Taxes

We are not subject to income taxes or taxes on capital gains, capital transfers or equity or estate duty under Bermuda law. However, some of our subsidiaries are subject to income tax and taxes on dividends paid to us, depending on the legislation of the jurisdictions in which they generate income.

Our Peruvian subsidiaries, including BCP, are subject to corporate taxation on income under Peruvian tax law. The statutory income tax rate payable in Peru since 2004 is 30% of taxable income. An additional 4.1% withholding tax is applied on dividends, which we register as income tax based on the liquid amount received from BCP, Grupo Crédito and Grupo Pacífico.

Peruvian tax legislation is applicable to legal entities established in Peru, and on an individual (not consolidated) basis. Our non-Peruvian subsidiaries are not subject to taxation in Peru and their assets are not included in the calculation of the Peruvian extraordinary tax on net assets.

ASHC is not subject to taxation in Panama since its operations are undertaken offshore. The Cayman Islands currently have no income, corporation or capital gains tax and no estate, duty, inheritance or gift tax.

Tax expense paid by the subsidiaries increased to US$251.6 million in 2012 from US$210.5 million in 2011, which increased from US$187.1 million in 2010. Income tax growth in these periods reflects increases in our taxable income. Since 1994, we have paid the Peruvian income tax at the statutory rate. The effective tax rates in 2010, 2011 and 2012 were 23.67%, 22.53%, and 23.74%, respectively.

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(3)

Financial Condition

Total Assets

As of December 31, 2012, Credicorp had total assets of US$40.8 billion, increasing by 32.8% compared to total assets of US$30.7 billion as of December 31, 2011 (total assets of US$ 28.4 billion in 2010). In 2012, cash and due from banks increased by 42.6% due to higher amounts maintained with Peru’s central bank. Investments increased by 31.0% due to an increase in BCR certificates of deposit.

As of December 31, 2012, our total loans were US$21,311.9 million, which represented 52.2% of total assets. Loans, net of reserves for loan losses, were US$20,772.6 million. As of December 31, 2011, our total loans were US$17,320.4 million, which represented 56.4% of total assets, and net of reserves for loan losses were US$16,922.2 million. From December 31, 2011 to December 31, 2012 our total loans increased by 23.1%, and net of loan loss reserves increased by 22.8%.

Our total deposits with the Central Bank increased to US$6,205.6 million as of December 31, 2012 from US$3,784.5 million as of December 31, 2011 (our total deposits with the Central Bank were US$6,308 million in 2010). Our securities holdings (which include marketable securities, available for sale and held to maturity investments) increased by 31.0% to US$7,848.1 million as of December 31, 2012 from US$5,991.2 million as of December 31, 2011 (US$3,883.8 million in 2010). The securities portfolio increase in 2012 was primarily due to higher investments in BCR certificates of deposits.

Total Liabilities

As of December 31, 2012, we had total liabilities of US$36.4 billion, a 33.7% increase from US$27.3 billion as of December 31, 2011 (US$25.4 billion in 2010); and we had total deposits of US$24.0 billion, a 28.5% increase from US$18.7 billion on December 31, 2011 (US$17.8 billion in 2010).

We have structured our funding strategy around maintaining a diversified deposit base. As of December 31, 2012, on an unconsolidated basis, we had 42.5% of total savings deposits in the Peruvian banking system, 41.4% of demand deposits, 33.2% of time deposits and 37.3% of total deposits, the highest of any Peruvian bank in all three types of deposits, according to the SBS. As of December 31, 2012, we had 54.9% of the entire Peruvian banking system’s CTS deposits, decreasing from 56.1% as of December 31, 2011, and 55.9% as of December 31, 2010, according to SBS statistics. We believe that we have traditionally attracted a high percentage of the savings and CTS deposit market because of our reputation as a sound institution, our extensive branch network and the quality of our service.

(B)

Liquidity and Capital Resources

Regulatory Capital and Capital Adequacy Ratios

	As of December 31,
	2010			2011			2012
	(U.S. Dollars in thousands, except percentages)
Capital stock	US$	516,837		US$	508,180		US$	505,164
Legal and other reserves		1,385,098			1,812,977			2,306,561
Capital stock, reserves and retained earnings of minority interest		34,352			40,876			95,450
Accepted provisions for loan losses		167,329			227,886			297,825
Subordinated debt		696,233			793,570			1,361,470
Total		2,799,849			3,383,489			4,566,469
Less: investment in multilateral organizations, banks and insurance companies and goodwill		(408,525	)		(360,791	)		(590,853	)
Total Regulatory Capital (1)		2,391,324			3,022,698			3,975,616

Financial Entities Capital Ratio
Regulatory Capital attributable to Financial Entities (1)		2,157,864			2,741,753			3,660,606
Risk-Weighted Assets From Financial Entities (3)		17,248,656			20,260,574			26,217,705
Capital Ratio for Financial Entities (1) / (3)		12.51	%		13.53	%		13.96	%

Minimum Regulatory Capital Required (MRCR)(2)
MRCR for Financial Entities (3)		1,616,368			2,119,319			3,001,276
MRCR for Insurance Entities (3)		184,330			231,416			274,620
MRCR for Other Entities (3)		75,787			122,793			342,226
Total Minimum Regulatory Capital Required	US$	1,876,485		US$	2,473,528		US$	3,618,122
Regulatory capital as percentage of Minimum Regulatory Capital Required		127.44	%		122.20	%		109.88	%

109

(1) Total Regulatory Capital and Financial Entities Regulatory Capital is prepared under the guidelines of the BIS I Accord (by the Basel Committee) as adopted by the SBS.

(2) The Minimum Regulatory Capital Required, or MRCR, is prepared under the guidelines of the BIS I Accord (by the Basel Committee) as adopted by the SBS, and must not exceed from the Total Regulatory Capital calculated. The consolidated MRCR is calculated by the addition of the MRCR of each one of the entities.

(3) Peruvian financial entities (BCP, Edyficar and Solución) have a MRCR of 10.0% of the Risk-Weighted Assets (or RWA). For ASHC (Cayman Islands), the MRCR is 12% of the RWA. For BCP Bolivia, the MRCR is 10% of the RWA. For the insurance companies, MRCR is calculated on the basis of the solvency margin, the guarantee funds and the credit risk. Other entities, with no MRCR, must be considered by the sum of the capital, reserves and retained earnings.

Credicorp Capital Adequacy Requirements

On September 29, 2010, a new SBS Resolution 11823-2010 established the methodologies for calculating the regulatory capital and capital requirements for financial and mixed conglomerates.

Article 4 of SBS Resolution 11823-2010 identifies two consolidated groups: (i) the financial system consolidated group, and (ii) the insurance system consolidated group. The group of companies formed by these entities is called the financial group.

Articles 5 and 9 of SBS Resolution 11823-2010, provide that the financial system consolidated group, the insurance system consolidated group, and the financial group are required to hold regulatory capital that is greater than or equal to the capital requirements of each group.

The capital requirements for the consolidated groups are the sum of the capital requirements of the companies that belong to each group. For unsupervised companies, their capital requirements should be the greater of: (i) 10% of third party assets and (ii) the ratio of third party assets over total assets multiplied by the sum of paid-in-capital, legal reserves, supplementary capital premiums, voluntary reserves distributable only with prior SBS approval, and retained earnings with capitalization agreements net of current and past years’ losses. The capital requirements for the financial group are the sum of the capital requirements of each consolidated group.

Article 6 of SBS resolution 11823-2010, provides that regulatory capital of the consolidated groups is comprised of the sum of basic capital and supplementary capital, and is calculated as follows:

•

Basic Capital: Basic Capital or Tier 1 capital is comprised of: (i) paid-in-capital (which includes common stock and perpetual non-cumulative preferred stock), legal reserves, supplementary capital premiums, voluntary reserves distributable only with prior SBS approval, and retained earnings with capitalization agreements (earnings that the shareholders or the Board of Directors, as the case may be, have committed to capitalize as common stock); (ii) other elements that have characteristics of permanence and loss absorption that are in compliance with regulations enacted by the SBS; and (iii) unrealized gains and retained earnings in Subsidiaries. Items deducted from Tier 1 capital include: (i) current and past years’ losses; (ii) deficits of loan loss provisions; (iii) goodwill resulting from corporate reorganizations or acquisitions; and (iv) half of the amount referred to in “Deductions” below. Absent any Tier 2 capital, 100% of the amount referred to in “Deductions” below must be deducted from Tier 1 capital. The elements referred to in item (ii) above should not exceed 17.65% of the amount resulting from adding components (i) and (iii) of Tier 1 capital net of the deductions in (i), (ii) and (iii) in this paragraph.

110

•

Supplementary Capital: Supplementary capital is comprised of the sum of Tier 2 and Tier 3 capital. Tier 2 capital elements include: (i) paid-in-capital, legal reserves, supplementary capital premiums, and voluntary reserves that may be reduced without prior consent from the SBS; (ii) the eligible portion of the consolidated redeemable subordinated debt and of any other components that have characteristics of debt and equity as provided by the SBS; (iii) for banks using the SAM, the generic loan loss provision up to 1.25% of credit risk-weighted assets; or, alternatively, for banks using the IRB, the generic loan loss provision up to 0.6% of total credit risk-weighted assets (pursuant to article 189 of the Law); and (iv) half of the amount referred to in “Deductions” below. Tier 3 capital is comprised of consolidated redeemable subordinated debt that is incurred with the exclusive purpose of covering market risk.

•

Deductions: The following elements are deducted from Tier 1 and Tier 2 capital: (i) for the financial system consolidated group all investments in shares and subordinated debt issued by other local or foreign financial institutions and insurance companies and for the insurance system consolidated group all investments in shares and subordinated debt issued by other local or foreign insurance companies; (ii) all investments in shares and subordinated debt issued by entities that are part of the holding but do not belong to any of the consolidated groups; (iii) for the financial system group, the amount by which (a) an investment in shares issued by a real sector company which is neither part of the holding nor of the negotiable portfolio exceeds (b) 15% of the financial system consolidated group’s regulatory capital; (iv) the aggregate amount of all investments in shares issued by real sector companies which are not part of the holding and which are not part of the financial system consolidated group’s negotiable portfolio, exceeds 60% of the regulatory capital.

Article 7 of SBS resolution 11823-2010 provides that the following limits apply when calculating regulatory capital: (i) the aggregate amount of supplementary capital must not exceed the aggregate amount of basic capital; (ii) the amount of redeemable Tier 2 subordinated instruments must be limited to 50% of the amount resulting from the sum of Tier 1 in “Basic Capital” above; (iii) the amount of Tier 3 capital must be limited to 250% of the amount resulting from the sum of Tier 1 elements.

Article 10 of SBS resolution 11823-2010, provides that regulatory capital of the financial group is comprised of the sum of basic capital and supplementary capital, and is calculated as follows:

•

Basic Capital: Basic Capital or Tier 1 capital is comprised of: (i) paid-in-capital (which includes common stock and perpetual non-cumulative preferred stock), legal reserves, supplementary capital premiums, voluntary reserves distributable only with prior SBS approval, and retained earnings with capitalization agreements (earnings that the shareholders or the Board of Directors, as the case may be, have committed to capitalize as common stock); and, (ii) other elements that have characteristics of permanence and loss absorption that are in compliance with regulations enacted by the SBS. Items deducted from Tier 1 capital include: (i) current and past years’ losses; (ii) deficits of loan loss provisions; (iii) goodwill resulting from corporate reorganizations or acquisitions; and (iv) half of the amount referred to in “Deductions” below. Absent any Tier 2 capital, 100% of the amount referred to in “Deductions” below must be deducted from Tier 1 capital.

•

Supplementary Capital: Supplementary capital is comprised of the sum of Tier 2 and Tier 3 capital. Tier 2 capital elements include: (i) paid-in-capital, legal reserves, supplementary capital premiums, and voluntary reserves that may be reduced without prior consent from the SBS; (ii) the eligible portion of the consolidated redeemable subordinated debt and of any other components that have characteristics of debt and equity as provided by the SBS; (iii) the generic loan loss provision included in the supplementary capital of the financial consolidated group; and (iv) half of the amount referred to in “Deductions” below. Tier 3 capital is comprised of consolidated redeemable subordinated debt computed in the consolidated groups.

•

111

The following table shows, regulatory capital and capital adequacy requirements as of December 31, 2010, 2011 and 2012:

US $ MM	Dec-2010		Dec-2011		Dec-2012
Financial group
Regulatory Capital		2,232		3,023		3,976
Capital Adequacy Requirements		2,048		3,202		3,721

Financial system consolidated group
Regulatory Capital		1,957		2,737		3,661
Capital Adequacy Requirements		1,858		2,270		3,470

Insurance system consolidated group
Regulatory Capital		207		274		336
Capital Adequacy Requirements		191		231		275

Liquidity Risk

We manage our assets and liabilities to ensure that we have sufficient liquidity to meet our present and future financial obligations and to be able to take advantage of appropriate business opportunities as they arise. Liquidity risk represents the potential for loss as a result of limitations on our ability to adjust future cash flows to meet the needs of depositors and borrowers and to fund operations on a timely and cost-effective basis. Financial obligations arise from withdrawals of deposits, repayment on maturity of purchased funds, extensions of loans or other forms of credit, and working capital needs.

The growth of our deposit base over the years has enabled us to significantly increase our lending activity. BCP is subject to SBS Resolution No. 472-2001, enacted in June 2001, which made its market risk area responsible for liquidity management, and by which minimum liquidity ratios were established. The ratio of liquid assets as a percentage of short-term liabilities, as strictly defined by the SBS, must exceed 8% for Nuevos Soles-based transactions, and 20% for foreign exchange-based transactions. BCP’s average daily ratios during the month of December 2012 were 49.16% and 46.25% for Nuevos Soles and foreign exchange-based transactions, respectively, demonstrating our continuing excess liquidity. We have never defaulted on any of our debt or been forced to reschedule any of our obligations. Even during the early 1980s, when the government of Peru and many Peruvian companies and banks were forced to restructure their debt as a result of the Latin American debt crisis and government restrictions, BCP and Grupo Pacífico complied with all of their payment obligations.

The available sources of excess liquidity for Nuevos soles and foreign exchange-based transactions at BCP (without including subsidiaries) are as follows:

	2008 S/.000		2009 S/.000		2010 S/.000		2011 S/.000		2012 S/.000
CURRENT ASSETS
Cash		891,812		874,489		1,035,056		1,292,638		1,333,246
Deposits in Peruvian Central Bank – BCR and deposits in Peruvian banks		1,050,866		379,308		11,898,306		3,023,812		4,705,925
Peruvian Government treasury bonds and BCR certificates of deposit		3,425,042		5,616,482		1,476,236		5,787,720		7,754,813
Others		4,493		67,154		439		40,496		1,031
Total		5,809,969		6,937,433		14,410,038		10,144,666		13,795,015
CURRENT LIABILITIES
Demand deposits, and tax and investments liabilities		5,809,969		6,304,886		7,457,802		7,778,281		9,563,505
Saving deposits		3,532,974		4,108,037		5,409,287		6,636,569		8,527,519
Time deposits		6,106,490		4,678,500		8,995,488		7,539,702		9,574,264
Others		367,796		270,304		512,973		150,338		395,878
Total		15,817,229		15,361,727		22,375,549		22,104,891		28,061,166
Current ratio		33.96		45.16		64.40		45.89		49.16

112

	2008 US$000		2009 US$000		2010 US$000		2011 US$000		2012 US$000
CURRENT ASSETS
Cash		191,676		207,630		210,076		240,563		224,882
Deposits in Peruvian Central Bank - BCR and deposits in Peruvian banks		2,085,433		2,131,278		2,526,81		2,931,623		3,783,718
Peruvian Government treasury bonds and BCR certificates of deposit		1,136,238		424,233		45,536		55,148		25,518
Others		489,55		250,402		349,670		338,348		249,324
Total		3,902,898		3,013,544		3,132,101		3,565,681		4,283,442
CURRENT LIABILITIES
Demand deposits, and tax and investments liabilities		2,120,236		2,345,929		2,695,286		3,480,428		3,605,608
Saving deposits		1,411,295		1,657,133		1,817,485		2,089,838		2,154,482
Time deposits		2,379,107		2,464,549		2,197,381		1,376,533		2,016,089
Others		643,730		905,662		1,799,981		1,197,787		1,485,937
Total		6,554,368		7,373,273		8,510,134		8,144,585		9,262,116
Current ratio		59.55		40.87		36.80		43.78		46.25

The capability of replacing interest-bearing deposits at their maturity is a key factor in determining liquidity requirements, as well as the exposure to interest and exchange rate risks. Our principal source of funding is customer deposits with BCP’s retail banking group and ASHC’s private banking group, and premiums and amounts earned on invested assets at Grupo Pacífico. We believe that funds from our deposit-taking operations generally will continue to meet our liquidity needs for the foreseeable future.

BCP’s retail banking group has developed a diversified and stable deposit base and its private banking group has developed a stable deposit base that, in each case, provides us with a low-cost source of funding. This deposit base has traditionally been one of our greatest strengths. The deposit gathering strategy has focused on products considered as BCP’s core deposits: demand deposits, savings, time deposits and CTS deposits. Other sources of funds and liquidity, which are mostly short- and long-term borrowings from correspondent banks and other financial institutions, issued bonds, and subordinated debt, are of a considerably lower significance compared to our core deposits. See Notes 13 and 14 to the Consolidated Financial Statements.

The following table presents our core deposits, other deposits and other sources of funds:

	At December 31,
	2010			2011			2012
	(U.S. Dollars in thousands, except percentages)
Core Deposits:
Demand deposits	US$	5,581,392		US$	6,614,487		US$	8,065,131
Savings deposits		4,244,750			5,096,509			6,084,078
Severance indemnity deposits		1,313,122			1,757,124			2,232,492
Total core deposits	US$	11,139,264		US$	13,468,120		US$	16,381,701

Other Deposits:
Time deposits		6,464,769			5,039,541			7,415,710
Bank certificates		163,681			136,338			167,542
Total deposits	US$	17,767,714		US$	18,643,999		US$	23,964,953

Payables from repurchase agreements and security lending	US$	250,000		US$	250,000		US$	1,878,341

Due to banks and correspondents		2,232,264			2,052,855			2,676,627

Issued bonds		2,955,887			3,920,722			4,732,826

Total sources of funds	US$	23,205,865		US$	24,867,576		US$	33,252,749
Core deposits as a percent of total deposits		62.7	%		72.2	%		68.4	%
Core deposits as a percent of total sources of liquid funds		48.0	%		54.2	%		49.3	%

BCP is required to keep deposits with the Central Bank as legal reserves, determined as a percentage of the deposits and other liabilities owed to its clients. The requirement is currently approximately 18.7% of Nuevos Soles-denominated deposits and approximately 39.9% for the U.S. Dollar-denominated deposits. See “Item 4. Information on the Company—(B) Business Overview—(11) Supervision and Regulation—(ii) BCP—Central Bank Reserve Requirements.” Legal reserves are meant to ensure the availability of liquid funds to cover withdrawals of deposits. Additionally, we have significant investments of excess liquid funds in short-term Central Bank certificates of deposits.

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The following table presents our deposits at the Central Bank and our investments in Central Bank certificates:

	At December 31,
	2010			2011			2012
	(U.S. Dollars in thousands, except percentages)
Funds at Central Bank
Deposits	US$	6,307,977		US$	3,784,514		US$	6,205,611
Certificates of deposits		363,850			2,059,780			2,965,313
Total funds at Central Bank	US$	6,671,827		US$	5,844,294		US$	9,170,924
Total funds at Central Bank of Perú as a percent of total deposits		37.6	%		31.3	%		38.1	%

BCP at times has accessed Peru’s short-term interbank deposit market, although it is generally a lender in this market. The Central Bank’s discount window, which makes short-term loans to banks at premium rates, is also available as a short-term funding source, but has been used infrequently by BCP.

On December 31, 2012, we had uncommitted credit lines with various banks, including long-term facilities that are mainly used for project financing, of which no significant amount was drawn down. We have also received long term funding from Cofide, Corporación Andina de Fomento (or CAF), syndicated loans, and other international lenders. The transactions relating to these credit lines include import and export transactions and average annual rates (including Libor) vary from 0.50% to 10.0%. As of December 31, 2012, we maintain US$2,891.7 million in such credit lines, secured by the collection of BCP’s (including its foreign branches’) instructing correspondent banks to make a payment of a certain amount to a beneficiary that is not a financial institution. These funds have maturities of up to seven years. See Notes 13(a) and (c) to the Consolidated Financial Statements. As of December 31, 2012 borrowed funds due to banks and correspondents amounted to US$2,686.3 million as compared to US$2,060.0 million in 2011 and US$2,240.3 million in 2010.

In addition, mortgage loans may be funded by mortgage funding notes and mortgage bonds that are sold by BCP in the market. Mortgage funding notes are instruments sold by BCP with payment terms that are matched to the related mortgage loans, thereby reducing BCP’s exposure to interest rate fluctuations and inflation. Mortgage bonds are mainly U.S. Dollar-denominated and have been issued with ten-year terms, with collateral established by real estate acquired through funded home mortgage loans. As of December 31, 2011, BCP had US$0.5 million of outstanding mortgage bonds and notes, which were fully paid in 2012. A source of funds specific to leasing operations are leasing bonds issued by lease financing companies, the terms of which are specified in the Peruvian leasing regulations. As of December 31, 2012, BCP had US$39.2 million of outstanding leasing bonds (US$37.1 million in 2011 and US$134.4 million in 2010). These bonds have maturities of up to four years. See Note 16 to the Consolidated Financial Statements for a detailed breakdown of our issued bonds.

The following table presents our issued bonds:

	Years ended December 31,
	2010		2011		2012
	(U.S. Dollars in millions)
Issued bonds
Corporate bonds	US$	800.0	US$	894.0	US$	207.8
Subordinated bonds		-		410.0		365.7
Subordinated debt		17.1		35.2		-
Total issuance	US$	817.1	US$	1,339.2	US$	573.5

In April 2012, BCP, through its Panama branch, issued on the international market subordinated notes in the aggregate amount of US$350.0 million due 2027. These notes accrue at a fixed annual interest rate of 6.13%, for the first 10 years with interest payments every six months. Starting April 24, 2022, the interest rate becomes a variable rate of Libor 3 months plus 704.3 basis points. Between April 24, 2017 and until April 24, 2022, BCP may redeem all or part of the subordinated notes with the penalty of the payment of an interest equivalent to the American Treasury plus 50 basis points. Additionally, from April 24, 2022 or at any later date of coupon payment, BCP can redeem all or part of the bonds without penalty. Payment of principal will take place at the date of maturity or redemption.

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In October and November 2012, BCP issued corporate bonds for S/.200.0 million in each with fixed annual interest rates of 5.50% and 5.31%, respectively, with maturities between October and November 2022.

In April and July 2012, Edyficar issued corporate bonds for S/.60.0 million and of S/.70.0 million each with fixed annual interest rates of 5.47% and 5.50%, respectively, with maturities between April 2015 and July 2016.

In September 2010 and March 2011, BCP, through its Panama branch, issued senior bonds for US$800.0 million and US$700.0 million, respectively, in the international market with principal maturity in 2020 and 2016, respectively. These debts accrue at a fixed annual interest rate of 5.38% and 4.75%, respectively, with semiannual interest payments.

BCP’s issuances in 2012 are described above See “Item 4. Information on the Company—(B) Business Overview—(1) Introduction – Review of 2012- Banking segment.”

In July and August 2011, Edyficar issued negotiable certificates of deposits for S/.40.0 million and two of S/.30.0 million each with fixed annual interest rates of 5.41%, 5.27% and 5.20%, respectively, with maturities between July and August 2012.

In November 2011, Grupo Pacífico issued subordinated bonds for US$60.0 million. This debt accrues a fixed annual interest rate of 6.97% with principal maturity on 2026. These bonds were issued in order to obtain cash for maturities in November 2026.

The principal sources of funds for Grupo Pacífico’s insurance operations are premiums and amounts earned on invested assets. The major uses of these funds are the payment of policyholder claims, benefits and related expenses, reinsurance costs, commissions and other operating costs. In general, Grupo Pacífico’s insurance operations generate substantial cash flow because most premiums are received in advance of the time when claim payments are required. Positive operating cash flows, along with that portion of the investment portfolio that is held in cash and highly liquid securities, historically have met the liquidity requirements of Grupo Pacífico’s insurance operations.

(C)

Research and Development, Patents and Licenses, Etc.

Not applicable.

(D)

Trend Information

We expect that 2013 will show a positive economic trend; however, the international environment still suggests some uncertainty. In particular, we expect that financial income will increase, mainly as a result of our prioritization of retail operations with individuals and small companies. In addition, according to BCR, credit risk is expected to remain stable up to the first quarter of 2013, followed by a soft trend for the rest of the year, despite planned positive loan evolution and higher provision due to higher volume in our loan portfolio. Furthermore, we plan to invest in the expansion of our distribution channels network by opening new branches.

Other important factor to consider is the pressure on consumer protection regulation, especially regarding to some sources of fee income in the credit card segment, all of which could impact our business in Peru.

In Bolivia, we expect that BCP Bolivia will maintain its profitability, although the political and economic environment, which involves a high level of uncertainty, is an important factor in this expectation.

We expect that in 2013, ASB will maintain its low-risk investment strategy and overall good performance (net earnings in 2012 increased 17.8% compared to 2011 but earnings in 2011 decreased 16% compared to 2010). We expect continued growth of our assets under management, given the high quality service we offer.

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In our insurance business, we expect to raise the profitability of each retail product sold in branches. The insurance business continues to grow and is supported by the result in total premiums. However, as with our banking business, pressure on consumer protection regulation and the elections in local, regional and central government authorities could impact our business in Peru.

Please see “Item 3. Key Information—(D) Risk Factors” and the cautionary statement regarding forward looking information.

(E)

Off-Balance Sheet Arrangements

We record various contractual obligations as liabilities in our financial statements. We do not recognize other contractual arrangements, such as contingent credits contracts, as liabilities in our financial statements. These other contractual arrangements are required to be registered in off-balance sheet accounts. We enter into these off-balance sheet arrangements in the ordinary course of business in order to provide support to our clients and hedge some risks in our balance sheet and use guarantees, letters of credit, derivatives and swaps.

The following table reflects our off-balance sheet arrangements as of December 31, 2010, 2011 and 2012:

	Year ended December 31,
	2010		2011		2012
	(U.S. Dollars in thousands)
Contingent Credits
Guarantees and stand by letters	US$	2,718,200	US$	3,128,534	US$	3,933,834
Import and export letters of credit		417,011		599,466		586,273
Sub Total		3,135,211		3,728,000		4,520,107

Responsibilities under credit line agreements		2,449,807		3,525,517		4,008,572
Forwards		2,628,195		3,473,264		5,831,227
Options		103,616		64,184		95,288
Swap contracts (notional amount)		2,470,047		2,449,792		3,359,928
Total	US$	10,786,876	US$	13,240,757	US$	17,815,122

In the normal course of its business, our banking subsidiaries are party to transactions with off-balance sheet risk. These transactions expose them to additional credit risks relative to amounts recognized in the consolidated balance sheets.

Credit risk for off-balance sheet financial instruments is defined as the possibility of sustaining a loss because any other party to a financial instrument fails to perform in accordance with the terms of the contract. The exposures to losses are represented by the contractual amount specified in the related contracts. We apply the same credit policies in making commitments and conditional obligations as we do for on-balance sheet instruments (see Note 7(a) to the Consolidated Financial Statements), including the requirement to obtain collateral when necessary. The collateral held varies, but may include deposits in financial institutions, securities or other assets. Many of the contingent transactions are expected to expire without any performance being required. Therefore the total committed amounts do not necessarily represent future cash requirements.

Credicorp has currency-forwards derivatives. Currency-forwards are commitments to buy or sell currency at a future date at a contracted price. Risk arises from the possibility that the counterparty to the transaction will not perform as agreed and from the changes in the prices of the underlying currencies. As of December 31, 2012 and 2011, the nominal amounts for forward currency purchase and sale agreements were approximately US$5,831.2 million and US$3,473.3 million, respectively, which in general have maturities of less than a year.

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These agreements are entered into to satisfy client requirements and are recognized in the consolidated financial statements at their fair value. As of December 31, 2012, the forward contracts net position is an overbuy of U.S. Dollars of approximately US$601.8 million (overbuy of approximately US$312.7 million as of December 31, 2011).

Interest rate and currency swaps are derivatives contracts, where counterparties exchange variable interest rates for fixed interest rates or different currencies, respectively, in the terms and conditions established at the contract inception. The risk arises each time the projected level of the variable rate during the term of the contract is higher than the swap rate, as well as from non-compliance with contractual terms by one of the parties. As of December 31, 2012, the notional amount of open interest rate and currency swap contracts was approximately US$3,042.3 million (approximately US$2,252.1 million as of December 31, 2011).

Cross-currency swap derivative contracts involve the exchange of interest payments based on two different currency principal balances and referenced interest rates. They generally also include the exchange of principal amounts at the start and/or end of the contract. As of December 31, 2012, the notional amount of cross-currency swap contracts were approximately US$317.6 million (approximately US$197.7 million as of December 31, 2011).

As of December 31, 2012, the fair values of the asset and liability forward-exchange contracts, options and interest rate and cross-currency swaps amounted approximately to US$159.4 million and US$166.2 million, respectively (approximately US$82.5 million and US$145.3 million as of December 31, 2011) and are included under the caption “Other assets and other liabilities” of the consolidated balance sheets, respectively. See Note 12(b) to the Consolidated Financial Statements.

Responsibilities under credit lines agreements include credit lines and other consumer loans facilities (credit card) and are cancelable upon notification to the client.

(F)

Tabular Disclosure of Contractual Obligations

Credicorp enters into various contractual obligations that may require future cash payments. The following table summarizes our contractual obligations by remaining maturity as of December 31, 2012. See “Item 4. Information on the Company—(B) Business Overview—(1) Introduction – Review of 2012.”

			Payments due by period
	Total at December 31, 2012		Less than 1 year		1–3 years		3–5 years		More than 5 years
	(U.S. Dollars in thousands)
Borrowed funds	US$	2,226,341	US$	1,633,521	US$	349,494	US$	235,697	US$	7,629
Promotional credit lines		332,687		19,249		28,438		19,241		265,759
Interbank funds		117,599		117,599
Time deposits		7,415,710		6,976,233		221,231		168,238		50,008
Operating lease obligations		127,633		23,896		39,374		31,924		32,438
Total	US$	10,219,970	US$	8,770,497	US$	638,537	US$	455,100	US$	355,834

Borrowed funds include two syndicated loans and various bilateral loans, primarily with foreign financial institutions.

One syndicated loan, in the amount of US$150.0 million as of December 31, 2012, matures in March 2014, with semiannual principal and interest payments of six month Libor plus 1.75 percent. The second syndicated loan, with a principal amount of US$233.3 million as of December 31, 2012, matures in October 2013. This loan has a variable interest rate of six month Libor plus1.75 percent. However, in 2011, we hedged both syndicated loans through interest rate swaps (IRS) for the same notional amount and maturities; as a result, this loan was economically converted to fixed rate. See Note 12(b) to the Consolidated Financial Statements.

Loans obtained include the obligation to comply with certain covenants which, in our management’s opinion, are being complied with as of the consolidated balance sheet dates.

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Some international funds and promotional credit lines include standard covenants related to the compliance with financial ratios, use of funds and other administrative matters. In our management’s opinion, these covenants do not limit our operations and we have fully complied with them as of the consolidated balance sheet dates.

Our deposits and obligations are widely diversified and have no significant concentrations.

ITEM 6.

DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

(A)

Directors and Senior Management

Board of Directors

The following table sets forth our current directors:

Name	Position	Years served as a Director(1)
Dionisio Romero Paoletti	Chairman	10
Raimundo Morales	Vice Chairman	5
Fernando Fort Marie	Director	31
Reynaldo Llosa Barber	Director	30
Juan Carlos Verme	Director	23
Luis Enrique Yarur	Director	17
Felipe Ortiz de Zevallos	Director	8
Germán Suárez	Director	8

(1) Of Credicorp, our subsidiaries and their predecessors as of December 31, 2012.

Dionisio Romero Paoletti is the Chairman of the Board of Directors of Credicorp and Banco de Crédito – BCP, and the Chief Executive Officer of Credicorp since 2009. Mr. Romero P. has served as a board member of BCP since 2003 and was appointed Vice Chairman in 2008. He is also the Chairman of Pacifico Peruano Suiza Cia. De Seguros y Reaseguros, Pacifico Vida Cia. De Seguros y Reaseguros. Mr. Romero P. is the Chairman of Grupo Romero’s companies such as: Alicorp S.A.A., Compañia Universal Textil S.A., Ransa Comercial S.A., Industrias del Espino S.A., Palmas del Espino S.A. and Agricola del Chira, among others. Furthermore, he has been Vice Chairman of the Board of Inversiones Centenario and Director of BCI Chile, Hermes Transportes Blindados and Cementos Pacasmayo S.A.A. Mr. Romero P. is an economist from Brown University, USA with an MBA from Stanford University, USA.

Raimundo Morales has been the Vice Chairman of the Board of Directors since April 2008. Prior to being elected to the Board of Directors, he served as our Chief Operating Officer and CEO of BCP, having joined BCP in 1980. Previously, Mr. Morales held various positions during his ten years at Wells Fargo Bank in its San Francisco, São Paulo, Caracas, Miami and Buenos Aires offices. His last position was Vice President for the Southern Region of Wells Fargo. From 1980 to 1987, Mr. Morales was Executive Vice President in charge of BCP’s Wholesale Banking Group. From 1987 to 1990, he was the COO of ASB in Miami. He rejoined BCP as the COO in 1990. Mr. Morales received his Master’s degree in Finance from the Wharton School of Business in the United States.

Fernando Fort Marie is a lawyer and partner at the law firm of Fort Bertorini Godoy & Pollari Abogados S.A. Mr. Fort served as a director of Banco de Crédito del Perú from 1979 to 1987 and from March 1990 to the present. Since March 2009, he has served on our Board of Directors and on the board of directors of ASB, BCP Bolivia and BCP’s subsidiaries. Mr. Fort also serves as chairman of Hermes Transportes Blindados S.A. and a director on the Board of Inversiones Centenario S.A.A., Motores Diesel Andinos S.A. (MODASA) and Edelnor S.A.A.

Reynaldo Llosa Barber is a business manager and since August 1995 has been a director on our Board of Directors and on the boards of ASB, BCP Bolivia, Pacifico Peruano Suiza and BCP’s subsidiaries. He has also been a director of BCP from 1980 to October 1987 and from March 1990 to the present. Mr. Llosa is the main partner and COO of F.N. Jones S.R. Ltda. and serves as Chairman of the board at Edelnor S.A.A and as a board member of Edegel S.A.A.

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Juan Carlos Verme is a private investor and businessman and has served on the Board of Directors since August 1995. He has served on the Board of Directors of BCP since March 1990 and is also on the Board of Directors of ASB and BCP Bolivia. Mr. Verme is Chariman of Inversiones Centenario and he also serves as a member of the Board of other Peruvian companies such as Celima, Corcesa, Piscifactorías de los Andes, and Medlab. He is the Chairman of the Board of MALI (Lima’s Fine Arts Museum), and a trustee of American Patrons of Tate where he also participates as a member of the Latin American Acquisitions Committee of Tate Modern. Since November 2012, he has served as the Vice President of the Fundación Museo Reina Sofía of Madrid, Spain.

Luis Enrique Yarur is a businessman with an undergraduate degree in law and graduate degrees in economics and management. He has served on the Board of Directors since October 2002 as well as the board of directors of BCP since February 1995. Mr. Yarur is Chairman of the Board of Empresas Juan Yarur S. A. C., Banco de Crédito e Inversiones of Chile, Chairman of Empresas Jordan S.A. and Vice-Chairman of Empresas Lourdes S.A. He is Vice-President of the Asociación de Bancos e Instituciones Financieras A. G. and director of BCI Seguros Generales S.A and BCI Seguros de Vida S.A.

Felipe Ortiz de Zevallos is an industrial engineer with a Master’s degree in Management Science from the University of Rochester and an OPM from Harvard Business School. Mr. Ortiz de Zevallos has served on the Board of Directors since March 2006. He also serves as a director on the boards of Grupo APOYO (where he is the Charman), Compañía de Minas Buenaventura S.A.A., Sociedad Minera El Brocal S.A. (where he is the Chairman) and AC Capitales SAFI. From September 2006 until March 2009, Felipe Ortiz de Zevallos was Ambassador of Peru to the United States. Prior to this post, Mr. Ortiz de Zevallos served as the President of Universidad del Pacífico in Lima (elected for the period 2004 – 2006).

Germán Suárez is an economist with a Master’s degree in Economics from Columbia University. Mr. Suárez was elected to the Board of Directors in March 2005. Mr. Suárez was President and Chairman of the Board of Banco Central de Reserva del Perú from 1992 to 2001, and serves as a director on the boards of BCP and Compañía de Minas Buenaventura S.A.

Dawna L. Ferguson was Credicorp’s Secretary until February 2012, when the Board of Directors decided to appoint Codan Services as Corporate Secretary. Mr. Mario Ferrari is the Deputy General Secretary.

Executive Officers

Our management consists of certain principal executive officers of BCP, ASHC and Grupo Pacífico. Credicorp believes that a unified financial group with a coordinated strategy is best able to take advantage of growth in the Peruvian economy and achieve synergies from cross-selling financial services and products (e.g., through BCP’s extensive branch network). Pursuant to Credicorp’s bye-laws, the Board of Directors has the power to delegate its power over day-to-day management to one or more directors or officers. The following table sets forth the name, position and term of service for each of our executive officers.

Name	Position	Years Served as an Officer (1)	Entity
Dionisio Romero P.	Chief Executive Officer	4	Credicorp
Walter Bayly	Chief Operating Officer	20	Credicorp
Alvaro Correa	Chief Financial Officer	16	Credicorp
David Saettone	Chief Insurance Officer	16	Credicorp
Reynaldo Llosa	Chief Risk Officer	14	Credicorp
Pedro Rubio	Executive Officer - Wholesale Banking	29	BCP
Gianfranco Ferrari	Executive Officer – Retail Banking and Wealth Management	16	BCP
Jorge Ramirez del Villar	Executive Officer – Operations, Systems and Administration	19	BCP

(1)

Of Credicorp, our subsidiaries and their predecessors as of December 31, 2012.

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Walter Bayly is the Chief Operating Officer of Credicorp and BCP, positions he has held since April 2008. Previously, he was Chief Financial Officer and the Executive Vice President of Planning and Finance of BCP and prior to that time he held various other management positions within BCP, which included managing the Wholesale Banking Group as well as other areas of BCP. Mr. Bayly joined BCP in 1993, after three years at Casa Bolsa México where he was Partner and Managing Director in Corporate Finance. Prior to that, he was with Citibank in Lima, New York, México, and Caracas for a period of ten years, where he worked primarily in the corporate finance and loan syndication groups. Mr. Bayly received a Bachelor’s degree in Business Administration from Universidad del Pacífico in Lima, Peru, and a Master’s degree in Management from Arthur D. Little Management in Cambridge, Massachusetts.

Alvaro Correa has been Chief Financial Officer for Credicorp Ltd. and BCP since April 2008. In 1997, he joined BCP as Retail Credit Risk Manager, serving later as IT Solutions Manager under the IT Division. Mr. Correa then served as COO of Credicorp´s Cayman based private banking operation Atlantic Security Bank, COO of Miami based broker dealer Credicorp Securities and BCP’s Miami Agency, all between January 2006 and March 2008. He currently serves on the board of directors of Credicorp's subsidiaries Prima AFP and Finaciera Edyficar. Mr. Correa is an Industrial Engineer from the Pontificia Universidad Catolica del Peru and holds a Master’s degree in Business Administration from Harvard Business School.

David Saettone is Chief Insurance Officer and the Chief Executive Officer of Grupo Pacífico. Mr. Saettone graduated with honors (BAH) from Queen’s University at Kingston, Canada. He has a Master of Economics and Finance (MA) from Princeton University. Mr. Saettone has been certified as a Chartered Insurer and Associate by the Chartered Insurance Institute (ACII), UK; a Chartered Property Casualty Underwriter (CPCU) by the Institute for CPCU, in the United States; Chartered Life Underwriter (CLU) by the American College, in the United States; Associate in Risk Management (ARM), Associate in Underwriting (AU), Associate in Reinsurance (ARe), Associate in Marine Insurance Management (AMIM), Associate in Claims (AIC) and Associate in Insurance Accounting & Finance (AIAF) from the Insurance Institute of America, in the United States. He obtained a Certificate in Information Technology for Insurance Professionals (CITIP) from the Chartered Insurance Institute and the British Computer Society of the United Kingdom. Mr. Saettone has worked as COO of Banco de Crédito de Bolivia, Head of the Cabinet of Advisors of the Peruvian Ministry of Economy and Finance, Manager of Corporate Finance at BCP and COO of Credibolsa SAB S.A., a subsidiary of BCP. In academia, Mr. Saettone was a professor of International Economics and Capital Markets at the University of Lima and taught Probability and Statistics at the Woodrow Wilson School of Public Administration of Princeton University. He was director of Cofide and the Fondo Consolidado de Reservas (Consolidated Reserves Fund). Mr. Saettone is currently COO of Pacífico Insurance, Chairman of the Board of Pacífico Salud, Director of Pacífico Vida and Director of Financiera Edyficar.

Reynaldo Llosa Benavides is the Chief Risk Officer of Credicorp and BCP since January, 2012. Previously, Mr. Llosa held different positions at BCP as Head of Risk, Head of Middle-Market Banking and Head of Corporate Banking. He received a Bachelor’s degree in Business Administration from St. Mary's University, San Antonio, Texas, USA, and holds a Master’s degree in Business Administration with specialization in Finance from Northwestern University (J.L. Kellogg Graduate School of Management), Chicago, Illinois, USA.

Pedro Rubio is the Wholesale Banking Executive Officer of BCP, responsible for the Wholesale Banking Group at Banco de Crédito which includes the Corporate, Investment and Middle Market Banking Divisions. He is also responsible for the Leasing, Trade Finance and Cash management Areas. Prior to this, he has held several positions within Credicorp. He has been Head of The Middle Market Division, CEO of Banco Tequendama in Colombia and Head of Trade Finance, starting his career as a Relationship Manager in the Corporate Banking Group over 30 years ago. Mr. Rubio holds BS in Industrial Engineering from North Carolina State University.

Gianfranco Ferrari has worked at BCP since 1995, holding various positions such as Associate of Corporate Finance, Associate of Special Accounts, Head of Corporate Finance and Head of Corporate Banking. From 2005 to 2008, Mr. Ferrari was the Chief Executive Officer of BCP Bolivia. Currently, he is Executive Officer of Retail Banking and Wealth Management at BCP. He has been a member of the board of PRIMA AFP since September 2008. He is Chairman of the Board of Financiera EDYFICAR, a position he has held since March 2010, and Chairman of Tarjeta Naranja Peru, a position he has held since September 2011. Mr. Ferrari holds Business Administration degree from Universidad del Pacifico, and has a Master’s degree from Kellogg Graduate School of Management, Northwestern University.

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Jorge Ramírez del Villar has worked at BCP since 1994, holding positions such as Manager of Corporate Finance, Manager of the Finance division, Manager of the Administration and Process division, and Executive Officer – Operations, Systems and Administration, the position he holds now. Previously, he was General Manager of Credibolsa SAB, a Financial Analyst at Occidental Petroleum Corporation and a business consultant for Booz, Allen & Hamilton International. Mr. Ramirez del Villar earned a degree in industrial engineering from Universidad Nacional de Ingeniería, holds a Master´s degree in Systems of the University of Pennsylvania, a Master´s degree in business from The Wharton School, a Master´s degree in economics from London School of Economics and a Master´s degree in International Relations from University of Cambridge.

(B)

Compensation

The aggregate amount of directors compensation and executive officers salaries (including our executive officers listed above and four additional executive officers of BCP) for 2012 was US$10.3 million. We do not disclose to our shareholders or otherwise make available to the public information as to the compensation of its individual directors or executive officers.

As indicated in Note 3(w) to the Consolidated Financial Statements, Credicorp has granted SARs to certain employees who have at least one year service to Credicorp or any of our subsidiaries. As of December 31, 2012 and 2011, all SARs had vested and they can be executed up to April, 2014.

Key executives’ compensation also includes share based payments. SARs valuation for the years 2012, 2011 and 2010 resulted in a gain amounting to US$5.3 million, a gain amounting to US$5.8 million and a loss amounting to US$24.5 million, respectively. During the same years approximately US$8.9 million, US$25.5 million and US$14.8 million, SARs were exercised from the SARs that vested in the trailing 12-month period through April of each year. Likewise, approximately US$5.6 million, US$4.9 million and US$3.8 million, stock awards vested in the years 2012, 2011 and 2010, respectively. The related executives´ income tax is assumed by Credicorp.

The liabilities recorded for this plan, including the above-mentioned income tax, are included in the consolidated balance sheet caption “Other liabilities – Payroll taxes, salaries and other personnel expenses.” See Note 12(a) to the Consolidated Financial Statements. The expenses are recorded in the consolidated income statement caption “Personnel expenses”. As of December 31, 2012, 2011 and 2010, these SARs were owned by 10, 15 and 53 executives, respectively.

Credicorp signed several contracts with Citigroup and Calyon Financial by which it acquired certificates linked to the yield of our shares. See Note 8(c) to the Consolidated Financial Statements.

The following table sets forth the movement of the SARs for the periods indicated:

	2011									2012
	Outstanding SARs			Vested SARs						Outstanding SARs			Vested SARs
	Number			Number			Amount			Number			Number			Amount
							US$(000)									US$(000)
Balance as of January 1		795,155			777,699			76,989			243,223			243,223			22,088
Granted and vested		-			15,627			(1,356	)		-			-			-
Exercised		(550,103	)		(550,103	)		(45,255	)		(110,529	)		(110,529	)		(12,750	)
Decrease		(1,829	)		-			-			-			-			-
Increase in the option fair value		-			-			(8,290	)		-			-			7,314
Balance as of December 31		243,223			243,223			22,088			132,694			132,694			16,652

Since 2009, Credicorp has a new plan to certain key employees. Under this new plan (stock awards), Credicorp grants its own shares to the plan beneficiaries. Shares granted will vest up to 33.3% percent of all granted shares in each one of the subsequent three years to the grant date (April of each year). As of December 31, 2012, 2011 and 2010, this plan included 154, 147 and 120 executives, respectively.

During 2012, 2011, 2010 and 2009, the Group granted approximately 144,000, 165,000, 170,000 and 227,000 Credicorp shares, of which 599,000 and 448,000 shares had vested as of December 31, 2012 and 2011. The expense recorded for the year ended December 31, 2012 amounted to approximately US$16.9 million (US$15.7 million and US$11.2 million for the years ended December 31, 2011 and 2010, respectively).

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The fair value of stock awards granted is estimated at the grant date using a binomial pricing model with similar key assumptions as those used for the valuation of SARs, taking into account the terms and conditions upon which the shares were granted. Credicorp assumes the payment of the related income tax on behalf of its employees, which corresponds to 30 percent of the benefit, however, capital gain taxes are assumed by employees. Credicorp estimates said income tax over the basis of the fair value of the shares granted at the grant date.

(C)

Board Practices

Credicorp’s management is the responsibility of its Board of Directors, which, pursuant to Credicorp’s bye-laws, is comprised of eight members. Directors may, but are not required to, be shareholders. Directors are elected and their remuneration is determined at the Annual General Meeting of Shareholders. Directors hold office for three-year terms. The date of expiration of our current Board of Directors is March 31, 2014. The annual remuneration perceived by each Director during 2012 was US$100,000.

Our current directors have no benefits in addition to the remuneration agreed at the Annual General Meeting of Shareholders, with the exception of the members of the Audit Committee and the Executive Committee. Each member of the Audit Committee received an additional annual remuneration determined by the Annual General Meeting of Shareholders, which in 2012 amounted to US$40,000. In the case of the members of the Executive Committee, the Annual General Meeting of Shareholders held in March, 26 2013 approved and an additional remuneration of US$1,500 per session attended for each director of the Executive Committee, as long as they do not perceive any additional compensation for similar functions in BCP . Directors do not have any benefits that could be enjoyed at the termination of their service terms.

Pursuant to Credicorp’s bye-laws, the required quorum for business to take place during a Board meeting shall be a majority of the Directors of the Company. The Board has the power to appoint any person as Director to fill a vacancy on the Board for the remainder of the period as a result of the death, disability, disqualification or resignation of any Director. A resolution in writing signed by all Directors shall be as valid as if it had been passed at a meeting duly called and constituted.

Credicorp’s Board of Directors has established the following corporate level Committees:

•

Executive Committee (Created in October 31, 2012)

•

Audit Committee (Created in October 31, 2002)

•

Corporate Governance Committee (Created in June 23, 2010)

•

Compensation Committee (Created in January 25, 2012)

•

Nominations Committee (Created in March 28, 2012)

•

Risk Committee (Created in March 28, 2012)

The Board of Directors, acting on the recommendation of the Chairman, shall decide on the appointment, ratification or removal of committee members. Directors who are members of the committees will initially be appointed up to a three year term, and shall maintain such appointments only while a member of the Board. Non-director members of the committees shall maintain such appointment only while he or she is an employee of the Company. All committees shall have a charter approved by the committee itself and shall designate a chair among its members.

Executive Committee

Credicorp’s Executive Committee is responsible for responding to management’s queries on business or operations that require guidance from the Board; making urgent decisions that correspond to the Board by submitting these decisions for ratification at its next session; and making decisions on other specific matters that the Board has delegated to it.

The Committee is comprised by five directors and its number may be modified by agreement of the Board. The Chairman and Vice Chairman of the Board must be members of the committee. The current members are Dionisio Romero P. (Chairman), Raimundo Morales (Vice Chairman, Independent), Fernando Fort, Reynaldo Llosa Barber, and Juan Carlos Verme (Independent).

122

Audit Committee

Credicorp’s Audit Committee is responsible for assisting in the recommendation of independent auditors to be appointed at the Annual General Shareholders’ Meeting and reviewing the scope of internal and external audits. The Audit Committee also reviews compliance with the system of internal control as well as financial controls, reviews our annual financial statements before their presentation to regulatory bodies and maintains the integrity of the preparation of audits, oversight compliance with applicable law and regulations, the establishment of procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls, auditing matters, fraud and ethics, through Credicorp´s Complaint System. The current members of the Audit Committee are Mr. Raimundo Morales (Chairman since July 2011), Mr. Germán Suárez (financial expert), and Mr. Juan Carlos Verme. The Audit Committee designated Mr. Benedicto Cigüeñas to serve as advisor to the committee. Mr. Benedicto Cigüeñas Guevara is an economist and became a Director of BCP in January 2005. Previously was Chief Financial Officer of BCP for 12 years.

The Audit Committee has also been assigned by the Board of Directors to oversee the audit committee responsibilities of all Credicorp subsidiaries. Credicorp’s Audit Committee therefore performs as the statutory audit committee of all Credicorp’s subsidiaries, except new acquired companies Correval (Colombia) and IM Trust (Chile) which are in the process of adapting corporate procedures. During 2012, Audit Committee held eleven sessions.

Corporate Governance Committee

Credicorp’s Corporate Governance Committee is responsible for proposing to the Board of Directors good corporate governance practices to be implemented throughout the Company; overseeing adequacy of the corporate governance policies adopted by the Company to the latest best practices; and deciding and/or resolving cases of serious misconduct in compliance with corporate governance policies and cases of conflicts of interest or ethics conflicts, of Directors and senior executives.

The Committee is comprised by four Directors of Credicorp or its subsidiaries. At least one member should be independent. The current members are Dionisio Romero P. (Chairman); Felipe Ortiz de Zevallos (Independent); Juan Carlos Verme (Independent) and Eduardo Hochschild (Independent Director of BCP).

Compensation Committee

Credicorp’s Compensation Committee is responsible for defining the remuneration policy for Credicorp and its subsidiaries; approving the remuneration and compensation of the main executives and managers of Credicorp and its subsidiaries; and recommending to the Board of Directors, for submission to the General Shareholders’ Meeting, basic compensation guidelines and levels of compensation for the members of the board of directors and committees of Credicorp and its subsidiaries. It is also responsible for approving any service contracts between the Directors and their companies, and Credicorp and its subsidiaries.

The committee consists of three Directors of Credicorp or its subsidiaries and BCP’s CEO (who is not a member of the Board of Directors). The current members are Dionisio Romero P. (Chairman), Raimundo Morales (Independent), Reynaldo Llosa Barber and Walter Bayly (CEO of BCP).

Credicorp does not have an independent compensation (remuneration) committee. When the committee was created in January 2012, the Board determined that the most important criteria in selecting directors to serve on the committee were both deep knowledge of the organization and its people and also the leadership and continuity provided by senior management. The Board believes that the individuals on the committee can and do make quality and independent judgments in the best interest of Credicorp on all relevant issues and that the existing membership will best accomplish the goals of the committee.

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Nominations Committee

Credicorp’s Nominations Committee is responsible for proposing the selection criteria for directors’ nominees, to the Board of Directors; selecting and recommending nominees to the Board of Directors based on the proposals received and to be proposed at the Shareholder’s Annual General Meeting; and recommending nominees to fill vacancies in the Board of Directors.

The committee consists of three Directors. The current members are Dionisio Romero P. (Chairman), Raimundo Morales (Independent) and Reynaldo Llosa Barber.

Risk Committee

Credicorp’s Risk Committee is responsible for establishing, periodically evaluating and reporting to the Board of Directors, the guidelines and policies for the integrated risk management of Credicorp and its subsidiaries. It also is in charge of proposing the risk appetite and exposure levels that Credicorp is willing to assume to develop its business, to the Board of Directors; approving all new strategic business and product initiatives that may alter the risk profile of Credicorp or its subsidiaries, consistent with the policies approved by the Corporation; and establishing specialized subcommittees to manage the different types of risks.

The committee consists of three Directors of Credicorp or its subsidiaries and four executive officers of Credicorp or its subsidiaries. The current members are Raimundo Morales (Chairman - Independent); Dionisio Romero P., Benedicto Cigüeñas (BCP Director – Independent), Walter Bayly (COO - BCP CEO), Alvaro Correa (CFO), Reynaldo Llosa Benavides (Chief Risk Officer), and Edgar Vicente (Head of Risk Management at BCP).

(D)

Employees

On December 31, 2012, Credicorp had 26,541 employees, distributed as set forth in the following table:

	At December 31,
	2010		2011		2012

BCP (1)		16,148		18,616		22,361
Grupo Pacífico (2)		2,611		2,759		3,038
ASHC		73		77		81
Prima AFP		800		814		876
Others		9		10		185
Total Credicorp		19,641		22,276		26,541

(1)

BCP includes BCP Miami Agency, BCP Panamá Agency, Credibolsa, Credifondo, BCP Bolivia, Edyficar and Correval.

(2)

Does not include the employees of the acquired private hospitals.

(3)

Others include Credicorp Securities and IM Trust.

All bank employees in Peru are given the option of belonging to an employee union. These employee unions are collectively represented by the Federación de Empleados Bancarios (the Federation of Banking Employees or FEB). In order to negotiate a collective agreement on behalf of its members, FEB must have as members over 50% of all Peruvian banking employees. Because this level fell to below 50%, the most recent collective bargaining agreement, which expired on June 30, 1995, was not renewed.

BCP was granted permission by the Peruvian Ministry of Labor to cancel the registration of BCP’s union in 1996 due to limited participation. As of December 31, 2011, no BCP employees belonged to a union. The last strike by union employees occurred in 1991 and did not interfere with BCP’s operations.

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(E)

Share Ownership

As of February 13, 2012, the Romero family owned 12.53 million (13.27%) of our common shares. Mr. Luis Enrique Yarur is a controlling shareholder of Banco de Crédito e Inversiones (BCI) Chile, which owns 1.71 million (1.85%) of Credicorp’s common shares. None of our other directors or executive officers beneficially own more than 1% of our common shares. See “Item 7. Major Shareholders and Related Party Transactions—(A) Major Shareholders.” Other members of the Board of Directors that own our common shares are Mr. Raimundo Morales, Mr. Fernando Fort Marie, Mr. Reynaldo Llosa Barber, Mr. Juan Carlos Verme, Mr. Felipe Ortiz de Zevallos and Mr. Germán Suárez. Each of these directors own less than 1% of our total outstanding common shares.

ITEM 7.

MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

(A)

Major Shareholders

As of December 31, 2012, Credicorp had issued 94,382,317 common shares, of which 14,620,846 were held by ASHC. Under Bermuda law, ASHC has the right to vote the common shares it owns. In order to restructure long term holdings, substantially all of our common shares held by BCP and Grupo Pacífico were transferred to ASHC in April 2004.

The table below provides details about the percentage of Credicorp’s common shares owned by holders of 5% or more of our total common shares, as of February 11, 2013.

Owner	Common Shares		Percent of Class(1)
Atlantic Security Holding Corporation (2)		14,620,846		15.49	%
Romero family (3)		12,527,277		13.27	%

(1) As a percentage of issued and outstanding shares (including shares held by ASHC).

(2) As of February 11, 2013, Atlantic Security Bank (a subsidiary of ASHC) held 3,335,786 shares of Credicorp on behalf of clients as part of the Private Banking Services that ASB provides, and which shares are purchased or sold based on client instructions. ASB does not have the power to dispose of these shares. Because the shares are held by ASB on behalf of clients, which have the power to vote the shares, ASHC and ASB each disclaims beneficial ownership of the shares.

(3) Includes common shares directly or indirectly owned by Dionisio Romero Paoletti and his family or companies owned or controlled by them. Mr. Romero P. is the Chairman of the Board.

Approximately 11.12% of Credicorp’s total issued and outstanding common shares are currently held in 2,548 individual accounts with Cavali, a Peruvian securities clearing company.

As of February 11, 2013, 79,761,471 of common shares of Credicorp (excluding the 14,620,846 shares held by ASHC) were outstanding, of which approximately 72.14% were held in the United States. There were approximately 62 registered holders of Credicorp’s common shares in the United States. Because many of these common shares were held by brokers or other nominees, and because of the impracticability of obtaining accurate residence information for all beneficial shareholders, the number of registered holders in the United States is not a representative figure of the beneficial holders or of the residence of beneficial holders. Credicorp is neither directly nor indirectly controlled by another corporation or by any foreign government.

(B)

Related Party Transactions

(i)

Credicorp

Under Bermuda law, Credicorp is not subject to any restrictions on transactions with affiliates, other than such restrictions as are applicable to Bermuda companies generally. Credicorp’s bye-laws provide that a director may not vote with respect to any contract or proposed contract or arrangement in which that director has an interest or a conflict of interest. Credicorp has not engaged in any transactions with related parties except through our subsidiaries.

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Credicorp’s consolidated financial statements as of December 31, 2010, 2011 and 2012 include transactions with related parties. For its 2010, 2011 and 2012 consolidated financial statements, Credicorp defines related parties as (i) related companies, (ii) its board of directors, (iii) its key executives (defined as the management of our holdings) and (iv) enterprises that are controlled by these individuals or entities through majority shareholding or their role as chairman or principal executive officer in those companies.

The following table shows Credicorp’s main transactions with related companies as of December 31, 2010, 2011 and 2012.

	Related companies
	2010			2011			2012
	(U.S. Dollars in thousands)
Direct loans	US$	265,566		US$	258,088		US$	448,353
Investments available-for-sale		120,486			139,676			171,025
Deposits		101,979			72,264			237,610
Contingent credits		26,994			38,927			52,556
Interest income related to loans		7,002			5,755			7,851
Interest expense related to deposits		1,707			1,564			6,651
Derivatives at fair value		(1,335	)		(1,491	)		(1,833	)
Other income	US$	2,327		US$	2,147		US$	2,136

Credicorp made these loans, contingent operations and derivative contracts with related parties in the ordinary course of business and in accordance with the normal market terms available to other customers. Outstanding loan balances at the year-end are guaranteed by collateral given by the related party. The loans to related companies as of December 31, 2012 have maturity dates ranging between January 2013 and August 2022 and an accrued annual interest average of 7.76% (and as of December 31, 2011 had a maturity between January 2012 and October 2019 and an accrued annual interest average of 7.55%). As of December 31, 2012, we recorded a US$0.7 million provision for doubtful debt in connection with loans to related parties and as of December 31, 2011 this provision amounted to US$1.5 million. The amount of this provision is established based on an assessment, performed on a continuous basis, of the financial position of each related party and the market in which it operates.

As of December 31, 2010, 2011 and 2012, Credicorp’s directors, officers and employees had been involved, directly and indirectly, in credit transactions with certain subsidiaries, as permitted by Peruvian Law No. 26702. This law regulates and limits certain transactions with employees, directors and officers of banks and insurance companies in Peru. As of December 31, 2010, 2011 and 2012, direct loans to employees, directors and key management of Credicorp amounted to US$140.0 million, US$176.5 million and US$247.2 million, respectively. These loans have been granted in the ordinary course of business and on market terms as allowed by regulations promulgated under Section 402 of Sarbanes-Oxley. Therefore, no privileged conditions have been granted on any type of loans to directors and executive officers. These loans are paid monthly and earn interest at rates that are similar to market rates for comparable loans.

Credicorp does not grant directors or key personnel loans that are guaranteed with its shares or shares of its other companies.

(C)

Interests of Experts and Counsel

Not applicable.

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ITEM 8.

FINANCIAL INFORMATION

(A)

Consolidated Statements and Other Financial Information

Legal Proceedings

We, along with our subsidiaries, are involved in certain legal proceedings that arise in the normal course of conducting business. We do not believe that any liabilities that may result from such proceedings would have a material adverse effect on our financial condition or results of operations, or on the financial condition or results of operations of any of our subsidiaries.

The following is a description of material ongoing litigation as of the date of this Annual Report.

Madoff Trustee Litigation. On September 22, 2011, the Trustee for the liquidation of Bernard L. Madoff Investment Securities LLC (“BLMIS”), and the substantively consolidated estate of Bernard L. Madoff (“the Madoff Trustee”) filed a complaint against Credicorp’s subsidiary ASB (the “Madoff Complaint”) in the U.S. Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”), pending under adversary proceeding number 11-02730 (BRL). The Madoff Complaint seeks recovery of approximately US$120 million. This amount is alleged to be equal to amount of funds that ASB managed in Atlantic US Blue Chip Fund that were invested in Fairfield Sentry Fund Limited (hereafter “Fairfield Sentry”) and redeemed, along with returns thereon between the end of 2004 and the beginning of 2005. The Madoff Complaint further alleges that Fairfield Sentry was a “feeder fund” that invested in BLMIS; that the Madoff Trustee filed an adversary proceeding against Fairfield Sentry, seeking to avoid and recover the initial transfers of monies from BLMIS to Fairfield Sentry; that on June 7 and 10, 2011, the Bankruptcy Court approved a settlement among the Madoff Trustee, Fairfield Sentry and others; and that the Madoff Trustee is entitled to recover the sums sought from ASB as “subsequent transfers” or “avoided transfers” from BLMIS to Fairfield Sentry that Fairfield Sentry in turn subsequently transferred to ASB. The Madoff Trustee has filed similar actions against numerous other alleged “subsequent transferees” that invested in Fairfield Sentry and its sister entities which, in turn, invested and redeemed funds from BLMIS. ASB’s counsel and the Madoff Trustee have entered into a stipulation extending ASB’s time to move, answer or otherwise respond to the Madoff Complaint through June 24, 2013. Management believes that ASB has substantial defenses against the Madoff Trustee’s claims alleged in the Madoff Complaint and intends to contest these claims vigorously.

In addition, ASB, as well as other defendants, filed a motion to withdraw the reference to Bankruptcy Court pursuant to an Administrative Order entered by the Bankruptcy Court on March 15, 2012 directing that all defendants to pending adversary proceedings brought by the Madoff Trustee file their motions to withdraw the reference no later than April 2, 2012. ASB’s Management considers that the Madoff Complaint against ASB raises several important issues that it believes require interpretation of federal, non-bankruptcy law and which interpretation should be addressed by a U.S. federal district court as opposed to a federal bankruptcy court. The Federal District Court for the Southern District of New York (the “District Court”) established various consolidated briefing procedures and schedules which have directly impacted the action pending against ASB, including with respect to one or more of the other issues advanced in support of ASB’s Motion to Withdraw the Bankruptcy Court Reference (the “Withdrawal Motion”). The District Court has now ruled on many of those motions. The District Court has to date declined to dismiss the complaints, but issued several rulings regarding legal standards that will apply to the litigation of the cases before the Bankruptcy Court, to which the Federal District Court remanded the cases.

Fairfield Litigation. On April 13, 2012, Fairfield Sentry Limited (In Liquidation) and its representative, Kenneth Krys (the “Fairfield Liquidator”), filed a complaint against ASB (the “Fairfield Complaint”) pursuant to Chapter 15 of the U.S. Bankruptcy Code, in the Bankruptcy Court, styled as Fairfield Sentry Limited (In Liquidation) v. Atlantic Security Bank, Adv. Pro. No. 12-01550 (BRL) (the “Fairfield v. ASB Adversary Proceeding”). The Fairfield Complaint seeks to recover the amount of US$115,165,423.28, reflecting ASB’s redemptions of certain investments in Fairfield Sentry, together with investment returns thereon. These are essentially the same moneys that Madoff Trustee seeks to recover in the Madoff Trustee Litigation described above. Thereafter, the Fairfield v. ASB Adversary Proceeding was procedurally consolidated by the Bankruptcy Court with other adversary actions brought by the Fairfield Liquidator against former investors in Fairfield Sentry. Pursuant to that consolidation, and by stipulation of the parties, the Bankruptcy Court’s previously entered stay of all proceedings in the Fairfield Liquidator adversary actions (except for the filing of amended complaints) in light of pending litigation in the British Virgin Island courts (and now before the Privy Council of Great Britain) calling into question the Fairfield Liquidator’s ability to seek recovery of funds invested with and redeemed from Fairfield Sentry, was applied in the Fairfield v. ASB Adversary Proceeding, thereby indefinitely extending ASB’s time to answer, move or otherwise respond to the Fairfield Complaint until the stay is lifted. On January 14, 2013, the Fairfield Liquidator filed an Amended Complaint in the Fairfield v. ASB Adversary Proceeding seeking the same amount of recovery as in the original Fairfield Complaint but adding additional allegations and causes of action. The Bankruptcy Court stay remains in effect, and ASB’s time to answer, move or otherwise respond to the Amended Complaint remains stayed indefinitely pending further order of the Bankruptcy Court. Management believes it has substantial defenses against the Fairfield Liquidator’s claims alleged in the Amended Complaint and intends to contest these claims vigorously.

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ASB believes it has substantial defenses against the Fairfield Liquidators’ claims alleged in the Amended Complaint and intends to contest these claims vigorously.

Government Investigations

Neither we, nor any of our subsidiaries, are involved in any government investigation.

Dividend Policy

Pursuant to Bermuda law, we may declare and pay dividends from time to time provided that after payment of the dividends: (i) we are able to pay our liabilities as they become due, and (ii) the realizable value of our assets is not less than the aggregate value of our liabilities, issued share capital, and share premium accounts. We cannot make any assurances as to the amount of any dividends or as to whether any dividends will be paid at all, although we currently intend to declare and pay dividends annually, and our Board of Directors currently expects to authorize the payment of an annual dividend to the shareholders of no less than 25% of our consolidated net income. However, our payment of dividends is subject to Bermuda law and to the discretion of our Board of Directors. The Board’s decision will depend on (i) general business conditions, (ii) our financial performance, (iii) the availability of dividends from our subsidiaries and any restrictions on their payment, and (iv) other factors that the Board may deem relevant.

We rely almost exclusively on dividends from our subsidiaries for the payment of our corporate expenses and for the distribution of dividends to holders of our common shares. Subject to certain reserve and capital adequacy requirements under applicable banking and insurance regulations, we are able to cause our subsidiaries to declare dividends. To the extent our subsidiaries do not have funds available or are otherwise restricted from paying us dividends, our ability to pay dividends on our common shares will be adversely affected. Currently, there are no restrictions on the ability of Grupo Crédito, BCP, ASHC and Grupo Pacífico or any of our other subsidiaries to pay dividends abroad. In addition, Grupo Crédito, BCP, and Grupo Pacífico intend to declare and pay dividends in Nuevos Soles, while we intend to declare and pay dividends in U.S. Dollars. If the value of the Nuevo Sol falls relative to the U.S. Dollar between the date of declaration and the date of payment of dividends, the value of the dividends we pay would be adversely affected. See “Item 3. Key Information—(A) Selected Financial Data—Exchange Rates.”

The following table shows cash and stock dividends that we paid in the periods indicated:

Year ended December 31,	Number of Shares Entitled to Dividends		Cash Dividends Per Share		Stock Dividends Per Share
2000		94,382,317	US$	0.10		0.00
2001		94,382,317	US$	0.10		0.00
2002		94,382,317	US$	0.40		0.00
2003		94,382,317	US$	0.30		0.00
2004		94,382,317	US$	0.40		0.00
2005		94,382,317	US$	0.80		0.00
2006		94,382,317	US$	1.10		0.00
2007		94,382,317	US$	1.30		0.00
2008		94,382,317	US$	1.50		0.00
2009		94,382,317	US$	1.70		0.00
2010		94,382,317	US$	1.95		0.00
2011		94,382,317	US$	2.30		0.00
2012		94,382,317	US$	2.60		0.00

On February 27, 2013, our Board of Directors declared a cash dividend of US$2.60 per common share held at the close of business on April 16, 2013. This dividend will be distributed on May 10, 2013.

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ITEM 9.

THE OFFER AND LISTING

(A)

Offer and Listing Details

Price History of Credicorp’s Stock

Our common shares have been traded on the New York Stock Exchange since October 25, 1995 under the symbol BAP. Our common shares also trade on the Lima Stock Exchange. They are quoted in U.S. Dollars on both the New York Stock Exchange and the Lima Stock Exchange. The table below sets forth, for the periods indicated, the reported high and low closing prices and average daily trading volume for our common shares on the New York Stock Exchange.

	High		Low		Average Daily Volume
2008	US$	80.33	US$	28.18		399,661
2009	US$	76.74	US$	32.23		359,807
2010	US$	124.90	US$	69.02		253573
2011	US$	117.31	US$	82.25		477,181
2012	US$	147.86	US$	103.01		272,320

2011
First quarter	US$	117.31	US$	95.18		383,499
Second quarter	US$	105.57	US$	82.55		837,742
Third quarter	US$	102.79	US$	82.25		429,899
Fourth quarter	US$	111.41	US$	89.44		256,847
2012
First quarter	US$	129.51	US$	103.01		272,304
Second quarter	US$	133.88	US$	117.22		258,480
Third quarter	US$	128.71	US$	112.09		290,887
Fourth quarter	US$	147.86	US$	124.19		267,531
2013
First quarter	US$	163.33	US$	140.61		286,386
Second quarter (through April 24)	US$	162.64	US$	145.21		406399

Source: Bloomberg

The table below sets forth, for the periods indicated, the reported high and low closing prices and average daily trading volume for our common shares on the Lima Stock Exchange.

	High		Low		Average Daily Volume
	(U.S. Dollars)
2008		80.16		28.90		15,483
2009		76.35		32.53		11,713
2010		124.79		69.40		6,114
2011		118.67		82.50		9,732
2012		146.70		102.76		5,523

2011
First quarter		118.67		95.20		7,721
Second quarter		105.30		85.00		11,631
Third quarter		102.40		82.50		11,984
Fourth quarter		111.10		88.50		7,655
2012
First quarter		128.85		102.76		9,418
Second quarter		130.94		115.33		4,341
Third quarter		128.00		112.20		4,049
Fourth quarter		146.70		124.50		3,911
2013
First quarter		158.76		140.66		6,438
Second quarter (through April 24)		161.66		145.00		4,948

Source: Bloomberg

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The table below sets forth, for the indicated months, the reported high and low closing prices for our common shares on the New York Stock Exchange.

	High		Low
	(U.S. Dollars)
2012
October		129.34		124.19
November		141.58		130.15
December		147.86		137.34
2013
January		158.97		149.19
February		158.80		142.95
March		166.33		149.33
April (through April 24)		162.64		145.21

Source: Bloomberg

The table below sets forth, for the indicated months, the reported high and low closing prices for our common shares on the Lima Stock Exchange.

	High		Low
	(U.S. Dollars)
2012
October		128.40		124.50
November		140.40		130.70
December		146.70		136.50
2013
January		159.90		146.50
February		158.60		143.00
March		158.76		148.53
April (through April 24)		161.66		145.00

Source: Bloomberg

On April 24, 2013, the last sale price of our common shares on the New York Stock Exchange was US$148.54 per share. On April 24, 2013, the closing price of our common shares on the Lima Stock Exchange was US$147.5.

(B)

Plan of Distribution

Not applicable.

(C)

Markets

The Lima Stock Exchange

(i)

Trading

As of December 2012, there were 282 companies listed on the Bolsa de Valores de Lima (Lima Stock Exchange). The Lima Stock Exchange is Peru’s only securities exchange and was established in 1970. Trading on the Lima Stock Exchange is primarily done on an electronic trading system. Trading hours are Monday through Friday as follows: 8:20 a.m.-8:30 a.m. (pre-market ordering); 8:30 a.m.-3.00 p.m. (trading); and 3:00 p.m.-3:10 p.m. (after-market sales). These trading hours became effective on March 12, 2012. Equity securities may also be traded in an open outcry auction floor session, which was the exclusive method of trading equity securities prior to the introduction of electronic trading. Nearly 100% of all transactions on the Lima Stock Exchange currently take place on the electronic system.

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Transactions during both the open trading and the electronic sessions are executed through brokerage firms and stock brokers on behalf of their clients. Brokers submit their orders in strict accordance with written instructions, following the chronological order in which they were received. The orders specify the type of security ordered or offered as well as the amounts and the price of the sale or purchase. In general, share prices are permitted to increase or decrease up to 15% for Peruvian companies, and up to 30% for foreign companies, within a single trading day.

The Peruvian stock market capitalization, in U.S. Dollar terms, amounted to US$ 160,867 million in 2010, US$ 121,596 million in 2011 (-24.4%) and US$ 153,404 million in 2012 (+26.2%). This increase was due to the better performance of the companies encountered on the Mining and Banking sector.

Total traded volume was 6,749 million shares in 2010, 7,817 million shares in 2011 (+12.9%) and 7,617 million shares in 2012 (-2.6%). These figures are far from the record level obtained in 2007, when trading volume reached 12,400 million shares. Resembling the typical volume distribution, 80.2% of the traded amount in 2012 was concentrated in equity securities, 7.5% was concentrated in fixed-income securities and 12.3% was concentrated in repurchase transactions.

The Índice General de la Bolsa de Valores de Lima (the General Index of the Lima Stock Exchange or IGBVL) closed at 20,629.35 points (+5.94%). After the international financial crisis that caused a serious reduction in the IGBVL (near 60%), in 2009 and 2010 the index gained 101% and 65%, respectively, before dropping by 16.7% in 2011.

(ii)

Market Regulation

The Securities Market Law (Legislative Decree 861) addresses matters such as transparency and disclosure, takeovers and corporate actions, capital market instruments and operations, the securities markets and broker-dealers, and risk rating agencies. The SMV, a governmental entity attached to Peru’s Ministry of Economy and Finance, was given additional responsibilities relating to the supervision, regulation, and development of the securities market, while the Lima Stock Exchange and its member firms were given the status of self-regulatory organizations. Additionally, a unified system of guarantees and capital requirements was established for the Lima Stock Exchange and its member firms.

SMV is governed by a five-member board, which includes an independent director and the Superintendent, whose appointed by the government. SMV has broad regulatory powers. These powers include studying, promoting, and making rules for the securities market, supervising its participants, and approving the registration of public offerings of securities.

SMV supervises the securities markets and the dissemination of information to investors. It also (i) governs the operations of the Public Registry of Securities and Brokers, (ii) regulates mutual funds and their management companies, (iii) monitors compliance with accounting regulations by companies under its supervision as well as the accuracy of financial statements and (iv) registers and supervises auditors who provide accounting services to those companies under SMV’s supervision.

On August 22, 1995, SMV approved regulations governing the public offering of securities in Peru by entities organized outside of Peru and, for the first time, authorized foreign companies to be listed on the Lima Stock Exchange. On October 25, 1995, we became the first non-Peruvian company to list our shares on the Lima Stock Exchange. See “Item 4. Information on the Company—(B) Business Overview—(11) Supervision and Regulation.”

Pursuant to the Securities Market Law, the Lima Stock Exchange must maintain a guarantee fund that is funded by its member firms. The actual contributions to be made by the 24 member firms of the Lima Stock Exchange are based on volume traded over the exchange. In addition to the guarantee fund managed by the Lima Stock Exchange, each member firm is required to maintain a guarantee for operations carried on outside the exchange in favor of SMV. Such guarantees are generally established through bank guarantees issued by local banks.

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(D)

Selling Shareholders

Not applicable.

(E)

Dilution

Not applicable.

(F)

Expenses of the issue

Not applicable.

ITEM 10.

ADDITIONAL INFORMATION

(A)

Share Capital

Not applicable.

(B)

Memorandum and Articles of Association

“Item 10. Additional Information—Memorandum and Articles of Incorporation” from our Annual Report on Form 20-F dated June 27, 2003 is incorporated herein by reference.

At our Annual General Shareholders’ Meeting held on March 31, 2005, we adopted an amendment to our bye-laws that increased the number of our directors from six to eight. In addition, we also removed provisions that established a classified board structure with staggered terms, adopting instead fixed three-year terms to be served until the end of the Annual General Shareholders’ Meeting for the year in which the three-year period expires.

(C)

Material Contracts

As of the date hereof, we have not, nor have our subsidiaries, entered into any material contracts.

(D)

Exchange Controls

We have been designated as a non-resident for Bermuda exchange control purposes, and therefore, there are no restrictions on our ability to transfer non-Bermuda funds in and out of Bermuda or to pay dividends to United States residents who are holders of our common shares.

We rely almost exclusively on dividends from Grupo Crédito, BCP, ASHC, Grupo Pacífico, and our other subsidiaries for the payment of dividends to holders of our common shares. To the extent our subsidiaries are restricted by law from paying us dividends, our ability to pay dividends on our common shares will be adversely affected.

In addition, we present our financial statements and pay dividends in U.S. Dollars. BCP and Grupo Pacífico prepare their financial statements and pay dividends in Nuevos Soles. If the value of the Nuevo Sol were to fall relative to the U.S. Dollar between the date of declaration and the date of payment of dividends, the value of the dividends we receive from our subsidiaries would be adversely affected. On an overall basis, the Peruvian currency has appreciated against the US. Dollar during the last decade.

132

Although substantially all of the customers of BCP, ASB and Grupo Pacífico are located in Peru, as of December 31, 2012, approximately 59.9% of BCP’s loan portfolio, 100% of ASHC’s loan portfolio, and 73.5% of Grupo Pacífico’s gross premiums were denominated in U.S. Dollars. Most of the borrowers or insureds of these three companies use Nuevos Soles. Therefore, a devaluation of the Nuevo Sol would effectively increase the cost to the borrower of repaying its loans and the cost to the insured of making its premium payments. As a result, devaluation could lead to more nonperforming loans or unpaid premiums for BCP, ASB and Grupo Pacífico.

One circumstance that could lead to devaluation is a decline in Peruvian foreign reserves to inadequate levels. Although the current level of Peru’s foreign reserves compares favorably with those of other Latin American countries (US$ 63,986 million at December 28, 2012), there can be no assurance that Peru will be able to maintain adequate foreign reserves to meet its foreign currency-denominated obligations or that Peru will not devalue its currency should its foreign reserves decline. See “Item 4. Information on the Company—(B) Business Overview—(9) Peruvian Government and Economy”.

Since March 1991, there have been no exchange rate controls in Peru and all foreign exchange transactions are based on free market exchange rates. Current Peruvian regulations on foreign investment allow the foreign holders of equity shares of Peruvian companies to receive and repatriate 100% of the cash dividends distributed by the company. These investors are allowed to purchase foreign exchange at free market exchange rates through any member of the Peruvian banking system.

(E)

Taxation

At the present time, there is no Bermuda income or profits tax, withholding tax, capital gains tax, capital transfer tax, estate duty, or inheritance tax that we must pay or our shareholders must pay with respect to their shares. We have obtained an assurance from the Minister of Finance of Bermuda under the Exempted Undertakings Tax Protection Act 1966 that, in the event that any legislation is enacted in Bermuda imposing any tax on profits or income, or on any capital asset, gain, or appreciation or any tax in the nature of an estate duty or inheritance tax, such tax shall not, until March 28, 2016, be applicable to us or to any of our operations or to our shares, debentures, or other obligations. This assurance, however, does not cover any tax applicable to persons who ordinarily reside in Bermuda or to any taxes that we must pay with respect to real property that we own or lease in Bermuda.

As an exempted company, we are liable to pay in Bermuda an annual government fee based upon our authorized share capital and the premium on our issued common shares, which amounted to approximately US$18,670 in 2012.

On February 15, 2011, the Peruvian government enacted Law 29663. On July 21, 2011 Law 29663 was amended by Law 29757. This new law partially modifies the country’s income tax regime by subjecting to taxation in Peru capital gains derived from an indirect transfer of shares and expanding the type of income that will qualify as Peruvian-source income. Under the new law, any transfer of shares issued by a non-resident entity will be subject to taxation in Peru (30% or 5%) if at any point during the 12 prior months to such transfer:

50% or more of the fair market value of the foreign shares -to be transferred- is derived from shares or participation rights representing the equity capital of one or more Peruvian entities. There is a rebuttable presumption that the threshold is met if the non-resident entity is a resident in a tax heaven.

The shares to be transferred represent at least 10% or more of the equity capital of the non-resident entity.

At the same time, two new obligations were imposed on Peruvian domiciled companies:

(1)

Each Peruvian domiciled company is now required to report to the Peruvian Tax Administration (SUNAT) transfers of its own shares or transfers of the shares of the non-Peruvian domiciled company that is the owner of its shares; and

(2)

Each Peruvian domiciled company is jointly liable for the income tax not paid by a non-Peruvian domiciled transferor that is directly or indirectly linked to the domiciled company (whether by means of control, management or equity participation) in connection with the transfer of the domiciled company’s shares, except in the event that the purchaser or acquirer of the shares is a Peruvian individual or entity.

133

(F)

Dividends and Paying Agents

Not applicable.

(G)

Statement by Experts

Not applicable.

(H)

Documents on Display

The documents referred to in this Annual Report are available for inspection at our registered office.

(I)

Subsidiary Information

Not applicable.

ITEM 11.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our activities involve principally the use of financial instruments, including derivatives. We accept deposits from customers at both fixed and floating rates, for various periods, and seek to earn above-average interest margins by investing these funds in high-quality assets. We seek to increase these margins by consolidating short-term funds and lending for longer periods at higher rates, while maintaining sufficient liquidity to meet all claims that might fall due.

We also seek to raise our interest margins by obtaining above-average market margins, net of allowances, through lending to commercial and retail borrowers with a range of credit products. Such exposures involve not just on-balance sheet loans and advances; we also enter into guarantees and other commitments such as letters of credit and performance. We also trade in financial instruments where we take positions in traded and over-the-counter instruments, including derivatives, to take advantage of short-term market movements in equities, bonds, currencies and interest rates.

In this sense, risk is inherent in our activities but it is managed through a process of ongoing identification, measurement and monitoring, subject to risk limits and other controls. This process of risk management is critical to our continuing profitability and each individual within our Group is accountable for the risk exposures relating to his or her responsibilities. We are exposed to operating risk, credit risk, liquidity risk and market risk, the latter being subdivided into trading and non-trading risks.

The independent risk control process does not include business risks such as changes in the environment, technology and industry. They are monitored through our strategic planning process.

134

Risk Management Structure

Our Board of Directors and the boards of each subsidiary are ultimately responsible for identifying and controlling risks; however, there are separate independent bodies in the major subsidiaries (BCP, Grupo Pacífico, ASB, Edyficar and Prima AFP) responsible for managing and monitoring risks, as further explained below:

(a)

Board of Directors: The board of directors of each major subsidiary is responsible for the overall risk management approach and for the approval of the policies and strategies currently in place. The board provides written principles for overall risk management, as well as written policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, risk related to the use of derivative financial instruments and non-derivative financial instruments.

(b)

Risk Management Committee: The Risk Management Committee of each major subsidiary is responsible for the strategy used for mitigating risks as well as setting forth the overall principles, policies and limits for the different types of risks; it is also responsible for monitoring fundamental risk issues and for managing and monitoring the relevant risk decisions.

In addition, in order to effectively manage all the risks, the Risk Management Committee is divided into the following tactical committees which report on a monthly basis all changes or issues in the managed risks:

Credit Risk Committee -

The Credit Risk Committee is responsible of reviewing the tolerance level, limits of exposure, the objective, guidelines and policies for managing credit risk, the delegation of authority and the supervision and establishment of autonomy for taking credit risks and the metrics for measuring performance incorporating risk variables. Also, it is responsible of approving the methodologies, models, parameters, scenarios, processes, stress tests and manuals to identify, measure, treat, monitor, control and report all the market risks to which the Group is exposed. Furthermore, it proposes the approval of any changes to the functions described above and reports any finding to the Risk Management Committee.

The Credit Risk Committee is mainly composed by the Chief Risk Executive, the Manager of the Credit Division and the Manager of the Risk Management Area.

Treasury and ALM Risk Committee -

The Treasury and ALM Risk Committee is responsible of reviewing the tolerance level, limits of exposure, the objective, guidelines and policies for managing market risks, the delegation of authority and the supervision and establishment of autonomy for taking market risks, and the metrics for measuring performance incorporating risk variables. Also, it is responsible of approving the methodologies, models, parameters, processes and manuals to identify, measure, treat, monitor, control and report all the market risks to which the Group is exposed. Furthermore, it proposes the approval of any changes of the functions described above and reports any finding to the Risk Management Committee.

The Treasury and ALM Risk Committee is mainly composed by the Chief Risk Executive, the Manager of the Risk Management Area, the Manager of the Treasury Risk Area and the Manager of the Treasury Division.

Operational Risk Committee -

The Operational Risk Committee is responsible of reviewing the tolerance level, limits of exposure, the objective, guidelines and policies for managing operational risks and the mechanisms for implementing corrective actions. Also, it is responsible of approving: (i) the standard methodology for measuring operational risks, (ii) the taxonomy of operational risks and controls and (iii) all the critical processes of the Group. Furthermore, it proposes the approval of any changes to the functions described above and reports any finding to the Risk Management Committee.

The Credit Risk Committee is mainly composed by the Chief Risk Executive, the Manager of the Risk Management Area, the Manager of the Operational Risk Management Department, the Manager of the Internal Audit Division.

135

(c)

Chief Risk Office: The Chief Risk Office is responsible for implementing policies, procedures, methodologies and actions to identify, measure, monitor, mitigate, report and control the different types of risks to which the Group is exposed. Also, it participates in the design and definition of the strategic plans of the business units to ensure that they are framed within the risk appetite metrics approved by the Board of Directors.

The Chief Risk Office is divided into the following areas:

Risk Management Area

The Risk Management Area is responsible of ensuring that policies and risk management policies established by the Board of Directors are compliant and monitored. The Risk Management Area is composed by the Credit Risk Management Department, Market Risk Management Department, the Operational Risk Management Department and the Insurance Risk Management Department.

Treasury Risk Area

The Treasury Risk Area is responsible of planning, coordinating and monitoring the compliance of the Treasury Division with risk measurement methodologies and limits approved by the Risk Management Committee. Also, it is responsible to assess the effectiveness of hedge derivatives and the valuation of investments.

Consumer and Micro-business Risk Area

The Consumer and Micro-business Risk Area is responsible of ensuring the quality of the retail loans portfolio and of developing credit standards in line with the guidelines and risk levels defined by the Board of Directors.

(d)

Treasury Division: Treasury Division is responsible for managing the Group’s assets and liabilities and the overall financial structure. It is also primarily responsible for the Group’s management of funding and liquidity risks; as well as the investment, forward and spot portfolios, assuming the related liquidity, interest rate and exchange rate risks under the policies and limits currently effective.

(e)

Internal Audit Division: Risk management processes throughout the Group are monitored by the internal audit function, which examines both the adequacy of the procedures and the compliance with them. The Internal Audit discusses the results of all assessments with Management, and reports its findings and recommendations to Credicorp’s Audit Committee and Board of Directors.

Risk Measurement and Reporting Systems

The models make use of probabilities derived from historical experience, adjusted to reflect the economic environment. We also examine worst case scenarios that might arise if extreme and unlikely events do, in fact, occur.

Monitoring and controlling risks are primarily performed based on limits that we establish. These limits reflect our business strategy, the market environment and the level of risk that we are willing to accept. In addition, we monitor and measure our overall risk bearing capacity relative to our aggregate risk exposure across all risk types and activities.

Information compiled from all our subsidiaries is examined and processed in order to analyze, control and identify risks early. This information is presented and explained to the Board of Directors, the Risk Management Committee, and all relevant members of the Group. The report includes aggregate credit exposure, credit metric forecasts, hold limit exceptions, VaR (Value at Risk), liquidity ratios and risk profile changes. Senior management assesses the fair value of the investments and the appropriateness of the allowance for credit losses periodically.

136

Risk Mitigation

As part of our overall risk management, we use derivatives and other instruments to manage exposures resulting from changes in interest rates, foreign currencies, equity risk and credit risk.

The risk profile is assessed before entering into hedge transactions, which are authorized by the appropriate level of seniority within the Group. The effectiveness of hedges is assessed by the Treasury Risk Area. The effectiveness of all the hedge relationships is monitored monthly. In situations of ineffectiveness, we will enter into a new hedge relationship to mitigate risk on a continuous basis.

We actively use collateral to reduce credit risks.

Excessive Risk Concentration

Concentrations arise when a number of counterparties are engaged in similar business activities, or activities in the same geographic region, or have similar economic, political or other conditions. Concentrations indicate the relative sensitivity of the Group’s performance to developments affecting a particular industry or geographical location.

In order to avoid excessive concentrations of risk, Credicorp’s policies and procedures include specific guidelines to focus on maintaining a diversified portfolio. Identified concentrations of credit risks are controlled and managed accordingly.

Market Risk

We take on exposure to market risks, which is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risks arise from open positions in fixed income securities, derivatives, currencies and equity products; all of which are exposed to general and specific market movements and changes in the level of volatility of prices such as interest rates, credit spreads, foreign exchange rates and equity prices.

We separate exposures to market risk into two groups: (i) those that arise from value fluctuation of trading portfolios due to movements of market rates or prices (trading book) and (ii) those that arise from changes in the structural positions of non-trading portfolios due to movements of the interest rates, prices and foreign exchange rates (ALM book).

The risks that trading portfolios face are managed through VaR historical simulation techniques; while non-trading portfolios are managed using ALM.

Trading Book

The trading book has liquid positions in equities, bonds, foreign currencies and derivatives, each arising from market-making transactions where the Group acts as a principal with the clients or with the market. This portfolio includes investments and derivatives classified by management as held for trading.

(i)

Value at Risk (VaR)

Based upon a number of assumptions for various changes in market conditions, we apply VaR to our trading portfolios to estimate the market risk of our positions and our maximum losses.

Daily calculation of VaR is a statistically-based estimate of the potential loss on our current portfolio caused by adverse market movements.

137

VaR is a statistically-based estimate of the potential loss on the current portfolio from adverse market movements. It expresses the “maximum” amount the Group might lose, but only to a certain level of confidence (99 percent). There is therefore a specified statistical probability (1 percent) that actual loss could be greater than the VaR estimate. The VaR model assumes a certain “holding period” until positions can be closed (1 - 10 days).

The time horizon used to calculate VaR is one day; however, the one-day VAR is amplified to a 10-day time frame and calculated by multiplying the one-day VaR by the square root of 10. This adjustment will be exact only if the changes in the portfolio in the following days have a normal distribution identical and independent; otherwise, the 10-day VAR will be an approximation.

The assessment of past movements has been based on historical one-year data and 89 market risk factors, which are composed as follows: 20 market curves, 58 stock prices, 10 mutual funds values and one volatility series. The Group applies these historical changes in rates directly to its current positions (a method known as historical simulation). The Company believes the market risk factors incorporated into its VaR model are adequate to measure the market risk to which the Group’s trading book is exposed.

The use of this approach does not prevent losses outside of these limits in the event of more significant market movements. Losses exceeding the VaR figure should occur, on average under normal market conditions, not more than once every hundred days.

VaR limits have been established to control and keep track of our risks taken. These risks arise from the size of our positions and/or the volatility of the risk factors embedded in each financial instrument. Regular reports are prepared for the Treasury and ALM Risk Committee, our risk management committees and our senior managers.

In VaR calculations, the foreign exchange effect is not included and as such the calculation is measured assuming a constant exchange rate (See Item 11, Trading Book, (ii) Backtesting, ALM Book, Foreign Exchange Risk).

As of December 31, 2012, 2011 and 2010, our VaR by type of asset were as follows:

	2012			2011			2010
	US$(000)			US$(000)			US$(000)
Equity investments		2,759			234			76
Debt investments		2,311			4,763			2,427
Swaps		309			3,957			2,516
Forwards		1,871			6,325			2,091
Options		49			9			97
Diversification effect		(4,962	)		(7,707	)		(3,749	)
Consolidated VaR by type of asset (1)		2,337			7,581			3,458

(1)

Amplified to the Holding, 10 days period.

As of December 31, 2012, 2011 and 2010, our VaR by risk type were as follows:

	2012			2011			2010
	US$(000)			US$(000)			US$(000)
Interest rate risk		2,787			7,596			3,500
Price risk		2,759			234			76
Volatility risk		1			4			25
Diversification effect		(3,210	)		(253	)		(143	)
Consolidated VaR by risk type (1)		2,337			7,581			3,458

(1)

Amplified to the Holding, 10 days period.

The information disclosed in these charts addresses the VaR calculation for the entire consolidated Group. However, minimum, maximum and average VaR calculations are estimated only for BCP´s trading book. The reason for this is that, although the trading book positions for the entire Group are consolidated once a year in order to calculate a VaR for reporting purposes, Credicorp calculates VaR on a daily basis only for BCP. Therefore, since there is not a sufficient sample for the Group, minimum, maximum and average VaR are calculated only for the BCP subsidiary. Nonetheless, the Company believes it is relevant information considering that BCP’s trading risk is very close to the total trading risk of the Group’s portfolio.

138

For the years ended December 31, 2012 and 2011, the BCP’s consolidated VaR is as follows:

	2012		2011
	US$(000)		US$(000)
Average daily		7,209		6,251
Highest		14,974		10,333
Lowest		1,887		3,212

(ii)

Backtesting

Backtesting is performed on a trading book to verify the predictive power of the VaR calculations. Backtesting compares results of the positions considered for the calculation of VaR and the calculation of the VaR from the previous day.

Backtesting exceptions occur when real losses exceed the estimated VaR for the previous day. In order for a backtesting analysis to be considered valid, it should be based on a minimum of 252 observations, and when it consists of 504 observations (2 years of data), a moving window is created.

Every month, back-testing exceptions are analyzed and reports are prepared to explain the results. These reports are presented to the Risk Committee of the Treasury and ALM, our risk management committees and our senior Management.

Backtesting is also estimated only for BCP’s trading book, since it should be based on a minimum of 252 observations and the Group’s VaR is consolidated only once a year for reporting purposes.

During 2012, BCP did not record any exceptions. During 2011, BCP recorded one backtesting exception, when actual losses exceeded daily VaR limits (based on 252 observations); therefore, we believe that the VaR model is statistically correct. This exception was due to an increase along the PEN curve, especially for the short term

(iii)

Stress test

A stress test is calculated for the Group. The test calculates the maximum loss that the Group incurs in light of daily shocks to the market from March 18, 2008 until the effective date of the stress test. The maximum loss is considered the outcome for the Stress test.

The methodology for the stress test assumes a certain “holding period” until positions can be closed (1 - 10 days). The time horizon used to calculate the losses is one day; however, the final figures are amplified to a 10-day time frame and the final calculation is determined by multiplying the one-day losses times the square root of 10. This adjustment will be exact only if the changes in the portfolio in the following days have a normal distribution that is identical and independent; otherwise, the worst loss of 10 days will be an approximation.

The results of our stress test as of December 31, 2012, 2011 and 2010, by type of asset, were as follows:

	2012			2011			2010
	US$(000)			US$(000)			US$(000)
Equity investments		9,922			1,330			1,115
Debt investments		5,554			5,209			5,832
Swaps		2,820			4,321			5,566
Forwards		9,644			7,426			3,533
Options		172			27			156
Diversification effect		(14,370	)		(7,394	)		(9,551	)
Consolidated VaR by type of asset		13,743			10,919			6,651

139

The results of our stress test as of December 31, 2012, 2011 and December 31, 2010, by risk type, were as follows:

	2012			2011			2010
	US$(000)			US$(000)			US$(000)
Interest rate risk		10,784			10,985			6,664
Price risk		9,922			1,330			1,115
Volatility risk		3			8			136
Diversification effect		(6,966	)		(1,404	)		(1,264	)
Consolidated VaR by risk type		13,743			10,919			6,651

ALM Book

The management of risks associated with long-term and structural positions is called ALM. Non-trading portfolios which comprise the ALM book are exposed to different sensitivities that can bring about deterioration in the value of the Group’s assets relative to its liabilities and hence can reduce the Group’s net worth.

Interest-Rate Risk

Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows or the fair values of financial instruments. Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Fair value interest rate risk is the risk that the value of a financial instrument will fluctuate because of changes in market interest rates. The Group is exposed to both fair value interest rate risk and cash flow interest rate risk. Interest margins may increase as a result of such changes but may also decrease in the event that unexpected movements arise. The Board sets limits on the level of mismatch of interest rate re-pricing that may be undertaken, which is monitored monthly by the Market Risk Management Unit.

Re-pricing Gap

Gap analysis consists of aggregating re-pricing timeframes into buckets and checking if each bucket nets to zero. Different bucketing schemes may be used. An interest rate gap is simply a positive or negative net re-pricing timeframe for any of the buckets.

The table below summarizes our exposure to interest rate risks. It includes our financial instruments at carrying amounts, categorized by the earlier of contractual re-pricing or maturity dates:

	As of December 31, 2012
	Up to 1 month		1 to 3 months		3 to 12 months			1 to 5 years			More than 5 years			Non-interest bearing			Total
	US$(000)		US$(000)		US$(000)			US$(000)			US$(000)			US$(000)			US$(000)
Assets
Cash and due from banks		6,600,786		32,762		49,288			19,312			-			1,146,957			7,849,105
Receivables from reverse repurchase agreements and security borrowing Investments		1,199,700		518		-			-			-			-			1,200,218
Investments		332,967		1,284,701		1,908,865			1,307,115			1,890,216			1,124,245			7,848,109
Loans		2,573,312		5,835,736		4,258,041			5,152,617			2,952,916			-			20,772,622
Assets designated at fair value through profit and loss		740		4		2,817			5,082			11,412			87,083			107,138
Premiums and other policies receivables		-		-		-			-			-			183,983			183,983
Accounts receivable from re-insurers and co-insurers		-		-		-			-			-			167,460			167,460
Other assets		-		-		-			-			-			2,668,486			2,668,486
Total assets		10,707,505		7,153,721		6,219,011			6,484,126			4,854,544			5,378,214			40,797,121
Liabilities
Deposits and obligations		6,587,944		1,218,407		7,824,254			1,666,669			119,781			6,623,365			24,040,420
Payables from repurchase agreements and security lending		1,097,358		438,336		342,647			-			-			-			1,878,341
Due to banks and correspondents		387,469		647,311		743,474			591,645			265,497			50,865			2,686,261
Liabilities designated at fair value through profit or loss		-		-		-			-			-			68,536			68,536
Accounts payable to reinsurers and coinsurers		-		-		-			-			-			96,124			96,124
Technical, insurance claims reserves and reserves for unearned premiums		28,244		27,358		80,366			359,231			701,489			418,311			1,614,999
Bonds and subordinated notes issued		645,994		14,607		53,114			1,412,375			2,648,566			8,732			4,783,388
Other liabilities		-		-		-			-			-			1,263,717			1,263,717
Equity		-		-		-			-			-			4,365,335			4,365,335
Total liabilities and equity		8,747,009		2,346,019		9,043,855			4,029,920			3,735,333			12,894,985			40,797,121
Off-Balance sheet items
Derivatives assets		365,338		448,243		236,937			311,622			98,054			-			1,460,194
Derivatives liabilities		173,992		305,055		262,070			533,902			185,175			-			1,460,194
		191,346		143,188		(25,133	)		(222,280	)		(87,121	)		-			-
Marginal gap		2,151,842		4,950,890		(2,849,977	)		2,231,926			1,032,000			(7,516,771	)		-
Accumulated gap		2,151,842		7,102,732		4,252,755			6,484,681			7,516,771			-			-

140

	As of December 31, 2011
	Up to 1 month		1 to 3 months			3 to 12 months			1 to 5 years			More than 5 years			Non-interest bearing			Total
	US$(000)		US$(000)			US$(000)			US$(000)			US$(000)			US$(000)			US$(000)
Assets
Cash and due from banks		4,246,213		78,627			54,071			29,383			-			1,094,568			5,502,862
Investments		373,863		918,258			1,657,330			832,015			1,430,167			779,580			5,991,212
Loans		2,162,685		4,925,920			3,257,678			4,363,071			2,212,879			-			16,922,233
Assets designated at fair value through profit and loss		239		-			1,012			7,043			4,937			76,872			90,103
Premiums and other policies receivables		-		-			-			-			-			174,367			174,367
Accounts receivable from re-insurers and co-insurers		-		-			-			-			-			151,080			151,080
Other assets		-		-			-			-			-			1,882,540			1,882,540
Total assets		6,783,000		5,922,805			4,970,091			5,231,512			3,647,982			4,159,007			30,714,397
Liabilities
Deposits and obligations		4,373,417		873,441			6,663,716			1,314,787			87,798			5,390,688			18,703,847
Payables from repurchase agreements and security lending		-		-			250,000			-			-			-			250,000
Due to banks and correspondents		463,660		170,703			683,052			562,815			121,513			58,277			2,060,020
Liabilities designated at fair value through profit or loss		-		-			-			-			-			75,366			75,366
Technical, insurance claims reserves and reserves for unearned premiums		23,622		19,418			59,191			303,226			596,492			376,349			1,378,298
Bonds and subordinated notes issued		711,515		2,737			33,934			1,289,361			1,856,528			71,447			3,965,522
Other liabilities		-		-			-			-			-			818,704			818,704
Equity		-		-			-			-			-			3,462,640			3,462,640
Total liabilities and equity		5,572,214		1,066,299			7,689,893			3,470,189			2,662,331			10,253,471			30,714,397
Off-Balance sheet items
Derivatives assets		495,709		255,321			485,646			202,705			-			-			1,439,381
Derivatives liabilities		14,595		66,720			317,161			972,288			68,617			-			1,439,381
		481,114		188,601			168,485			(769,583	)		(68,617	)		-			-
Marginal gap		1,691,900		5,045,107			(2,551,317	)		991,740			917,034			(6,094,464	)		-
Accumulated gap		1,691,900		6,737,007			4,185,690			5,177,430			6,094,464			-			-

	As of December 31, 2010
	Up to 1 month		1 to 3 months			3 to 12 months			1 to 5 years			More than 5 years			Non-interest bearing			Total
	US$(000)		US$(000)			US$(000)			US$(000)			US$(000)			US$(000)			US$(000)
Assets
Cash and due from banks		5,567,838		1,325,201			26,999			-			-			1,624,377			8,544,415
Investments		535,658		274,790			256,872			860,605			1,088,441			867,450			3,883,816
Loans		1,903,439		3,931,178			2,594,608			3,753,193			1,777,237			-			13,959,655
Assets designated at fair value through profit and loss		-		40			1,443			2,999			6,047			168,526			179,055
Premiums and other policies receivables		-		-			-			-			-			129,136			129,136
Accounts receivable from re-insurers and co-insurers		-		-			-			-			-			160,249			160,249
Other assets		-		-			-			-			-			1,534,831			1,534,831
Total assets		8,006,935		5,531,209			2,879,922			4,616,797			2,871,725			4,484,569			28,391,157
Liabilities
Deposits and obligations		6,366,203		4,150,629			2,379,260			518,882			42,574			4,360,570			17,818,118
Due to banks and correspondents		511,317		509,355			958,955			118,143			110,017			32,533			2,240,320
Accounts payable to re-insurers and co-insurers		-		-			-			-			-			60,775			60,775
Technical, insurance claims reserves and reserves for unearned premiums		51,258		31,035			139,700			188,801			432,951			352,578			1,196,323
Bonds and subordinated notes issued		840,256		38,807			137,381			419,553			1,518,419			27,502			2,981,918
Other liabilities		-		-			250,000			-			-			913,452			1,163,452
Equity		-		-			-			-			-			2,930,251			2,930,251
Total liabilities and equity		7,769,034		4,729,826			3,865,296			1,245,379			2,103,961			8,677,661			28,391,157
Off-Balance sheet items
Derivatives assets		507,560		348,181			245,977			179,503			25,922			-			1,307,143
Derivatives liabilities		280,099		351,836			331,670			291,862			51,676			-			1,307,143
		227,461		(3,655	)		(85,693	)		(112,359	)		(25,754	)		-			-
Marginal gap		465,362		797,728			(1,071,067	)		3,259,059			742,010			(4,193,092	)		-
Accumulated gap		465,362		1,263,090			192,023			3,451,082			4,193,092			-			-

Sensitivity to Changes in Interest Rates

The following table presents the sensitivity of our consolidated income statement and consolidated statement of comprehensive income (before tax and non-controlling interest) to a reasonable possible change in interest rates, with all other variables held constant.

141

The sensitivity of the consolidated income statement reflects the effect of the assumed changes in interest rates on the net interest income for one year before income tax and non-controlling interest, based on the floating rate of non-trading financial assets and financial liabilities held at December 31, 2012 and 2011, including the effect of derivatives instruments. The sensitivity of consolidated comprehensive income is calculated by revaluing, at various interest rates, our fixed rate available-for-sale financial assets before income tax and non-controlling interest. The analysis includes the effect of any associated hedges and derivative instruments designated as cash flow hedges, as of December 31, 2012, 2011 and 2010:

As of December 31, 2012

Currency

Changes in
basis points

Sensitivity of
net income

Sensitivity of
comprehensive
income

US$(000)

U.S. Dollar

+/-

26,026

-/+

87,437

U.S. Dollar

+/-

39,039

-/+

131,155

U.S. Dollar

+/-

100

+/-

52,052

-/+

174,874

U.S. Dollar

+/-

150

+/-

78,079

-/+

262,310

Peruvian Currency

+/-

-/+

505

-/+

59,708

Peruvian Currency

+/-

-/+

757

-/+

89,561

Peruvian Currency

+/-

100

-/+

1,009

-/+

119,415

Peruvian Currency

+/-

150

-/+

1,514

-/+

179,123

As of December 31, 2011

Currency

Changes in
basis points

Sensitivity of
net income

Sensitivity of
comprehensive
income

US$(000)

U.S. Dollar

+/-

15,400

-/+

41,907

U.S. Dollar

+/-

23,100

-/+

62,861

U.S. Dollar

+/-

100

+/-

30,800

-/+

83,815

U.S. Dollar

+/-

150

+/-

46,199

-/+

125,722

Peruvian Currency

+/-

-/+

792

-/+

41,839

Peruvian Currency

+/-

-/+

1,188

-/+

62,759

Peruvian Currency

+/-

100

-/+

1,585

-/+

83,678

Peruvian Currency

+/-

150

-/+

2,377

-/+

125,518

As of December 31, 2010

Currency

Changes in
basis points

Sensitivity of
net income

Sensitivity of
comprehensive
income

US$(000)

U.S. Dollar

+/-

8,607

-/+

57,293

U.S. Dollar

+/-

12,911

-/+

85,940

U.S. Dollar

+/-

100

+/-

17,215

-/+

114,587

U.S. Dollar

+/-

150

+/-

25,822

-/+

171,880

Peruvian Currency

+/-

-/+

1,658

-/+

32,541

Peruvian Currency

+/-

-/+

2,487

-/+

48,812

Peruvian Currency

+/-

100

-/+

3,317

-/+

65,083

Peruvian Currency

+/-

150

-/+

4,917

-/+

97,624

The interest rate sensitivities set out in the table above are illustrative only and are based on simplified scenarios. The figures represent the effect of the pro-forma movements in the net interest income based on the projected yield curve scenarios and our current interest rate risk profile. This effect, however, does not incorporate actions that would be taken by our management to mitigate the impact of this interest rate risk. In addition, we seek proactively to change the interest rate risk profile to minimize losses and optimize net revenues. The projections above also assume that interest rate of all maturities move by the same amount and, therefore, do not reflect the potential impact on net interest income of some rates changing while others remain unchanged. The projections make other simplifying assumptions as well, including an assumption that all positions run to maturity.

Our positions held in equity securities, mutual funds and hedge funds are not considered part of investment securities for sensitivity calculation purposes; however, presented below is a table that demonstrates how our expected unrealized gain or loss (before income taxes) on equity securities, mutual funds, and hedge funds (as of December 31, 2011 and December 31, 2012) would correspond to changes in market prices of these securities at the 10%, 25% and 30% levels:

142

Market price sensitivity	Changes in market prices %		2012		2011		2010
			US$(000)		US$(000)		US$(000)
Equity securities	+/-	10		62,406		47,942		54,052
Equity securities	+/-	25		156,016		119,854		135,129
Equity securities	+/-	30		187,219		143,825		162,155
Mutual funds	+/-	10		14,791		6,871		7,714
Mutual funds	+/-	25		36,976		17,177		19,285
Mutual funds	+/-	30		44,372		20,612		23,142
Hedge funds	+/-	10		2,505		2,786		993
Hedge funds	+/-	25		6,263		6,964		2,482
Hedge funds	+/-	30		7,515		8,357		2,978

Commitments in liabilities at fair value (short sales) are related to fixed income and equity financial instruments, and have maturities of one month or less; therefore, the Group expects minimal price fluctuations. As a result, the Group is not subject to significant price risk on these financial liabilities.

Foreign Exchange Risk

Our financial position and cash flows are exposed to foreign currency exchange rates. Our management sets limits on the level of total exposure to foreign currencies, which are monitored daily.

Foreign currency transactions are executed using the free market exchange rates applicable in countries in which Credicorp’s subsidiaries operate. As of December 31, 2012, 2011 and 2010, the Group’s assets and liabilities by currencies were as follows:

2012	U.S. Dollars			Peruvian currency			Other currencies			Total
	US$(000)			US$(000)			US$(000)			US$(000)

Monetary assets -
Cash and due from banks		4,864,941			2,811,102			173,062			7,849,105
Receivables from reverse repurchase agreements and security borrowing Investments		7,500			-			1,192,718			1,200,218
Trading securities		70,406			36,557			69,788			176,751
Available-for-sale investments		2,566,998			4,315,913			528,784			7,411,695
Investments held-to-maturity pledged as collateral		150,097			109,566			-			259,663
Loans, net		11,338,280			8,731,467			702,875			20,772,622
Financial assets designated to fair value through profit and loss		78,218			28,920			-			107,138
Other assets		390,209			861,137			184,907			1,436,253
		19,466,649			16,894,662			2,852,134			39,213,445
Monetary liabilities -
Deposits and obligations		(10,839,721	)		(12,299,579	)		(901,120	)		(24,040,420	)
Payables from repurchase agreements and security lending		(651,664	)		(117,647	)		(1,109,030	)		(1,878,341	)
Due to bank and correspondents and borrowed funds		(1,835,540	)		(652,240	)		(198,481	)		(2,686,261	)
Liabilities designated at fair value through profit or loss		-			-			(96,124	)		(96,124	)
Technical reserves, insurance claims reserves and reserves for unearned premiums		(1,032,693	)		(582,306	)		-			(1,614,999	)
Bonds and subordinated notes issued		(3,818,484	)		(835,663	)		(129,241	)		(4,783,388	)
Other liabilities		(514,113	)		(679,152	)		(138,988	)		(1,333,253	)
		(18,692,215	)		(15,166,587	)		(2,572,984	)		(36,431,786	)
		774,434			1,728,075			279,150			2,781,659
Forwards position, net		(575,212	)		318,871			256,341			-
Currency swaps position, net		(37,466	)		65,782			(28,316	)		-
Cross-currency swaps position, net and interest rate swaps position, net		(60,322	)		(28,872	)		89,194			-
Options		18,279			(18,279	)		-			-
Net monetary position		119,713			2,065,577			596,369			2,781,659

143

2011	U.S. Dollars			Peruvian currency			Other currencies			Total
	US$(000)			US$(000)			US$(000)			US$(000)

Monetary assets -
Cash and due from banks		3,848,401			1,528,576			125,885			5,502,862
Trading securities		18,416			57,195			-			75,611
Available-for-sale investments		2,402,643			3,156,017			356,941			5,915,601
Loans, net		9,734,175			6,773,628			414,430			16,922,233
Financial assets designated to fair value through profit and loss		90,103			-			-			90,103
Other assets		684,549			479,663			122,773			1,286,985
		16,778,287			11,995,079			1,020,029			29,793,395
Monetary liabilities -
Deposits and obligations		(9,282,891	)		(8,718,597	)		(702,359	)		(18,703,847	)
Payables from repurchase agreements and security lending		(250,000	)		-			-			(250,000	)
Due to bank and correspondents and borrowed funds		(1,755,816	)		(304,204	)		-			(2,060,020
Technical reserves, insurance claims reserves and reserves for unearned premiums		(994,522	)		(383,776	)		-			(1,378,298	)
Bonds and subordinated notes issued		(3,491,135	)		(474,387	)					(3,965,522	)
Other liabilities		(478,792	)		(364,334	)		(50,944	)		(894,070	)
		(16,253,156	)		(10,245,298	)		(753,303	)		(27,251,757	)
		525,131			1,749,781			266,726			2,541,638
Forwards position, net		339,606			(346,262	)		6,656			-
Currency swaps position, net		(167,263	)		167,263			-			-
Cross-currency swaps position, net and interest rate swaps position, net		(197,659	)		82,226			115,433			-
Options		3,269			(3,269	)		-			-
Net monetary position		503,084			1,649,739			388,815			2,541,638

2010	U.S. Dollars			Peruvian currency			Other currencies			Total
	US$(000)			US$(000)			US$(000)			US$(000)

Monetary assets -
Cash and due from banks		3,555,965			4,747,802			240,648			8,544,415
Trading securities		59,020			56,548			-			115,568
Available-for-sale investments		2,162,738			1,223,339			382,171			3,768,248
Loans, net		8,356,316			5,260,816			342,523			13,959,655
Financial assets designated to fair value through profit and loss		179,055			-			-			179,055
Other assets		435,766			534,057			14,382			984,205
		14,748,860			11,822,562			979,724			27,551,146
Monetary liabilities -
Deposits and obligations		(9,135,298	)		(8,051,953	)		(630,867	)		(17,818,118	)
Due to bank and correspondents and borrowed funds		(1,966,845	)		(273,366	)		(109	)		(2,240,320	)
Technical reserves, insurance claims reserves and reserves for unearned premiums		(892,998	)		(303,325	)		-			(1,196,323	)
Bonds and subordinated notes issued		(2,307,392	)		(550,014	)		(124,512	)		(2,981,918	)
Other liabilities		(778,953	)		(378,935	)		(66,339	)		(1,224,227	)
		(15,081,486	)		(9,557,593	)		(821,827	)		(25,460,906	)
		(332,626	)		2,264,969			157,897			2,090,240
Forwards position, net		956,279			(951,426	)		(4,853	)		-
Currency swaps position, net		(222,854	)		222,854			-			-
Cross-currency swaps position, net and interest rate swaps position, net		(252,912	)		129,050			123,862			-
Options		25,561			(25,561	)		-			-
Net monetary position		173,448			1,639,886			276,906			2,090,240

144

We manage foreign exchange risk by monitoring and controlling the position values due to changes in exchange rates. We measure its performance in U.S. Dollars, so if the net foreign exchange position (e.g. Peruvian currency) is an asset, any depreciation of the U.S. Dollar with respect to this currency would affect positively our consolidated statements of financial position. The current position in a foreign currency comprises exchange rate-linked assets and liabilities in that currency. An institution’s open position in individual currencies comprises assets, liabilities and off-balance sheet items denominated in the respective foreign currency for which the institution itself bears the risk; any appreciation/depreciation of the foreign exchange would affect the consolidated income statement.

The Group’s net foreign exchange balance is the sum of its positive open non-U.S. Dollar positions (net long position) less the sum of its negative open non-U.S. Dollar positions (net short position). Any depreciation/appreciation of the foreign exchange position would affect the consolidated income statement. A currency mismatch would leave the Group’s consolidated statements of financial position vulnerable to a fluctuation of the foreign currency (exchange rate shock).

The table below shows the sensitivity analysis of the Peruvian currency, the currency to which we had significant exposure as of December 31, 2012, 2011 and 2010 on our non-trading monetary assets and liabilities and our forecasted cash flows. The analysis calculates the effect of a reasonably possible movement of the currency rate against the U.S. Dollar, with all other variables held constant on the consolidated income statement, before income tax. A negative amount in the table reflects a potential net reduction in our consolidated income statement, while a positive amount reflects a net potential increase:

Sensitivity Analysis	Change in Currency Rates		2012			2011			2010
	%		US$(000)			US$(000)			US$(000)
Depreciation -
Peruvian Currency		5		(98,361	)		(86,828	)		(86,310	)
Peruvian Currency		10		(187,780	)		(183,304	)		(182,210	)

Appreciation -
Peruvian Currency		5		108,715			78,559			78,090
Peruvian Currency		10		229,509			149,976			149,081

ITEM 12.

DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.

145

PART II

ITEM 13.

DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

(A)

Material Defaults

Neither we, nor any of our subsidiaries, have ever defaulted on any of our debt or have ever been forced to reschedule any of our obligations.

(B)

Dividend Arrearages and Delinquencies

None.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

None.

ITEM 15.

CONTROLS AND PROCEDURES

(A)

Disclosure Controls and Procedures

Our management, with the participation of and under the supervision of our principal executive officer and principal financial officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of December 31, 2012. Based on this evaluation, our management, principal executive officer, and principal financial officer have concluded that our disclosure controls and procedures are effective in ensuring that information that we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms.

(B)

Management’s Annual Report on Internal Control over Financial Reporting

Our Board of Directors and management are responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation and fair presentation of published financial statements in accordance with International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, the IASB.

Our internal control over financial reporting includes policies and procedures that:

•

Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets;

•

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements, and our receipts and expenditures are being made only in accordance with authorizations of our management in accordance with IFRS; and

146

•

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on our financial statements.

Because of inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. Also, projections about of the effectiveness of our internal controls are subject to the risk that controls will become inadequate because of changes in conditions or deterioration in compliance with policies or procedure.

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2012 based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO, in Internal Control-Integrated Framework. Based on this assessment, our management concluded that, as of December 31, 2012, our internal control over financial reporting was effective. Our management also found no material weaknesses in our internal control over financial reporting and therefore no corrective actions were taken.

Based on common practices among SEC registrants and due to the fact that the acquisitions of Correval S.A. and IM Trust S.A. did not extend beyond one year from the date of the acquisition, management´s assessment of and conclusion on the effectiveness of the internal control over financial reporting did not include the internal control of such entities included in the consolidated financial statements of Credicorp Ltd. and its subsidiaries. Correval S.A. and IM Trust S.A. constituted US$ 1,167 million and US$ 229 million of total assets and US$ 47 million and US$ 51 million of net assets, respectively as of December 31,2012, and US$ 67.2 million and US$ 20.1 million of revenues and US$ 4.9 million and US$ 5.4 million of net income, respectively, for the year ended.

The effectiveness of our internal control over financial reporting as of December 31, 2012 has been audited by Medina, Zaldívar, Paredes & Asociados (member firm of Ernst & Young Global), our independent registered public accounting firm, as stated in their report included herein, and it has expressed an unqualified opinion on the effectiveness of our internal control over financial reporting as of December 31, 2012.

(C)

Attestation Report of the Registered Public Accounting Firm

To the Shareholders and Board of Directors of Credicorp Ltd.

We have audited Credicorp Ltd. and Subsidiaries (hereinafter “Credicorp”) internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Credicorp’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Credicorp’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

As indicated in the Item 15(B) of Credicorp’s Annual Report on Form 20-F, Management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Correval S.A. Sociedad Comisionista de Bolsa and IM Trust S.A. Corredores de Bolsa which are included in the consolidated financial statements of Credicorp Ltd. and Subsidiaries and constituted US$1,166.7 million and US$229.4 million of total assets and US$46.7 million and US$51.2 million net assets, respectively, as of December 31, 2012 and US$67.2 million and US$20.1 million of revenues and US$4.9 million and US$5.4 million net income, respectively, for the year then ended. Our audit of internal control over financial reporting of Credicorp Ltd. and Subsidiaries also did not include an evaluation of the internal control over financial reporting of Correval S.A. Sociedad Comisionista de Bolsa and IM Trust S.A. Corredores de Bolsa.

In our opinion, Credicorp maintained, in all material respects, effective internal control over financial reporting as of December 31, 2012, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States of America), the 2012 consolidated financial statements of Credicorp and our report dated April 24, 2013, expressed an unqualified opinion thereon.

Lima, Perú,

April 24, 2013

Countersigned by:

/S/ Medina, Zaldívar, Paredes & Asociados S.C.R.L

/S/ CRISTIAN EMMERICH

Cristian Emmerich

C.P.C.C. Register Nº19-289

(D)

Changes in Internal Control over Financial Reporting

During the period covered by this Annual Report, no changes were made to our internal control over financial reporting that have materially affected, or are likely to materially affect, internal control over financial reporting.

ITEM 15T.

CONTROLS AND PROCEDURES

Not applicable.

148

ITEM 16A.

AUDIT COMMITTEE FINANCIAL EXPERT

In its session held on May 25, 2011, our Board of Directors elected Mr. Juan Carlos Verme as member of the Audit Committee. Mr. Juan Carlos Verme replaced Mr. Reynaldo Llosa, who reached the statutory limit for being a member of the Audit Committee. In its session held on October 27, 2010, the Board of Directors elected Mr. Raimundo Morales as a member of the Audit Committee and in its session held on July 12, 2011, the Audit Committee elected Mr. Raimundo Morales as the Chairman of the Audit Committee. Mr. Suárez was elected as the Audit Committee Financial Expert, as that term is defined in the instructions to Item 16A of Form 20-F, by the Board of Directors in its session held on March 31, 2009 and Mr. Benedicto Cigüeñas, Director of BCP, was elected as an advisor.

Our Board of Directors also determined that Mr. Morales, Mr. Suárez and Mr. Verme are “independent” as defined in Rule 10A-3 under the Exchange Act and in Section 303A.02 of The NYSE Listed Company Manual. Mr. Suárez, our Audit Committee Financial Expert is an economist, and received his Masters degree in economics from Columbia University. Mr. Suárez became a director on March 31, 2005. Mr. Suárez was President and Chairman of the Board of Banco Central de Reserva del Perú from 1992 to 2001, and serves as director on the Board of Directors of various other companies, one of which is Compañía de Minas Buenaventura S.A.

ITEM 16B.

CODE OF ETHICS

We have adopted a code of ethics (Código de Ética) that applies to our board of directors, including our chief executive officer, chief financial officer, and our other principal executive officers, as well as to all other employees. In addition, we have adopted a code of ethics for professionals with financial responsibility (Código de Ética Para Profesionales con Responsibilidad Financiera) that applies to employees with financial management responsibilities. Our code of ethics and code of ethics for professionals with financial responsibility are available on the corporate governance section of our web site at www.credicorpnet.com.

ITEM 16C.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Committee Pre-Approval Policies and Procedures

Our Audit Committee must approve all of the services that the independent auditor provides as part of its responsibility to supervise the auditor’s work. There are two types of approvals. The Audit Committee grants a “general approval” in advance for a list of services that the independent auditor may provide without further approval from the Audit Committee. A general approval is valid for 12 months from the date of approval unless the Audit Committee determines a different period should apply. The Audit Committee is regularly informed about the services provided through the general approval process. The Audit Committee also grants “specific approval” for services that do not have general approval on a case-by-case basis. All of the services that do not have general approval need specific approval from the Audit Committee before any agreement is signed with the independent auditor to provide such services. Any service that exceeds approved costs or budgets will need specific approval from the Audit Committee. The Audit Committee has set a limit on tax fees and all other fees, which cannot be greater than 35% of total auditor’s fees during a fiscal year. The Audit Committee may change this limit based upon our corporate needs and the complexity of the service provided by the independent auditor. When considering granting any type of approval, the Audit Committee takes into account whether the requested services are consistent with the SEC’s rules regarding the independence of the independent auditors.

Our audit committee supervises the execution of the independent audit services as necessary. It approves, when necessary, any modification in the terms, conditions, fees, and extent of the audit services. The Audit Committee may give a general approval for other audit services where the independent auditor is in the best position to provide those services. Such services typically include: audit services required by regulations, financial audits for our subsidiaries or affiliates, and services associated with the presentation of documents to the SEC or other documents published in connection with the trading of our shares.

149

The Audit Committee may award a general approval to audit-related services if the committee believes that these services will not negatively affect the integrity of the independent auditor and are consistent with SEC rules.

Consistent with SEC rules, our audit committee requires that all tax services provided by the independent auditors be subject to its approval. The Audit Committee may grant a specific approval for other services provided by the independent auditor as long as they do not impair the independence of the independent auditor and are permissible under SEC rules.

Each year the Audit Committee recommends the appointment of an independent auditor for consideration of our shareholders at the Annual General Shareholders’ Meeting. At our Annual General Shareholders’ Meeting held on March 26, 2013, Medina, Zaldívar, Paredes & Asociados was reelected as our external auditor for the financial year 2013. This designation was made in accordance with the proposal and recommendation of the Audit Committee, as authorized by the Board of Directors. The Board also delegated the duty of approving the auditor’s fees to the Audit Committee.

The following table sets forth, for each of the years indicated, the fees paid to our independent auditor, Medina, Zaldívar, Paredes & Asociados, a member of Ernst & Young Global, for the audit of our financial statements for the years ended December 31, 2010, 2011 and 2012.

	Years ended December 31,
	2010		2011		2012
	(U.S. Dollars in thousands)

Audit	US$	2,554	US$	3,140	US$	4,492
Audit – Related		356		181		803
Tax		201		301		562
All Other		712		1,802		1,710
Total	US$	3,823	US$	5,424	US$	7,567

Audit Fees correspond to audit services performed (i) reviewing Credicorp’s consolidated financial statements and its subsidiaries, (ii) establishing the procedures that the independent auditor needs to perform in order to form an opinion about Credicorp’s consolidated financial statements, and (iii) complying with the statutory requirements applicable to Credicorp’s subsidiaries. Audit fees also include expenses related to the audit work in connection with reviews of interim financial information and the issuance of comfort, letters, and other services related to filling documents with regulatory bodies or regarding public offerings. All fees were approved by the Audit Committee.

Audit-Related Fees relate to services that are similar to the execution of an audit or a review of Credicorp’s financial statements and which are traditionally performed by the independent auditor. Such audit-related services include: assistance in the understanding of new accounting and financial rules established by regulatory entities; audit related procedures on accounting matters; due diligence; and special audit reviews of internal control procedures, certain training courses and permitted advisory services related to IT systems. All fees were approved by the Audit Committee.

Tax Fees relate to tax services which include all services performed by Credicorp’s independent auditor’s tax personnel, except those services specifically related to the review and preparation of Credicorp’s financial statements, and which principally consist of tax compliance and advisory services approved by the Audit Committee.

All Other Fees mainly corresponded to advisory services provided by the independent auditors related to control review over revenue processes for the years 2011 and 2012.

The Audit Committee, in its session held on April 5, 2011, provided a waiver to permit the independent auditors to exceed the aforementioned 35% limit as a result of the fees we paid for the project “Control review over revenue processes” for BCP. This project represented the largest portion of the item “All Other” included in the table presented above for 2011. As a result, the “Tax” and “All Other” fees represented 38.8% of the total auditor’s fees for the financial year 2011. The waiver approved by the Audit Committee applied only to total auditor’s fees for the fiscal year 2011; hence, audit fees to be paid in 2012 were subject to the aforementioned 35% limit and represented 30% of the total auditor’s fees.

150

ITEM 16D.

EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

Not applicable.

ITEM 16E.

PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

During 2012, as part of their core businesses, our affiliates, Prima AFP, Atlantic Security Bank, Credifondo, and Credibolsa made purchases in open-market transactions on behalf of our clients. Furthermore, the following purchases were made for the 2012 supplementary senior management remuneration plan, as explained in notes 3(w)(ii) and 19(b) of the financial statements.

Period

(a) Total Number of Shares (or
Units) Purchased (1)

(b) Average Price Paid per Share
(or Units)

(d) Maximum Number (or
Approximate Dollar Value) of
Shares ( or Units) that May Yet Be
Purchased Under the Plans or
Programs

March 2012

144,494

US$ 128.54

ITEM 16F.

CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

Not applicable.

ITEM 16G.

CORPORATE GOVERNANCE

(A)

New York Stock Exchange – Corporate Governance

The NYSE’s corporate governance rules, codified in Section 303A of the NYSE’s Listed Company Manual, apply, with certain limited exceptions, in full to companies listing common equity securities. The chart below provides a brief description of the significant differences between our corporate governance practices and those followed by U.S. companies under NYSE listing standards:

Section of NYSE Listed Company Manual	NYSE Corporate Governance Rules for U.S. Domestic Issuers	Credicorp Corporate Governance Practices
303A.01	A majority of the members of the board of directors must be “independent directors”, as defined by the NYSE.	Credicorp is not required under Bermuda Law to maintain a board of directors with a majority of independent directors; however, a majority of our directors are independent according to our definition of “independence”, as set forth below.

303A.02	A director cannot be “independent” unless the board of directors affirmatively determines that the director has no material relationship with the listed company. In addition, a director is not independent if the director: · is, or has been within the last three years, an employee of the listed company, or an immediate family member is, or has been within the last three years, an executive officer, of the listed company	Credicorp has adopted an “independence” standard that is different than the standard established by the NYSE. Credicorp’s independence standard incorporates the SEC’s minimum independence requirements applicable to directors serving on audit committees. The definition of independence is included in Credicorp’s Corporate Governance Policy. There is no similar requirement under Bermuda law.

151

· has received, or has an immediate family member who has received, during any twelve-month period within the last three years, more than $120,000 in direct compensation from the listed company, other than director and committee fees and pension or other forms of deferred compensation for prior service

· (a) is a current partner or employee of a firm that is the listed company's internal or external auditor; (b) has an immediate family member who is a current partner of such a firm; (c) has an immediate family member who is a current employee of such a firm and personally works on the listed company's audit; or (d) was, or an immediate family member was, within the last three years a partner or employee of such a firm and personally worked on the listed company's audit within that time

· is, or has been with the last three years, employed as an executive officer of another company where any of the listed company's present executive officers at the same time serves or served on that company’s compensation committee

· is a current employee, or an immediate family member is a current executive officer, of a company that has made payments to, or received payments from, the listed company for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1 million, or 2% of such other company's consolidated gross revenues.

Under our definition, a director shall be deemed to be independent if he/she meets each of the following conditions:

• He/she has no material relationship⁽¹⁾ with Credicorp⁽²⁾.

• He/she is not and has not been an employee of Credicorp⁽²⁾ during the last twelve months.

• He/she does not have an immediate family member⁽³⁾ who is currently a senior executive⁽⁴⁾ of Credicorp⁽²⁾.

• He/she has not received during the last twelve months, more than US$150,000 from Credicorp⁽²⁾, as direct compensation, other than his/her compensation as director or as a member of a committee designated by the Board of Directors.

• He/she does not have an immediate family member⁽³⁾ that has received during the last twelve months, more than US$150,000 from Credicorp⁽²⁾.

• He/she is not a current partner or employee of Credicorp’s⁽²⁾ current external auditing firm.

• He/she does not have an immediate family member⁽³⁾ who is a partner of Credicorp’s⁽²⁾ current external auditing firm, or an employee of Credicorp’s⁽²⁾ current external auditing firm and who is directly involved in the audit of Credicorp⁽²⁾.

• For the last twelve months, neither he/she nor any immediate family member⁽³⁾ has been a partner or an employee of Credicorp’s⁽²⁾ current external auditing firm and been directly involved in the audit of Credicorp⁽²⁾.

• Neither he/she nor any immediate family member⁽³⁾is, or has been within the last twelve months, a senior executive of any company not affiliated with Credicorp⁽²⁾where any current senior executive⁽⁴⁾ of Credicorp⁽²⁾ is or has been, at the same time, a member of the Compensation Committee of such company.

• He/she is not a current employee, and none of his/her immediate family members⁽³⁾ is a current senior executive, of any company not affiliated with Credicorp⁽²⁾ that has made payments to, or received from, Credicorp⁽²⁾ for property or services in an amount which, in any of the last twelve months, totals over US$1 million in one year and which may represent 10% or more of the consolidated gross revenue of such company in one year.

• He/she does not, directly or indirectly, accept any consulting, advisory or other compensatory fee from Credicorp⁽²⁾ (other than (i) in his or her capacity as a member or advisor of the Audit Committee, the Board of Directors, or any other board committee, ii) as approved by the Board of Directors and which is less than US$150,000 during the last twelve months or (iii) for any fixed amounts of compensation under a retirement plan for prior service with Credicorp⁽²⁾)

• He/she is not an affiliate⁽⁵⁾ of Credicorp⁽²⁾, an executive officer of an affiliate, an employee of an affiliate, a general partner of an affiliate or a managing member of an affiliate.

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		⁽¹⁾ Material Relationship: A material relationship may occur if a person has a direct relationship with Credicorp or if a person is a partner or shareholder holding more than 4% of Credicorp’s capital stock, or officer of an organization that has a relationship with Credicorp. ⁽²⁾ Credicorp: Includes Credicorp and its subsidiaries. ⁽³⁾ Immediate Family Member: Up to the second degree of consanguinity or second degree of affinity. ⁽⁴⁾ Senior Executive: An executive officer of Credicorp (holding), or COO or Central Manager of BCP, or COO of any of its other subsidiaries. ⁽⁵⁾ Affiliate: A person or entity that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with Credicorp.

303A.03	Non-management directors of a listed company must meet at regularly scheduled executive sessions without management.	Credicorp is not required by Bermuda law to hold regular meetings of the board of directors at which only independent directors are present.

303A.04	Listed companies must have a nominating/corporate governance committee composed entirely of independent directors, with a written charter that addresses specific minimum requirements.	Credicorp has established a Nominations Committee and a Corporate Governance Committee. The minimum requirements and procedures to be followed by each committee are set forth in Credicorp’s Corporate Governance Policy. Credicorp has adopted a charter for the Corporate Governance Committee, and for the Nominations Committee. Although these committees are not required by law to be composed entirely of independent directors (as defined by the NYSE), under Credicorp’s current Corporate Governance Policy: · the Nominations Committee must consist of at least three directors of Credicorp or its subsidiaries; and · the Corporate Governance Committee must be composed of at least three directors of Credicorp or its subsidiaries, and at least one of them must be independent (as determined by Credicorp). There is no similar requirement under Bermuda law.

303A.05	Listed companies must have a compensation committee composed entirely of independent directors, with a written charter that addresses specific minimum requirements.	Under Bermuda law, compensation of executive officers need not be determined by an independent committee. However, Credicorp has established a Compensation Committee that reviews and approves the compensation and benefits for Credicorp’s executive officers and other key executives of Credicorp and its subsidiaries. The Committee must consist of at least three directors of Credicorp or its subsidiaries and BCP’s CEO. Although the Compensation Committee does not currently have a separate charter, Credicorp’s Corporate Governance Policy establishes minimum requirements for the committee, and provide that the committee must consist of at least three directors of Credicorp or its subsidiaries and BCP’s CEO.

153

303A.06	Listed companies must have an audit committee that satisfies the requirements of Rule 10A-3 under the Exchange Act.	Credicorp has an audit committee that satisfies the requirements of Rule 10A-3 under the Exchange Act. There is no similar requirement under Bermuda law.

303A.07	Listed companies must have an audit committee with at least three members, and all members of the committee must satisfy the “independence” requirements set forth in Section 303A.02 of the NYSE Listed Company Manual (described above). The audit committee must also have a written charter that addresses specific minimum requirements, and listed companies must have an internal audit function.	In accordance with NYSE rules, Credicorp has formed an Audit Committee responsible for advising the board regarding the selection of independent auditors and evaluating Credicorp’s internal controls. Credicorp’s Audit Committee has three members and the members comply with the NYSE’s standards of independence for domestic issuers. Credicorp’s board of directors has adopted an audit committee charter. There is no similar requirement under Bermuda law.

303A.08	Shareholders must be given the opportunity to vote on equity-compensation plans and material revisions thereto, with limited exemptions set forth in the NYSE rules.	Under Bermuda law, Credicorp is not required to obtain shareholder consent prior to adopting share compensation plans.

303A.09	Listed companies must adopt and disclose corporate governance guidelines addressing specific minimum requirements.	Credicorp has adopted a set of corporate governance guidelines.

303A.10	Listed companies must adopt and disclose a code of business conduct and ethics for directors, officers and employees, and promptly disclose any waivers of the code for directors or executive officers.	Credicorp has adopted and published a Code of Ethics for directors, officers and employees and has adopted a Code of Ethics for professionals with financial responsibility. Both Codes are published on Credicorp’s website (www.credicorpnet.com)

303A.12	Each listed company must submit an executed written affirmation annually to the NYSE. Each listed company CEO must (i) certify to the NYSE each year that he or she is not aware of any violation by the listed company of NYSE corporate governance listing standards, qualifying the certification to the extent necessary and (ii) promptly notify the NYSE in writing after any executive officer of the listed company becomes aware of any non-compliance with any applicable provisions of Section 303A.	As a NYSE listed company, Credicorp must submit an executed written affirmation annually to the NYSE, and its CEO must promptly notify the NYSE in writing after any executive officer of Credicorp becomes aware of any non-compliance with any applicable provisions of Section 303A. There is no similar requirement under Bermuda law.

(B)

Bermuda Law – Corporate Governance

We are a company incorporated under the laws of Bermuda and are subject to Bermuda laws related to corporate governance. Under Bermuda law, there are no statutory requirements with respect to the independence of our board of directors, meetings of non-management directors, the establishment and composition of certain committees or the adoption and disclosure of corporate governance guidelines or codes of business conduct and ethics. Certain Bermuda common law and statutory provisions, however, relate to duties and obligations of a company and its directors that are similar to some of the duties and obligations arising from the provisions of Section 303A.

154

(1)

Fiduciary Duties and Duties of Skill and Care Under Bermuda Law

Under section 97(1) of the Companies Act 1981 of Bermuda, as amended (also referred to as the Companies Act), every director and officer of a company must act honestly and in good faith with a view to the best interests of the company (often referred to as a “fiduciary duty”) and must exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances (often referred to as a “duty of skill and care”).

Fiduciary Duty

Under the common law, the fiduciary duty of directors has four aspects which may be briefly summarized as follows:

•

A duty to act honestly and in good faith. A director has a duty to act honestly and in good faith in what he considers are the best interests of the company and not for any collateral purpose. The courts allow the director wide discretion in determining this, interfering only if no reasonable director could have believed that a course of action was in the best interests of the company. However, a director acting honestly, but not in the best interests of the company, is in breach of such duty.

•

A duty to exercise powers for a proper purpose. Directors must act within the powers set out in the company’s memorandum of association and bye-laws and exercise their powers in the company’s interests and for the purposes for which those powers were conferred. Even if the directors are acting in good faith in the interests of the company as a whole, they must still use their powers for the purposes for which they were intended. For example, in general directors are not allowed to exercise their powers in such a way as to prevent a majority of the members from exercising their rights.

•

A duty to avoid conflicts of interest. A director must not put himself in a position where there is an actual or potential conflict between a personal interest and his duty to the company. However, a director may enter into a contract where a conflict of interest might arise if the bye-laws allow it or the company gives its approval in a general meeting. Our bye-laws do not prohibit a director from entering into a contract where a conflict of interest may arise, but they do prohibit a director from voting with respect to any contract or proposed contract or arrangement in which such director is interested or with which such director has a conflict of interest. In addition, section 97(4) of the Companies Act requires our directors and officers to disclose at the first opportunity any interest in a material contract, proposed material contract or person that is a party to a material contract or proposed material contract with us or any of our subsidiaries.

•

A duty not to appropriate, divert or personally profit from corporate opportunities. Unless the bye-laws specifically provide otherwise, a director’s fiduciary position precludes him from appropriating, diverting or taking a personal profit from any opportunities that result from the directorship. Our bye-laws do provide an exception to this rule. They provide that any director, any director’s firm or partner, or any company with which any director is associated may act for us in a professional capacity. Such director, firm, partner or company will be entitled to compensation for professional services as if the director were not a member of our board of directors. However, such director, firm, partner or company may not act as our auditor.

Duty of Skill and Care

Under the common law, the duty of skill and care has three aspects which may be briefly summarized as follows:

•

Degree of Skill. A director need not exhibit in the performance of his duties a greater degree of skill than may reasonably be expected from a person of like knowledge and experience.

155

•

A director is not expected to exercise a level of skill he does not have. The level of skill required of a director is subjective, in that the director is not expected, merely by virtue of the office, to possess any particular skills. Performance must be judged by the way the director applies any skills which he actually has. However, directors ought to acquire and maintain a sufficient knowledge and understanding of the company’s business to enable them to properly discharge their duties as directors.

•

Attention to the Business. A director must diligently attend to the affairs of the company. In the performance of this duty, a director must at a minimum display the reasonable care an ordinary person would be expected to take in the same circumstances on his own behalf. Mere errors of judgment have been held not to breach the duty of skill and care. A director, as such, is not bound to give continuous attention to the affairs of the company, as his or her duties are of an intermittent nature.

•

Reliance on Others. A director is not liable for the acts of co-directors or other company officers solely by virtue of the position. A director is entitled to rely on his co-directors or company officers as well as subordinates who are expressly put in charge of attending to the detail of management, provided such reliance is honest and reasonable (although a director cannot absolve himself entirely of responsibility by delegation to others). As a general rule, before delegating responsibility to others, the directors in question should satisfy themselves that the delegates have the requisite skills to discharge the functions delegated to them. In addition, the directors must ensure that there is set up an adequate system of monitoring such delegates (e.g., managers). The directors must, on a regular basis, ensure that their delegates have fulfilled their obligations. The directors should require a regular flow of information from the delegates to ensure that they are carrying out their duties satisfactorily. In addition, section 97(5A) of the Companies Act provides that a director shall not have breached the fiduciary duty or duty of skill and care required by section 97(1) if he relies in good faith upon financial statements of the company represented to him by another director or officer of the company or a report of an attorney, accountant, engineer, appraiser or other person whose profession lends credibility to a statement made by him.

(2)

Other Statutory Duties and Obligations

The Companies Act imposes certain specific duties and obligations on companies and directors, both directly and indirectly, including duties and obligations with respect to (i) loans to directors and related persons, (ii) limits on indemnities for directors and officers and (iii) the keeping of proper books of account.

Loans to Directors and Related Persons

It is not lawful for a company to make a loan or to enter into a guarantee or provide security in connection with a loan to a director or certain persons related to a director without the consent of the members of the company holding in the aggregate not less than 90% of the total voting rights of all the members having the right to vote at any meeting of the members of the company, except in certain specific circumstances.

Limits on Indemnity for Directors

Section 98 of the Companies Act provides generally that a Bermuda company may indemnify its directors, officers and auditors against any liability which, by virtue of any rule of law, would otherwise be imposed on them with respect to any negligence, default, breach of duty or breach of trust. However, this rule does not apply in cases where such liability arises from fraud or dishonesty of which such director, officer or auditor may be guilty in relation to the company or any of its subsidiaries. Any provision, whether contained in the bye-laws of a company or in any contract or arrangement between the company and one of its directors which would exempt such director from, or indemnify him against, any liability that would otherwise attach to him with respect to his fraud or dishonesty in relation to the company will be void. Section 98 further provides that a Bermuda company may indemnify its directors, officers and auditors against any liability incurred by them in defending any proceedings, whether civil or criminal, in which judgment is awarded in their favor or in which they are acquitted or granted relief by the Supreme Court of Bermuda pursuant to section 281 of the Companies Act. In the event that an allegation of fraud or dishonesty is proven, the director is obligated to disgorge any money provided for his defense.

156

Books of Account

It is the duty of the directors to cause to be kept proper books of account with respect to all sums of money received and expended by the company and the matters with respect to which the receipts and expenditures take place, all sales and purchases by the company, and the assets and liabilities of the company.

(C)

Peruvian Law – Corporate Governance

Although we are a holding company whose principal subsidiaries (Grupo Crédito, BCP, and Grupo Pacífico) are incorporated under and subject to the laws of Peru, we are registered in Peru as a foreign issuer and are consequently only subject to Peruvian regulations applicable to foreign issuers. There are no corporate governance provisions under Peruvian law applicable to us that are similar to the provisions of Section 303A.

ITEM 16H.

MINE SAFETY DISCLOSURE

Not applicable.

157

PART III

ITEM 17.

FINANCIAL STATEMENTS

Not applicable.

ITEM 18.

FINANCIAL STATEMENTS

Credicorp Consolidated Financial Statements and the report of the independent public accounting firm in connection therewith are filed as part of this Annual Report on Form 20-F, as noted below:

		Page
Report of Independent Registered Public Accounting Firm		F-1

Consolidated financial statements

Consolidated statements of financial position		F-3
Consolidated statements of income		F-4
Consolidated statements of comprehensive income		F-6
Consolidated statements of changes in equity		F-7
Consolidated statements of cash flows		F-8
Notes to consolidated financial statements		F-10

All supplementary schedules relating to the registrant are omitted because they are not required or because the required information, where material, is contained in the consolidated financial statements or notes thereto.

Credicorp Ltd. and Subsidiaries

Consolidated financial statements as of December 31, 2012, 2011 and 2010 together with the Report of Independent Registered Public Accounting Firm

158

ITEM 19.

EXHIBITS

(a)

Index to Exhibits

1.1

Bye-laws of Credicorp Ltd., incorporated herein by reference to Exhibit 1.1 to Credicorp’s Annual Report on Form 20-F dated June 30, 2005

1.2

Memorandum of Association of Credicorp Ltd., incorporated herein by reference to Exhibit 1.2 to Credicorp’s Annual Report on Form 20-F dated June 27, 2003

List of Subsidiaries, incorporated herein by reference to Exhibit 8 to Credicorp’s Annual Report on Form 20-F dated June 27, 2003

12.1

Certification by the Chief Executive Officer Pursuant to Section 302 of the U.S. Sarbanes-Oxley Act of 2002

12.2

Certification by the Chief Financial Officer Pursuant to Section 302 of the U.S. Sarbanes-Oxley Act of 2002

13.1

Certification by the Chief Executive Officer Pursuant to Section 906 of the U.S. Sarbanes-Oxley Act of 2002

13.2

Certification by the Chief Financial Officer Pursuant to Section 906 of the U.S. Sarbanes-Oxley Act of 2002

159

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this Annual Report on its behalf

CREDICORP LTD.

By:	/S/ ALVARO CORREA

Name:	Alvaro Correa
Tittle:	Chief Financial Officer

Dated: April 30, 2013

160

EXHIBIT INDEX

1.1

Bye-laws of Credicorp Ltd., incorporated herein by reference to Exhibit 1.1 to Credicorp’s Annual Report on Form 20-F dated June 30, 2005

1.2

Memorandum of Association of Credicorp Ltd., incorporated herein by reference to Exhibit 1.2 to Credicorp’s Annual Report on Form 20-F dated June 27, 2003

List of Subsidiaries, incorporated herein by reference to Exhibit 8 to Credicorp’s Annual Report on Form 20-F dated June 27, 2003

12.1

Certification by the Chief Executive Officer Pursuant to Section 302 of the U.S. Sarbanes-Oxley Act of 2002

12.2

Certification by the Chief Financial Officer Pursuant to Section 302 of the U.S. Sarbanes-Oxley Act of 2002

13.1

Certification by the Chief Executive Officer Pursuant to Section 906 of the U.S. Sarbanes-Oxley Act of 2002

13.2

Certification by the Chief Financial Officer Pursuant to Section 906 of the U.S. Sarbanes-Oxley Act of 2002

161

Credicorp Ltd. and Subsidiaries

Consolidated financial statements as of December 31, 2012 and 2011 together with the Report of Independent Registered Public Accounting Firm

Credicorp Ltd. and Subsidiaries

Consolidated financial statements as of December 31, 2012 and 2011 together with the Report of Independent Registered Public Accounting Firm

Content

Report of Independent Registered Public Accounting Firm	F-1

Consolidated financial statements

Consolidated statements of financial position	F-3
Consolidated statements of income	F-4
Consolidated statements of comprehensive income	F-6
Consolidated statements of changes in equity	F-7
Consolidated statements of cash flows	F-8
Notes to the consolidated financial statements	F-10

Report of Independent Registered Public Accounting Firm

To the shareholders and Board of Directors of Credicorp Ltd.

We have audited the accompanying consolidated statements of financial position of Credicorp Ltd. and Subsidiaries as of December 31, 2012 and 2011, and the related consolidated statements of income, comprehensive income, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2012. These consolidated financial statements are the responsibility of Credicorp’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Credicorp and subsidiaries at December 31, 2012 and 2011, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2012, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

F-1

Report of Independent Registered Public Accounting Firm (continued)

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States of America), Credicorp’s internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated April 24, 2013, expressed an unqualified opinion thereon.

As indicated in the Item 15(B) of Credicorp’s Annual Report on Form 20-F, Management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Correval S.A. Sociedad Comisionista de Bolsa and IM Trust S.A. Corredores de Bolsa which are included in the consolidated financial statements of Credicorp Ltd. and Subsidiaries and constituted US$1,166.7 million and US$229.4 million of total assets and US$46.7 million and US$51.2 million of net assets, respectively, as of December 31, 2012 and US$67.2 million and US$20.1 million of revenues and US$4.9 million and US$5.4 million net income, respectively, for the year then ended.

Our audit of internal control over financial reporting of Credicorp Ltd. and Subsidiaries also did not include an evaluation of the internal control over financial reporting of Correval S.A. Sociedad Comisionista de Bolsa and IM Trust S.A. Corredores de Bolsa.

Lima, Peru,

April 24, 2013

/S/ MEDINA, ZALDIVAR, PAREDES & ASOCIADOS

Countersigned by:

/S/ CRISTIAN EMMERICH

Cristian Emmerich

C.P.C.C. Register Nº19-289

F-2

Credicorp Ltd. and Subsidiaries

Consolidated statements of financial position

As of December 31, 2012 and 2011

	Note		2012			2011
			US$(000)			US$(000)

Assets
Cash and due from banks:		4
Non-interest bearing				1,146,957			1,094,568
Interest bearing				6,702,148			4,408,294

				7,849,105			5,502,862
Receivables from reverse repurchase agreements and security borrowing		5(a)		1,200,218			-
Investments:
Trading securities				176,751			75,611
Investments available-for-sale				6,910,827			5,692,396
Investments available-for-sale pledged as collateral				500,868			223,205

		6		7,411,695			5,915,601

Investments held-to-maturity pledged as collateral		6(o)		259,663			-
Loans, net:		7
Loans, net of unearned income				21,471,644			17,441,941
Allowance for loan losses				(699,022	)		(519,708	)

				20,772,622			16,922,233
Financial assets designated at fair value through profit or loss		8		107,138			90,103
Premiums and other policies receivable		9(a)		183,983			174,367
Accounts receivable from reinsurers and coinsurers		9(b)		167,460			151,080
Property, furniture and equipment, net		10		590,299			472,433
Due from customers on acceptances				100,768			61,695
Intangible assets and goodwill, net		11		759,629			453,422
Other assets		12		1,217,790			894,990

Total assets				40,797,121			30,714,397


Liabilities and equity
Deposits and obligations:	13
Non-interest bearing		6,623,365		5,390,688
Interest bearing		17,417,055		13,313,159
		24,040,420		18,703,847
Payables from repurchase agreements and security lending	5(b)	1,878,341		250,000
Due to banks and correspondents	14	2,686,261		2,060,020
Bankers’ acceptances outstanding		100,768		61,695
Accounts payable to reinsurers and coinsurers	9(b)	68,536		75,366
Financial liabilities designated at fair value through profit or loss	3(f)(v)	96,124		-
Insurance claims reserves and technical reserves	15	1,614,999		1,378,298
Bonds and notes issued	16	4,783,388		3,965,522
Other liabilities	12	1,162,949		757,009
Total liabilities		36,431,786		27,251,757

Equity	17
Capital and reserves attributable to Credicorp’s equity holders:
Capital stock		471,912		471,912
Treasury stock		(74,630	)	(74,877	)
Capital surplus		107,883		111,145
Reserves and put options		2,209,990		1,812,977
Other reserves		637,267		340,168
Retained earnings		815,547		734,474
		4,167,969		3,395,799
Non-controlling interest		197,366		66,841

Total equity		4,365,335		3,462,640

Total liabilities and equity		40,797,121		30,714,397

The accompanying notes are an integral part of these consolidated financial statements.

F-3

Credicorp Ltd. and Subsidiaries

Consolidated statements of income

For the years ended December 31, 2012, 2011 and 2010

	Note		2012			2011			2010
			US$(000)			US$(000)			US$(000)
Interest and dividend income		21		2,310,441			1,837,764			1,471,708
Interest expense		21		(693,646	)		(531,600	)		(414,121	)
Net interest and dividend income				1,616,795			1,306,164			1,057,587
Provision for loan losses, net of recoveries		7(d)		(377,841	)		(214,898	)		(174,682	)
Net interest and dividend income after provision for loan losses				1,238,954			1,091,266			882,905
Other income
Banking services commissions		22		737,421			607,843			524,895
Net gain on foreign exchange transactions				177,472			138,492			104,169
Net gain on sale of securities				101,269			61,927			80,326
Net gain on financial assets designated at fair value through profit or loss		8		18,398			-			64,477
Other		25		86,574			30,374			30,668
Total other income				1,121,134			838,636			804,535
Insurance premiums and claims
Net premiums earned		23		704,205			574,423			480,293
Net claims incurred for life, property, casualty and health insurance contracts		24		(465,460	)		(377,759	)		(315,572	)
Total premiums earned less claims				238,745			196,664			164,721
Other expenses
Salaries and employees benefits				(780,734	)		(595,705	)		(568,004	)
Administrative expenses				(536,727	)		(405,357	)		(341,123	)
Depreciation and amortization		10(a) and 11(a)		(108,510	)		(93,882	)		(82,289	)
Impairment loss on available-for-sale investments		6(c)		(81	)		(1,025	)		(3,250	)
Net loss on financial assets designated at fair value through profit or loss		8		-			(24,640	)		-
Other		25		(188,050	)		(109,540	)		(91,219	)
Total other expenses				(1,614,102	)		(1,230,149	)		(1,085,885	)
Income before translation result and income tax				984,731			896,417			766,276
Translation result				75,079			37,881			24,120
Income tax		18(b)		(251,583	)		(210,508	)		(187,081	)
Net income				808,227			723,790			603,315

F-4

Consolidated statements of income (continued)

	Note	2012		2011		2010
		US$(000)		US$(000)		US$(000)
Attributable to:
Equity holders of Credicorp Ltd.			788,778		709,272		571,302
Non-controlling interest			19,449		14,518		32,013
			808,227		723,790		603,315
Earnings per share for net income attributable to equity holders of Credicorp Ltd. (in U.S. Dollars):
Basic	26		9.93		8.93		7.19
Diluted	26		9.90		8.90		7.17

The accompanying notes are an integral part of these consolidated financial statements.

F-5

Credicorp Ltd. and Subsidiaries

Consolidated statements of comprehensive income

For the years ended December 31, 2012, 2011 and 2010

	Note	2012			2011			2010
		US$(000)			US$(000)			US$(000)

Net income			808,227			723,790			603,315
Other comprehensive income

Net (loss) gain on investments available–for-sale	17(d)		299,318			(53,168	)		225,261
Net movement of cash flow hedges	17(d)		12,103			168			(7,319	)
Exchange differences on translation of foreign operations	17(d)		8,262			-			-
Income tax	17(d)		(21,507	)		31,017			(66,010	)
Other comprehensive income for the year, net of income tax			298,176			(21,983	)		151,932

Total comprehensive income for the year, net of income tax			1,106,403			701,807			755,247

Attributable to:
Equity holders of Credicorp Ltd.			1,085,877			682,719			700,577
Non-controlling interest			20,526			19,088			54,670

			1,106,403			701,807			755,247

The accompanying notes are an integral part of these consolidated financial statements.

F-6

Credicorp Ltd. and Subsidiaries

Consolidated statements of changes in equity

For the years ended December 31, 2012, 2011 and 2010

			Attributable to Credicorp’s equity holders
	Number of shares issued, notes 17(a) and 25			Capital stock		Treasury stock			Capital surplus			Reserves		Put options			Available-for- sale investments reserve			Cash flow hedges reserve			Foreign currency translation reserve		Retained earnings			Total			Non- controlling interest			Total net equity
	(In thousands of units)			US$(000)		US$(000)			US$(000)			US$(000)		US$(000)			US$(000)			US$(000)			US$(000)		US$(000)			US$(000)			US$(000)			US$(000)

Balances as of January 1, 2010		94,382			471,912		(74,242	)		130,341			1,059,344		-			288,977			(51,531	)		-		492,055			2,316,856			186,496			2,503,352
Changes in equity for 2010 -
Net income		-			-		-			-			-		-			-			-			-		571,302			571,302			32,013			603,315
Other comprehensive income		-			-		-			-			-		-			134,770			(5,495	)		-		-			129,275			22,657			151,932
Total comprehensive income		-			-		-			-			-		-			134,770			(5,495	)		-		571,302			700,577			54,670			755,247
Purchase of non-controlling interest, Note 2(d) and 3(b)		-			-		-			-			-					-			-			-		(4,289	)		(4,289	)		(180,682	)		(184,971	)
Transfer of retained earnings to reserves, Note 17(c)		-			-		-			-			331,605		-			-			-			-		(331,605	)		-			-			-
Cash dividends, Note 17(e)		-			-		-			-			-		-			-			-			-		(135,595	)		(135,595	)		-			(135,595	)
Purchase of treasury stock, Note 19(b)		-			-		(848	)		(14,154	)		-		-			-			-			-		-			(15,002	)		-			(15,002	)
Share-based payments transactions, Note 19(b)		-			-		378			3,450			7,374		-			-			-			-		-			11,202			-			11,202
Dividends of subsidiaries and other		-			-		-			-			-		-			-			-			-		-			-			(3,982	)		(3,982	)
Balances as of December 31, 2010		94,382			471,912		(74,712	)		119,637			1,398,323		-			423,747			(57,026	)		-		591,868			2,873,749			56,502			2,930,251
Changes in equity for 2011 -
Net income		-			-		-			-			-		-			-			-			-		709,272			709,272			14,518			723,790
Other comprehensive income		-			-		-			-			-		-			(28,405	)		1,852			-		-			(26,553	)		4,570			(21,983	)
Total comprehensive income		-			-		-			-			-		-			(28,405	)		1,852			-		709,272			682,719			19,088			701,807
Purchase of non-controlling interest		-			-		-			-			-		-			-			-			-		(1,228	)		(1,228	)		(1,171	)		(2,399	)
Transfer of retained earnings to reserves, Note 17(c)		-			-		-			-			407,822		-			-			-			-		(407,822	)		-			-			-
Cash dividends, Note 17(e)		-			-		-			-			-		-			-			-			-		(155,535	)		(155,535	)		-			(155,535	)
Purchase of treasury stock, Note 19(b)		-			-		(827	)		(16,661	)		-		-			-			-			-		-			(17,488	)		-			(17,488	)
Share-based payments transactions, Note 19(b)		-			-		662			8,169			6,832		-			-			-			-		-			15,663			-			15,663
Dividends of subsidiaries and other		-			-		-			-			-		-			-			-			-		(2,081	)		(2,081	)		(7,578	)		(9,659	)
Balances as of December 31, 2011		94,382			471,912		(74,877	)		111,145			1,812,977		-			395,342			(55,174	)		-		734,474			3,395,799			66,841			3,462,640
Changes in equity for 2012 -
Net income		-			-		-			-			-		-			-			-			-		788,778			788,778			19,449			808,227
Other comprehensive income		-			-		-			-			-		-			277,062			11,866			8,171		-			297,099			1,077			298,176
Total comprehensive income		-			-		-			-			-		-			277,062			11,866			8,171		788,778			1,085,877			20,526			1,106,403
Transfer of retained earnings to reserves, Note 17(c)		-			-		-			-			517,395		-			-			-			-		(517,395	)		-			-			-
Cash dividends, Note 17(e)		-			-		-			-			-		-			-			-			-		(183,451	)		(183,451	)		-			(183,451	)
Purchase of treasury stock, Note 19(b)		-			-		(722	)		(17,850	)		-		-			-			-			-		-			(18,572	)		-			(18,572	)
Share-based payments transactions, Note 19(b)		-			-		969			14,588			1,390		-			-			-			-		-			16,947			-			16,947
Acquisitions of subsidiaries, Note 2(a)		-			-		-			-			-		-			-			-			-		-			-			106,282			106,282
Put options over non-controlling interest, Note 2(c)		-			-		-			-			-		(121,772	)		-			-			-		-			(121,772	)		-			(121,772	)
Purchase of non-controlling interest		-			-		-			-			-		-			-			-			-		(5,982	)		(5,982	)		(765	)		(6,747	)
Dividends of subsidiaries and other		-			-		-			-			-		-			-			-			-		(877	)		(877	)		4,482			3,605
Balances as of December 31, 2012		94,382			471,912		(74,630	)		107,883			2,331,762		(121,772	)		672,404			(43,308	)		8,171		815,547			4,167,969			197,366			4,365,335

The accompanying notes are an integral part of these consolidated financial statements.

F-7

Credicorp Ltd. and Subsidiaries

Consolidated statements of cash flows

For the years ended December 2012, 2011 and 2010

	2012			2011			2010
	US$(000)			US$(000)			US$(000)

Cash flows from operating activities
Net income		808,227			723,790			603,315
Add (deduct)
Provision for loan losses		377,841			214,898			174,682
Depreciation and amortization		108,510			93,882			82,289
Provision for sundry risks		12,942			10,661			8,440
Deferred income tax		(16,308	)		(9,057	)		(16,333	)
Net gain on sales of securities		(101,269	)		(61,927	)		(80,326	)
Impairment loss on available-for-sale investments		81			1,025			3,250
Net (gain) loss on financial assets designated at fair value through profit and loss		(18,398	)		24,640			(64,477	)
Gain (loss) on sales of property, furniture and equipment		8,251			112			357
Translation result		(75,079	)		(37,881	)		(24,120	)
Loss for shared-based compensation plan		26,659			7,014			73,527
Purchase (sale) of trading securities, net		155,011			39,957			(43,048	)
Net changes in assets and liabilities
Increase in loans		(5,194,150	)		(3,443,013	)		(2,943,128	)
(Increase) decrease in other assets		(626,077	)		(132,605	)		65,154
Increase in deposits and obligations		7,103,288			1,001,408			4,074,938
(Decrease) increase in due to banks and correspondents		408,751			(174,949	)		1,082,383
Increase in payables from repurchase agreements and security lending		1,098,120			-			-
Increase in receivables from reverse repurchase agreements and security borrowing		(1,200,218	)		-			-
Increase (decrease) in other liabilities		708,978			91,822			263,147

Net cash provided by (used in) operating activities		3,585,160			(1,650,223	)		3,260,050

F-8

Consolidated statements of cash flows (continued)

	2012			2011			2010
	US$(000)			US$(000)			US$(000)

Cash flows from investing activities
Acquisition of subsidiary		(192,950	)		(82,656	)		-
Net (purchase) sale of investments available-for-sale		(1,738,808	)		(2,468,326	)		1,393,345
Purchase of property, furniture and equipment		(162,217	)		(100,819	)		(80,184	)
Purchase of intangible assets		(63,630	)		(55,311	)		(68,344	)
Sales of property, furniture and equipment		22,603			526			265
Purchase of non-controlling interest		(5,982	)		(2,399	)		(184,971	)
Net cash provided by investing activities		(2,140,984	)		(2,708,985	)		1,060,111

Cash flows from financing activities
Issuance of bonds and notes		1,013,847			1,841,332			1,449,323
Redemption and payments of bonds and notes		(553,396	)		(398,406	)		(858,890	)
Increase in payables from repurchase agreements		530,221			-			-
Acquisition of Credicorp’s shares		(18,572	)		(17,488	)		(15,002	)
Cash dividends		(183,451	)		(155,535	)		(135,595	)
Net cash provided by financing activities		788,649			1,269,903			439,836

Net (decrease) increase in cash and cash equivalents		2,232,825			(3,089,305	)		4,759,997

Translation gain (loss) on cash and cash equivalents		113,418			47,752			(52,240	)

Cash and cash equivalents at the beginning of the year		5,502,862			8,544,415			3,836,658

Cash and cash equivalents at the end of the year		7,849,105			5,502,862			8,544,415

Supplementary cash flows information:
Cash paid during the year for -
Interest		669,796			504,278			401,156
Income tax		453,421			254,564			172,481
Cash received during the year for -
Interest		2,259,355			1,816,992			1,462,520

The accompanying notes are an integral part of these consolidated financial statements.

F-9

Credicorp Ltd. and Subsidiaries

Notes to the consolidated financial statements

As of December 31, 2012 and 2011

Operations

Credicorp Ltd. (hereinafter “Credicorp” or “the Group”) is a limited liability company incorporated in Bermuda in 1995 to act as a holding company and to coordinate the policies and administration of its subsidiaries. It is also engaged in investing activities.

Credicorp Ltd., through its banking and non-banking subsidiaries, provides a wide range of financial and health services and products mainly throughout Peru and in certain other countries (see Note 3(b)). Its major subsidiary is Banco de Crédito del Perú (hereinafter “BCP” or the “Bank”), a Peruvian universal bank. Credicorp’s address is Claredon House 2 Church Street Hamilton, Bermuda; likewise, administration offices of its representative in Peru are located in Calle Centenario Nº156, La Molina, Lima, Peru.

Credicorp is listed in Lima and New York stock exchanges.

The consolidated financial statements as of and for the years ended December 31, 2012 and 2011 were approved by Management on April 24, 2013 and April 24, 2012, respectively.

Acquisitions

(a)

Acquisitions in 2012

On April 27, 2012, Credicorp, through its subsidiary BCP, acquired 51 percent of Correval S.A. Sociedad Comisionista de Bolsa (hereinafter “Correval”), an investment banking entity established in Bogota, Colombia, for approximately US$72.3 million in cash consideration.

On July 31, 2012, Credicorp, through its subsidiary BCP, acquired 60.6 percent of IM Trust S.A. Corredores de Bolsa (hereinafter “IM Trust”), an investment banking entity established in Santiago, Chile, for approximately US$131.5 million, of which US$110.9 million were paid in cash consideration at the acquisitions date and US$20.6 million will be paid in cash on August 2013. The related liability is presented in the caption “Other liabilities – Account payable for acquisition of subsidiary” of the consolidated statement of financial position at its fair value, see note 12(a).

Correval and IM Trust purchase agreements include put and call options to acquire the remaining non-controlling interests in such entities, see paragraph (c) below.

With the acquisition of Correval and IM Trust, Credicorp intends to create a regional investment bank that will operate in the Integrated Latin American Market (MILA), which involves the stock exchanges in Peru, Colombia and Chile.

On the other hand, Credicorp in order to increase its integrated insurance and health providing services acquired, through its subsidiary Pacífico EPS S.A., in cash consideration the following Peruvian entities specialized in providing health and wellness programs, primary and specialized ambulatory services, and comprehensive acute care services (hereinafter referred as “Private hospitals”):

F-10

Notes to the consolidated financial statements (continued)

Entity	Acquisition date	Activity	Percentage of participation	Cash consideration
			%	US$(000)

Clínica Belén S.A.	October, 2012	Private hospital	97.48		16,611
Centro Odontológico Americano	April, 2012	Dental center	80		7,660
Prosemedic S.A.	April, 2012	Sale of medical products	80		6,303
Clínica Sánchez Ferrer S.A. and Inversiones Masfe S.R.L	January, 2012	Private hospital	83.17 and 99.99		4,369
Bio Pap Service S.A.C	September, 2012	Laboratory	75		3,684
Total					38,627

All transactions were recorded using the acquisition method, as required by IFRS 3, “Business Combinations”. Assets and liabilities were recorded at their estimated fair values at the acquisition dates, including the identified intangible assets unrecorded in the acquirees’ statements of financial position. Acquisition costs incurred were expensed and included in the caption “Administrative expenses” of the consolidated statements of income.

The Group has elected to measure the non-controlling interests in Correval and IM Trust at fair value; which has been estimated considering the consideration paid and a discount for lack of control.

In the case of private hospitals, the Group has elected to measure the non-controlling interests at proportionate share of identifiable net assets

F-11

Notes to the consolidated financial statements (continued)

At the date of acquisition, book value and estimated fair values of the identified assets and liabilities in the acquired entities were as follows:

	Book Value						Fair value adjustments						Fair value recognized on acquisition
	Correval		IM Trust		Private hospitals		Correval		IM Trust		Private Hospitals		Correval			IM Trust			Private Hospitals			Total fair value recognized on acquisition
	US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)			US$(000)			US$(000)			US$(000)
Assets
Cash		4,550		23,184		1,150		-		-		-		4,550			23,184			1,150			28,884
Accounts receivables, net		11,619		104		4,583		-		-		-		11,619			104			4,583			16,306
Receivables from reverse repurchase agreements and security borrowing		406,875		46,353		-		-		-		-		406,875			46,353			-			453,228
Investments		46,483		18,887		-		-		-		-		46,483			18,887			-			65,370
Property, furniture and equipments, net, note 10(a)		1,778		4,945		12,998		-		-		-		1,778			4,945			12,998			19,721
Intangibles, note 11(a):
Licenses		-		-		-		-		-		1,900		-			-			1,900			1,900
Brand name		-		-		-		15,209		10,017		4,321		15,209			10,017			4,321			29,547
Client relationships		-		-		-		11,928		13,664		-		11,928			13,664			-			25,592
Fund manager contract		-		-		-		27,221		19,394		-		27,221			19,394			-			46,615
Other assets		2,808		52,302		5,108		2,752		4,587		1,165		5,560			56,889			6,273			68,722

Liabilities
Payables from repurchase agreements and security lending		342,605		46,592		-		-		-		-		342,605			46,592			-			389,197
Financial liabilities at fair value through profit or loss		62,492		-		-		-		-		-		62,492			-			-			62,492
Other liabilities		27,754		52,566		12,957		2,752		4,587		-		30,506			57,153			12,957			100,616
Deferred income tax liability		-		771		4		17,938		8,615		3,337		17,938			9,386			3,341			30,665

Total identifiable net assets at fair value		41,262		45,846		10,878		36,420		34,460		4,049		77,682			80,306			14,927			172,915

Non-controlling interest														(44,808	)		(59,176	)		(2,298	)		(106,282	)

Goodwill arising on acquisition, Note 11(b)														39,444			108,894			25,998			174,336

Total purchase consideration														72,318			130,024			38,627			240,969

F-12

Notes to the consolidated financial statements (continued)

The fair values of identifiable intangible assets as of the acquisition dates were determined using the income approach, based on the present value of the profits attributable to the asset or costs avoided as a result of owning the asset. Under this approach, the fair value of the asset is determined by the discounted future cash flows and the discount rate applied is to the rate of return that considers the relative risk of achieving the cash flows and the time value of money.

The following methods based on the income approach were used by Credicorp’s Management to estimate the fair values of identifiable intangible assets as of the acquisition dates:

For license valuation the "With-and-without" method was applied, which estimates the fair value of the intangible asset comparing the cash flows generated by the entity including the intangible asset against the cash flows generated by the company excluding said intangible asset.

For brand name valuation the "Relief from Royalty" method was applied, which estimates the cash flows saved from owning the brand or relief from royalties that would be paid to the brand owner.

For client relationship and fund manager contract valuation the "Multi-Period-Excess-Earnings-Method" was applied, which estimates residual cash flow derived from an intangible asset after deducting portions of the cash flow that can be attributed to supporting assets that contributed to the generation of the cash flow.

In Management’s opinion these methods are generally accepted for measurement of identifiable intangible assets in business combinations process.

Considering the dates of acquisition, the initial accounting for the business combinations are incomplete as of the end of the reporting period. Therefore; certain amounts reported are provisional amounts. Credicorp during the measurement periods, if necessary, will retrospectively adjust the provisional amounts recognized, including net assets or liabilities, at the acquisition dates to reflect new information obtained about facts and circumstances that existed as of the acquisition dates.

The measurement period ends as soon as Credicorp receives the information sought about facts and circumstances as of the acquisition dates or learns that more information is not obtainable. However, the measurement period will not exceed one year from the acquisition dates.

From the date of acquisition, Correval, IM Trust and the Private Hospitals have contributed US$67.2, US$20.1 and US$18.3 million, respectively of revenue and US$4.9, US$5.4 and US$0.1 million to the net income before income tax. If the combination had taken place at the beginning of the year, revenue from continuing operations would have been US$95.4, US$43.5 and US$30.2 million, respectively and the net income before income tax for the Group would have been US$5.3, US$12.4 and US$1.0 million, respectively.

F-13

Notes to the consolidated financial statements (continued)

(b)

Acquisition in 2011

The following Peruvian private hospitals were acquired:

Entity

Acquisition date

Activity

Percentage of
participation

Cash
consideration

US$(000)

Doctor + S.A.C.

July, 2011

Health services

100.00

1,790

La Esperanza del Perú S.A.

August, 2011

Private hospital

70.00

17,606

Análisis Clínicos ML S.R.L.

August, 2011

Laboratory

100.00

5,000

Galeno I.E.M. S.A.C.

August, 2011

Private hospital

100.00

4,000

Oncocare S.R.L.

November, 2011

Private hospital

80.00

4,040

Sistemas de Administración Hospitalaria S.A.C.

December, 2011

Private hospital

97.32

37,000

Servicios de Salud San Isidro

December, 2011

Private hospital

100.00

13,220

Total

82,656

The acquisitions of these entities were recorded using the acquisition method, as required by IFRS 3, “Business Combinations”. The non-controlling interests in the acquirees were measured at proportionate share of identifiable net assets. Book value and the total fair value of the identified assets and liabilities were as follows:

	Book Value		Fair value adjustments			Fair value recognized on acquisition
	US$(000)		US$(000)			US$(000)
Assets
Accounts receivables, net		8,761		-			8,761
Property, furniture and equipment, net, Note 10(a)		25,356		21,514			46,870
Intangible
Licenses, Note 11(a)		-		12,271			12,271
Brand name, Note 11(a)		-		10,587			10,587
Client relationships, Note 11(a)		-		3,116			3,116
Other assets		3,212		-			3,212

Liabilities
Loans		7,177		-			7,177
Accounts payable		24,447		(290	)		24,157
Deferred income tax liability		1,334		14,333			15,667

Total identifiable net assets at fair value		4,371		33,445			37,816

Non controlling interest measured at proportionate of identifiable net assets		-		(700	)		(700	)

Goodwill arising on acquisition, Note 11(b)		-		45,540			45,540

Total purchase consideration		4,371		78,285			82,656

F-14

Notes to the consolidated financial statements (continued)

As of December 31, 2011, the initial accounting for the business combinations was incomplete; nevertheless, at the end of the measurement period there were no material adjustments to the reported amounts.

(c)

Put and call options over non-controlling interest –

Correval and IM Trust purchase agreements include put and call options to acquire the remaining non-controlling interests in such entities.

As of December 31, 2012, financial liabilities related to put options granted to non-controlling interest of Correval and IM Trust amounted to US$59.2 million and US$62.6 million, respectively, and are included in the caption “Other liabilities” of the consolidated statements of financial position, see Note 12.

The formula used to calculate the amount of this commitment is fixed contractually, is based on the average net income over the last eight quarters and the average net equity over the last four quarters before the exercise date of each option, to which some multiples are then applied.

In the case of Correval, the put options can be exercised by non-controlling interest for a period of three months after the second year and fourth year of acquisition.

In the case of IM Trust, the put options can be exercised by non-controlling interest for a period of five days after the 48^th, 51^st and 54^th month of acquisition.

Furthermore, Credicorp can exercise its call options for a period of three months in the case of Correval and between the 20^th and 24^th business day of January 2017 in the case of IM Trust, if non-controlling interests do not exercise their put options after the fourth year of acquisition in the case of Correval and after the 54^th month of acquisition in the case of IM Trust. The call options are valued using the same formula as the put options.

Significant accounting policies

Significant accounting principles used in the preparation of Credicorp’s consolidated financial statements are set out below and were consistently applied to all of the years presented.

(a)

Basis of presentation and use of estimates -

The consolidated financial statements were prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). The consolidated financial statements were prepared on a historical cost basis, except for trading securities, available-for-sale investments, derivative financial instruments, share-based payment, financial assets and liabilities designated at fair value through profit or loss, which were measured at fair value. The consolidated financial statements are presented in United States Dollars (US$), and all values are rounded to the nearest US$ thousands, except when otherwise indicated.

F-15

Notes to the consolidated financial statements (continued)

The preparation of the consolidated financial statements in conformity with IFRS requires Management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of significant events in notes to the consolidated financial statements.

Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the current circumstances. Actual results could differ from those estimates. The most significant estimates comprised in the accompanying consolidated financial statements are related to the computation of the allowance for loan losses, the measurement of financial instruments, the measurement of the share-based payment transactions, the technical reserves for claims and premiums, the provision for seized assets, the estimated useful life of intangible assets, property, furniture and equipment, goodwill impairment, the valuation of derivative financial instruments, liabilities for put options held by non-controlling interests in subsidiaries and the deferred tax assets and liabilities. The accounting criteria used for each of these items is described in this note.

The accounting policies adopted are consistent with those of the previous year, except that the Group has adopted those new IFRS and revised IAS mandatory for years beginning on or after January 1, 2012. Due to the Group’s operations or accounting policies, the adoption of the new and revised accounting standards did not have any significant impact on its consolidated financial position or performance:

IAS 12 “Income Taxes (amendment) – Recovery of Underlying Assets”. It includes the determination of deferred tax on investment property measured at fair value and introduced the requirement that deferred tax on non-depreciable assets that are measured using the revaluation model in IAS 16 always be measured on a sale basis of the asset.

IFRS 7 “Financial Instruments: Disclosures (amendment)“. It required additional disclosure about financial assets that have been transferred but not derecognized.

(b)

Consolidation -

Subsidiaries -

Subsidiaries are all entities (including special purpose entities) in which the Group has the power to govern their financial and operating policies. This situation is generally evidenced by controlling more than one half of the voting rights.

Subsidiaries are fully consolidated from the date on which effective control is transferred to the Group and are no longer consolidated from the date control ceases. The consolidated financial statements include the assets, liabilities, income and expenses of Credicorp and its Subsidiaries. Transactions between the Group’s entities, including balances, gains or losses are eliminated.

F-16

Notes to the consolidated financial statements (continued)

Business combinations made after January 1, 2010 are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interest in the acquiree. For each business combination, the non-controlling interest in the acquiree is measured at fair value. Acquisition costs incurred are expensed and included in the caption “Administrative expenses” of the consolidated statement of income.

Any contingent consideration to be transferred by the acquirer is recognized at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability will be recognized either in profit or loss or as a change to other comprehensive income. If the contingent consideration is classified as equity, it should not be remeasured until it is finally settled within equity.

Starting January 1, 2010, acquisition of non-controlling interest is recorded directly in equity; the difference between the amount paid and the share of the net assets acquired is a debit or credit to equity. Therefore, no additional goodwill is recorded upon purchase of non-controlling interest nor a gain or loss is recognized upon disposal of a non-controlling interest.

Assets in custody or managed by the Group, such as investment funds and private pension funds (AFP funds), are not part of the Group’s consolidated financial statements, Note 3(z).

Net equity attributable to the non-controlling interest is presented separately in the consolidated statements of financial position. Income attributable to the non-controlling interest is presented separately in the consolidated statements of income and in the consolidated statements of comprehensive income.

Business combinations and acquisitions of non-controlling interest prior to January 1, 2010, were accounted for using the “purchase method” and the “parent entity extension method”, respectively.

Associates -

An associate is an entity over which the Group has significant influence but not control. Investments in these entities represent shareholding between 20 and 50 percent of the voting rights; and are recognized initially at cost and then are accounted for by the “equity method”. The Group does not have significant investments in associates; therefore, they are included in the caption “Other assets” in the consolidated statements of financial position; gains resulting from the use of the equity method of accounting are included in the caption “Other income” of the consolidated statements of income.

F-17

Notes to the consolidated financial statements (continued)

As of December 31, 2012 and 2011, the following entities comprise the Group (individual financial statements data is presented in accordance with IFRS and before eliminations for consolidation purposes, except for the elimination of Credicorp’s treasury stock and its related dividends):

Entity	Percentage of participation (direct and indirect)				Assets				Liabilities				Equity						Net income (loss)
	2012		2011		2012		2011		2012		2011		2012			2011			2012			2011
	%		%		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)			US$(000)			US$(000)			US$(000)

Banco de Crédito del Perú and Subsidiaries (BCP) (i)		97.66		97.65		35,792,896		26,976,489		32,943,962		24,633,735		2,848,934			2,342,754			664,559			577,711
Credicorp Investments Ltd. and Subsidiaries (ii)		100.00		-		381,318		-		208,746		-		172,572			-			6,645			-
BCP Capital S.A.A. and Subsidiaries (iii)		97.66		-		93,326		-		36,154		-		57,172			-			3,132			-
Atlantic Security Holding Corporation and Subsidiaries (iv)		100.00		100.00		1,833,252		1,586,083		1,586,126		1,363,444		247,126			222,639			48,398			42,454
El Pacífico Peruano-Suiza Compañía de Seguros y Reaseguros and Subsidiaries (PPS) (v)		97.77		97.68		2,677,551		2,148,960		1,981,304		1,654,490		696,247			494,470			67,079			67,257
Prima AFP S.A. (vi)		99.99		99.99		310,821		270,239		141,713		92,311		169,108			177,928			38,186			32,393
Grupo Crédito S.A. (vii)		99.99		99.99		146,494		101,029		74,794		76,121		71,700			24,908			4,183			6,988
CCR Inc. (viii)		99.99		99.99		1,027,863		760,772		1,070,757		820,580		(42,894	)		(59,808	)		2,702			(1,243	)
Credicorp Securities Inc. (ix)		99.99		99.99		3,902		2,825		215		179		3,687			2,646			1,046			1,088
BCP Emisiones Latam 1 S.A. (x)		100.00		100.00		130,557		118,451		130,063		117,861		494			590			(96	)		74
Tarjeta Naranja Perú S.A.C. (xi)		76.00		76.00		17,479		8,277		2,699		803		14,780			7,474			(8,336	)		(2,169	)

(i)

BCP is a universal bank incorporated in Peru in 1889. Its activities are supervised by the Superintendence of Banking, Insurance and AFP (the Peruvian banking, insurance and AFP authority, hereafter “the SBS” for its Spanish acronym). During 2012 and 2011, the Group acquired 0.009 percent and 0.0429 percent of BCP shares owned by non-controlling interest, respectively. As explained in more detail in Note 2(a), during 2012 BCP acquired Correval and IM Trust; latter that year BCP transferred its shares in IM Trust to Credicorp Investment Ltd., and will do the same with its Correval shares once the required authorizations are received from the Colombian authorities. The transfer had no effect in the accompanying consolidated financial statements; no gains or losses arose from it. BCP and Subsidiaries hold as of December 31, 2012 and 2011, 95.92 percent of the capital stock of Banco de Crédito de Bolivia (BCB), a universal bank operating in Bolivia (Credicorp holds directly an additional 4.08 percent). As of December 31, 2012, BCB’s assets, liabilities, equity and net income amounted to US$1,407.4, US$1,277.0, US$130.4 and US$21.1 million, respectively (US$1,195.5, US$1,083.9, US$111.6 and US$22.3 million, respectively, as of December 31, 2011). As of December 31, 2012, Correval’s assets, liabilities, equity and net income amounted to US$1,166.7, US$1,120.0, US$46.7 and US$4.7 million, respectively.

(ii)

Credicorp Investments Ltd. was established in Bermuda in 2012 to hold the Group’s investment banking activities in Chile, Colombia and Perú. As of December 31, 2012, its consolidated financial statements only include IM Trust operations.

(iii)

BCP Capital S.A.A. is incorporated in Peru and was established in April 2012 through the split of an equity block of BCP; said split resulted in a reduction of BCP’s assets, liabilities and net equity in an amount of US$71.2, US$18.0 and US$53.2 million, respectively. Assets transferred included Credibolsa S.A.B., Creditítulos S.T., Credifondos S.A.F.M. and BCP’s investment banking activities. The equity block split had no effect in the accompanying consolidated financial statements; no gains or losses arose from it.

(iv)

Atlantic Security Holding Corporation (ASHC) is incorporated in the Cayman Islands; its main activity is to invest in equity instruments. Its most significant subsidiary is Atlantic Security Bank (ASB), which is incorporated in the Cayman Islands and operates through branches and offices in Grand Cayman and the Republic of Panama; its main activity is private and institutional banking services and trustee administration.

(v)

PPS is incorporated in Peru; it provides property, casualty, life, health and personal insurance; its activities are supervised by the SBS. During 2012 and 2011, the Group acquired 0.093 and 0.079 percent of PPS shares owned by non-controlling interest, respectively. Through its subsidiary Pacífico S.A. Entidad Prestadora de Salud (EPS) it also provides a wide range of health services in Peru; as explained in more detail in Notes 2(a) and 2(b), during 2012 and 2011, EPS acquired various Peruvian entities specialized in providing health care services.

(vi)

Prima AFP S.A. is a private pension fund administrator incorporated in Peru; its activities are supervised by the SBS.

(vii)

Grupo Crédito S.A. is incorporated in Peru, its main activity is to invest in listed and not listed securities in Peru; it mainly holds part of the Group’s shares in BCP, Prima AFP S.A., PPS and BCP Emisiones Latam 1 S.A.. Grupo Crédito S.A. balances are presented net of its investments in said entities.

(viii)

CCR Inc., is a special purposes entity incorporated in The Bahamas in 2001, its main activity is to manage certain loans granted to BCP by foreign financial entities, see Note 16(a). These loans are collateralized by transactions performed by BCP. As of December 31, 2012 and 2011, the negative equity is generated by unrealized losses from cash flow hedges derivatives.

(ix)

Credicorp Securities Inc. is incorporated in the United States of America and provides securities brokerage services, mainly to retail customers in Latin America.

(x)

BCP Emisiones Latam 1 S.A. is a special purposes entity incorporated in Chile in 2009 through which the Group issued corporate bonds, see Note 16(a).

(xi)

Tarjeta Naranja Perú S.A.C. was incorporated in Peru in 2011. Its main activity is to promote the use of a credit card named “Tarjeta Naranja”.

F-18

Notes to the consolidated financial statements (continued)

(c)

Foreign currency translation -

Functional and presentation currency -

The Group has determined that its functional and presentation currency is the United States Dollar (U.S. Dollar or US$), because it reflects the economic substance of the underlying events and circumstances relevant to most of the Group entities, insofar as its main operations and/or transactions in the different countries where the Group operates, such as: loans granted, financing obtained, sale of insurance premiums, interest income, interest expense and an important percentage of purchases; are established and settled in U.S. Dollars.

Assets and liabilities, at the closing rate at the date of each statement of financial position presented.

Income and expense, at the average exchange rate for each month of the year.

All resulting translation differences were recognized in the caption “Exchange differences on translation of foreign operations” of the consolidated statement of other comprehensive income.

Foreign currency balances or transactions -

(d)

Income and expense recognition from banking activities -

Interest income and expense for all interest-bearing financial instruments, including those related to financial instruments classified as held for trading or designated at fair value through profit or loss, are recognized within “Interest and dividend income” and “Interest expense” in the consolidated statements of income using the effective interest rate method, which is the rate that discounts estimated future cash payments or receipts through the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or financial liability.

F-19

Notes to the consolidated financial statements (continued)

Interest income is suspended when collection of loans become doubtful, when loans are overdue more than 90 days or when the borrower or securities issuer defaults, if earlier than 90 days; such income is excluded from interest income until collected. Uncollected income on such loans is provisioned. When Management determines that the debtor’s financial condition has improved, the recording of interest thereon is reestablished on an accrual basis.

Fees and commission income are recognized on an accrual basis. Contingent credit fees for loans that are likely to be drawn down and other credit related fees are deferred (together with any direct incremental costs) and recognized as an adjustment to the effective interest rate on the loan.

All other revenues and expenses are recognized on an accrual basis.

(e)

Insurance activities -

Accounting policies for insurance activities

For the adoption of IFRS 4 “Insurance contracts”, Management concluded that USGAAP used as of December 31, 2004 was the relevant framework to be used, as permitted by IFRS 4.

Product classification:

Insurance contracts are those contracts when the Group (the insurer) has accepted significant insurance risk from another party (the policyholder) by agreeing to compensate the policyholder if a specified uncertain future event (the insured event) adversely affects the policyholder. This definition also includes reinsurance contracts that the Group holds. As a general guideline, the Group determines whether it has significant insurance risk by comparing benefits paid with benefits payable if the insured event did not occur. Insurance contracts can also transfer financial risk.

Reinsurance:

The Group cedes insurance risk in the normal course of the operations for all of its businesses. Reinsurance assets represent balances due from reinsurance companies. Reinsurance ceded is placed on both a proportional and non–proportional basis.

F-20

Notes to the consolidated financial statements (continued)

Ceded reinsurance arrangements do not relieve the Group from its obligations to a policyholder.

Reinsurance liabilities represent balances due to reinsurance companies. Amounts payable are estimated in a manner consistent with the related reinsurance contract.

Premiums and claims are presented on a gross basis for both ceded and assumed reinsurance, see notes 23 and 24. Reinsurance assets or liabilities are derecognized when the contractual rights are extinguished or expire or when the contract is transferred to another party. Reinsurance contracts that do not transfer significant insurance risk are not material to the insurance segment.

Insurance receivables

Insurance receivables are recognized when due and measured on initial recognition at the fair value of the consideration received or receivable. Subsequent to initial recognition, insurance receivables are measured at amortized cost. As of December 31, 2012 and 2011 the carrying value of the insurance receivables is similar to its fair value due to its short term. The carrying value of insurance receivables is reviewed for impairment whenever events or circumstances indicate that the carrying amount may not be recoverable, with the impairment loss recorded in the consolidated statements of income. Insurance receivables are derecognized when the derecognition criteria for financial assets, as described in Note 3(g), has been met.

“Unit- Linked” assets

“Unit- Linked” assets represent financial instruments held for purposes of funding a group of life insurance contracts and for which investment gains and losses accrue directly to the policyholders who bear the investment risk. Each account has specific objectives, and the financial assets are carried at fair value. The balance of each account is legally segregated and is not subject to claims that arise out of any other business of the Group. The liabilities for these accounts are equal to the account assets, net of the commission that the Group charges for the management of these contracts.

Deferred acquisition costs (DAC)

Those direct costs that vary with and are related to traditional life and unit linked insurance contracts are deferred; all other acquisition costs are recognized as an expense when incurred. The acquisition costs comprise primarily agent commissions related to the underwriting and policy issuance costs.

Subsequent to initial recognition, these costs are amortized on a straight line basis based on the averaged expiration period of the related insurance contracts. Amortization is recorded in the consolidated statements of income.

F-21

Notes to the consolidated financial statements (continued)

DAC for general insurance and health products are amortized over the period in which the related revenues are earned. The reinsurers’ share of deferred acquisition costs is amortized in the same manner as the underlying asset amortization is recorded in the income statement.

DAC are derecognized when the related contracts are either settled or disposed of.

An impairment review is performed at each reporting date or more frequently when an indication of impairment arises. When the recoverable amounts is less than the carrying value an impairment loss is recognized in the consolidated statements of income. DAC is also considered in the liability adequacy test for each reporting period.

Reinsurance commissions

Commissions receivable on outwards reinsurance contracts are deferred and amortized on a straight line basis over the term of the expected coverage of the insurance contracts.

Insurance contract liabilities

(i)

Life insurance contracts liabilities

Life insurance liabilities are recognized when contracts are entered into.

The technical reserves for retirement, disability and survival annuities are determined as the sum of the discounted value of expected future pensions to be paid during a defined or non defined period, computed upon the basis of mortality tables and discount interest rates. Individual life (including unit linked policies) technical reserves are determined as the sum of the discounted value of expected future benefits, administration expenses, policyholder options and guarantees and investment income, less the discounted value of the expected theoretical premiums that would be required to meet the future cash outflows. Furthermore, the technical reserves for life insurance contracts comprise the provision for unearned premiums and unexpired risks.

The technical reserves for retirement, disability and survival annuities and individual life insurance contracts are based on assumptions established at the time the contract was issued. Current assumptions are used to update the interest accrued for unit linked insurance contracts.

F-22

Notes to the consolidated financial statements (continued)

Life insurance claims reserves include reserves for reported claims and an estimate of the incurred but non-reported claims to the Group (hereinafter “IBNR”). IBNR reserves as of December 31, 2012 and 2011, were determined on the basis of the Chain Ladder methodology (a generally accepted actuarial method), whereby the weighted average of past claim development is projected into the future; the projection is based on the ratios of cumulative past claims. Adjustments to the liabilities at each reporting date are recorded in the consolidated statements of income. The liability is derecognized when the contract expires, is discharged or is cancelled.

At each reporting date, an assessment is made of whether the recognized life insurance liabilities are adequate, net of related DAC, by using an existing liability adequacy test as laid out under IFRS 4. As of December 31, 2012 and 2011, Management determined that the liabilities were adequate and; therefore, it has not recorded any additional life insurance liability.

(ii)

Non-life insurance contract liabilities (which comprises general and healthcare insurance)

Non-life insurance contract liabilities are recognized when contracts are entered into.

Claims reserves are based on the estimated ultimate cost of all claims incurred but not settled at the date of the consolidated statements of financial position, whether reported or not, together with related claims handling costs and reduction for the expected value of salvage and other recoveries. Delays can be experienced in the notification and settlement of certain types of claims, therefore the ultimate cost of these cannot be known with certainty at the date of the consolidated statements of financial position. IBNR are estimated and included in the provision (liabilities). IBNR reserves as of December 31, 2012 and 2011, were determined on the basis of the Bornhuetter - Ferguson methodology – BF (a generally accepted actuarial method), which considers a statistical analysis of the recorded loss history, the use of projection methods and, when appropriate, qualitative factors that reflect present conditions or trends that could affect historical data. No provision for equalization or catastrophe reserves is recognized. The liabilities are derecognized when the contract expires, is discharged or is cancelled.

Technical reserves for non-life insurance contracts comprise the provision for unearned premiums which represents premiums received for risks that have not yet expired. Generally the reserve is released over the term of the contract and is recognized as premium income.

At each reporting date the Group reviews its unexpired risk and an existing liability adequacy test as laid out under IFRS 4 to determine whether there is any overall excess of expected claims over unearned premiums. If these estimates show that the carrying amount of the unearned premiums is inadequate, the deficiency is recognized in the consolidated income statement by setting up a provision for liability adequacy. As of December 31, 2012 and 2011, Management determined that the liabilities were adequate; therefore, it has not recorded any additional non life insurance liabilities.

F-23

Notes to the consolidated financial statements (continued)

Income recognition

(i)

Gross premiums

Life insurance contracts

Gross recurring premiums on life contracts are recognized as revenue when due from policyholder. For single premium business, revenue is recognized on the date on which the policy is effective.

Non-life insurance contracts

Gross non-life insurance direct and assumed premiums comprise the total premiums written and are recognized at the contract inception as a receivable. At the same time, it is recorded a reserve for unearned premiums which represents premiums for risks that have not yet expired. Unearned premiums are recognized into income over the contract period which is also the coverage and risk period.

(ii)

Fees and commission income

Unit linked insurance contract policyholders are charged for policy administration services, investment management services, surrenders and other contract fees. These fees are recognized as revenue in the consolidated statements of income when due.

(iii)

Income from medical services and sale of medicines (those not categorized as healthcare insurance)

Income from medical services is recognized in the date the service is provided. -

Income from the sale of medicines is recognized when the significant risks and rewards of ownership of the medicines have passed to the buyer, usually on delivery of the medicines.

Income from medical services and sale of medicines is recorded in the caption “Other income” of the consolidated statements of income.

Benefits, claims and expenses recognition

(i)

Gross benefits and claims

Gross benefits and claims for life insurance contracts include the cost of all claims arising during the year including internal and external claims handling costs that are directly related to the processing and settlement of claims. Death, survival and disability claims are recorded on the basis of notifications received. Annuities payments are recorded when due.

General and health insurance claims includes all claims occurring during the year, whether reported or not, internal and external claims handling costs that are directly related to the processing and settlement of claims, a reduction for the value of salvage and other recoveries, and any adjustments to claims outstanding from previous years.

F-24

Notes to the consolidated financial statements (continued)

(ii)

Reinsurance premiums

Comprise the total premiums payable for the whole coverage provided by contracts entered in the period and are recognized on the date on which the policy incepts. Unearned reinsurance premiums are deferred over the term of the underlying insurance contract.

(iii)

Reinsurance claims

Reinsurance claims are recognized when the related gross insurance claim is recognized according to the terms of the relevant contract.

(iv)

Cost of medical services and sale of medicines (those not categorized as healthcare insurance)

Cost of medical services is recorded when incurred.

Cost of sale of medicines, which is the cost of acquisition of the medicines, is recorded when medicines are delivered, simultaneously with the recognition of income for the corresponding sale.

Cost of medical services and sale of medicines are recorded in the caption “Other expense” of the consolidated statements of income.

(f)

Financial Instruments: Initial recognition and subsequent measurement -

(i)

Financial assets and liabilities at fair value through profit or loss

Financial assets and liabilities at fair value through profit or loss includes financial assets held for trading and financial assets designated at fair value through profit or loss, which designation is upon initial recognition and in an instrument by instrument basis. Derivatives financial instrument are also categorized as held for trading unless they are designated as hedging instruments.

F-25

Notes to the consolidated financial statements (continued)

Management may only designate an instrument at fair value through profit or loss upon initial recognition when the following criteria are met:

the financial instrument contains one or more embedded derivatives, which significantly modify the cash flows that otherwise would be required by the contract.

Changes in fair value of designated financial assets through profit or loss upon initial recognition are recorded in the consolidated statements of income caption “Net gain on financial assets designated at fair value through profit and loss”. Interest earned is accrued in the consolidated statements of income in the caption “Interest and dividend income”, according to the terms of the contract. Dividend income is recorded when the collection right has been established.

(ii)

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.

After initial measurement, loans and receivables are subsequently measured at amortized cost using the effective interest rate method, less any allowance for impairment. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees and costs that are an integral part of the effective interest rate. The effective interest rate amortization is recognized in the consolidated statements of income in the caption “Interest and dividend income”. Losses from impairment are recognized in the consolidated statements of income in the caption “Provision for loan losses, net of recoveries”.

An allowance for loan losses is established if there is objective evidence that the Group will not be able to collect all amounts due according to the original contractual terms of the loans. The allowance for loan losses is established based in an internal risk classification and considering any guarantees and collaterals received, Note 3(i) and 30.1.

F-26

Notes to the consolidated financial statements (continued)

(iii)

Available-for-sale financial investments

After initial recognition, available-for-sale financial investments are measured at fair value with unrealized gains or losses recognized as other comprehensive income in the available-for-sale reserve, net of its corresponding deferred tax and non-controlling interest, until the investment is derecognized, at which time the cumulative gain or loss is recognized in the consolidated statements of income in the caption “Net gain on sale of securities”, or determined to be impaired, at which time the impaired amount is recognized in the consolidated statements of income in the caption “Impairment loss on available–for–sale investments” and removed from the available-for-sale reserve.

Interest and dividends earned are recognized in the consolidated statements of income in the caption “Interest and dividend income”. Interest earned is reported as interest income using the effective interest rate method and dividends earned are recognized when collection rights are established.

Estimated fair values are based primarily on quoted prices or, if quoted market prices are not available, discounted expected cash flows using market rates commensurate with the credit quality and maturity of the investment.

The Group evaluates whether the ability and intention to sell its available-for-sale financial assets in the near term is still appropriate. When, in rare circumstances, the Group is unable to trade these financial assets due to inactive markets and Management’s intention to do so significantly changes in the foreseeable future, the Group may elect to reclassify these financial assets. Reclassification to loans and receivables is permitted when the financial assets meet the definition of loans and receivables and the Group has the intent and ability to hold these assets for the foreseeable future or until maturity.

Reclassification to the held-to-maturity category is permitted only when the Group has the ability and intention to hold the financial asset accordingly.

As of December, 31, 2012 and 2011, the Group did not reclassify any of its available-for- sale financial investments.

(iv)

Held-to-maturity financial investments

As of December, 31, 2012, the Group has not recognized any impairment loss on held-to-maturity investments.

F-27

Notes to the consolidated financial statements (continued)

As of December, 31, 2012, the Group did not sell or reclassify any of its held-to-maturity investments.

(v)

Repurchase and reverse repurchase agreements and security lending and borrowing transactions

(vi)

Put and call options over non-controlling interest

Put and call options do not give the Group present access to the benefits associated with the ownership interest.

F-28

Notes to the consolidated financial statements (continued)

(vii)

Other financial liabilities

After initial measurement other financial liabilities are subsequently measured at amortized cost using the effective interest rate method. Amortized cost includes any issuance discount or premium and directly attributable transaction costs that are an integral part of the effective interest rate.

(g)

Derecognition of financial assets and financial liabilities -

Financial assets

F-29

Notes to the consolidated financial statements (continued)

Financial liabilities

A financial liability is derecognized when the obligation under the liability is discharged, cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability; difference between the carrying amount of the original financial liability and the consideration paid is recognized in the consolidated statements of income

(h)

Offsetting financial instruments -

Financial assets and liabilities are offset and the net amount is reported in the consolidated statements of financial position when there is a legally enforceable right to offset the recognized amounts and Management has the intention to settle on a net basis, or realize the assets and settle the liability simultaneously.

(i)

Impairment of financial assets -

The Group assesses at each date of the consolidated statements of financial position whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that have occurred after the initial recognition of the asset (an incurred “loss event”) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the borrower or a group of borrowers is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will go bankrupt or other legal financial reorganization process and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults. Criteria used for each category of financial assets are as follows:

(i)

Financial assets carried at amortized cost

F-30

Notes to the consolidated financial statements (continued)

For collective evaluation impairment, financial assets are grouped considering the Group’s internal credit grading system, which considers credit risk characteristics; for example: asset type, industry, geographical location, collateral type and past-due status and other relevant factors.

(ii)

Available-for-sale financial investments

For available-for-sale financial investments, the Group assesses at each date of the consolidated statements of financial position whether there is objective evidence that an investment or a group of investments is impaired.

In the case of equity investments, objective evidence would include a significant or prolonged decline in its fair value below cost. “Significant” is to be evaluated against the original cost of the investment and “prolonged” against the period in which the fair value has been below its original cost. Where there is evidence of impairment, the cumulative loss (measured as the difference between the acquisition cost and the current fair value, less any previously recognized impairment loss) is removed from investments available-for-sale reserve of the consolidated statements of changes in equity and recognized in the consolidated statements of income. Impairment losses on equity investments are not reversed through the consolidated statements of income; increases in their fair value after impairment are recognized directly in the consolidated statements of comprehensive income.

In the case of debt instruments, impairment is assessed based on the same criteria as financial assets carried at amortized cost. However, the amount recorded for impairment is the cumulative loss measured as the difference between the amortized cost and the current fair value, less any impairment loss on that investment previously recognized in the consolidated statements of income. Future interest income is based on the reduced carrying amount and is accrued using the interest rate used to discount the future cash flows for the purpose of measuring the impairment loss. Interest income is recorded as part of “Interest and dividend income” of the consolidated statements of income. If in a subsequent year, the fair value of a debt instrument increases and the increase can be objectively related to an event occurring after the impairment loss was recognized in the consolidated statements of income, the impairment loss is reversed through the consolidated statements of income.

F-31

Notes to the consolidated financial statements (continued)

(iii)

Renegotiated loans

(j)

Leases -

The determination of whether an arrangement is, or contains, a lease is based in the substance of the arrangement at inception date: whether fulfillment of the arrangement is dependent on the use of a specific asset or assets on the arrangement conveys a right to use the asset even if that right is not explicitly specified in an arrangement.

Operating leases -

Leases in which a significant portion of the risks and benefits of the asset are hold by the lessor are classified as operating leases. Under this concept the Group has mainly leases used as banking branches.

When an operating lease is terminated before the lease period has expired, any penalty payment to the lessor is recognized as an expense in the period in which termination takes place.

F-32

Notes to the consolidated financial statements (continued)

Finance leases -

Finance leases are recognized as granted loans at the present value of the future lease collections. The difference between the gross receivable amount and the present value of the loan is recognized as unearned interest. Lease income is recognized over the term of the lease agreement using the effective interest rate method, which reflects a constant periodic rate of return.

(k)

Property, furniture and equipment -

Property, furniture and equipment are stated at historical acquisition cost less accumulated depreciation and impairment losses, if applicable. Historical acquisition costs include expenditures that are directly attributable to the acquired property, furniture or equipment. Maintenance and repair costs are charged to the consolidated statements of income; significant renewals and improvements are capitalized when it is probable that future economic benefits, in excess of the originally assessed standard of performance, will flow from the use of the acquired property, furniture or equipment.

Land is not depreciated. Depreciation is calculated using the straight-line method over the estimated useful lives, which are as follows:

		Years

Buildings, hospitals and other construction		33
Installations		10
Furniture and fixtures		10
Vehicles and equipment		5
Computer hardware		4

An item of property, furniture and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the consolidated statements of income.

Asset’s residual value, useful life and the selected depreciation method are periodically reviewed to ensure that they are consistent with current economic benefits and life expectations.

(l)

Seized assets -

Seized assets are recorded at the lower of cost or estimated market value, which is obtained from valuations made by independent appraisals. Reductions in book values are recorded in the consolidated statements of income.

(m)

Intangible assets -

Comprise internal developed and acquired software licenses used by the Group. Acquired software licenses are measured on initial recognition at cost. These intangible assets are amortized using the straight-line method over their estimated useful life (between 3 and 5 years).

F-33

Notes to the consolidated financial statements (continued)

Intangible assets identified as a consequence of the acquisition of subsidiaries and other intangible assets, are recognized on the consolidated statements of financial position at their fair values determined on the acquisition date and are amortized using the straight line method over their estimated useful life; as follows:

		Years

Client relationship – Prima AFP		20
Client relationship – Edyficar		10
Client relationship – Private hospitals		2, 3 and 14
Client relationship – Correval		8 and 10
Client relationship – IM Trust		22
Brand name – Edyficar		20
Brand name – Private hospitals		30
Brand name – Correval		25
Brand name – IM Trust		25
Fund manager contract - Correval		28
Fund manager contract – IM Trust		11
Licenses – Private hospitals		35
Rights of use - BCP		5
Other		5

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the consolidated statements of income when the asset is derecognized.

(n)

Goodwill -

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is tested for impairment annually and when circumstances indicate that the carrying value may be impaired. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash generating units (CGU) that are expected to benefit from the combination.

Impairment is determined for goodwill by assessing the recoverable amount of each CGU (or group of CGUs) to which the goodwill relates. Where the recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognized. Impairment losses relating to goodwill cannot be reversed in future periods.

F-34

Notes to the consolidated financial statements (continued)

(o)

Impairment of non-financial assets -

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or CGU fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets.

When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded subsidiaries or other available fair value indicators.

For non-financial assets, excluding goodwill, an assessment is made at each reporting date whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognized impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognized.

The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in the consolidated statements of income.

(p)

Due from customers on acceptances -

(q)

Financial guarantees -

In the ordinary course of business, the Group issues financial guarantees, such as letters of credit, guarantees and acceptances. Financial guarantees are initially recognized at fair value (which is equivalent at that moment to the fee received) as “Other liabilities” in the consolidated statements of financial position. Subsequent to initial recognition, the Group’s liability under each guarantee is measured at the higher of the amount initially recognized less, when appropriate, cumulative amortization recognized in the consolidated statements of income, and the best estimate of expenditure required to settle any financial obligation arising as a result of the financial guarantee.

F-35

Notes to the consolidated financial statements (continued)

Any increase in the liability relating to a financial guarantee is included in the consolidated statements of income. The fee received is recognized in the consolidated statement of income in the caption “Banking services commissions” on a straight line basis over the life of the granted financial guarantee.

(r)

Defined contribution pension plan -

The Group only operates a defined contribution pension plan. The contribution payable to a defined contribution pension plan is in proportion to the services rendered to the Group by the employees and it is recorded as an expense in the caption “Salaries and employees benefits” of the consolidated statements of income. Unpaid contributions are recorded as a liability.

(s)

Provisions -

Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow or resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The expense relating to any provision is presented in the consolidated statements of income net of any reimbursement. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the specific risks of the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.

(t)

Contingencies -

(u)

Income tax -

Income tax is computed based on individual financial statements of Credicorp and each one of its Subsidiaries.

Deferred income tax reflect the effects of temporary differences between the carrying amounts of assets and liabilities for accounting purposes and the amounts determined for tax purposes. Deferred assets and liabilities are measured using the tax rates expected to be applied to taxable income in the years in which temporary differences are expected to be recovered or eliminated. The measurement of deferred assets and deferred liabilities reflects the tax consequences that arise from the manner in which Credicorp and its Subsidiaries expect, at the date of the consolidated statements of financial position, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are recognized regardless of when the timing differences are likely to reverse. Deferred tax assets are recognized when it is more likely than not, that future taxable profit will be available against which the temporary difference can be utilized. At the date of the consolidated statements of financial position, Credicorp and its Subsidiaries assess unrecognized deferred assets and the carrying amount of recognized deferred assets.

Credicorp and its Subsidiaries determine the deferred income tax considering the tax rate applicable to its undistributed earnings; any additional tax on dividends distribution is recorded on the date a liability is recognized.

(v)

Earnings per share -

Basic earnings per share is calculated by dividing the net profit for the year attributable to Credicorp’s equity holders by the weighted average number of ordinary shares outstanding during the year, excluding the average number of ordinary shares purchased and held as treasury stock.

F-36

Notes to the consolidated financial statements (continued)

Diluted earnings per share is calculated by dividing the net profit attributable to Credicorp’s equity holders by the weighted average number of ordinary shares outstanding during the year, excluding the average number of ordinary shares purchased and held as treasury stock, plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.

(w)

Share-based payment transactions -

(i)

Cash-settled transactions

As explained in Note 19(a), until 2008 the Group granted a supplementary remuneration plan to certain employees who had at least one year serving Credicorp or any of its Subsidiaries in the form of stock appreciation rights (SARs) over a certain number of Credicorp shares. SARs were granted at a fixed price and are exercisable at that price, allowing the employee to obtain a gain in cash (“cash-settled transaction”) arising from the difference between the fixed exercise price and the market price at the date the SARs are executed.

The SARs fair value is expensed over the period up to the vesting date, with recognition of a corresponding liability. The liability is remeasured to fair value at each reporting date up to and including the settlement date, with changes in fair value recognized in the consolidated statements of income caption “Salaries and employee benefits”. When the price or terms of the SARs are modified, any additional expense is recorded in the consolidated statements of income.

(ii)

Equity-settled transactions

As explained in Note 19(b), since 2009 a new supplementary remuneration plan was implemented to replace the SARs plan (see (i) above).

The cost of this equity-settled plan is recognized, together with a corresponding increase in equity, over the period in which the service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (‘the vesting date”). The cumulative expense recognized for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of equity instruments that will ultimately vest. The expense is recorded in the consolidated statements of income caption “Salaries and employees benefits”.

When the terms of an equity-settled award are modified, the minimum expense recognized is the expense as if the terms had not been modified. An additional expense is recognized for any modification which increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee as measured at the date of modification.

The dilutive effect of outstanding stock awards is reflected as a share dilution in the computation of diluted earnings per share, see Note 3(v).

(x)

Derivative financial instruments and hedge accounting -

Trading -

Part of transactions with derivatives , while providing effective economic hedges under Group’s risk management positions, do not qualify for hedge accounting under the specific rules of IAS 39 and are, therefore, treated as trading derivatives.

F-37

Notes to the consolidated financial statements (continued)

Hedge -

The Group uses derivative instruments to manage exposures to interest rate and foreign currency. In order to manage particular risks, the Group applies hedge accounting for transactions which meet the specified criteria.

At inception of the hedge relationship, the Group formally documents the relationship between the hedged item and the hedging instrument, including the nature of the risk, the objective and strategy for undertaking the hedge and the method that will be used to assess the effectiveness of the hedging relationship.

Also, at the inception of the hedge relationship, a formal assessment is undertaken to ensure the hedging instrument is expected to be highly effective in offsetting the designated risk in the hedged item. Hedges are formally assessed at each reporting date. A hedge is regarded as highly effective if a change in fair value or cash flows attributable to the hedged risk during the period for which the hedge is designated is expected to offset in a range between 80 percent and 125 percent.

F-38

Notes to the consolidated financial statements (continued)

The accounting treatment is established according to the nature of the hedged item and compliance with the hedge criteria, as follows:

(i)

Cash flow hedges

The effective portion of the gain or loss on the hedging instrument is recognized directly in other comprehensive income in the cash flow hedge reserve, while any ineffective portion is recognized immediately in the consolidated statements of income.

Amounts recognized as other comprehensive income are transferred to the consolidated statements of income when the hedged transaction affects profit or loss, such as when the hedged financial income or financial expense is recognized or when a forecast sale occurs.

If the forecast transaction or firm commitment is no longer expected to occur, the cumulative gain or loss previously recognized in the cash flow hedge reserve are transferred to the consolidated statements of income. If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover, or if its designation as a hedge is revoked, any cumulative gain or loss previously recognized in the cash flow hedge reserve remains in the cash flow hedge reserve until the forecast transaction or firm commitment affects profit or loss.

(ii)

Fair value hedges

The change in the fair value of an interest rate hedging derivative is recognized in the consolidated statements of income in interest expense. The change in the fair value of the hedged item attributable to the risk hedged is recorded as a part of the carrying value of the hedged item and is also recognized in the consolidated statements of income.

For fair value hedges relating to consolidated items carried at amortized cost, the adjustment to carrying value is amortized through the consolidated statements of income over the remaining maturity term. Effective interest rate amortization may begin as soon as an adjustment exists and shall begin no later than when the hedged item ceases to be adjusted for changes in its fair value attributable to the risk being hedged.

If the hedged item is derecognized, the unamortized fair value is recognized immediately in the consolidated statements of income.

If the hedging instrument expires or is sold, terminated or exercised, or where the hedge no longer meets the criteria for hedge accounting, the hedge relationship is terminated. For hedged items recorded at amortized cost, the difference between the carrying value of the hedged item on termination and the face value is amortized over the remaining term of the original hedge using the effective interest rate. If the hedged item is derecognized, the unamortized fair value adjustment is recognized immediately in the consolidated statements of income.

F-39

Notes to the consolidated financial statements (continued)

(iii)

Embedded derivates

The Group has certificates indexed to the price of Credicorp Ltd. shares that will be settled in cash, and investments indexed to certain life insurance contracts liabilities, denominated “Unit Linked”. These instruments have been classified at inception by the Group as “Financial instruments at fair value though profit or loss”, see Note 3(f)(i), and Note 8.

(y)

Segment reporting -

The Group reports financial and descriptive information about its reportable segments. Reportable segments are operating segments or aggregations of operating segments that meet specified criteria. Operating segments are a component of an entity for which separate financial information is available that is evaluated regularly by the entity’s Chief Operating Decision Maker (“CODM”) in making decisions about how to allocate resources and in assessing performance. Generally, financial information is required to be reported on the same basis as it is used internally for evaluating operating segment performance and deciding how to allocate resources to segments, Note 27.

(z)

Fiduciary activities, management of funds and pension funds -

Commissions generated for these activities are included in the caption “Other income” of the consolidated statements of income.

(aa)

Cash and cash equivalents -

For the purpose of the consolidated statements of cash flows, cash and cash equivalents comprise balances of cash and non-restricted balances with central banks, overnight deposits, time deposits and amounts due from banks with original maturities of three months or less, excluding restricted balances.

(ab)

Reclassifications -

When it is necessary, comparative figures have been reclassified to conform to the current year presentation. Certain transactions were reclassified in the current year presentation; in Management’s opinion those reclassifications are not significant to the consolidated financial statement as of December 31, 2012 and 2011.

F-40

Notes to the consolidated financial statements (continued)

(ac)

Issued International Financial Reporting Standards but not yet effective -

The Group decided not to early adopt the following standards and interpretations that were issued but not effective as of December 31, 2012:

IAS 1 “Presentation of Items of Other Comprehensive Income — Amendments to IAS 1”. Effective for annual periods beginning on or after January 1, 2013. It changes the grouping of items presented in Other Comprehensive Income (OCI). Items that could be reclassified (or recycled) to profit or loss at a future point in time are presented separately from items that will never be reclassified.

IAS 19 “Employee benefits (amendment)”. Effective for annual periods beginning on or after January 1, 2013. The amendments to IAS 19 remove the option to defer the recognition of actuarial gains and losses, i.e., the corridor mechanism. All changes in the value of defined benefit plans will be recognised in profit or loss and other comprehensive income.

IAS 28 “Investments in Associates and Joint Ventures (revised)”. Effective for annual periods beginning on or after January 1, 2013. As a consequence of the new IFRS 11 Joint Arrangements, and IFRS 12 Disclosure of Interests in Other Entities, IAS 28 Investments in Associates, has been renamed IAS 28 Investments in Associates and Joint Ventures, and describes the application of the equity method to investments in joint ventures in addition to associates.

IAS 32 “Financial instruments: Presentation – Offsetting financial assets and financial liabilities (amendment)”. Effective for annual periods beginning on or after January 1, 2014. The amendment clarifies the meaning of currently has a legally enforceable right to set-off and criteria for non-simultaneous settlement mechanisms of clearing houses to qualify for offsetting. Furthermore, this amendment clarifies that in order to offset two or more financial instruments, entities must currently have a right of set-off that cannot be contingent on a future event, and must be legally enforceable in all of the following circumstances: (i) the normal course of business; (ii) an event of default; and (iii) an event of insolvency or bankruptcy of the entity or any of the counterparties.

IFRS 7 “Financial Instruments: Disclosures - Offsetting financial assets and financial liabilities (amendment)”. Effective for annual periods beginning on or after January 1, 2013. The amendment will require entities to disclose gross amounts subject to rights of set-off and the related net credit exposure. This information will help understand the extent to which an entity has set off in its statement of financial position and the effects of rights of set-off on the entity’s rights and obligations.

IFRS 9 “Financial Instruments: Classification and Measurement”. Effective for annual periods beginning on or after January 1, 2015. IFRS 9 as issued reflects the first phase of the IASBs work on the replacement of IAS 39 and applies to classification and measurement of financial assets as defined in IAS 39. The adoption of the first phase of IFRS 9 will have an effect on the classification and measurement of the Group’s financial assets, but will potentially have no impact on classification and measurements of financial liabilities. In subsequent phases, the IASB will address hedge accounting and impairment of financial assets.

IFRS 10 “Consolidated Financial Statements”. Effective for annual periods beginning on or after January 1, 2013. IFRS 10 replaces the portion of IAS 27 “Consolidated and Separate Financial Statements” that addresses the accounting for consolidated financial statements. It also includes the issues raised in SIC-12 “Consolidation — Special Purpose Entities”. IFRS 10 establishes a single control model that applies to all entities including special purpose entities. The changes introduced by IFRS 10 will require Management to exercise significant judgment to determine which entities are controlled, and therefore, are required to be consolidated by a parent, compared with the requirements that were in IAS 27.

F-41

Notes to the consolidated financial statements (continued)

IFRS 11 “Joint Arrangements”. Effective for annual periods beginning on or after January 1, 2013. IFRS 11 replaces IAS 31 Interests in Joint Ventures and SIC-13 Jointly-controlled Entities — Non-monetary Contributions by Venturers. IFRS 11 removes the option to account for jointly controlled entities (JCEs) using proportionate consolidation. Instead, JCEs that meet the definition of a joint venture must be accounted for using the equity method.

IFRS 12 “Disclosure of Interests in Other Entities”. Effective for annual periods beginning on or after January 1, 2013. IFRS 12 includes all of the disclosures that were previously in IAS 27 related to consolidated financial statements, as well as all of the disclosures that were previously included in IAS 31 and IAS 28. These disclosures relate to an entity’s interests in subsidiaries, joint arrangements, associates and structured entities. A number of new disclosures are also required.

IFRS 13 “Fair Value Measurement”. Effective for annual periods beginning on or after January 1, 2013. IFRS 13 establishes a single source of guidance under IFRS for all fair value measurements. IFRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under IFRS when fair value is required or permitted.

Annual Improvements to IFRS (issued in May 2012) The IASB issued Improvements to IFRSs, an omnibus of amendments and improves to its IFRS standards. The amendments have not been adopted as they become effective for annual periods on or after January 1, 2013.

The Group is in process of assessing the impact, if any, that the application of these standards may have on its consolidated financial statements.

Cash and due from banks

This item is made up as follows:

	2012		2011
	US$(000)		US$(000)

Cash and clearing		953,354		926,008
Deposits in Peruvian Central Bank – BCRP		6,205,611		3,784,514
Deposits in banks		686,115		790,187
		7,845,080		5,500,709

Accrued interest		4,025		2,153

Total		7,849,105		5,502,862

F-42

Notes to the consolidated financial statements (continued)

As of December 31, 2012 and 2011, cash and due from banks includes approximately US$6,396.4 and US$4,617.9 million, respectively, mainly from BCP, which represent the legal reserve that Peruvian banks must maintain for its obligations with the public, and are within the limits established by prevailing Peruvian legislation at those dates.

The legal reserve funds maintained with BCRP are not interest-bearing, except for the part of the mandatory reserve in U.S. Dollars and in Nuevos Soles that exceeds the minimum legal reserve. As of December 31, 2012, the excess in U.S. Dollars amounts approximately to US$3,257.4 million and bear interest at an annual average interest rate of 0.10 percent (US$2,257.3 million and annual average interest rate of 0.18, as of December 31, 2011), while the excess in Nuevos Soles amounts approximately to S/.2,953.7 million, equivalent to US$1,158.3 million, and bear interest in Nuevos Soles at an annual average interest rate of 1.75 percent (S/.1,007.2 million, equivalent to US$373.6 million, and annual average interest rate of 2.45 percent, as of December 31, 2011).

Deposits in local and foreign banks correspond principally to balances in Nuevos Soles and U.S. Dollars. All deposits are unrestricted and earn interest at market rates. As of December 31, 2012 and 2011, Credicorp does not have significant deposits in any specific financial institution.

F-43

Notes to the consolidated financial statements (continued)

Repurchase and reverse repurchase agreements and security lending and borrowing

(a)

Credicorp, through its subsidiaries, Correval and IM Trust, provides financing to its customers through “Receivables from reverse repurchase agreements and security borrowing”, in which a financial instrument serves as collateral. As of December 31, 2012, the details of said transactions were the following:

	Average interest rate		Up to 3 days		From 3 to 30 days		More than 30 days		Total		Fair value of underlying assets
	(%)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)

Instruments issued by the Colombian Government		4.58		506,354		566,381		-		1,072,735		1,074,712
Instruments issued by the Chilean Government		0.53		50,653		-		-		50,653		50,708
Other instruments		5.24		14,892		61,420		518		76,830		77,049
				571,899		627,801		518		1,200,218		1,202,469

(b)

Credicorp, through its subsidiaries, obtains financing through “Payables from repurchase agreements and security lending” by selling financial instruments and committing to repurchase them at future dates, plus interest at a prefixed rate. As of December 31, 2012 and 2011, the details of said transactions were the following:

	Average interest rate		Up to 3 days		From 3 to 30 days		More than 30 days		Total		Fair value of underlying assets
	(%)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)

Instruments issued by the Colombian Government		4.28		417,980		565,083		-		983,063		991,808
Instruments issued by the Chilean Government		0.51		46,872		-		-		46,872		46,920
Other instruments		3.09		30,925		36,498		762		68,185		71,133
Debt Instruments (*)				-		-		780,221		780,221		832,114
				495,777		601,581		780,983		1,878,341		1,941,975

(*)

Includes repurchase agreements in which the Bank has pledged as collateral cash, see Note 12(e), available-for-sale investments and held-to-maturity investments, see note 6(p). As of December 31, 2012, the balance includes mainly US$225.0 million payable to Commerzbank, US$200.0 million payable to Nomura International Plc., US$117.6 million payable to Deutsche Bank A.G. and US$100.4 million payable to Barclays PLC (US$250 million payable to Barclays as of December 31, 2011). These repurchase agreements have maturity between February 2013 and August 2020. (June 2012, as of December 31, 2011) and their interest rates are between 0.66 percent and 4.3 percent (Libor 6M+0.72 percent, as of December 31, 2011). Likewise, as of December 31,2012, the Group has hedged through Interest Rate Swaps (IRS) repurchase agreements at variable rate for a notional amount of US$200 million, see Note 12(b); as a result, these repurchase agreements were economically converted to fix rate.

F-44

Notes to the consolidated financial statements (continued)

Investments available-for-sale and held-to-maturity

(a)

Investments available for sale are made up as follows:

	2012									2011
			Unrealized gross amount									Unrealized gross amount
	Amortized Cost		Gains		Losses (b)			Estimated fair value		Amortized cost		Gains		Losses (b)			Estimated fair value
	US$(000)		US$(000)		US$(000)			US$(000)		US$(000)		US$(000)		US$(000)			US$(000)

BCRP certificates of deposit (e)		2,964,473		1,024		(184	)		2,965,313		2,061,020		65		(1,305	)		2,059,780
Corporate, leasing and subordinated bonds (f)		1,907,688		156,680		(2,155	)		2,062,213		1,670,805		74,962		(16,439	)		1,729,328
Governments’ treasury bonds (g)		613,107		128,026		(356	)		740,777		768,304		79,480		(923	)		846,861
Assets back securities (h)		271,692		33,008		(187	)		304,513		245,556		12,466		(733	)		257,289
Central Bank of Bolivia certificates of deposit (i)		159,312		785		-			160,097		110,727		226		(8	)		110,945
Participations in mutual funds		141,250		6,812		(157	)		147,905		62,333		6,466		(91	)		68,708
Restricted mutual funds (j)		62,640		37,108		-			99,748		61,642		26,677		-			88,319
Participation in RAL’s funds (k)		78,751		-		-			78,751		49,263		-		-			49,263
Bonds of multilateral development banks		70,935		6,737		-			77,672		69,923		4,223		(78	)		74,068
Negotiable certificates of deposit		35,358		5,269		-			40,627		39,966		1,158		(5	)		41,119
Hedge funds		22,283		3,307		(540	)		25,050		27,133		1,462		(738	)		27,857
Collateralized mortgage obligations (CMO) (l)		17,984		2,867		-			20,851		23,265		1,163		(77	)		24,351
US Government – Agencies and Sponsored Enterprises		11,969		1,418		-			13,387		17,161		1,469		(2	)		18,628
		6,357,442		383,041		(3,579	)		6,736,904		5,207,098		209,817		(20,399	)		5,396,516


Listed securities (m)		151,245		462,111		(2,762	)		610,594		116,193		361,525		(2,281	)		475,437
Not-listed securities		12,247		1,436		(215	)		13,468		4,065		126		(212	)		3,979
		163,492		463,547		(2,977	)		624,062		120,258		361,651		(2,493	)		479,416

		6,520,934		846,588		(6,556	)		7,360,966		5,327,356		571,468		(22,892	)		5,875,932

Accrued interest									50,729									39,669

Total									7,411,695									5,915,601

(b)

Credicorp’s Management has determined that the unrealized losses as of December 31, 2012 and 2011 are of temporary nature. Management intents and has the ability to hold each investment for a period of time sufficient to allow for an anticipated recovery in fair value, until the earlier of its anticipated recovery or maturity.

(c)

For the year ended December 31, 2012, as a result of the impairment assessment of its investments available-for-sale, the Group recorded an impairment amounting to US$0.1 million (US$1.0 million as of December 31, 2011), which is presented in the caption “Impairment loss on available-for-sale investments” of the consolidated statements of income.

The movement of available-for-sale investments reserves, net of deferred income tax and non-controlling interest is presented in Note 17(c).

F-45

Notes to the consolidated financial statements (continued)

(d)

As of December 31, 2012 and 2011, the maturities and the annual effective interest rates of the investments available for sale are as follows:

Investments available-for-sale	Maturity		Annual effective interest rates
	2012	2011	2012												2011
			S/.				US$				Other currencies				S/.				US$				Other currencies
			Min		Max		Min		Max		Min		Max		Min		Max		Min		Max		Min		Max
			%		%		%		%		%		%		%		%		%		%		%		%

BCRP certificates of deposit	Jan-2013 / May-2014	Jan-2012 / Dec-2012		3.76		4.09		-		-		-		-		4.10		4.26		-		-		-		-
Corporate, leasing and subordinated bonds	Jan-2013 / Nov-2067	Jan-2012 / Nov-2067		2.84		8.07		0.05		21.10		1.49		5.78		2.19		9.48		0.20		47.10		3.29		8.80
Governments’ treasury bonds	Jan-2013 / Nov-2050	Jan-2012 / Nov-2050		2.67		3.80		0.07		5.82		0.57		0.57		1.34		7.42		0.02		9.95		-		-
Central Bank of Bolivia certificates of deposit	Jan-2013 / Mar-2014	Jan-2012 / Nov-2013		-		-		-		-		0.00		2.80		-		-		-		-		0.00		2.80
Assets back securities	Mar-2013 / May-2032	Jan-2012 / May-2033		0.61		4.40		1.90		5.42		6.94		8.44		4.25		6.97		2.56		9.34		6.94		8.44
Bonds of multilateral development banks	May-2013 / Jun-2022	Feb-2012 / Aug-2018		0.32		0.34		0.20		3.28		-		-		5.66		6.74		0.65		7.77		-		-
Negotiable certificates of deposit	Mar-2013 / Mar-2019	Jan-2012 / Mar-2029		0.02		5.40		3.08		3.08		1.10		1.20		4.40		5.13		0.97		3.00		1.50		1.50
Collateralized mortgage obligations (CMO)	Oct-2013 / May-2036	Nov-2016 / Mar-2067		-		-		0.95		8.95		-		-		-		-		4.71		11.19		-		-
US Government – Agencies and sponsored enterprises	Jul-2014 / Oct-2041	Jul-2012 / Apr-2057		-		-		0.31		3.41		-		-		-		-		0.61		5.93		-		-

(e)

BCRP certificates of deposit are issued at discount through public auctions, negotiated in the Peruvian secondary market and settled in Nuevos Soles.

(f)

The unrealized losses on these investments as of December 31, 2012, corresponded to 85 items of which the highest individual unrealized loss amounts to approximately US$0.3 million (65 items and US$1.8 million, respectively as of December 31, 2011).

(g)

As of December 31, 2012, includes mainly debt instruments issued by the Peruvian Government in Nuevos Soles for an amount of US$371.9 million and in U.S. Dollars for an amount of US$176.9 million, the Colombian Government in U.S. Dollars for US$79.9 million and the U.S. Government in U.S Dollars for US$39.1 million (US$423.8 million and US$210.8 million, US$143.9 million and US$48.7 million issued by the Peruvian, Colombian, and the U.S Governments, respectively, as of December 31, 2011).

As of December 31, 2012, the Group maintains cross currency swaps (“CCS”) designated as cash flow hedges of certain fix bonds denominated in Nuevos Soles and Euros issued by the Peruvian Government for a notional amount of US$124.8 million, see note 12(b); through CCS theses bonds were economically converted to U.S. Dollars at fix rate.

(h)

Assets back securities are secured by a specified pool of underlying assets and are mainly traded in the Peruvian over-the-counter market. Pools of underlying assets are made up of receivables with predictable future payments.

As of December 31, 2012 and 2011, the balance includes US$124.4 million and US$122.2 million, respectively of financial instruments issued by Hunt Oil Company (the originator). The underlying assets are future receivables from the sale of hydrocarbons extracted in Peru. The bonds have semiannual payments up to 2025.

(i)

As of December 31, 2012 and 2011, certificates of deposits issued by the Central Bank of Bolivia are mainly denominated in Bolivianos.

F-46

Notes to the consolidated financial statements (continued)

(j)

Restricted mutual funds comprise participation quotas in the private pension funds managed by the Group as required by Peruvian regulations. They have disposal restrictions and their profitability is the same as the one obtained by the private pension funds managed.

(k)

These funds amount approximately to US$35.6 million in Bolivianos and US$43.2 million in U.S. Dollars, respectively, (US$27.4 million and US$21.8 million, respectively, as of December 31, 2011) and comprise investments made by the Group in the Central Bank of Bolivia as collateral for deposits received from the public. These funds have restrictions for their use and are required to all banks established in Bolivia.

(l)

Collaterized mortgage obligations correspond to senior tranches.

(m)

As of December 31, 2012, the unrealized gains on listed securities arises mainly from shares in Banco de Crédito e Inversiones de Chile (BCI Chile), Inversiones Centenario S.A.A., Alicorp S.A.A. and Edelnor S.A.A., which amounted to US$208.4, US$66.1, US$98.3 and US$54.3 million, respectively (US$158.3, US$53.3, US$65.9 and US$41.9 million, respectively, as of December 31, 2011).

(n)

As of December 31, 2012 and 2011, the Group maintains IRS, which were designated as fair value hedges of fix rate bonds denominated in U.S. Dollars issued by the Peruvian Government, corporate and international financial entities, for a notional amount of US$53.5 million (US$54.0 million as of December 31, 2011), see Note 12(b); through the IRS these bonds were economically converted to variable interest rate.

(o)

Investments held-to-maturity

This item is made up as follows:

	2012
	US$(000)

Peruvian sovereign bonds		106,955
Bonds of foreign governments		104,879
Peruvian treasury bonds		43,288
		255,122

Accrued interest		4,541

Total		259,663

As of December 31, 2012, held-to-maturity investments mature between March 2019 and August 2020 and their fair value amounts to US$262.5. These investments bear interest at an annual effective interest rate of 3.80 percent for bonds issued in Nuevos Soles and between 1.55 and 1.96 percent for bonds issued in U.S. Dollars.

F-47

Notes to the consolidated financial statements (continued)

(p)

As of December 31, 2012, the Group entered into Repo transactions over corporate, multilateral development banks and governments’ bonds accounted for as investments available-for-sale for an estimated fair value of US$501.0 million (US$223.2 million as of December 31, 2011); the related liability is presented in the caption “Payables from repurchase agreements and security lending” of the consolidated statements of financial position, see Notes 5(b) and 12(e).

Also, as of December 31, 2012, the Group entered into Repo transactions over investments held-to-maturity for an estimated fair value US$262.5, as described in (o) above. The related liability is presented in the caption “Payables from repurchase agreements and security lending” of the consolidated statements of financial position, see Notes 5(b).

(q)

Investments available-for-sale and investments held-to-maturity classified by contractual maturity is as follows:

	2012				2011
	Available-for-sale		Held-to-maturity		Available-for-sale
	US$(000)		US$(000)		US$(000)

Up to 3 months		1,166,594		-		964,035
From 3 months to 1 year		1,716,156		-		1,486,204
From 1 to 3 years		1,009,905		-		556,542
From 3 to 5 years		457,729		-		436,876
Over 5 years		2,035,066		255,122		1,718,712
Without maturity		975,516		-		713,563

Total		7,360,966		255,122		5,875,932

F-48

Notes to the consolidated financial statements (continued)

Loans, net

(a)

This item is made up as follows:

	2012			2011
	US$(000)			US$(000)
Direct loans -
Loans		14,593,949			11,986,080
Leasing receivables		3,487,351			2,786,129
Credit card receivables		2,311,329			1,807,717
Discounted notes		557,328			552,233
Factoring receivables		326,497			254,516
Advances and overdrafts		55,881			25,130
Refinanced and restructured loans		142,207			96,031
Past due and under legal collection loans		372,431			259,050
		21,846,973			17,766,886
Add (less) -
Accrued interest		159,716			121,563
Unearned interest		(535,045	)		(446,508	)
Allowance for loan losses (d)(*)		(699,022	)		(519,708	)

Total direct loans, net		20,772,622			16,922,233

Indirect loans, Note 20(a)		4,520,107			3,728,000

(b)

Loans by class are as follows:

	2012		2011
	US$(000)		US$(000)

Commercial loans		12,549,088		10,631,341
Residential mortgage loans		3,485,487		2,725,145
Consumer loans		2,965,277		2,234,871
Micro-business loans		2,847,121		2,175,529

Total		21,846,973		17,766,886

(c)

Interest rates on loans are set considering the rates prevailing in the markets where the Group’s subsidiaries operate.

F-49

Notes to the consolidated financial statements (continued)

(d)

The movement in the allowance for loan losses (direct and indirect loans) is shown below:

	2012
	Commercial loans			Residential mortgage loans			Micro-business loans			Consumer loans			Total
	US$(000)			US$(000)			US$(000)			US$(000)			US$(000)

Beginning balances		224,796			65,429			132,626			135,335			558,186
Provision		78,589			11,103			115,171			172,978			377,841
Recoveries of written-off loans		15,626			3,196			9,546			17,933			46,301
Loan portfolio written-off		(31,111	)		(559	)		(79,657	)		(134,462	)		(245,789	)
Translation result		1,777			1,268			291			4,633			7,969

Ending balances (*)		289,677			80,437			177,977			196,417			744,508

	2011
	Commercial loans			Residential mortgage loans			Micro-business loans			Consumer loans			Total
	US$(000)			US$(000)			US$(000)			US$(000)			US$(000)

Beginning balances		188,786			52,324			100,778			106,709			448,597
Provision		56,009			10,626			49,535			98,728			214,898
Recoveries of written-off loans		12,380			2,794			10,949			15,319			41,442
Loan portfolio written-off		(34,443	)		(1,265	)		(30,462	)		(89,239	)		(155,409	)
Translation result		2,064			950			1,826			3,818			8,658

Ending balances (*)		224,796			65,429			132,626			135,335			558,186

	2010
	Commercial loans			Residential mortgage loans			Micro-business loans			Consumer loans			Total
	US$(000)			US$(000)			US$(000)			US$(000)			US$(000)

Beginning balances		158,947			41,471			84,849			90,782			376,049
Provision		56,803			8,398			30,322			79,159			174,682
Recoveries of written-off loans		12,953			2,517			6,914			12,221			34,605
Loan portfolio written-off		(41,158	)		(853	)		(21,970	)		(78,755	)		(142,736	)
Translation result		1,241			791			663			3,302			5,997

Ending balances (*)		188,786			52,324			100,778			106,709			448,597

(*)

The movement in the allowance for loan losses includes the allowance for direct and indirect loans for approximately US$699.0 million and US$45.5 million, respectively, as of December 31, 2012 (approximately US$519.7 million and US$38.5 million; and US$415.7 million and US$32.9 million, as of December 31, 2011 and 2010, respectively). The allowance for indirect loan losses is included in the caption “Other liabilities” of the consolidated statements of financial position, Note 12(a).

In Management’s opinion, the allowance for loan losses recorded as of December 31, 2012, 2011 and 2010 has been established in accordance with IAS 39 and is sufficient to cover incurred losses on the loan portfolio.

F-50

Notes to the consolidated financial statements (continued)

(e)

Part of the loan portfolio is collateralized with guarantees received from clients, which mainly consist of mortgages, trust assignments, financial instruments and industrial and mercantile pledges.

(f)

Interest on past due for more than 90 days and under legal collection loans are recognized when collected. Interest income that would have been recorded for these loans in accordance with their original contract terms and have not been recognize as income amounts to approximately US$72.2 million, US$49.8 million and US$38.5 million as of December 31, 2012, 2011 and 2010, respectively.

(g)

As of December 31,2012, the Group has hedged through CCS a group of assets (loans) at fixed rate and denominated in Nuevos Soles for a notional amount of US$3.8 million, see Note 12(b); as a result, these loans were economically converted to US$ Dollars at fixed exchange rate.

(h)

As of December 31, 2012 and 2011, the direct gross loan portfolio classified by maturity, based on the remaining period to repayment date is as follows:

	2012		2011
	US$(000)		US$(000)

Outstanding loans -
Up to 1 year		9,375,949		7,855,825
From 1 to 3 years		4,761,917		3,753,857
From 3 to 5 years		2,778,334		2,219,746
Over 5 years		4,558,342		3,678,408

Past due loans -
Up to 4 months		148,709		91,653
Over 4 months		100,338		95,769
Under legal collection		123,384		71,628

Total		21,846,973		17,766,886

Financial assets designated at fair value through profit or loss

(a)

This item is made up as follows:

	2012		2011
	US$(000)		US$(000)

Unit Linked financial assets (b)		74,323		49,816
Indexed certificates (c)		32,815		40,287

		107,138		90,103

(b)

The Group issues unit linked life insurance contracts whereby the policyholder bears the investment risk on the assets held in the unit linked funds as the policy benefits are directly linked to the value of the assets in the fund. The Group’s exposure to market risk is limited to the extent that income arising from asset management charges is based on the value of assets in the fund. For the year 2012, the gain resulting from the difference between cost and estimated fair value for these financial assets amounted to approximately US$6.8 million (loss of US$6.1 million for the year 2011) and is presented in the caption “Net gain on financial assets designated at fair value through profit or loss” of the consolidated statements of income (“Net loss on financial assets designated at fair value through profit or loss” for the year 2011). The offsetting of this effect is included in gross premiums which are part of the caption “Net premiums earned” of the consolidated statements of income, see Note 23.

F-51

Notes to the consolidated financial statements (continued)

(c)

In connection with the liabilities that result from Credicorp’s stock appreciation rights (SARs), (Note 19(a)), BCP signed several contracts with Citigroup Global Markets Holdings Inc., Citigroup Capital Limited, Citigroup Capital Market Inc. (collectively hereinafter “Citigroup”) and Credit Agricole Corporate and Investment Bank (hereinafter “Calyon”). These contracts consist of the purchase of certificates indexed to the performance of Credicorp Ltd. (BAP) shares, in the form of “warrants” issued by Citigroup and Calyon, with the same number of Credicorp Ltd. shares. These certificates are cash settled and their final settlement price is equivalent to the daily volume-weighted average of the per share price for BAP shares on each business day, on which Citigroup or any of its affiliates or Calyon effects any transactions with respect to BAP shares in order to unwind its position established and maintained to hedge its price and market risk with respect to the issued certificates.

The certificates have a maturity of 5 years but can be settled anytime before their maturity, partially or totally. As of December 31, 2012 and 2011, the Group had 214,914 and 355,914 certificates at a total cost of US$13.5 million and US$22.4 million, respectively (US$62.9 per certificate as of December 31, 2012 and 2011). For the year 2012, the net gain generated by the indexed certificates is comprised by the gain arising from their valuation, approximately US$1.4 million (loss of US$49.1 million for the year 2011), plus the gain resulting from their settlement, approximately US$10.1 million (gain of US$30.6 million for the year 2011) and has been recorded in the caption “Net gain on financial assets designated at fair value through profit or loss” of the consolidated statements of income (“Net loss on financial assets designated at fair value through profit or loss” for the year 2011).

F-52

Notes to the consolidated financial statements (continued)

Receivable and payable accounts from insurance contracts

(a)

As of December 31, 2012 and 2011, the caption “Premiums and other policies receivable” of the consolidated statements of financial position includes balances which primarily due in a current period, have no collaterals and present no material past due balances.

(b)

The movements of the captions accounts receivable and payable to reinsurers and coinsurers are as follows:

Accounts receivable	2012			2011
	US$(000)			US$(000)

Beginning balances		151,080			160,249
Reported claims of premiums ceded, Note 24		62,508			28,627
Premiums ceded unearned during the year, Note 23(a) (**)		597			9,091
Premiums assumed		14,722			20,039
Settled claims of premiums ceded by facultative contracts		26,094			26,345
Collections and other		(87,541	)		(93,271	)

Ending balances		167,460			151,080

Accounts receivable as of December 31, 2012 and 2011, include US$56.5 and US$58.0 million, respectively, which correspond to the unearned portion of the ceded premiums to the reinsurers.

Accounts payable	2012			2011
	US$(000)			US$(000)

Beginning balances		75,366			60,775
Premiums ceded to reinsurers in facultative contracts, Note 23(a) (**)		101,023			98,639
Coinsurance granted		4,462			11,067
Payments and other		(112,315	)		(95,115	)

Ending balances		68,536			75,366

Accounts payable to reinsurers are primarily related to the proportional facultative contracts (on an individual basis) for ceded premiums, automatic non-proportional contracts (excess of loss) and reinstallation premiums. For facultative contracts the Group transfers to the reinsurers a percentage or an amount of an insurance contract or individual risk, based on the premium and the covered period. The net movement of the accounts payable of automatic contracts (mainly excess of loss) of the years 2012 and 2011 are included in the item “Premiums ceded to reinsurers, net” for US$52.2 million and U$40.3 million, respectively, see Note 23(a) (**).

F-53

Notes to the consolidated financial statements (continued)

10.

Property, furniture and equipment, net

(a)

The movement of property, furniture and equipment and accumulated depreciation, for the years ended December 31, 2012 and 2011, is as follows:

	Land			Buildings and other construction			Installations			Furniture and fixtures			Computer hardware			Hospitals		Vehicles and equipment			Work in progress			2012			2011
	US$(000)			US$(000)			US$(000)			US$(000)			US$(000)			US$(000)		US$(000)			US$(000)			US$(000)			US$(000)

Cost -
Balance as of January 1		50,973			358,348			138,013			110,303			171,189			50,814		44,481			19,444			943,565			902,814
Additions		53,932			9,905			1,799			13,813			20,772			14,173		1,517			46,306			162,217			100,819
Business acquisitions, Note 2(a)		-			5,137			-			937			1,373			14,316		-			-			21,763			-
Business acquisitions, Note 2(b)		-			-			-			-			-			-		-			-			-			50,814
Transfers		65			3,407			11,633			5,487			6,401			-		1,760			(28,753	)		-			-
Sales, disposals and other		(3,377	)		(6,020	)		(3,986	)		(3,060	)		(8,850	)		-		(1,233	)		-			(26,526	)		(110,882	)
Balance as of December 31		101,593			370,777			147,459			127,480			190,885			79,303		46,525			36,997			1,101,019			943,565

Accumulated depreciation -
Balance as of January 1		-			169,164			91,486			70,709			118,052			3,944		17,777			-			471,132			529,901
Depreciation for the year		-			9,123			9,129			5,912			21,794			3,763		3,711			-			53,432			48,028
Business acquisitions, Note 2(a)		-			398			-			154			172			2,475		-			-			3,199			-
Business acquisitions, Note 2(b)		-			-			-			-			-			-		-			-			-			3,944
Retiros, bajas y otros		-			(2,363	)		(2,433	)		(2,880	)		(8,162	)		-		(1,205	)		-			(17,043	)		(110,741	)
Balance as of December 31		-			176,322			98,182			73,895			131,856			10,182		20,283			-			510,720			471,132

Net book value		101,593			194,455			49,277			53,585			59,029			69,121		26,242			36,997			590,299			472,433

(b)

Banks, financial institutions and insurance entities operating in Peru are not allowed to pledge their fixed assets.

(c)

As of December 31, 2012, Credicorp and its Subsidiaries have property available for sale for approximately US$42.7 million, net of its accumulated depreciation amounting to approximately US$10.3 million (US$23.0 and US$10.4 million, respectively, as of December 31, 2011).

(d)

Management periodically reviews the residual value, useful life and method of depreciation of the Group’s property, furniture and equipment to ensure that they are consistent with their actual economic benefits and life expectations. In Management’s opinion, as of December 31, 2012 and 2011 there is no evidence of impairment of the Group’s property, furniture and equipment.

F-54

Notes to the consolidated financial statements (continued)

11.

Intangibles assets and goodwill, net

(a)

Intangibles –

The movement of finite useful lives intangible assets for the years ended December 31, 2012 and 2011, is as follows:

Description	Client relationships (i)		Rights of use		Brand name (ii)		Fund Manager Contract (iii)		Software and developments			Other			2012			2011
	US$(000)		US$(000)		US$(000)		US$(000)		US$(000)			US$(000)			US$(000)			US$(000)

Cost -
Balance as of January 1		98,068		20,000		23,746		-		245,115			56,134			443,063			363,215
Additions		-		-		-		-		31,908			31,722			63,630			55,311
Business acquisition 2(a)		27,282		-		29,203		46,753		-			2,305			105,543			-
Business acquisition 2(b)		-		-		-		-		-			-			-			26,147
Transfers		-		-		-		-		25,800			(25,800	)		-			-
Disposals and other		-		-		-		-		(1,856	)		(1,294	)		(3,150	)		(1,610	)
Balance as of December 31		125,350		20,000		52,949		46,753		300,967			63,067			609,086			443,063

Accumulated amortization -
Balance as of January 1		24,239		1,333		1,606		-		138,552			10,885			176,615			132,024
Amortization of the year		6,461		4,000		2,847		-		41,335			435			55,078			45,854
Disposals and other		-		-		-		-		(1,835	)		(34	)		(1,869	)		(1,263	)
Balance as of December 31		30,700		5,333		4,453		-		178,052			11,286			229,824			176,615

Net book value		94,650		14,667		48,496		46,753		122,915			51,781			379,262			266,448

During 2012, additions are related to the implementation and development of several projects (Implementation of treasury solutions, windows system, CRM for wholesale banking, basic information of clients among others). During 2011, additions were related to implementation and development of sundry IT projects, mainly “AIO” related to the increase in infrastructure, mainframe and licenses to support the increase in operations.

F-55

Notes to the consolidated financial statements (continued)

(i)

Client relationships -

This item is made up as follows:

	2012		2011
	US$(000)		US$(000)

Prima AFP – AFP Unión Vida		61,267		65,686
IM Trust		13,728		-
Correval		11,010		-
Edyficar		4,438		5,099
Private hospitals		4,207		3,044

Book value, net		94,650		73,829

(ii)

Brand name -

This item is made up as follows:

	2012		2011
	US$(000)		US$(000)

Correval		14,087		-
Private hospitals		14,043		10,452
Edyficar		11,028		11,688
IM Trust		9,338		-

Book value, net		48,496		22,140

(iii)

Fund manager contract -

This item is made up as follows:

	2012
	US$(000)

Correval		27,173
IM Trust		19,580

Book value, net		46,753

Management has assessed at each reporting date that there is no indication that client relationships, rights of use, brand name, fund manager contract and software and developments may be impaired.

F-56

Notes to the consolidated financial statements (continued)

(b)

Goodwill -

This item is made up as follows:

	2012		2011
	US$(000)		US$(000)
Goodwill -
IM Trust, Note 2(a)		109,948		-
Private hospitals, Notes 2(a) and 2(b)		86,825		45,540
Edyficar		50,696		50,696
Prima AFP		44,594		44,594
Correval, Note 2(a)		39,376		-
Banco de Crédito del Perú		18,733		18,733
El Pacífico Peruano – Suiza Compañía de Seguros y Reaseguros		13,007		13,007
Atlantic Security Holding Corporation		10,660		10,660
Corporación Novasalud Perú S.A. EPS		3,744		3,744
Willis Corredores de Seguros S.A.		2,784		-

Book value, net		380,367		186,974

Management annually assesses goodwill to identify any impairment; assumptions used are consistent with previous years. As of December 31, 2012 and 2011, Management concluded that there is no impairment in the recorded goodwill.

F-57

Notes to the consolidated financial statements (continued)

12.

Other assets and other liabilities

(a)

These items are made up as follows:

	2012		2011
	US$(000)		US$(000)

Other assets
Financial instruments
Value added tax credit		261,757		231,012
Accounts receivable		248,963		129,645
Derivatives receivable (b)		159,364		82,519
Income tax prepayments, net		102,260		54,435
Cash collateral on repurchase agreements and others (e)		68,680		90,065
Operations in process (c)		20,368		44,952
		861,392		632,628
Non-financial instruments
Deferred income tax asset, Note 18(c)		144,508		96,074
Prepaid expenses		105,915		72,393
Deferred fees		49,875		47,629
Investments in associates		29,725		13,428
Seized assets, net		10,405		10,842
Other		15,970		21,996
		356,398		262,362

Total		1,217,790		894,990

Other liabilities
Financial instruments:
Accounts payable		360,152		223,743
Payroll, taxes, salaries and other personnel expenses		196,556		155,184
Derivatives payable (b)		166,158		145,261
Put options written on non-controlling interest, Note 2(c)		121,772		-
Allowance for indirect loan losses, Note 7(d)		45,486		38,478
Operations in process (c)		32,210		31,020
Account payable for acquisition of subsidiary, Note 2(a)		20,643		-
Contributions		9,245		23,694

		952,222		617,380
Non-financial instruments
Deferred income tax liability, Note 18(c)		168,499		109,564
Provision for sundry risks (d)		39,070		29,009
Other		3,158		1,056

		210,727		139,629

Total		1,162,949		757,009

F-58

Notes to the consolidated financial statements (continued)

(b)

The risk in derivative contracts arises from the possibility of the counterparty failing to comply with the terms and conditions agreed and that the reference rates at which the transactions took place changes.

The table below presents as of December 31, 2012 and 2011, the fair value of derivative financial instruments, recorded as an asset or a liability, together with their notional amounts and maturities. The notional amount, recorded gross, is the amount of a derivative’s underlying asset and is the basis upon which changes in the value of derivatives are measured, see Note 20(a).

		2012							2011							2012 and 2011
	Note	Assets		Liabilities		Notional amount		Maturity	Assets		Liabilities		Notional amount		Maturity	Hedged instrument
		US$(000)		US$(000)		US$(000)			US$(000)		US$(000)		US$(000)

Derivatives held for trading (i) -
Forward exchange contracts			74,955		59,379		5,831,227	Between January 2013 and October 2014		21,135		28,672		3,473,264	Between January and December 2012	-
Interest rate swaps			30,028		29,387		1,310,895	Between January 2013 and December 2022		31,220		31,203		697,436	Between March 2012 and December 2022	-
Currency swaps			26,931		16,975		588,839	Between March 2013 and September 2022		18,093		9,587		312,975	Between January 2012 and September 2022	-
Options			433		423		95,288	Between January and July 2013		206		801		64,184	Between January and December 2012	-

			132,347		106,164		7,826,249			70,654		70,263		4,547,859

Derivatives held as hedges -
Cash flow hedges (ii):
Interest rate swaps (IRS)	5(b)(*)		-		662		200,000	Between March 2019 and August 2020		-		-		-	-	Repurchase agreements
Interest rate swaps (IRS)	14(a)(i)(*)		-		2,774		383,333	Between April 2013 and March 2014		534		3,200		500,000	Between October 2012 and March 2014	Due to banks
Interest rate swaps (IRS)	16(a)(ii)		-		46,388		505,722	Between January 2013 and March 2016		-		62,601		687,673	Between January 2012 and June 2017	Secured notes issued
Cross currency swaps (CCS)	6(g)		-		3,001		124,827	Between October 2014 and August 2020		-		-		-	-	Investments available-for-sale
Cross currency swaps (CCS)	7(g)		-		210		3,824	Between March 2013 and November 2020		-		-		-	-	Loans
Cross currency swaps (CCS)	16(a)(iii)		15,915		-		128,855	October 2014		2,411		-		115,433	October 2014	Bonds issued
Cross currency swaps and interest rate swaps (CCS and IRS)	16(a)(iv)		11,102		2,028		60,118	Between March 2013 and March 2015		8,920		3,651		82,226	Between June 2012 and March 2015	Bonds issued

Fair value hedges:
Interest rate swaps (IRS)	6(n)		-		4,931		53,515	Between May 2013 and June 2019		-		5,546		54,049	Between May 2012 and June 2019	Investments available-for-sale

			27,017		59,994		1,460,194			11,865		74,998		1,439,381

			159,364		166,158		9,286,443			82,519		145,261		5,987,240

F-59

Notes to the consolidated financial statements (continued)

(i)

Derivatives held for trading are principally negotiated to satisfy client’s needs. The Group may also take positions with the expectation of profiting from favorable movements in prices or rates. Also, this caption includes any derivatives which do not comply IAS 39 hedging accounting requirements. Fair value of derivatives held for trading classified by contractual maturity is as follows:

	As of December 31, 2012												As of December 31, 2011
	Up to 3 months		From 3 months to 1 year		From 1 to 3 years		From 3 to 5 years		Over 5 years		Total		Up to 3 months		From 3 months to 1 year		From 1 to 3 years		From 3 to 5 years		Over 5 years		Total
	US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)

Forward exchange contracts		53,710		18,687		2,558		-		-		74,955		11,962		8,162		1,010		-		-		21,134
Interest rate swap		-		91		2,299		15,806		11,832		30,028		3		136		2,129		1,290		27,662		31,220
Currency swap		1,836		1,135		19,742		954		3,264		26,931		5,388		1,593		6,898		2,433		1,783		18,095
Options		335		98		-		-		-		433		90		115		-		-		-		205

Total assets		55,881		20,011		24,599		16,760		15,096		132,347		17,443		10,006		10,037		3,723		29,445		70,654

	As of December 31, 2012												As of December 31, 2011
	Up to 3 months		From 3 months to 1 year		From 1 to 3 years		From 3 to 5 years		Over 5 years		Total		Up to 3 months		From 3 months to 1 year		From 1 to 3 years		From 3 to 5 years		Over 5 years		Total
	US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)

Forward exchange contracts		27,744		31,175		460		-		-		59,379		11,974		16,420		278		-		-		28,672
Interest rate swap		19		93		3,293		15,828		10,154		29,387		3		133		3,399		1,228		26,440		31,203
Currency swap		-		18		12,288		927		3,742		16,975		3		915		4,352		2,634		1,683		9,587
Options		299		124		-		-		-		423		695		106		-		-		-		801

Total liabilities		28,062		31,410		16,041		16,755		13,896		106,164		12,675		17,574		8,029		3,862		28,123		70,263

F-60

Notes to the consolidated financial statements (continued)

(ii)

The Group is exposed to variability in future interest cash flows on assets and liabilities in foreign currency and/or which bear interest variable rates. The Group uses derivatives financial instruments as cash flow hedges to cover these risks.

A schedule indicating, as of December 31, 2012, the periods when the cash flow hedges are expected to occur and affect the consolidated statement of income, net of the deferred income tax is presented below:

	Up to 1 year		From 1 to 3 years		From 3 to 5 years		Over 5 years
	US$(000)		US$(000)		US$(000)		US$(000)

Cash outflows (liabilities)		382,825		513,977		30,644		273,605
Consolidated statement of income		22,394		30,640		6,535		5,913

As of December 31, 2012, the accumulated balance of unrealized loss on cash flow hedges recorded as other comprehensive income in the caption “Cash flow hedges reserve”, results from the current hedges (unrealized loss for approximately US$52.4 million) and the terminated hedge in 2009 (unrealized gain for approximately US$9.1 million) which is being recognized over the maturity of the underlying financial instrument, see Note 16(a)(viii). Likewise, the transfer of net unrealized loss on cash flow hedges to the consolidated statements of income is presented in Note 17(c).

(c)

Operations in process include deposits received, loans disbursed, loans collected, funds transferred and other similar types of transactions, which are made at the end of the month and not reclassified to their final consolidated statements of financial position account until the first days of the following month. These transactions do not affect the Group’s net consolidated income.

(d)

The movement of the provision for sundry risks for the years ended December 31, 2012, 2011 and 2010 is as follows:

	2012			2011			2010
	US$(000)			US$(000)			US$(000)

Beginning balance		29,009			19,425			27,225
Provision, Note 25		12,942			10,661			8,440
Business acquisition , Note 2(b)		7,339			4,044			-
Decreases		(10,220	)		(5,121	)		(16,240	)

Ending balance		39,070			29,009			19,425

F-61

Notes to the consolidated financial statements (continued)

Due to the nature of its business, the Group has some pending legal claims for which it records a provision when, in Management’s and its legal advisor’s opinion, they will result in an additional liability and such amount can be reliably estimated. Regarding legal claims against the Group which have not been provided for, in Management’s and its legal advisor’s opinion, they will not have a material effect on the Group’s consolidated financial statements.

(e)

As of December 31, 2012, it corresponds to restricted funds related to repurchase agreements (Note 5(b)) amounting to US$68.7 million (as of December 31, 2011, it corresponds to restricted funds related to repurchase agreements and derivatives transactions amounting to US$82.8 million and US$7.3 million, respectively).

13.

Deposits and obligations

(a)

This item is made up as follows:

	2012		2011
	US$(000)		US$(000)

Demand deposits		8,065,131		6,614,487
Saving deposits		6,084,078		5,096,509
Time deposits (c)		7,415,710		5,039,541
Severance indemnity deposits		2,232,492		1,757,124
Bank’s negotiable certificates		167,542		136,338

		23,964,953		18,643,999

Interest payable		75,467		59,848

Total		24,040,420		18,703,847

The Group has established a policy to remunerate demand deposits and savings accounts according to an interest rate scale, based on the average balance maintained in those accounts; on the other hand, according to such policy, balances that are lower than a specified amount for each type of account, do not bear interest. Also, time deposits earn interest at market rates.

Interest rates are determined by the Group considering interest rates prevailing in the market in which each of the Group’s subsidiaries operates.

F-62

Notes to the consolidated financial statements (continued)

(b)

The amounts of non-interest and interest bearing deposits and obligations are made up as follows:

	2012		2011
	US$(000)		US$(000)
Non-interest
In Peru		5,767,705		4,645,607
In other countries		855,660		745,081
		6,623,365		5,390,688

Interest bearing
In Peru		16,033,766		12,363,772
In other countries		1,307,822		889,539
		17,341,588		13,253,311

Total		23,964,953		18,643,999

(c)

Time deposits balance classified by maturity is as follows:

	2012		2011
	US$(000)		US$(000)

Up to 3 months		5,218,466		3,163,777
From 3 months to 1 year		1,757,737		1,531,252
From 1 to 3 years		221,231		293,393
From 3 to 5 years		168,268		1,118
More than 5 years		50,008		50,001

Total		7,415,710		5,039,541

As of December 31, 2012 and 2011, in Management’s opinion, the Group’s deposits and obligations are diversified with no significant concentrations.

As of December 31, 2012 and 2011, approximately US$7,560.0 million and US$6,233.4 million, respectively of the deposits and obligations balances, are covered by the Peruvian “Fondo de Seguro de Depósitos” (Deposit Insurance Fund). At those dates, the “Fondo de Seguro de Depósitos” covered up to US$35,771.0 and US$33,984.1, respectively.

F-63

Notes to the consolidated financial statements (continued)

14.

Due to banks and correspondents

(a)

This item is made up as follows:

	2012		2011
	US$(000)		US$(000)

International funds and others (i)		2,226,341		1,672,348
Promotional credit lines (ii)		332,687		241,836
Inter-bank funds		117,599		138,671
		2,676,627		2,052,855

Interest payable		9,634		7,165

Total		2,686,261		2,060,020

(i)

This item is made up as follows:

	2012		2011
	US$(000)		US$(000)

Syndicated loans (*)		381,101		496,073
Deutsche Bank		154,161		121,679
China Development Bank		149,122		148,875
Standard Chartered Bank		140,335		197
JP Morgan Chase		130,068		-
Cobank		116,338		47,903
Bank of America N.A.		110,000		95,645
Citibank N.A.		105,390		94,968
Bank of New York Mellon		99,000		50,000
Toronto Dominion Bank		98,000		85,000
Sumitomo Mitsui Banking Corp.		90,000		20,000
Corporación Andina de Fomento – CAF		85,000		200,00
Wells Fargo & Co.		78,000		144,998
Banco Latinoamericano de Comercio Exterior		60,000		-
Banco de la Nación		47,059		11,128
Commerzbank		29,910		-
Other		352,857		355,882

Total		2,226,341		1,672,348

(*)

As of December 31, 2012, the balance includes two syndicated loans obtained from foreign financial entities in March 2011 and October 2010 amounting to US$150.0 million and US$233.3 million, respectively with maturity in March 2014 and October 2013, respectively, with interest payments every semester at Libor 6m+1.75 percent. During 2011, the syndicated loans, which are subject to variable interest rate risk, were hedged through IRS with the same maturities; as a result, the loans were economically converted to fix interest rate, see Note 12(b).

F-64

Notes to the consolidated financial statements (continued)

(ii)

Promotional credit lines represent loans granted by Corporación Financiera de Desarrollo and Fondo de Cooperación para el Desarrollo Social (COFIDE and FONCODES for their Spanish acronym, respectively) to promote the development of Peru, they have maturities between May 2013 and December 2035 and their annual interest rates are between 6.00 and 7.75 percent (between January 2012 and November 2031 and annual interest rate between 6.00 and 7.75 percent as of December 31, 2011). These credit lines are secured by a loan portfolio amounting to US$332.6 and US$241.8 million as of December 31, 2012 and 2011, respectively.

Some due to foreign financial entities and promotional credit lines balances include standard covenants related to financial ratios, use of funds and other administrative matters, which in Management’s opinion, do not limit the Group’s operations and it has fully complied with as of the dates of the consolidated financial statements.

(b)

As of December 31, 2012 and 2011, maturities of due to banks and correspondents are shown below, based on the remaining period to the repayment date:

Due to banks and correspondents	2012		2011
	US$(000)		US$(000)

Up to 3 months		898,085		585,211
From 3 months to 1 year		872,282		458,685
From 1 to 3 years		377,932		731,912
From 3 to 5 years		254,938		199,575
More than 5 years		273,390		77,472

Total		2,676,627		2,052,855

(c)

As of December 31, 2012 and 2011, credit lines granted by several local and foreign financial institutions, available for future operating activities amounted to US$2,891.7 and US$2,117.0, respectively.

F-65

Notes to the consolidated financial statements (continued)

15.

Insurance claims reserves and technical reserves

(a)

This item is made up as follows:

	2012
	Claims reserves				Technical reserves		Total
	Direct		Assumed
	US$(000)		US$(000)		US$(000)		US$(000)

Life insurance		129,260		-		1,067,727		1,196,987
General insurance		116,913		15,487		189,267		321,667
Health insurance		54,848		8		41,489		96,345

Total		301,021		15,495		1,298,483		1,614,999

	2011
	Claims reserves				Technical reserves		Total
	Direct		Assumed
	US$(000)		US$(000)		US$(000)		US$(000)

Life insurance		100,940		-		901,175		1,002,115
General insurance		111,901		1,136		186,470		299,507
Health insurance		44,718		7		31,951		76,676

Total		257,559		1,143		1,119,596		1,378,298

Insurance claims reserves represent reported claims and an estimation for incurred but non reported claims (IBNR). Reported claims are adjusted on the basis of technical reports received from independent adjusters.

Insurance claims and technical reserves corresponding to the reinsurers and coinsurers are shown as ceded claims, which are presented in the caption “Accounts receivable from reinsurers and coinsurers” of the consolidated financial statements, see note 9.

As of December 31, 2012, the reserves for direct claims include reserves for IBNR for life, general and health insurance for an amount of US$44.4, US$1.2 and US$28.9 million, respectively (US$28.1, US$3.2 and US$23.8 million, respectively, as of December 31, 2011).

During 2012 and previous years, the differences between the estimations for the incurred and non-reported claims and the settled and pending liquidation claims have not been significant. Retrospective analysis indicates that the amounts accrued are adequate and the Management believes that the estimated IBNR reserve is sufficient to cover any liability as of December 31, 2012 and 2011.

F-66

Notes to the consolidated financial statements (continued)

Technical reserves comprise reserves for future benefit obligation under its in-force life, annuities and accident insurance policies and the unearned premium reserves in respect of the portion of premiums written that is allocable to the unexpired portion of the related policy periods for general and health insurance products.

The movement for the years ended December 31, 2012 and 2011 of insurance claims and technical reserves is as follows:

(b)

Insurance claims reserves (direct and assumed):

	2012
	Life insurance			General insurance			Health insurance			Total
	US$(000)			US$(000)			US$(000)			US$(000)

Initial balance		100,940			113,037			44,725			258,702
Claims, Note 24		166,249			140,747			220,972			527,968
Payments		(124,735	)		(121,206	)		(214,133	)		(460,074	)
Translation result		(13,194	)		(178	)		3,292			(10,080	)

Final balance		129,260			132,400			54,856			316,516

	2011
	Life insurance			General insurance			Health insurance			Total
	US$(000)			US$(000)			US$(000)			US$(000)

Initial balance		84,919			127,712			41,431			254,062
Claims, Note 24		123,194			93,314			189,878			406,386
Payments		(108,738	)		(107,840	)		(187,250	)		(403,828	)
Translation result		1,565			(149	)		666			2,082

Final balance		100,940			113,037			44,725			258,702

(c)

Technical reserves:

	2012
	Life insurance			General insurance		Health insurance		Total
	US$(000)			US$(000)		US$(000)		US$(000)

Initial balance		901,175			186,470		31,951		1,119,596
Time course expenses and other		34,541			-		-		34,541
Unearned premium and other technical reserves variation, net		11,233			2,375		8,362		21,970
Insurance subscriptions		168,641			-		-		168,641
Payments		(41,765	)		-		-		(41,765	)
Translation result		(6,098	)		422		1,176		(4,500	)

Final balance		1,067,727			189,267		41,489		1,298,483

F-67

Notes to the consolidated financial statements (continued)

	2011
	Life insurance			General insurance			Health insurance			Total
	US$(000)			US$(000)			US$(000)			US$(000)

Initial balance		758,807			156,808			26,646			942,261
Time course expenses and other		32,258			-			-			32,258
Unearned premium and other technical reserves variation, net		9,435			30,953			5,312			45,700
Insurance subscriptions		135,073			-			-			135,073
Payments		(37,470	)		-			-			(37,470	)
Translation result		3,072			(1,291	)		(7	)		1,774

Final balance		901,175			186,470			31,951			1,119,596

As of December 31, 2012 and 2011, no additional reserves were needed as a result of the liability adequacy test. The main assumptions used in estimation of retirement, disability and survival annuities and individual life (included unit linked insurance contracts) reserves as of those dates, were the following:

Modality	Mortality Table	Technical rates

Annuities	RV - 2009, B - 2006 and MI – 2006	3.5% - 6.03% in dollars, 3.5% - 5.13% in adjusted dollars, 1.50% - 3.56% in soles and 4.5% - 5.59% adjusted soles.
Retirement, disability and survival	B-85, B-85 adjusted, MI-85	1.24% -3% in soles, 4.54% - 4.55% in adjusted soles and 3.62% - 3.53% in adjusted dollars
Individual life insurance contracts (included unit linked insurance contracts)	CSO 80 adjustable	4.00% - 5.00% in US$

F-68

Notes to the consolidated financial statements (continued)

The sensitivity of the estimates used by the Group to measure its insurance risks is represented primarily by the life insurance risks; the main variables as of December 31, 2012, are the interest rates and the mortality tables used. The Group has evaluated the changes of the reserves related to its most significant life insurance contracts included in retirement, disability and survival annuities contracts of +/- 100 bps of the interest rates and of +/- 5 bps of the mortality factors, being the results as follows:

	Amount of the		Variation of the reserve
Variables	reserve		Amount			Percentage
	US$(000)		US$(000)			%

Portfolio in U.S. Dollars - Basis amount		500,730
Changes in interest rates: + 100 bps		453,897		(46,832	)		(9.35	)
Changes in interest rates: - 100 bps		556,975		56,245			11.23
Changes in Mortality tables to 105%		495,485		(5,245	)		(1.05	)
Changes in Mortality tables to 95%		506,263		5,533			1.11

	Amount of the		Variation of the reserve
Variables	reserve		Amount			Percentage
	US$(000)		US$(000)			%

Portfolio in S/. - Basis amount		389,364
Changes in interest rates: + 100 bps		346,051		(43,313	)		(11.12	)
Changes in interest rates: - 100 bps		442,560		53,196			13.66
Changes in Mortality tables to 105%		385,906		(3,459	)		(0.89	)
Changes in Mortality tables to 95%		393,027		3,662			0.94

F-69

Notes to the consolidated financial statements (continued)

16.

Bonds and notes issued

(a)

This item is made up as follows:

		Weighted annual interest rate	Interest payment	Maturity	Issued amount		2012		2011
					(000)		US$(000)		US$(000)
	%

Senior Notes – (i)
First issuance		5.38	Semi-annual	September 2020	US$	800,000		790,446		796,010
Second issuance		4.75	Semi-annual	March 2016	US$	700,000		694,037		687,002
								1,484,483		1,483,012
CCR Inc. MMT 100 – Secured notes – (ii)
2005 Series A Floating Rate Certificates		Libor 1m + 21 bps	Monthly	October 2012	US$	230,000		-		19,252
2006 Series A Floating Rate Certificates		Libor 1m + 24 bps	Monthly	March 2016	US$	100,000		22,364		27,326
2008 Series A Fixed Rate Certificates		6.27	Monthly	June 2015	US$	150,000		66,173		88,170
2008 Series B Floating Rate Certificates		Libor 1m + 25 bps	Monthly	December 2015	US$	150,000		87,112		116,731
2010 Series A Floating Rate Certificates		Libor 1m + 47.5 bps	Monthly	October 2012	US$	128,074		-		44,118
2010 Series B Floating Rate Certificates		Libor 1m + 57.6 bps	Monthly	March 2016	US$	100,000		41,399		51,164
2010 Series C Floating Rate Certificates		Libor 1m + 44.5 bps	Monthly	July 2017	US$	350,000		279,247		311,912
2010 Series D Floating Rate Certificates		Libor 1m + 36.1 bps	Monthly	July 2014	US$	150,000		66,896		103,821
2012 Series A y B Floating Rate Certificates		Libor 1m + 22.5 bps	Monthly	July 2017	US$	150,000		148,976		-
2012 Series C Fixed Rate Certificates		4.75	Monthly	July 2022	US$	315,000		312,785		-
								1,024,952		762,494

Corporate bonds – (iii)
First program
Tenth issuance Series B		8.00	Quarterly	March 2013	S/.	10,000		3,922		9,273

Second program
First issuance (Series A y B)		6.83	Semi-annual	Between December 2014 and March 2015	S/.	275,000		80,045		102,003
First and second issuance (Series A) – Edyficar		5.49	Semi-annual	Between April 2015 and January 2016	S/.	130,000		49,411		-
Third issuance (Series A and B)		7.72	Quarterly	Between June and July 2018	S/.	200,000		76,302		74,184

Fourth Program
Fourth issuance (Series A, B, C y D)		6.41	Semi-annual	Between July and December 2014	S/.	233,414		70,360		66,549
Fifth issuance (Series A)		5.31	Semi-annual	September 2013	S/.	50,000		19,608		17,365
Eight issuance (Series A)		3.75	Semi-annual	January 2014	US$	91,000		89,000		88,674
Ninth issuance (Series A)		6.22	Semi-annual	November 2016	S/.	128,000		49,957		47,423
Tenth issuance (Series A, B and C)		5.92	Semi-annual	Between December 2021 and November 2022	S/.	550,000		210,298		55,638

BCP Emisiones Latam 1 S.A. (First issuance - Series A) – (iv)		4.00	Semi-annual	October 2014	Ch UF	2,700		128,490		114,692
								777,393		575,801

F-70

Notes to the consolidated financial statements (continued)

		Weighted annual interest rate	Interest payment	Maturity	Issued amount		2012		2011
					(000)		US$(000)		US$(000)
	%

Subordinated notes - (v)		6.13	Semi-annual	April 2027	US$	350,000		348,015		-

Subordinated notes – (vi)		6.88	Semi-annual	September 2026	US$	350,000		327,708		317,497

Junior subordinated bonds – (vii)		9.75	Semi-annual	November 2069	US$	250,000		223,374		220,396

Subordinated bonds
First issuance (Series A)		6.22	Semi-annual	May 2027	S/.	15,000		5,882		5,564
First issuance (Series A) – PPS		6.97	Quarterly	November 2026	US$	60,175		55,174		52,018
First, second and third issuance (Series A) – Edyficar		7.44	Semi-annual	Between October 2021 and December 2022	S/.	110,000		43,137		25,965
Fifth issuance (Series A)		8.25	Semi-annual	October 2012	S/.	50,000		-		4,803
Fourth issuance (Series A, B, C y D)		7.82	Quarterly	Between February and May 2016	US$	113,822		98,789		97,612


First issuance – Second program (Series A y B)		5.75	Semi-annual	Between September and October 2013	US$	20,000		8,078		12,801
								211,060		198,763

Negotiable certificate of deposit – (viii)		7.45	Semi-annual	October 2022	S/.	483,280		177,386		171,387

Subordinated negotiable certificates of deposit - (ix)		6.88	Semi-annual	Between November 2021 and September 2026	US$	129,080		119,239		118,574

Leasing bonds - First program – (x)
Sixth issuance (Series A)		8.72	Quarterly	August 2018	S/.	100,000		39,216		37,092

Negotiable certificates of deposit – First Program
Fourth issue (Series A, B y C) – Edyficar		5.31	At maturity	Between July and August 2012	S/.	94,906		-		35,203

Mortgage bonds - (x)		7.44	Semi-annual	April 2012	US$	5,000		-		503


								4,732,826		3,920,722
Interest payable								50,562		44,800

Total								4,783,388		3,965,522

F-71

Notes to the consolidated financial statements (continued)

(i)

BCP can redeem in whole or in a part these notes at any time, with the penalty of the payment of an interest rate equivalent to the American Treasury plus 40 basis points. Payment of principal will take place at the date of maturity or redemption.

(ii)

All issuances are secured by the collection of BCP´s (including its foreign branches) future inflows from electronic messages sent through the Society for Worldwide Interbank Financial Telecommunications (“SWIFT”) network and utilized within the network to instruct correspondent banks to make a payment of a certain amount to a beneficiary that is not a financial institution.

2005, 2006, 2008 and 2010 issuances subject to variable interest rates were hedged through IRS; as a result, they were economically converted to fix interest rate, see Note 12(b).

(iii)

As of December 31,2012 and 2011, the Group has hedged through CCS and IRS, corporate bonds issued in Peruvian currency for a notional amount of US$60.1 million and US$82.2 million, respectively, subject to foreign exchange and variable interest risks, see Note 12(b); as a result, these bonds were economically converted to US$ Dollars at fixed rate.

(iv)

This issuance is denominated in “Chilean Unidades de Fomento – UF” for 2.7 million. The Group can redeem 100 of the bonds only if the legal reserve funds legislation and the tax law, related to income tax and value added tax change in Peru, Panama or Chile. This debt, subject to foreign exchange risk, has been hedged through CCS for a notional amount equal to the principal and with the same maturity, see Note 12(b); as a result, these bonds were economically converted to US$ Dollars.

(v)

Starting April 24, 2022, the interest rate becomes a variable rate of Libor 3 months plus 704.3 basis points. Between April 24, 2017 and until April 24, 2022, BCP may redeem all or part of the subordinated notes with the penalty of the payment of an interest equivalent to the American Treasury plus 50 basis points. Additionally, from April 24, 2022 or at any later date of coupon payment, BCP can redeem all or part of the bonds without penalty. Payment of principal will take place at the date of maturity or redemption.

(vi)

Starting September 16, 2021, the interest rate becomes a variable rate of Libor 3 months plus 770.8 basis points. Between September 16, 2016 and until September 15, 2021, BCP may redeem all or part of the bonds, with the penalty of the payment of an interest equivalent to the American Treasury plus 50 basis points. Additionally, from September 16, 2021 or at any later date of coupon payment, BCP can redeem all or part of the bonds without penalty. Payment of principal will take place at the date of maturity or redemption.

(vii)

In November 2019, interest rate will be Libor 3 months plus 816.7 basis points. On that date and on any interest payment date BCP can redeem 100 percent of the bonds without penalty. Payment of principal will take place at the date of maturity or redemption.

This debt does not have collateral and qualifies as Tier 1 capital for SBS regulations.

(viii)

In October 2017, interest rate will be the average of at least three valuations on the market interest rate for sovereign bonds issued by the Peruvian Government (with maturity on 2037), plus 150 basis points, with semiannual payments. From such date, BCP can redeem 100 percent of the certificates, without penalties. Payment of principal will take place at the date of maturity or redemption.

Cash flows of this debt, subject to foreign exchange risk and interest rate risk, were hedged, until October 2009, through CCS and IRS; at that date, the Group discontinued prospectively the combined cash flow hedge of CCS and IRS through their unwinding, see Note 12(b)(ii).

(ix)

In November 2016, the interest rate will change to a floating interest rate, established as Libor plus 2.79 percent, with semi-annual payments. From such date, BCP can redeem 100 percent of the debt, without penalties. Payment of principal will take place at he date of maturity or redemption.

(x)

The leasing bonds and mortgage bonds are collateralized by the fixed assets financed by the Group.

F-72

Notes to the consolidated financial statements (continued)

(b)

Bonds and notes issued, classified by maturity are shown below:

	2012		2011
	US$(000)		US$(000)

Up to 3 months		44,573		55,335
From 3 months to 1 year		169,750		227,195
From 1 to 3 years		770,808		683,228
From 3 to 5 years		1,211,711		345,134
More than 5 years		2,535,984		2,609,830

Total		4,732,826		3,920,722

17.

Equity

(a)

Share capital -

As of December 31, 2012, 2011 and 2010, 94,382,317 shares of capital stock were issued at US$5 per share.

(b)

Treasury stock -

As of December 31, 2012, treasury stock comprises the par value of 14,991,059 Credicorp’s shares (14,974,957 and 14,941,833 Credicorp’s shares as of December 31, 2011 and 2010, respectively) owned by the Group’s companies.

The difference between their acquisition cost of US$220.8 million and their par value of US$74.6 million (as of December 31, 2011 and 2010 acquisition cost of US$217.8 million and of US$209.2 million, respectively and their par value of US$74.9 million and US$74.7 million, respectively) is presented as a reduction of “Capital surplus”.

F-73

Notes to the consolidated financial statements (continued)

(c)

Reserves -

Some of the Group’s subsidiaries are required to establish a reserve equivalent to a certain percentage of their paid-in capital (20, 30 or 35 percent, depending on their activity and country of incorporation) through annual transfers of 10 percent of their net income. As of December 31, 2012, 2011 and 2010, these reserves amounted to approximately US$620.3, US$461.9 and US$441.5 million, respectively.

The Shareholders’ meetings held on March 30, 2012, March 31, 2011 and March 26, 2010 agreed to transfer from “Retained earnings” to “Reserves” US$517.4, US$407.8 and US$331.6 million, respectively.

F-74

Notes to the consolidated financial statements (continued)

The caption “Other reserves” includes the unrealized net gain (loss) from available-for-sale investments and from derivatives instruments used as cash flow hedges, net deferred income tax and non-controlling interest; its movement is as follows:

	Unrealized net gain (loss) of:
	Available-for-sale Investments reserve			Cash flow hedge reserve			Foreign currency translation reserve		Total
	US$(000)			US$(000)			US$(000)		US$(000)

Balances as of January 1, 2010		288,977			(51,531	)		-		237,446
Net unrealized gain from available-for-sale investments		191,305			-			-		191,305
Transfer of net realized gain from investments available-for-sale to the consolidated statements of income, net of realized loss		(59,785	)		-			-		(59,785	)
Transfer of impairment on investment available-for-sale to the consolidated statements of income		3,250			-			-		3,250
Net unrealized gain from cash flow hedges		-			(44,584	)		-		(44,584	)
Transfer of net realized loss from cash flow hedges to the consolidated statements of income		-			39,089			-		39,089
Balances as of December 31, 2010		423,747			(57,026	)		-		366,721
Net unrealized gain from available-for-sale investments		6,330			-			-		6,330
Transfer of net realized gain from investments available-for-sale to the consolidated statements of income, net of realized loss		(35,760	)		-			-		(35,760	)
Transfer of impairment on investment available-for-sale to the consolidated statements of income, Note 6(c)		1,025			-			-		1,025
Net unrealized loss from cash flow hedges		-			(23,578	)		-		(23,578	)
Transfer of net realized loss from cash flow hedges to the consolidated statements of income		-			25,430			-		25,430
Balances as of December 31, 2011		395,342			(55,174	)		-		340,168
Net unrealized gain from available-for-sale investments		321,492			-			-		321,492
Transfer of net realized gain from investments available-for-sale to the consolidated statements of income, net of realized loss		(44,511	)		-			-		(44,511	)
Transfer of impairment on investment available-for-sale to the consolidated statements of income, Note 6(c)		81			-			-		81
Net unrealized loss from cash flow hedges, Note12(b)(ii)		-			(8,548	)		-		(8,548	)
Transfer of net realized loss from cash flow hedges to the consolidated statements of income, Note 12(b)(ii)		-			20,414			-		20,414
Foreign currency translation		-			-			8,171		8,171
Balances as of December 31, 2012		672,404			(43,308	)		8,171		637,267

F-75

Notes to the consolidated financial statements (continued)

(d)

Components of other comprehensive income -

The consolidated statement of comprehensive income includes other comprehensive income from available-for-sale investments and from derivatives financial instruments used as cash flow hedges; its movement is as follows:

	2012			2011			2010
	US$(000)			US$(000)			US$(000)

Available-for-sale investments:
Net unrealized gain from available-for-sale investments		321,492			6,330			191,305
Transfer of realized gain from investments available-for-sale to the consolidated statements of income, net of realized loss		(44,511	)		(35,760	)		(59,785	)
Transfer of impairment on investment available-for-sale to consolidated statements of income		81			1,025			3,250

Sub total		277,062			(28,405	)		134,770
Non-controlling interest		914			4,842			22,795
Income tax		21,342			(29,605	)		67,696

		299,318			(53,168	)		225,261

Cash flow hedges:
Net unrealized loss from cash flow hedges		(8,548	)		(23,578	)		(44,584	)
Transfer of net realized loss from cash flow hedges to the consolidated statements of income		20,414			25,430			39,089

Sub total		11,866			1,852			(5,495	)

Non-controlling interest		72			(272	)		(138	)
Income tax		165			(1,412	)		(1,686	)
		12,103			168			(7,319	)
Foreign currency translation reserve
Exchange differences on translation of foreign operations		8,171			-			-

Non-controlling interest		91			-			-

		8,262			-			-

F-76

Notes to the consolidated financial statements (continued)

(e)

Dividend distribution -

During 2012, 2011 and 2010, Credicorp paid cash dividends, net of the effect of treasury shares, for approximately US$183.4, US$155.5 and US$135.5 million, respectively.

The Board of Directors Meeting dated February 27, 2013 agreed to declare a cash dividend of US$2.6 per common share, approximately US$245.4 million, corresponding to the 2012 results, dividends will be paid in cash starting May 10, 2013.

In accordance with current Peruvian legislation, there is no restriction for overseas remittance of dividends or the repatriation of foreign investment. Dividends paid by the Peruvian subsidiaries to Credicorp are subject to a withholding tax of 4.1 percent.

(f)

Equity for legal purposes (Regulatory capital) -

As of December 31, 2012 and 2011, the regulatory capital for Credicorp’s subsidiaries engaged in financial and insurance activities in Peru calculated following SBS regulations amounted to approximately US$3,975.6 and US$3,022.7 million, respectively. As of December 31, 2012, the consolidated regulatory capital for Credicorp exceeds by approximately US$357.5 million the minimum regulatory consolidated capital required by the SBS (approximately US$549.2 million as of December 31, 2011).

18.

Taxes

(a)

Credicorp is not subject to income tax or any taxes on capital gains, equity or property. Credicorp’s subsidiaries are subject to corporate taxation on income depending on their country of incorporation. The Peruvian statutory Income Tax rate is 30 percent on taxable income after calculating the workers’ profit sharing, which is determined using a 5 percent rate.

The Bolivian, Chilean and Colombian statutory Income Tax rate are 25, 35 and 33 percent, respectively.

ASHC and its Subsidiaries are not subject to taxes in the Cayman Islands or Panama. For the three years ended December 31, 2012, 2011 and 2010, no taxable income was generated from their operations in the United States of America.

The reconciliation between the statutory income tax rate and the effective tax rate for the Group is as follows:

		2012			2011			2010
		%			%			%

Peruvian statutory income tax rate			30.00			30.00			30.00

Increase (decrease) in the statutory tax rate due to:
(i)	Increase (Decrease) arising from net income of subsidiaries not domiciled in Peru		0.60			(0.91	)		(0.36	)
(ii)	Non-taxable income, net		(3.94	)		(4.49	)		(4.73	)
(iii)	Translation results not considered for tax purposes		(2.92	)		(2.07	)		(1.24	)

Effective income tax rate			23.74			22.53			23.67

F-77

Notes to the consolidated financial statements (continued)

(b)

Income tax expense as of December 31, 2012, 2011 and 2010 comprises:

	2012			2011			2010
	US$(000)			US$(000)			US$(000)
Current -
In Peru		259,367			217,726			200,195
In other countries		8,524			1,839			3,219

		267,891			219,565			203,414
Deferred -
In Peru		(16,308	)		(9,057	)		(16,333	)

Total		251,583			210,508			187,081

The deferred income tax has been calculated on all temporary differences considering the income tax rates effective where Credicorp’s subsidiaries are located.

(c)

The following table presents a summary of the Group’s deferred income tax:

	2012			2011
	US$(000)			US$(000)
Net deferred income tax asset
Deferred assets
Allowance for loan losses, net		99,405			72,540
Reserve for sundry risks, net		8,000			9,010
Share-based compensation rights provision		3,437			3,293
Other		48,602			27,085

Deferred liabilities
Indexed certificates		(6,033	)		(5,596	)
Intangibles assets, net		(668	)		(2,561	)
Gain for difference tax exchange		(1,444	)		(1,438	)
Other		(6,791	)		(6,259	)

Total		144,508			96,074

Net deferred income tax liability
Deferred assets
Allowance for loan losses, net		597			889
Reserve for sundry risks, net		1,472			1,220
Other		1,530			434

Deferred liabilities
Unrealized net gains on investments		(96,432	)		(67,405	)
Intangibles assets, net		(52,403	)		(23,298	)
Deferred commissions		(5,651	)		(5,742	)
Leasing operations, net		(2,326	)		(2,066	)
Other		(15,286	)		(13,596	)

Total		(168,499	)		(109,564	)

F-78

Notes to the consolidated financial statements (continued)

Credicorp and its subsidiaries have recorded a deferred income tax as part of the equity caption “Other reserves” for US$13.0, US$31.0 and US$66.0 million, as of December 31, 2012, 2011 and 2010, respectively, related to the income tax effects of unrealized gains and losses on investments available for sale and cash flow hedges. Likewise, the recognized deferred tax liability arising from the Group’s acquisitions, see Notes 2(a) and 2(b), amounted to US$29.7 million (approximately US$14.3 million, as of December 31, 2011).

(d)

The Peruvian Tax Authority has the right to review and, if necessary, amend the annual tax returns of the Peruvian subsidiaries up to four years after their filing. Tax returns of the main subsidiaries not yet reviewed by the Peruvian Tax Authority are the following:

Banco de Crédito del Perú		2009 to 2012
Edyficar		2008 to 2012
Prima AFP		2008 and 2010 to 2012
Pacífico Peruano Suiza		2008 and 2010 to 2012
Pacífico EPS		2008 and 2010 to 2012
Pacífico Vida		2008 and 2010 to 2012

Likewise, the Income Tax returns for the fiscal years 2006 to 2012 of Banco de Crédito de Bolivia are pending to be reviewed by the Bolivian Tax Authority.

The Income Tax returns for the fiscal years 2010 to 2012 of Correval are pending to be reviewed by the Colombian Tax Authority

Also, the Income Tax returns for the fiscal years 2009 to 2012 of IM Trust are pending to be reviewed by the Chilean Tax Authority.

Since tax regulations are subject to interpretation by the different Tax Authorities where Credicorp’s subsidiaries are located it is not possible to determine up to date whether the reviews will generate additional liabilities for Credicorp’s subsidiaries. Therefore, any unpaid tax, penalties or interests that might result from said reviews will be expensed in the year in which they are determined. Nevertheless, Management of Credicorp and its Subsidiaries and their legal advisors consider that any additional tax assessments would not have a significant impact on the consolidated financial statements as of December 31, 2012 and 2011.

F-79

Notes to the consolidated financial statements (continued)

19.

Share-based compensation plans


	(a)	Stock appreciation rights -

As indicated in Note 3(w)(i), the Group granted Credicorp stock appreciation rights (SARs) to certain employees. As of December 31, 2012 and 2011, all SARs had vested and they can be executed up to April, 2014.

Credicorp’s Management has estimated the SARs’ fair value as of December 31, 2012 and 2011, using the binomial option pricing model, considering the following market information:

Key assumptions	2012			2011

Expected volatility		37.23	%		39.05	%
Risk free interest rate		3.08	%		2.43	%
Expected lifetime		1.21 years			1.76 years
Quoted price of Credicorp shares at year-end	US$	146.56		US$	109.47

The expected life of the SARs is based on historical data and current expectations and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility over a period similar to the life of the SARs is indicative of future trends, which may also not necessarily be the actual outcome.

The movement of SARs for the years ended December 31, 2012 and 2011 is as follows:

	2012									2011
	Outstanding SARs			Vested SARs						Outstanding SARs			Vested SARs
	Number			Number			Amount			Number			Number			Amount
							US$(000)									US$(000)

Balance as of January 1		243,223			243,223			22,088			795,155			777,699			76,989
Vested		-			-			-			-			15,627			(1,356	)
Exercised		(110,529	)		(110,529	)		(12,750	)		(550,103	)		(550,103	)		(45,255	)
Decrease		-			-			-			(1,829	)		-			-
Increase (decrease) in fair value		-			-			7,314			-			-			(8,290	)

Balance as of December 31		132,694			132,694			16,652			243,223			243,223			22,088

The Group assumes the payment of the related income tax on behalf of its employees, which corresponds to 30 percent of the benefit.

The liability recorded for this plan, including the above mentioned income tax, is included in the consolidated statements of financial position caption “Other liabilities – Payroll taxes, salaries and other personnel expenses”, Note 12(a), and the related expense in the consolidated statements of income caption “Salaries and employees benefits”.

As explained in Note 8(c), the Group has certificates linked to the yield of Credicorp’s shares.

(b)

Stock awards (“equity-settled transaction”) -

As indicated in Note 3(w)(iii), on March or April of each year (the “grant date”), the Group grants Credicorp shares (“stock awards”) to certain employees. Shares granted vest 33.3 percent in each one of the subsequent three years. The Group assumes the payment of the related income tax on behalf of its employees, which corresponds to 30 percent of the benefit.

F-80

Notes to the consolidated financial statements (continued)

The fair value of stock awards granted is estimated at the grant date using a binomial pricing model with similar key assumptions as those used for the valuation of SARs (see paragraph (a) above), taking into account the terms and conditions upon which the shares were granted.

During 2012, 2011, 2010 and 2009, the Group granted approximately 144,000, 165,000, 170,000 and 227,000 Credicorp’ shares, of which 599,000 and 448,000 shares had vested as of December 31, 2012 and 2011. The expense recorded for the year ended December 31, 2012 amounted to approximately US$16.9 million (US$15.7 and US$11.2 million for the years ended December 31, 2011 and 2010, respectively).

20.

Off-balance sheet accounts

(a)

This item is made up as follows:

	2012		2011
	US$(000)		US$(000)

Contingent credits - indirect loans (b), Note 7(a)
Guarantees and standby letters		3,933,834		3,128,534

Import and export letters of credit		586,273		599,466

		4,520,107		3,728,000

Derivatives, Note 12(b)
Held for trading
Forward currency contracts - buy		3,216,504		1,892,970
Forward currency contracts - sell		2,614,723		1,580,294
Interest rate swaps		1,310,895		697,436
Currency swaps		588,839		312,975
Options		95,288		64,184

F-81

Notes to the consolidated financial statements (continued)

	2012		2011
	US$(000)		US$(000)

Held as hedges
Cash flow hedges:
Interest rate swaps		1,089,055		1,187,673
Cross currency swaps		257,506		115,433
Cross currency swaps and interest rate swaps		60,118		82,226
Fair value hedges:
Interest rate swap		53,515		54,049

		9,286,443		5,987,240

Responsibilities under credit lines agreements (c)		4,008,572		3,525,517

Total		17,815,122		13,240,757

(b)

In the normal course of its business, the Group’s banking subsidiaries are party to transactions with off-balance sheet risk. These transactions expose them to credit risk in addition to the amounts recognized in the consolidated statements of financial position.

Credit risk for off-balance sheet financial instruments is defined as the possibility of sustaining a loss because any other party to a financial instrument fails to perform in accordance with the terms of the contract. The exposures to losses are represented by the contractual amounts specified in the related contracts. The Group applies the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments (Note 7(a)), including the requirement to obtain collateral when it is deemed necessary. Collateral held varies, but may include deposits in financial institutions, securities or other assets. Many of the contingent transactions are expected to expire without any performance being required; therefore, the total committed amounts do not necessarily represent future cash requirements.

(c)

Responsibilities under credit lines agreements include credit lines and other consumer loans facilities (credit card) and are cancelable upon notification to the client.

F-82

Notes to the consolidated financial statements (continued)

21.

Interest and dividend income and interest expenses

These items are made up as follow:

	2012			2011			2010
	US$(000)			US$(000)			US$(000)

Interest and dividend income
Interest on loans		1,948,472			1,533,351			1,218,728
Interest on investments available-for-sale		268,408			223,809			191,971
Interest on due from banks		40,844			42,886			32,337
Interest on trading securities		6,378			3,900			4,824
Dividends from investments available-for-sale and trading securities		16,354			15,321			11,615
Other interest income		29,985			18,497			12,233

Total		2,310,441			1,837,764			1,471,708

Interest expenses
Interest on deposits and obligations		(284,827	)		(217,322	)		(156,106	)
Interest on bonds and notes issued		(242,266	)		(186,743	)		(124,311	)
Interest on due to banks and correspondents		(82,776	)		(64,369	)		(43,532	)
Loss from hedging derivatives instruments		(27,666	)		(34,922	)		(25,692	)
Other interest expenses		(56,111	)		(28,244	)		(64,480	)

Total		(693,646	)		(531,600	)		(414,121	)

During 2012, 2011 and 2010, the interest income accrued on impaired financial instruments recognized in the consolidated statements of income amounted to US$11.5, US$7.8 and US$7.2 million, respectively.

22.

Banking services commissions

This item is made up as follows:

	2012		2011		2010
	US$(000)		US$(000)		US$(000)

Maintenance of accounts, transfers and credit and debit card services		336,779		288,493		251,840
Funds management		177,189		147,470		125,605
Contingent loans fees		60,616		52,162		43,781
Collection services		69,747		57,036		49,836
Commissions for banking services		23,256		28,249		22,038
Brokerage and custody services		19,756		8,737		7,473
Other		50,078		25,696		24,322

Total		737,421		607,843		524,895

F-83

Notes to the consolidated financial statements (continued)

23.

Net premiums earned

(a)

This item is made up as follows:

	Gross premiums (*)		Premiums ceded to reinsurers, net (**)			Assumed from other companies, net		Net premiums earned		Percentage of assumed net premiums
	US$(000)		US$(000)			US$(000)		US$(000)		%

2012
Life insurance		255,938		(11,026	)		137		245,049		0.06
Health insurance		294,111		(2,854	)		202		291,459		0.07
General insurance		302,252		(138,718	)		4,163		167,697		2.48

Total		852,301		(152,598	)		4,502		704,205		0.64

2011
Life insurance		200,468		(8,633	)		-		191,835		-
Health insurance		236,512		(3,195	)		2,338		235,655		1.00
General insurance		258,274		(117,975	)		6,634		146,933		4.51

Total		695,254		(129,803	)		8,972		574,423		1.56

2010
Life insurance		156,611		(7,544	)		-		149,067		-
Health insurance		203,635		(2,817	)		3,355		204,173		1.64
General insurance		204,236		(84,935	)		7,752		127,053		6.10

Total		564,482		(95,296	)		11,107		480,293		2.31

(*)

Includes the annual variation of the unearned premiums and other technical reserves.

(**)

“Premiums ceded to reinsurers, net” include:

	2012			2011
	US$(000)			US$(000)

Premiums ceded for automatic contracts (mainly excess of loss), Note 9(b)		(52,172	)		(40,255	)
Premiums ceded for facultative contracts, Note 9(b)		(101,023	)		(98,639	)
Annual variation for unearned premiums ceded reserves, Note 9(b)		597			9,091

		(152,598	)		(129,803	)

F-84

Notes to the consolidated financial statements (continued)

(b)

Gross premiums earned by insurance type and its participation over total gross premiums are described below:

	2012				2011				2010
	US$(000)		%		US$(000)		%		US$(000)		%

Life insurance (i)		255,938		30.03		200,468		28.83		156,611		27.74
Health insurance (ii)		294,111		34.51		236,512		34.02		203,635		36.07
General insurance (iii)		302,252		35.46		258,274		37.15		204,236		36.18

Total		852,301		100.00		695,254		100.00		564,482		100.00

(i)

The breakdown of life insurance gross premiums earned is as follows:

	2012				2011				2010
	US$(000)		%		US$(000)		%		US$(000)		%

Credit Life		60,364		23.59		43,328		21.61		32,445		20.72
Group Life		51,465		20.11		42,382		21.14		35,078		22.40
Retirement, disability and survival		79,814		31.18		54,746		27.31		47,083		30.06
Annuities		5,623		2.20		5,159		2.58		6,941		4.43
Individual life and personal accident (*)		58,672		22.92		54,853		27.36		35,064		22.39

Total life insurance gross premiums		255,938		100.00		200,468		100.00		156,611		100.00

(*)

This item includes unit linked insurance contracts.

(ii)

Health insurance gross premiums includes medical assistance which amounts to US$287.3 in 2012 (US$231.1 and US$198.8 in 2011 and 2010, respectively) and represents 97.67 percent in this business line in 2012 (97.71 and 97.60 percent in 2011 and 2010, respectively).

F-85

Notes to the consolidated financial statements (continued)

(iii)

The breakdown of General insurance gross premiums earned is as follows:

	2012				2011				2010
	US$(000)		%		US$(000)		%		US$(000)		%

Automobile		95,847		31.71		85,567		33.13		73,753		36.11
Fire and allied lines		72,624		24.03		50,490		19.55		45,136		22.10
Technical lines (*)		28,933		9.57		26,138		10.12		20,978		10.27
Third party liability		20,073		6.64		20,719		8.02		5,495		2.69
Aviation		17,727		5.86		17,377		6.73		7,275		3.56
Theft and robbery		17,258		5.71		13,054		5.06		11,136		5.45
Transport		16,736		5.54		14,217		5.50		12,916		6.33
SOAT (Mandatory automobile line)		11,303		3.74		11,160		4.32		9,716		4.76
Marine Hull		7,306		2.42		6,684		2.59		6,228		3.05
Others		14,445		4.78		12,868		4.98		11,603		5.68

Total general insurance gross premiums		302,252		100.00		258,274		100.00		204,236		100.00

(*)

Technical lines include Contractual All Risk (CAR), Machinery breakdown, Erection All Risk (EAR), Electronic equipment (EE), Construction equipment All Risk (TREC).

24.

Net claims incurred for life, property and casualty and health insurance contracts

This item is made up as follows:

	2012
	Life insurance			General insurance			Health insurance			Total
	US$(000)			US$(000)			US$(000)			US$(000)

Gross insurance claims, Note 15(b)		166,249			140,747			220,972			527,968
Ceded claims, Note 9(b)		(6,284	)		(55,125	)		(1,099	)		(62,508	)

Net insurance claims		159,965			85,622			219,873			465,460

	2011
	Life insurance			General insurance			Health insurance			Total
	US$(000)			US$(000)			US$(000)			US$(000)

Gross insurance claims, Note 15(b)		123,194			93,314			189,878			406,386
Ceded claims, Note 9(b)		(4,515	)		(22,602	)		(1,510	)		(28,627	)

Net insurance claims		118,679			70,712			188,368			377,759

F-86

Notes to the consolidated financial statements (continued)

	2010
	Life insurance			General insurance			Health insurance			Total
	US$(000)			US$(000)			US$(000)			US$(000)

Gross insurance claims		102,821			82,763			161,606			347,190
Ceded claims		(2,719	)		(27,849	)		(1,050	)		(31,618	)

Net insurance claims		100,102			54,914			160,556			315,572

25.

Other income and expenses

These items are made up as follow:

	2012		2011		2010
	US$(000)		US$(000)		US$(000)

Other income
Income from medical services and sale of medicines		67,918		11,442		-
Real estate rental income		6,564		5,672		4,309
Income from sale of seized assets		2,976		4,089		5,373
Recoveries of other accounts receivable and other assets		668		658		1,749
Other		8,448		8,513		19,237

Total other income		86,574		30,374		30,668

Other expenses
Commissions from insurance activities		68,428		48,847		39,796
Cost of medical services and sale of medicines		60,452		7,693		-
Sundry technical insurance expenses		27,684		29,292		17,413
Provision for sundry risks, Note 12(d)		12,942		10,661		8,440
Provision for other accounts receivables		1,343		1,649		2,613
Other		17,201		11,398		22,957

Total other expenses		188,050		109,540		91,219

F-87

Notes to the consolidated financial statements (continued)

26.

Earnings per share

The net earnings per ordinary share were determined over the net income attributable to equity holders of Credicorp, as follows:

	2012			2011			2010
	US$(000)			US$(000)			US$(000)

Net income attributable to equity holders of Credicorp (in thousands of U.S. Dollars)		788,778			709,272			571,302

Number of shares:
Ordinary shares, Note 17(a)		94,382,317			94,382,317			94,382,317
Less - treasury shares		(14,974,957	)		(14,941,833	)		(14,847,842	)
Acquisition of treasury shares, net		28,903			(24,843	)		(70,494	)

Weighted average number of ordinary shares for basic earnings		79,436,263			79,415,641			79,463,981

Plus - effect of dilution		211,720			247,204			201,168
Stock awards
Weighted average number of ordinary shares adjusted for the effect of dilution		79,647,983			79,662,845			79,665,149

Basic earnings per share (in U.S. Dollars)		9.93			8.93			7.19
Diluted earnings per share (in U.S. Dollars)		9.90			8.90			7.17

27.

Operating segments

For management purposes, the Group is organized into four operating segments based on products and services as follows:

Banking -

Principally handling loans, credit facilities, deposits and current accounts.

Insurance -

Principally granting property, transportation, marine hull, automobile, life, health and pension fund underwriting insurance. Private hospitals operations are also included under this operating segment, said operations are specialized in providing health and wellness programs, primary and specialized ambulatory services, and comprehensive acute care services.

Pension funds -

Providing private pension fund management services to individuals.

Investment banking –

Providing brokerage and securities and investment management services to a diversified client base, including corporations, institutional investors, governments and endowments. Also, it includes the structuring and placement of primary market issuances and the execution and trading of secondary market transactions. In addition, offers securitization structuring to corporate entities and manages mutual funds.

Certain operating segments have been aggregated to form the above reportable operating segments.

F-88

Notes to the consolidated financial statements (continued)

The Group monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss and is measured consistently with operating profit or loss in the consolidated financial statements.

Transfer prices between operating segments are on an arm’s length basis in a manner similar to transactions with third parties.

No revenue from transactions with a single external customer or counterparty amounted to 10 percent or more of the Group’s total revenue in 2012, 2011 and 2010.

F-89

Notes to the consolidated financial statements (continued)

(i)

The following table presents income and certain asset information regarding the Group’s operating segments (in millions of U.S. Dollars) for the years ended 31 December 2012, 2011 and 2010:

	External income		Income from other segments		Eliminations			Total income (*)		Operating income (**)		Provision for loan losses, net of recoveries			Depreciation and amortization			Impairment of available–for– sale investments			Income before translation result and income tax		Translation result and income tax			Net income		Capital expenditures, intangible assets and goodwill		Total assets

2012
Banking		3,062		140		(140	)		3,062		1,558		(378	)		(87	)		-			786		(151	)		632		202		36,227
Insurance		827		33		(33	)		827		261		-			(11	)		-			98		-			97		66		2,616
Pension funds		118		1		(1	)		118		-		-			(9	)		-			55		(18	)		41		-		249
Investment banking		128		1		(1	)		128		37		-			(2	)		-			46		(8	)		38		274		1,705

Total consolidated		4,135		175		(175	)		4,135		1,856		(378	)		(109	)		-			985		(177	)		808		542		40,797

2011
Banking		2,419		125		(125	)		2,419		1,224		(215	)		(77	)		(1	)		725		(146	)		571		144		28,338
Insurance		682		37		(37	)		682		279		-			(8	)		-			90		(2	)		89		133		2,101
Pension funds		106		-		-			106		-		-			(9	)		-			52		(15	)		37		2		239
Investment banking		44		1		(1	)		44		-		-			-			-			29		(10	)		27		-		36

Total consolidated		3,251		163		(163	)		3,251		1,503		(215	)		(94	)		(1	)		896		(173	)		724		279		30,714

2010
Banking		2,054		133		(133	)		2,054		990		(175	)		(66	)		(3	)		601		(132	)		470		140		26,377
Insurance		578		30		(30	)		578		232		-			(6	)		-			94		(13	)		80		7		1,716
Pension funds		87		-		-			87		-		-			(10	)		-			38		(9	)		29		2		258
Investment banking		38		2		(2	)		38		-		-			-			-			33		(9	)		24		-		43

Total consolidated		2,757		165		(165	)		2,757		1,222		(175	)		(82	)		(3	)		766		(163	)		603		149		28,394

F-90

Notes to the consolidated financial statements (continued)

(ii)

The following tables presents (in millions of U.S. Dollars) the distribution of the Group’s external income, operating income, and non-current assets allocated based on the location of the customer and its assets, respectively for the years ended 31 December 2012, 2011 and 2010:

	2012						2011						2010
	Total income (*)		Operating income (**)		Non-current assets (***)		Total income (*)		Operating income (**)		Non-current assets (***)		Total income (*)		Operating income (**)			Non-current assets (***)

Peru		3,554		1,698		909		3,019		1,423		719		2,540		1,158			687
Panama		255		8		123		50		8		155		46		13			-
Cayman Islands		91		35		-		69		16		-		69		7			-
Bolivia		105		60		16		91		42		17		83		33			19
Colombia		67		37		109		-		-		-		-		-			-
United States of America		17		15		5		17		13		35		16		13			40
Chile		46		3		188		5		1		-		3		(2	)		-

Total consolidated		4,135		1,856		1,350		3,251		1,503		926		2,757		1,222			746

(*)

Includes total interest and dividend income, other income and net premiums earned from insurance activities.

(**)

Operating income includes the net interest income from banking activities and the amount of the net premiums earned, less insurance claims.

(***)

Non-current assets consist of property, furniture and equipment, intangible assets, and goodwill, net.

F-91

Notes to the consolidated financial statements (continued)

28.

Transactions with related parties

(a)

The Group’s consolidated financial statements as of December 31, 2012 and 2011 include transactions with related companies, the Board of Directors, the Group’s key executives (defined as the Management of Credicorp) and enterprises which are controlled by these individuals through their majority shareholding or their role as Chairman or CEO.

(b)

The following table shows the main transactions with related parties as of December 31, 2012 and 2011:

	2012			2011
	US$(000)			US$(000)

Direct loans		448,353			258,088
Investments available-for-sale and trading securities		171,025			139,676
Deposits		237,610			72,264
Contingent credits		52,556			38,927
Derivatives at fair value		(1,833	)		(1,491	)
Interest income related to loans – income		7,851			5,755
Interest expense related to deposits - expense		6,651			1,564
Other income		2,136			2,147

(c)

All transactions with related parties are made in accordance with normal market conditions available to other customers. As of December 31, 2012, direct loans to related companies are secured by collaterals, had maturities between January 2013 and August 2022 and accrued an annual average interest rate of 7.76 percent (as of December 31, 2011, had maturities between January 2012 and October 2019 and accrued an annual average interest rate of 7.55 percent). Likewise, as of December 31, 2012, the Group maintained an allowance for loan losses to related parties amounting to US$0.7 million (US$1.5 as of December 31, 2011).

(d)

As of December 31, 2012 and 2011, directors, officers and employees of the Group have been involved, directly and indirectly, in credit transactions with certain subsidiaries of the Group, as permitted by Peruvian Banking and Insurance Law Nº26702, which regulates and limits certain transactions with employees, directors and officers of a bank or an insurance company. As of December 31, 2012 and 2011, direct loans to employees, directors and key Management amounted to US$247.2 and US$176.5 million, respectively; said loans are paid monthly and earn interest at market rates.

There are no loans to the Group’s directors and key personnel guaranteed with Credicorp or any of its Subsidiaries’ shares.

F-92

Notes to the consolidated financial statements (continued)

(e)

The Group’s key executives’ compensation (including the related income taxes assumed by the Group) as of December 31, 2012, 2011 and 2010, comprised the following:

	2012		2011		2010
	US$(000)		US$(000)		US$(000)

Salaries		8,060		6,672		5,893
Directors’ compensations		2,214		2,181		2,090

Total		10,274		8,853		7,983

Also, key executives compensation includes share based payments as explained in more detail in Note 19. SARs valuation for the years 2012, 2011 and 2010 resulted in a loss amounting to US$5.3 million, a gain amounting to US$5.8 million and a loss amounting to US$24.5 million, respectively. During said years approximately US$8.9 million, US$25.5 million and US$14.8 million, SARs were executed corresponding to SARs vested in previous years and up to April, 2011. Likewise, approximately US$5.6 million, US$4.9 million and US$3.8 million, stock awards vested in the years 2012, 2011 and 2010, respectively. The related executives’ income tax is assumed by the Group.

(f)

As of December 31, 2012 and 2011, the Group has participations in different mutual funds and hedge funds managed by certain Group’s Subsidiaries; said participations are classified as trading securities or Investments available-for-sale and amounted to approximately US$172.1 and US$75.2 million, respectively.

F-93

Notes to the consolidated financial statements (continued)

29.

Financial instruments classification

The following are the carrying amounts of the financial assets and liabilities captions in the consolidated statements of financial position, by categories as defined under IAS 39:

	As of December 31, 2012														As of December 31, 2011
	Financial assets and liabilities designated at fair value														Financial assets and liabilities designated at fair value
	Held for trading or hedging		At inception		Loans and receivables		Investments available-for-sale		Investments held- to-maturity		Liabilities at amortized cost		Total		Held for trading or hedging		At inception		Loans and receivables		Investments available-for-sale		Liabilities at amortized cost		Total
	US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)
Assets
Cash and due from banks		-		-		7,849,105		-		-		-		7,849,105		-		-		5,502,862		-		-		5,502,862
Receivables from reverse repurchase agreements and security borrowing		-		-		1,200,218		-		-		-		1,200,218		-		-		-		-		-		-
Trading securities		176,751		-		-		-		-		-		176,751		75,611		-		-		-		-		75,611
Investments available-for-sale		-		-		-		7,411,695		-		-		7,411,695		-		-		-		5,915,601		-		5,915,601
Investments held-to-maturity		-		-		-		-		259,663		-		259,663		-		-		-		-		-		-
Loans, net		-		-		20,772,622		-		-		-		20,772,622		-		-		16,922,233		-		-		16,922,233
Financial assets designated at fair value through profit or loss		-		107,138		-		-		-		-		107,138		-		90,103		-		-		-		90,103
Premiums and other policies receivable		-		-		183,983		-		-		-		183,983		-		-		174,367		-		-		174,367
Accounts receivable from reinsurers and coinsurers		-		-		167,460		-		-		-		167,460		-		-		151,080		-		-		151,080
Due from customers on acceptances		-		-		100,768		-		-		-		100,768		-		-		61,695		-		-		61,695
Other assets, Note 12		159,364		-		702,028		-		-		-		861,392		82,519		-		550,109		-		-		632,628

		336,115		107,138		30,976,184		7,411,695		259,663		-		39,090,795		158,130		90,103		23,362,346		5,915,601		-		29,526,180

Liabilities
Deposits and obligation		-		-		-		-		-		24,040,420		24,040,420		-		-		-		-		18,703,847		18,703,847
Payables from repurchase agreements and security lending		-		-		-		-		-		1,878,341		1,878,341		-		-		-		-		250,000		250,000
Due to banks and correspondents		-		-		-		-		-		2,686,261		2,686,261		-		-		-		-		2,060,020		2,060,020
Bankers’ acceptances outstanding		-		-		-		-		-		100,768		100,768		-		-		-		-		61,695		61,695
Financial liabilities designated at fair value through profit or loss		96,124		-		-		-		-		-		96,124		-		-		-		-		-		-
Accounts payable to reinsurers and coinsurers		-		-		-		-		-		68,536		68,536		-		-		-		-		75,366		75,366
Bonds and notes issued		-		-		-		-		-		4,783,388		4,783,388		-		-		-		-		3,965,522		3,965,522
Other liabilities, Note 12		166,158		121,772		-		-		-		664,292		952,222		145,261		-		-		-		472,119		617,380

		262,282		121,772		-		-		-		34,222,006		34,606,060		145,261		-		-		-		25,588,569		25,733,830

F-94

Notes to the consolidated financial statements (continued)

30.

Financial risk management

The Group’s activities involve principally the use of financial instruments, including derivatives. The Group accepts deposits from customers at both fixed and floating rates, for various periods, and seeks to earn above-average interest margins by investing these funds in high-quality assets. The Group seeks to increase these margins by consolidating short-term funds and lending for longer periods at higher rates, while maintaining sufficient liquidity to meet all claims that might fall due.

The Group also seeks to raise its interest margins by obtaining above-average market margins, net of allowances, through lending to commercial and retail borrowers with a range of credit products. Such exposures involve not just on-balance sheet loans and advances; the Group also enters into guarantees and other commitments such as letters of credit and performance.

The Group also trades in financial instruments where it takes positions in traded and over-the-counter instruments, including derivatives, to take advantage of short-term market movements in equities, bonds, currencies and interest rates.

In this sense, risk is inherent in the Group’s activities but it is managed through a process of ongoing identification, measurement and monitoring, subject to risk limits and other controls. This process of risk management is critical to the Group’s continuing profitability and each individual within the Group is accountable for the risk exposures relating to his or her responsibilities. The Group is exposed to operating risk, credit risk, liquidity risk and market risk, the latter being subdivided into trading and non-trading risks.

The independent risk control process does not include business risks such as changes in the environment, technology and industry. They are monitored through the Group’s strategic planning process.

(a)

Risk management structure -

The Group’s Board of Directors and of each subsidiary is ultimately responsible for identifying and controlling risks; however, there are separate independent bodies in the major subsidiaries responsible for managing and monitoring risks, as further explained bellow:

(i)

Board of Directors

The Board of Directors of each major Subsidiary is responsible for the overall risk management approach and for the approval of the policies and strategies currently in place. The Board provides written principles for overall risk management, as well as written policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments.

(ii)

Risk Management Committee

The Risk Management Committee of each major Subsidiary is responsible for the strategy used for mitigating risks as well as setting forth the overall principles, policies and limits for the different types of risks; it is also responsible for monitoring fundamental risk issues and manages and monitors the relevant risk decisions. In addition, in order to effectively manage all the risks, the Risk Management Committee is divided into the following tactical committees which report on a monthly basis all changes or issues in the managed risks:

Credit Risk Committee -

F-95

Notes to the consolidated financial statements (continued)

The Credit Risk Committee is mainly composed by the Chief Risk Executive, the Manager of the Credit Division and the Manager of the Risk Management Area.

Treasury and ALM Risk Committee -

Operational Risk Committee -

(i) the standard methodology for measuring operational risks, (ii) the taxonomy of operational risks and controls and (iii) all the critical processes of the Group. Furthermore, it proposes the approval of any changes to the functions described above and reports any finding to the Risk Management Committee.

F-96

Notes to the consolidated financial statements (continued)

(iii)

Chief Risk Office

The Chief Risk Office is responsible for Implementing policies, procedures, methodologies and actions to identify, measure, monitor, mitigate, report and control the different types of risks to which the Group is exposed. Also, it participates in the design and definition of the strategic plans of the business units to ensure that they are framed within the risk appetite metrics approved by the Board of Directors.

The Chief Risk Office is divided into the following areas:

Risk Management Area

The Risk Management Area is responsible of ensuring that policies and risk management policies established by the Board of Directors are complied and monitored. The Risk Management Area is composed by the Credit Risk Management Department, Market Risk Management Department, the Operational Risk Management Department and the Insurance Risk Management Department.

Treasury Risk Area

Consumer and Micro-business Risk Area

(iv)

Treasury Division

Treasury Division is responsible for managing the Group’s assets and liabilities and the overall financial structure. It is also primarily responsible for the Group’s management of funding and liquidity risks; as well as the investment, forward and spot portfolios, assuming the related liquidity, interest rate and exchange rate risks under the policies and limits currently effective.

(v)

Internal Audit Division

Risk management processes throughout the Group are monitored by the internal audit function, which examines both the adequacy of the procedures and the compliance of them. Internal Audit discusses the results of all assessments with Management, and reports its findings and recommendations to Credicorp’s Audit Committee and Board of Directors.

F-97

Notes to the consolidated financial statements (continued)

(b)

Risk measurement and reporting systems -

The models make use of probabilities derived from historical experience, adjusted to reflect the economic environment. The Group also runs worse case scenarios that would arise in the event that extreme events which are unlikely to occur do, in fact, occur.

Monitoring and controlling risks are primarily performed based on limits established by the Group. These limits reflect the business strategy and market environment of the Group as well as the level of risk that the Group is willing to accept. In addition, the Group monitors and measures the overall risk bearing capacity in relation to the aggregate risk exposure across all risk types and activities.

Information compiled from all the Group’s Subsidiaries is examined and processed in order to analyze, control and identify early any risks. This information is presented and explained to the Board of Directors, the Risk Management Committee, the Audit Committee, and all relevant members of the Group. The report includes aggregate credit exposure, credit metric forecasts, hold limit exceptions, VaR (Value at Risk), liquidity ratios and risk profile changes. Senior Management assesses the fair value of the investments and the appropriateness of the allowance for credit losses periodically.

(c)

Risk mitigation -

As part of its overall risk management, the Group uses derivatives and other instruments to manage exposures resulting from changes in interest rates, foreign currencies, equity risk and credit risk.

The risk profile is assessed before entering into hedge transactions, which are authorized by the appropriate level of seniority within the Group. The effectiveness of hedges is assessed by the Treasury Risk Area. The effectiveness of all the hedge relationships is monitored monthly. In situations of ineffectiveness, the Group will enter into a new hedge relationship to mitigate risk on a continuous basis.

The Group actively uses collateral to reduce its credit risks.

(d)

Excessive risk concentration -

In order to avoid excessive concentrations of risk, the Group’s policies and procedures include specific guidelines to focus on maintaining a diversified portfolio. Identified concentrations of credit risks are controlled and managed accordingly.

F-98

Notes to the consolidated financial statements (continued)

30.1.

Credit risk -

(a)

The Group takes on exposure to credit risk, which is the risk that a counterparty cause a financial loss by failing to discharge an obligation. Credit risk is the most important risk for the Group’s business; therefore, Management carefully manages its exposure to credit risk. Credit exposures arise principally in lending activities that lead to loans and receivables from security borrowing, and investment activities that bring debt securities and other bills into the Group’s asset portfolio. There is also credit risk in off-balance sheet financial instruments, such as contingent credits (indirect loans), which expose the Group to similar risks to loans (direct loans); they are both mitigated by the same control processes and policies. Likewise, credit risk arising from derivative financial instruments is, at any time, limited to those with positive fair values, as recorded in the consolidated statements of financial position.

Impairment provisions are provided for losses that have been incurred at the date of the consolidated statements of financial position. Significant changes in the economy or in the particular situation of an industry segment that represents a concentration in the Group’s portfolio could result in losses that are different from those provided for at the date of the consolidated statements of financial position.

The Group structures the levels of credit risk it undertakes by placing limits on the amount of risk accepted in relation to one borrower or groups of borrowers, and to geographical and industry segments. Such risks are monitored on a revolving basis and subject to frequent reviews. Limits in the level of credit risk by product, industry sector and by geographic segment are approved by the Board of Directors.

Exposure to credit risk is managed through regular analysis of the ability of borrowers and potential borrowers to meet interest and principal repayment obligations and by changing these lending limits where appropriate. Some other specific control and mitigation measures are outlined below:

(i)

Collateral

The Group employs a range of policies and practices to mitigate credit risk. The most traditional of these is the taking of collateral for loans granted. The Group implements guidelines on the acceptability of specific classes of collateral or credit risk mitigation. The main types of collateral obtained are as follows:

For reverse repurchase agreements and security borrowing, securities.

For loans and advances, collaterals include, among others, mortgages over residential properties; liens over business assets such as premises, inventory and accounts receivable; and liens over financial instruments such as debt securities and equities.

F-99

Notes to the consolidated financial statements (continued)

For longer-term finance and lending to corporate entities, collateral includes revolving individual credit facilities. Loans to micro entrepreneurs are generally unsecured. In addition, in order to minimize credit loss the Group will seek additional collateral from the counterparty as soon as impairment indicators arise.

Collateral held as security for financial assets other than loans is determined by the nature of the instrument. Debt securities, treasury and other eligible bills are generally unsecured, with the exception of assets back securities and similar instruments, which are secured by portfolios of financial instruments.

Management monitors the market value of collateral, requests additional collateral in accordance with the underlying agreement, and monitors the market value of collateral obtained during its review of the adequacy of the allowance for impairment losses. It is the Group’s policy to dispose off repossessed properties in an orderly manner. The proceeds are used to reduce or repay the outstanding claim. In general, the Group does not use repossessed properties for its own business.

(ii)

Derivatives

The Group maintains strict control limits on net open derivative positions (for example, the difference between purchase and sale contracts), by both amount and term. The amount subject to credit risk is limited to the current fair value of instruments that are favorable to the Group (for example, an asset when fair value is positive), which in relation to derivatives is only a small fraction of the contract, or notional amount used to express the volume of instruments outstanding. This credit risk exposure is managed as part of the overall lending limits with customers, together with potential exposures from market movements. Collateral or other security is not usually obtained for credit risk exposures on these instruments.

Settlement risk arises in any situation where a payment in cash, securities or equity is made in the expectation of a corresponding receipt in cash, securities or equity. Daily settlement limits are established for each counterparty in order to cover the aggregate of all settlement risk arising from the Group’s market transactions on any single day.

(iii)

Credit-related commitments

The primary purpose of these instruments is to ensure that funds are available to a customer as required. Guarantees and standby letters of credit have the same credit risk as loans. Documentary and commercial letters of credit - which are written undertakings by the Group on behalf of a customer authorizing a third party to draw drafts on the Group up to a stipulated amount under specific terms and conditions - are collateralized by the underlying shipments of goods to which they relate and therefore have less risk than a direct loan. The Group has no mandatory commitments to extend credit.

F-100

Notes to the consolidated financial statements (continued)

In order to manage credit risk, as part of the Group’s risk management structure, see Note 30(a), there is a Credit Risk Management Department whose major functions are implementing methodologies and statistical models for measuring credit risk exposures, developing and applying methodologies for the calculation of risk-ratings, both at the corporate and business unit levels, performing analysis of credit concentrations, verifying that credit exposures are within the established limits and suggesting global risk exposures by economic sector, time term, among others.

Also, a Risk Assessment Committee has been established comprising three directors, the Chief Executive Officer, the Chief Financial Officer, the Deputy Chief Executive Officer, the Chief Risk Officer, the Risk Management Department Manager, Central Manager Retail Banking, Central Manager Wholesale Banking, the Credit Division Manager and the Internal Audit Division Manager as an observer. Each of the financial indicators prepared by the Risk Management Department are analyzed by this committee on a monthly basis to subsequently evaluate the policies, procedures and limits currently effective at the Group to ensure that an efficient and effective risk management is always in place.

At the same time, the Group has a Credit Division, which establishes the overall credit policies for each and all the businesses in which the Group decides to take part. Said credit policies are set forth based on the guidelines established by the Board of Directors and keeping in mind the statutory financial laws and regulations. It’s main activities are: establish the client credit standards and guidelines (evaluation, authorization and control); follow the guidelines established by the Board of Directors and General Management, as well as those established by governmental regulatory bodies; review and authorize credit applications, up to the limit within the scope of its responsibilities and to submit to upper hierarchies those credit applications exceeding the established limits; monitor credit-granting activities within the different autonomous bodies, among others.

(b)

The maximum exposure to credit risk as of December 31, 2012 and 2011, before the effect of mitigation through any collateral, is the book value of each class of financial assets indicated in Note 30.7(a) and the contingent credits detailed in Note 20(a).

Management is confident in its ability to continue to control and sustain minimal exposure of credit risk to the Group resulting from both its loan portfolio and investments based on the following:

98 percent of the gross loan portfolio is categorized in the top two grades of the internal rating system as of December 31, 2012 and 2011;

96 percent of the loan portfolio is considered to be neither past due nor impaired as of December 31, 2012 (97 percent as of December 31, 2011);

81.4 percent of the investments have at least investment credit rating (BBB- or higher) or are debt securities issued by BCRP (unrated) as of December 31, 2012 (81.6 percent as of December 31, 2011);

93.6 percent of securities received as collateral in reverse repurchase agreements and security borrowing have investment credit rating (BBB- or higher) or are debt securities issued by the Colombian and Chilean Governments as of December 31, 2012; and

8.7 percent and 79.1 percent of the cash and due from banks represent amounts deposited in the Group’s vaults or in the BCRP, respectively, as of December 31, 2011 (15.2 percent and 68.7 percent, respectively, as of December 31, 2011).

F-101

Notes to the consolidated financial statements (continued)

(c)

Credit risk management for loans -

Credicorp classifies its loan portfolio into one of five risk categories, depending upon the degree of risk of non-payment of each debtor. The categories used are: (i) normal - A, (ii) potential problems - B, (iii) substandard - C, (iv) doubtful - D and (v) loss - E, which have the following characteristics:

Normal (Class A): Debtors of commercial loans that fall into this category have complied on a timely basis with their obligations and at the time of evaluation do not present any reason for doubt with respect to repayment of interest and principal on the agreed dates, and there is no reason to believe that the status will change before the next evaluation. To place a loan in Class A, a clear understanding of the use to be made of the funds and the origin of the cash flows to be used by the debtor to repay the loan is required. Consumer and micro-business loans are categorized as Class A if payments are current or up to eight days past-due. Residential mortgage loans warrant Class A classification if payments are current or up to thirty days past-due.

Potential problems (Class B): Debtors of commercial loans included in this category are those that at the time of the evaluation demonstrate certain deficiencies, which, if not corrected on a timely manner, imply risks with respect to the recovery of the loan. Certain common characteristics of loans or credits in the category include: delays in loan payments which are promptly covered, a general lack of information required to analyze the credit, out-of-date financial information, temporary economic or financial imbalances on the part of the debtor which could affect its ability to repay the loan, and market conditions that could affect the economic sector in which the debtor is active. Consumer and micro-business loans are categorized as Class B if payments are between 9 and 30 days late. Residential mortgage loans become Class B when payments are between 31 and 60 days late.

Substandard (Class C): Debtors of commercial loans included in this category demonstrate serious financial weakness, often with operating results or available income insufficient to cover financial obligations on agreed upon terms, with no reasonable short-term prospects for a strengthening of their financial capacity. Debtors demonstrating the same deficiencies that warrant classification as category B warrant classification as Class C if those deficiencies are such that if they are not corrected in the near term, they could impede the recovery of principal and interest on the loan on the originally agreed terms. In addition, commercial loans are classified in this category when payments are between 61 and 120 days late. Consumer and micro-business loans are categorized as Class C if payments are between 31 and 60 days late. Residential mortgage loans are classified as Class C when payments are between 61 and 120 days late.

Doubtful (Class D): Debtors of commercial loans included in this category present characteristics that make doubtful the recovery of the loan. Although the loan recovery is doubtful, if there is a reasonable possibility that in the near future the creditworthiness of the debtor might improve, a Class D categorization is appropriate. These credits are distinguished from Class E credits by the requirement that the debtor remain in operation, generate cash flow, and make payments on the loan, although at a rate less than that specified in its contractual obligations. In addition, commercial loans are classified in this category when payments are between 121 and 365 days late. Consumer and micro-business loans are categorized as Class D if payments are between 61 and 120 days late. Residential mortgage loans are Class D when payments are between 121 and 365 days late.

Loss (Class E): Commercial loans which are considered unrecoverable or which for any other reason should not appear on Group’s books as an asset based on the originally contracted terms fall into this category. In addition, commercial loans are classified in this category when payments are more than 365 days late. Consumer and micro-business loans are categorized as Class E if payments are more than 120 days late. Residential mortgage loans are Class E when payments are more than 365 days late.

F-102

Notes to the consolidated financial statements (continued)

The Group reviews its loan portfolio on a continuing basis in order to assess the completion and accuracy of its classifications.

All loans considered impaired (the ones classified as substandard, doubtful or loss) are analyzed by the Group’s Management, which addresses impairment in two areas: individually assessed allowance and collectively assessed allowance, as follows:

Individually assessed allowance -

The Group determines the appropriate allowance for each individually significant loan or advance on an individual basis. Items considered when determining allowance amounts include the sustainability of the counterparty’s business plan, its ability to improve its performance once a financial difficulty has arisen, projected cash flows and the expected payout should bankruptcy happens, the availability of other financial support, including the realizable value of collateral, and the timing of the expected cash flows.

The methodology and assumptions used for estimating future cash flows are reviewed regularly by the Group in order to reduce any differences between loss estimates and actual loss experience.

Collectively assessed allowance -

Allowance requirements are assessed collectively for losses on loans and advances that are not individually significant (including consumer, micro-business and residential mortgages) and for individually significant loans and advances where there is not yet objective evidence of individual impairment (included in categories A and B).

F-103

Notes to the consolidated financial statements (continued)

The collective assessment takes account of impairment that is likely to be present in the portfolio even though there is not yet objective evidence of the impairment in an individual assessment. Impairment losses are estimated by taking into consideration the following information: historical losses on the portfolio, current economic conditions, the approximate delay between the time a loss is likely to have been incurred and the time it will be identified as requiring an individually assessed impairment allowance, and expected receipts and recoveries once impaired. Management is responsible for deciding the length of this period which can extend for as long as one year. The impairment allowance is then reviewed by Management to ensure alignment with the Group’s overall policy.

Impairment losses are evaluated at each reporting date as to whether there is any objective evidence that a financial asset or group of assets is impaired.

Financial guarantees and letter of credit (indirect loans) are assessed and a provision estimated following a similar procedure as for loans.

In the case of borrowers in countries where there is an increased risk of difficulties in servicing external debt, an assessment of the political and economic situation is made, and an additional country risk provision is recorded, if deemed necessary.

When a loan is uncollectible, it is written off against the related provision for loan impairment. Such loans are written off after all the necessary legal procedures have been completed. Subsequent recoveries of amounts previously written off decrease the amount of the provision for loan impairment in the consolidated statements of income.

F-104

Notes to the consolidated financial statements (continued)

The following is a summary of the direct loans classified in three major groups: i) Loans neither past due nor impaired, comprising those direct loans having presently no delinquency characteristics and related to clients ranked as normal or potential problems; ii) Past due but not impaired loans, comprising past due loans of clients classified as normal or with potential problems and iii) Impaired loans, or those past due loans of clients classified as substandard, doubtful or loss; presented net of the provision for loan losses for each of the loan classifications:

	As of December 31, 2012												As of December 31, 2011
	Commercial loans		Residential mortgage loans		Micro-business loans		Consumer loans		Total		%		Commercial loans		Residential mortgage loans		Micro-business loans		Consumer loans		Total		%
	US$(000)		US$(000)		US$(000)		US$(000)		US$(000)				US$(000)		US$(000)		US$(000)		US$(000)		US$(000)
Neither past due nor impaired -
Normal		11,772,380		3,157,358		2,518,271		2,414,579		19,862,588		94		10,036,441		2,496,958		1,954,199		1,919,305		16,406,903		95
Potential problem		259,701		17,922		24,847		23,458		325,928		2		308,164		16,673		15,464		15,188		355,489		2

Past due but not impaired -
Normal		423,698		197,393		71,221		246,657		938,969		4		192,320		118,598		50,584		138,931		500,433		3
Potential problem		10,018		14,696		13,862		48,006		86,582		-		3,532		13,462		4,952		13,600		35,546		-

Impaired -
Substandard		31,399		29,860		60,573		70,780		192,612		1		35,791		23,883		36,716		44,441		140,831		1
Doubtful		46,289		35,993		64,571		85,315		232,168		1		36,908		26,545		43,680		49,394		156,527		1
Loss		5,603		32,265		93,776		76,482		208,126		1		18,185		29,026		69,934		54,012		171,157		1

Gross		12,549,088		3,485,487		2,847,121		2,965,277		21,846,973		103		10,631,341		2,725,145		2,175,529		2,234,871		17,766,886		103

Less: Allowance for loan losses		244,929		80,437		177,239		196,417		699,022		3		187,056		65,429		131,888		135,335		519,708		3

Total, net		12,304,159		3,405,050		2,669,882		2,768,860		21,147,951		100		10,444,285		2,659,716		2,043,641		2,099,536		17,247,178		100

As of December 31, 2012 and 2011, renegotiated loans amounted to approximately US$142.2 and US$96.0 million, respectively, of which US$35.2 and US$23.8 million, respectively, are classified as neither past due nor impaired, US$13.7 and US$0.5 million past due but not impaired, and US$93.3 and US$71.7 million impaired but not past due, respectively.

F-105

Notes to the consolidated financial statements (continued)

The breakdown of the gross amount of impaired loans by class, along with the fair value of related collateral and the amounts of their allowance for loan losses is as follows:

	As of December 31, 2012										As of December 31, 2011
	Commercial loans		Residential mortgage loans		Micro-business loans		Consumer loans		Total		Commercial loans		Residential mortgage loans		Micro- business loans		Consumer loans		Total
	US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)

Impaired loans		83,291		98,118		218,920		232,577		632,906		90,884		79,454		150,330		147,847		468,515

Fair value of collateral		106,635		91,877		38,596		23,800		260,908		112,530		73,815		16,081		11,824		214,250

Allowance for loan losses		48,905		46,401		123,414		162,726		381,446		39,729		38,187		93,215		111,825		282,956

(d)

Credit risk management on reverse repurchase agreements and security borrowing -

Most of these operations are performed by Correval and IM Trust. The Group has implemented credit limits for each counterparty and most of the transactions are collaterized with investment grade financial instruments issued by Colombian and Chilean entities and financial instruments issued by the Colombian and Chilean Governments.

(e)

Credit risk management on investments in trading securities, available-for-sale and held-to-maturity -

The Group evaluates the credit risk identified of each of the financial instruments in these categories, considering the risk rating granted to them by a risk rating agency. For investments traded in Peru, the risk ratings used are those provided by the three most prestigious Peruvian rating agencies (authorized by the Peruvian government regulator) and for investments traded abroad, the risk-ratings used are those provided by the three most prestigious international rating agencies. In the event any subsidiary uses a risk-rating prepared by any other risk rating agency, such risk-ratings are standardized with those provided by the afore-mentioned institutions for consolidation purposes.

F-106

Notes to the consolidated financial statements (continued)

The following table shows the analysis of the risk-rating of investments available-for-sale and held-to-maturity, provided by the institutions referred to above:

	As of December 31, 2012				As of December 31, 2011
	US$(000)		%		US$(000)		%

Instruments rated in Peru:
AAA		484,610		6.3		481,736		8.1
AA- to AA+		179,566		2.3		88,669		1.5
A- to A+		16,985		0.2		23,984		0.4
BB- to BB+		-		-		2,232		-
Unrated
BCRP certificates of deposit		2,965,313		38.7		2,059,780		34.8
Listed and non-listed securities		325,737		4.3		254,306		4.3
Restricted mutual funds		99,748		1.3		88,319		1.5
Mutual funds		117,206		1.5		38,639		0.7
Other instruments		17,937		0.2		33,729		0.6

Subtotal		4,207,102		54.8		3,071,394		51.9

Instruments rated abroad:
AAA		47,957		0.6		128,762		2.2
AA- to AA+		99,081		1.3		164,636		2.8
A- to A+		509,819		6.7		501,229		8.5
BBB- to BBB+		1,929,326		25.2		1,377,466		23.3
BB- to BB+		141,810		1.9		162,137		2.7
Lower than B+		81,450		1.0		47,781		0.8
Unrated
Listed and non-listed securities		298,325		3.9		225,110		3.8
Central Bank of Bolivia certificates of deposit		160,097		2.1		110,945		1.9
Participation in RAL’s funds		78,751		1.0		49,263		0.8
Mutual funds		30,699		0.4		30,069		0.5
Hedge funds		25,050		0.3		27,857		0.5
Other instruments		61,891		0.8		18,952		0.3

Subtotal		3,464,256		45.2		2,844,207		48.1

Total		7,671,358		100.0		5,915,601		100.0

F-107

Notes to the consolidated financial statements (continued)

(f)

Concentration of financial instruments exposed to credit risk:

As of December 31, 2012 and 2011, financial instruments with exposure to credit risk were distributed considering the following economic sectors:

	2012												2011
	Designated at fair value through profit for loss												Designated at fair value through profit for loss
	Held for trading and hedging		At inception		Loans and receivables		Investments available-for-sale		Investments held-to- maturity		Total		Held for trading and hedging		At inception		Loans and receivables		Investments available-for-sale		Total
	US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)

Central Reserve Bank of Perú		-		-		6,205,611		2,965,313		-		9,170,924		-		-		3,784,514		2,059,780		5,844,294
Financial services		238,529		67,774		4,112,539		1,837,776		-		6,256,618		68,940		67,370		2,118,920		1,326,991		3,582,221
Manufacturing		3,438		10,799		2,884,945		445,694		-		3,344,876		27,389		5,308		2,972,923		551,599		3,557,219
Mortgage loans		-		-		3,405,050		-		-		3,405,050		-		-		2,659,716		-		2,659,716
Consumer loans		-		-		2,768,860		-		-		2,768,860		-		-		2,099,536		-		2,099,536
Micro-business loans		-		-		2,669,882		-		-		2,669,882		-		-		2,043,641		-		2,043,641
Commerce		7,343		1,244		2,204,924		64,517		-		2,278,028		1,825		1,754		1,854,206		78,039		1,935,824
Electricity, gas and water		22,588		9,089		1,301,228		509,344		-		1,842,249		3,581		4,741		1,063,025		328,115		1,399,462
Government and public administration		38,095		923		21,125		1,003,341		259,663		1,323,147		50,739		-		310,817		993,166		1,354,722
Leaseholds and real estate activities		853		-		1,212,116		80,112		-		1,293,081		4,201		-		924,031		64,785		993,017
Communications, storage and transportation		1,137		2,325		724,846		289,094		-		1,017,402		39		2,152		665,460		271,922		939,573
Mining		4,370		13,271		734,003		111,071		-		862,715		138		7,640		834,210		150,387		992,375
Community services		-		-		816,744		-		-		816,744		10		-		585,654		94		585,758
Construction		5,438		1,653		478,389		25,894		-		511,374		523		1,138		245,083		30,006		276,750
Agriculture		1,878		-		431,794		1,032		-		434,704		383		-		292,648		674		293,705
Education, health and other services		1,902		-		229,441		28,407		-		259,750		323		-		339,201		21,591		361,115
Insurance		-		-		242,045		711		-		242,756		-		-		178,795		-		178,795
Fishing		939		-		197,810		-		-		198,749		-		-		162,196		2,747		164,943
Other		9,605		60		334,832		49,389		-		393,886		39		-		227,770		35,705		263,514

Total		336,115		107,138		30,976,184		7,411,695		259,663		39,090,795		158,130		90,103		23,362,346		5,915,601		29,526,180

F-108

Notes to the consolidated financial statements (continued)

As of December 31, 2012 and 2011, the financial instruments with exposure to credit risk were distributed by the following geographical areas:

	2012
	Designated at fair value through profit or loss
	Held for trading and hedging		At inception		Loans and receivables		Investments available-for-sale		Investments held- to-maturity		Total
	US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)

Peru		135,021		39,499		27,780,639		5,059,738		153,438		33,168,335
United States of America		42,771		32,101		521,118		901,518		-		1,497,508
Colombia		74,323		-		1,193,428		147,887		50,155		1,465,793
Bolivia		154		-		1,068,992		260,712		-		1,329,858
Chile		24,914		-		191,711		394,783		-		611,408
Brazil		-		1,059		25,451		156,801		43,885		227,196
Europe:
United Kingdom		33,127		-		57,623		71,636		-		162,386
Switzerland		3,028		-		15,499		6,834		-		25,361
France		3,155		20,545		273		19,937		-		43,910
Luxembourg		-		11,594		-		25,590		-		37,184
Spain		-		-		15,525		21,449		-		36,974
Netherlands		-		-		43		24,820		-		24,863
Other Europe		529		-		16,884		11,304		-		28,717
Mexico		-		353		10,097		59,891		12,185		82,526
Multilateral development banks		-		64		-		78,287		-		78,351
Other		19,093		1,923		78,901		170,508		-		270,425

Total		336,115		107,138		30,976,184		7,411,695		259,663		39,090,795

F-109

Notes to the consolidated financial statements (continued)

	2011
	Designated at fair value through profit or loss
	Held for trading and hedging		At inception		Loans and receivables		Investments available-for-sale		Total
	US$(000)		US$(000)		US$(000)		US$(000)		US$(000)

Peru		119,391		28,390		21,410,476		3,843,207		25,401,464
United States of America		18,468		26,981		425,327		939,126		1,409,902
Bolivia		182		-		942,281		179,353		1,121,816
Colombia		4,028		-		210,324		172,117		386,469
Chile		135		-		43,610		284,047		327,792
Brazil		-		297		7,460		113,710		121,467
Europe:
United Kingdom		14,941		-		56,874		62,283		134,098
Switzerland		-		-		51,871		6,485		58,356
France		-		31,157		1,696		11,735		44,588
Luxembourg		-		2,201		-		26,466		28,667
Spain		-		-		8,844		16,815		25,659
Netherlands		-		-		77		20,782		20,859
Other Europe		136		-		12,273		5,610		18,019
Multilateral development banks		-		-		-		74,910		74,910
Mexico		-		-		10,001		59,865		69,866
Other		849		1,077		181,232		99,090		282,248

Total		158,130		90,103		23,362,346		5,915,601		29,526,180

30.2. Market risk -

The Group takes on exposure to market risks, which is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risks arise from open positions in interest rates, currency, commodities and equity products; all of which are exposed to general and specific market movements and changes in the level of volatility of prices such as interest rates, credit spreads, foreign exchange rates and equity prices. Due to the nature of the Group’s current activities, commodity price risk is not applicable.

The Group separates exposures to market risk into two groups: (i) those that arise from value fluctuation of trading portfolios due to movements of market rates or prices (Trading Book) and (ii) those that arise from changes in the structural positions of non-trading portfolios due to movements of the interest rates, prices and foreign exchange ratios (ALM Book).

F-110

Notes to the consolidated financial statements (continued)

The risks that trading portfolios face are managed through Value at Risk (VaR) historical simulation techniques; while non-trading portfolios are managed using Asset and Liability Management (ALM).

(a) Trading Book –

The trading book is characterized for having liquid positions in equities, bonds, foreign currencies and derivatives, arising from market-making transactions where the Group acts as a principal with the clients or with the market. This portfolio includes investments and derivatives classified by Management as held for trading.

(i)

Value at Risk (VaR) -

The Group applies the VaR approach to its trading portfolio to estimate the market risk of positions held and the maximum losses that are expected, based upon a number of assumptions for various changes in market conditions.

Daily calculation of VaR is a statistically-based estimate of the potential loss on the current portfolio from adverse market movements.

The VaR expresses the “maximum” amount the Group might lose, but only to a certain level of confidence (99 percent). There is therefore a specified statistical probability (1 percent) that actual loss could be greater than the VaR estimate. The VaR model assumes a certain “holding period” until positions can be closed (1 - 10 days).

The time horizon used to calculate VaR is one day; however, the one-day VAR is amplified to a 10-day time frame and calculated multiplying the one-day VaR times the square root of 10. This adjustment will be exact only if the changes in the portfolio in the following days have a normal distribution identical and independent; otherwise, the VAR to 10 days will be an approximation.

VaR limits have been established to control and keep track of all the risks taken. These risks arise from the size of the positions and/or the volatility of the risk factors embedded in each financial instrument. Regular reports are prepared for the Treasury and ALM Risk Committee, the Risk Management Committee and Senior Management.

In VaR calculation, the foreign exchange effect is not included because it is measured in the net monetary position, see note 30.2 (b)(ii).

F-111

Notes to the consolidated financial statements (continued)

As of December 31, 2012 and 2011, the Group’s VaR by type of asset is as follows:

	2012			2011
	US$(000)			US$(000)

Equity investments		2,759			234
Debt Investments		2,311			4,763
Swaps		309			3,957
Forwards		1,871			6,325
Options		49			9
Diversification effect		(4,962	)		(7,707	)
Consolidated VaR by asset type		2,337			7,581

As of December 31, 2012 and 2011, the Group’s VaR by risk type is as follows:

	2012			2011
	US$(000)			US$(000)

Interest rate risk		2,787			7,596
Price risk		2,759			234
Volatility risk		1			4
Diversification effect		(3,210	)		(253	)
Consolidated VaR by risk type		2,337			7,581

(b) ALM Book –

Non-trading portfolios which comprise the ALM Book are exposed to different sensitivities that can bring about a deterioration in the value of the assets compared to its liabilities and hence to a reduction of its net worth.

(i)

Interest rate risk -

Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows or the fair values of financial instruments. Cash flows interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Fair value interest rate risk is the risk that the value of a financial instrument will fluctuate because of changes in market interest rates. The Group takes on exposure to the effects of fluctuations in the prevailing levels of market interest rates on both its fair value and cash flows risks. Interest margins may increase as a result of such changes but may also decrease in the event that unexpected movements arise. The Board sets limits on the level of mismatch of interest rate re-pricing that may be undertaken, which is monitored daily by the Market Risk Management Department.

Re-pricing gap -

Gap analysis comprises aggregating re-pricing timeframes into buckets and checking if each bucket nets to zero. Different bucketing schemes might be used. An interest rate gap is simply a positive or negative net re-pricing timeframe for one of the buckets.

F-112

Notes to the consolidated financial statements (continued)

The table below summarizes the Group’s exposure to interest rate risks. It includes the Group’s financial instruments at carrying amounts, categorized by the earlier of contractual re-pricing or maturity dates:

	As of December 31, 2012
	Up to 1 month		1 to 3 months		3 to 12 months			1 to 5 years			More than 5 years			Non-interest bearing			Total
	US$(000)		US$(000)		US$(000)			US$(000)			US$(000)			US$(000)			US$(000)

Assets
Cash and due from banks		6,600,786		32,762		49,288			19,312			-			1,146,957			7,849,105
Receivables from reverse repurchase agreements and security borrowing		1,199,700		518		-			-			-			-			1,200,218
Investments		332,967		1,284,701		1,908,865			1,307,115			1,890,216			1,124,245			7,848,109
Loans, net		2,573,312		5,835,736		4,258,041			5,152,617			2,952,916			-			20,772,622
Financial assets designated at fair value through profit or loss		740		4		2,817			5,082			11,412			87,083			107,138
Premiums and other policies receivables		-		-		-			-			-			183,983			183,983
Accounts receivable from reinsurers and coinsurers		-		-		-			-			-			167,460			167,460
Other assets		-		-		-			-			-			2,668,486			2,668,486
Total assets		10,707,505		7,153,721		6,219,011			6,484,126			4,854,544			5,378,214			40,797,121

Liabilities
Deposits and obligations		6,587,944		1,218,407		7,824,254			1,666,669			119,781			6,623,365			24,040,420
Payables from repurchase agreements and security lending		1,097,358		438,336		342,647			-			-			-			1,878,341
Due to banks and correspondents		387,469		647,311		743,474			591,645			265,497			50,865			2,686,261
Accounts payable to reinsurers and coinsurers		-		-		-			-			-			68,536			68,536
Financial liabilities designated at fair value through profit or loss		-		-		-			-			-			96,124			96,124
Technical, insurance claims reserves and reserves for unearned premiums		28,244		27,358		80,366			359,231			701,489			418,311			1,614,999
Bonds and notes issued		645,994		14,607		53,114			1,412,375			2,648,566			8,732			4,783,388
Other liabilities		-		-		-			-			-			1,263,717			1,263,717
Equity		-		-		-			-			-			4,365,335			4,365,335
Total liabilities and equity		8,747,009		2,346,019		9,043,855			4,029,920			3,735,333			12,894,985			40,797,121

Off-Balance sheet items
Derivatives assets		365,338		448,243		236,937			311,622			98,054			-			1,460,194
Derivatives liabilities		173,992		305,055		262,070			533,902			185,175			-			1,460,194
		191,346		143,188		(25,133	)		(222,280	)		(87,121	)		-			-
Marginal gap		2,151,842		4,950,890		(2,849,977			2,231,926			1,032,000			(7,516,771	)		-

Accumulated gap		2,151,842		7,102,732		4,252,755			6,484,681			7,516,771			-			-

F-113

Notes to the consolidated financial statements (continued)

	As of December 31, 2011
	Up to 1 month		1 to 3 months		3 to 12 months			1 to 5 years			More than 5 years			Non-interest bearing			Total
	US$(000)		US$(000)		US$(000)			US$(000)			US$(000)			US$(000)			US$(000)

Assets
Cash and due from banks		4,246,213		78,627		54,071			29,383			-			1,094,568			5,502,862
Investments		373,863		918,258		1,657,330			832,015			1,430,167			779,580			5,991,212
Loans, net		2,162,685		4,925,920		3,257,678			4,363,071			2,212,879			-			16,922,233
Financial assets designated at fair value through profit or loss		239		-		1,012			7,043			4,937			76,872			90,103
Premiums and other policies receivables		-		-		-			-			-			174,367			174,367
Accounts receivable from reinsurers and coinsurers		-		-		-			-			-			151,080			151,080
Other assets		-		-		-			-			-			1,882,540			1,882,540
Total assets		6,783,000		5,922,805		4,970,091			5,231,512			3,647,982			4,159,007			30,714,397

Liabilities
Deposits and obligations		4,373,417		873,441		6,663,716			1,314,787			87,798			5,390,688			18,703,847
Payables from repurchase agreements and security lending		-		-		250,000			-			-			-			250,000
Due to banks and correspondents		463,660		170,703		683,052			562,815			121,513			58,277			2,060,020
Accounts payable to reinsurers and coinsurers		-		-		-			-			-			75,366			75,366
Technical, insurance claims reserves and reserves for unearned premiums		23,622		19,418		59,191			303,226			596,492			376,349			1,378,298
Bonds and notes issued		711,515		2,737		33,934			1,289,361			1,856,528			71,447			3,965,522
Other liabilities		-		-		-			-			-			818,704			818,704
Equity		-		-		-			-			-			3,462,640			3,462,640
Total liabilities and equity		5,572,214		1,066,299		7,689,893			3,470,189			2,662,331			10,253,471			30,714,397

Off-Balance sheet items
Derivatives assets		495,709		255,321		485,646			202,705			-			-			1,439,381
Derivatives liabilities		14,595		66,720		317,161			972,288			68,617			-			1,439,381
		481,114		188,601		168,485			(769,583	)		(68,617	)		-			-
Marginal gap		1,691,900		5,045,107		(2,551,317	)		991,740			917,034			(6,094,464	)		-

Accumulated gap		1,691,900		6,737,007		4,185,690			5,177,430			6,094,464			-			-

F-114

Notes to the consolidated financial statements (continued)

Sensitivity to changes in interest rates –

The following table presents the sensitivity to a reasonable possible change in interest rates, with all other variables held constant, of the Group’s consolidated statements of income and consolidated statements of comprehensive income; before income tax and non-controlling interest.

The sensitivity of the consolidated statements of income is the effect of the assumed changes in interest rates on the net interest income for one year before income tax and non-controlling interest, based on the floating rate of non-trading financial assets and financial liabilities held at December 31, 2012 and 2011, including the effect of derivatives instruments. The sensitivity of consolidated comprehensive income is calculated by revaluing fixed rate available-for-sale financial assets, before income tax and non-controlling interest, including the effect of any associated hedges, and derivatives instruments designated as cash flow hedges, as of December 31, 2012 and 2011 for the effects of the assumed changes in interest rates:

As of December 31, 2012

Currency

Changes in basis points

Sensitivity of net
income

Sensitivity of
comprehensive income

US$(000)

U.S. Dollar

+/-

26,026

-/+

87,437

U.S. Dollar

+/-

39,039

-/+

131,155

U.S. Dollar

+/-

100

+/-

52,052

-/+

174,874

U.S. Dollar

+/-

150

+/-

78,079

-/+

262,310

Peruvian Currency

+/-

-/+

505

-/+

59,708

Peruvian Currency

+/-

-/+

757

-/+

89,561

Peruvian Currency

+/-

100

-/+

1,009

-/+

119,415

Peruvian Currency

+/-

150

-/+

1,514

-/+

179,123

As of December 31, 2011

Currency

Changes in basis points

Sensitivity of net
income

Sensitivity of
comprehensive income

US$(000)

U.S. Dollar

+/-

15,400

-/+

41,907

U.S. Dollar

+/-

23,100

-/+

62,861

U.S. Dollar

+/-

100

+/-

30,800

-/+

83,815

U.S. Dollar

+/-

150

+/-

46,199

-/+

125,722

Peruvian Currency

+/-

-/+

792

-/+

41,839

Peruvian Currency

+/-

-/+

1,188

-/+

62,759

Peruvian Currency

+/-

100

-/+

1,585

-/+

83,678

Peruvian Currency

+/-

150

-/+

2,377

-/+

125,518

The interest rate sensitivities set out in the table above are illustrative only and are based on simplified scenarios. The figures represent the effect of the pro-forma movements in the net interest income based on the projected yield curve scenarios and the Group’s current interest rate risk profile. This effect, however, does not incorporate actions that would be taken by Management to mitigate the impact of this interest rate risk. In addition, the Group seeks proactively to change the interest rate risk profile to minimize losses and optimize net revenues. The projections above also assume that interest rate of all maturities move by the same amount and, therefore, do not reflect the potential impact on net interest income of some rates changing while others remain unchanged. The projections make other simplifying assumptions too, including that all positions run to maturity.

F-115

Notes to the consolidated financial statements (continued)

Equity securities, mutual funds and hedge funds are not considered as part of the investment securities for sensitivity calculation purposes; however, a 10, 25 and 30 percent of changes in market prices is conducted to these price-sensitivity securities and the expected unrealized gain or loss, before income tax, as of December 31, 2012 and 2011 is presented below:

Market price sensitivity	Changes in market prices	2012		2011
	%	US$(000)		US$(000)

Equity securities	+/-10		62,406		47,942
Equity securities	+/-25		156,016		119,854
Equity securities	+/-30		187,219		143,825
Mutual funds	+/-10		14,791		6,871
Mutual funds	+/-25		36,976		17,177
Mutual funds	+/-30		44,372		20,612
Hedge funds	+/-10		2,505		2,786
Hedge funds	+/-25		6,263		6,964
Hedge funds	+/- 30		7,515		8,357

Commitments in liabilities at fair value (short sales) are related to fixed income and equity financial instruments, and have maturities of one month or less, therefore, the Group expects minimal price fluctuations. As a result, the Group is not subject to significant price risk on these financial liabilities.

(ii)

Foreign exchange risk -

The Group is exposed to foreign currency exchange rates on its financial position and cash flows. Management sets limits on the level of exposure by currency and in total for both overnight and intra-day positions, which are monitored daily.

F-116

Notes to the consolidated financial statements (continued)

Foreign currency transactions are made at the free market exchange rates of the countries where Credicorp’s Subsidiaries are established. As of December 31, 2012 and 2011, the Group’s assets and liabilities by currencies were as follows:

	2012												2011
	U.S. Dollars			Peruvian currency			Other currencies			Total			U.S. Dollars			Peruvian currency			Other currencies			Total
	US$(000)			US$(000)			US$(000)			US$(000)			US$(000)			US$(000)			US$(000)			US$(000)

Monetary assets -
Cash and due from banks		4,864,941			2,811,102			173,062			7,849,105			3,848,401			1,528,576			125,885			5,502,862
Receivables from reverse repurchase agreements and security borrowing		7,500			-			1,192,718			1,200,218			-			-			-			-
Trading securities		70,406			36,557			69,788			176,751			18,416			57,195			-			75,611
Available-for-sale investments		2,566,998			4,315,913			528,784			7,411,695			2,402,643			3,156,017			356,941			5,915,601
Held-to-maturity investments		150,097			109,566			-			259,663			-			-			-			-
Loans, net		11,338,280			8,731,467			702,875			20,772,622			9,734,175			6,773,628			414,430			16,922,233
Financial assets designated at fair value through profit or loss		78,218			28,920			-			107,138			90,103			-			-			90,103
Other assets		390,209			861,137			184,907			1,436,253			684,549			479,663			122,773			1,286,985
		19,466,649			16,894,662			2,852,134			39,213,445			16,778,287			11,995,079			1,020,029			29,793,395

Monetary liabilities -
Deposits and obligations		(10,839,721	)		(12,299,579	)		(901,120	)		(24,040,420	)		(9,282,891	)		(8,718,597	)		(702,359	)		(18,703,847	)
Payables from repurchase agreements and security lending		(651,664	)		(117,647	)		(1,109,030	)		(1,878,341	)		(250,000	)		-			-			(250,000	)
Due to bank and correspondents		(1,835,540	)		(652,240	)		(198,481	)		(2,686,261	)		(1,755,816	)		(304,204	)		-			(2,060,020	)
Financial liabilities designated at fair value through profit or loss		-			-			(96,124	)		(96,124	)		-			-			-			-
Insurance claims reserves and technical reserves		(1,032,693	)		(582,306	)		-			(1,614,999	)		(994,522	)		(383,776	)		-			(1,378,298	)
Bonds and notes issued		(3,818,484	)		(835,663	)		(129,241	)		(4,783,388	)		(3,491,135	)		(474,387	)		-			(3,965,522	)
Other liabilities		(514,113	)		(679,152	)		(138,988	)		(1,332,253	)		(478,792	)		(364,334	)		(50,944	)		(894,070	)
		(18,692,215	)		(15,166,587	)		(2,572,984	)		(36,431,786	)		(16,253,156	)		(10,245,298	)		(753,303	)		(27,251,757	)
		774,434			1,728,075			279,150			2,781,659			525,131			1,749,781			266,726			2,541,638

Forwards position, net		(575,212	)		318,871			256,341			-			339,606			(346,262	)		6,656			-
Currency swaps position, net		(37,466	)		65,782			(28,316	)		-			(167,263	)		167,263			-			-
Cross currency swaps position, net		(60,322	)		(28,872	)		89,194			-			(197,659	)		82,226			115,433			-
Options, net		18,279			(18,279	)		-			-			3,269			(3,269	)		-			-

Net monetary position		119,713			2,065,577			596,369			2,781,659			503,084			1,649,739			388,815			2,541,638

F-117

Notes to the consolidated financial statements (continued)

The Group manages foreign exchange risk by monitoring and controlling the position values due to changes in exchange rates. The Group measures its performance in U.S. Dollar, so if the net foreign exchange position (e.g. Peruvian currency) is an asset, any depreciation of the U.S. Dollar with respect to this currency would affect positively the Group’s consolidated statements of financial position. The current position in a foreign currency comprises exchange rate-linked assets and liabilities in that currency. An institution’s open position in individual currencies comprises assets, liabilities and off-balance sheet items denominated in the respective foreign currency for which the institution itself bears the risk; any appreciation/depreciation of the foreign exchange would affect the consolidated statements of income.

The Group’s net foreign exchange balance is the sum of its positive open non-U.S. Dollars positions (net long position) less the sum of its negative open non-U.S. Dollar positions (net short position); and any devaluation/revaluation of the foreign exchange position would affect the consolidated statements of income. A currency mismatch would leave the Group’s consolidated statements of financial position vulnerable to a fluctuation of the foreign currency (exchange rate shock).

The table below shows the sensitivity analysis of the Peruvian Currency, the currency to which the Group had significant exposure as of December 31, 2012 and 2011 on its non-trading monetary assets and liabilities and its forecast cash flows. The analysis calculates the effect of a reasonably possible movement of the currency rate against the U.S. Dollar, with all other variables held constant on the consolidated statements of income, before income tax. A negative amount in the table reflects a potential net reduction in consolidated statements of income, while a positive amount reflects a net potential increase:

Sensitivity Analysis	Change in currency rates		2012			2011
	%		US$(000)			US$(000)

Devaluation -
Peruvian Currency		5		(98,361	)		(86,828	)
Peruvian Currency		10		(187,780	)		(183,304	)

Revaluation -
Peruvian Currency		5		108,715			78,559
Peruvian Currency		10		229,509			149,976

F-118

Notes to the consolidated financial statements (continued)

30.3.

Liquidity risk -

Liquidity risk is the risk that the Group is unable to meet its payment obligations associated with its financial liabilities when they fall due and to replace funds when they are withdrawn. The consequence may be the failure to meet obligations to repay depositors, fulfill commitments to lend or meet other operating cash needs.

The Group is exposed to daily calls on, among others, its available cash resources from overnight deposits, current accounts, maturing deposits, loans draw-downs, guarantees and other calls. The Group does not maintain cash resources to meet all of these needs, as experience shows that a minimum level of reinvestment of maturing funds can be predicted with a high level of certainty. The Management of the Group’s subsidiaries sets limits on the minimum proportion of funds available to meet such calls and on the minimum level of inter-bank and other borrowing facilities that should be in place to cover withdrawals at unexpected levels of demands. Sources of liquidity are regularly reviewed by the Market Risk Management Department to maintain a wide diversification by currency, geography, provider, product and term.

The matching and controlled mismatching of the maturities and interest rates of assets and liabilities is fundamental to the management of the Group. It is unusual for banks to be completely matched, as transacted business is often based on uncertain terms and of different types. An unmatched position potentially enhances profitability, but also increases the risk of losses.

The maturities of assets and liabilities and the ability to replace, at an acceptable cost, interest-bearing liabilities as they mature are important factors in assessing the liquidity of the Group and its exposure to changes in interest rates and exchange rates.

Liquidity requirements to support calls under guarantees and standby letters of credit (indirect loans) are considerably less than the amount of the commitment, because the Group does not generally expect the third party to draw funds under the agreement. The total outstanding contractual amount of commitments to extend credit does not necessarily represent future cash requirements, as many of these commitments will expire or terminate without being funded.

A maturity mismatch, long-term illiquid assets against short-term liabilities, exposes the consolidated statements of financial position to risks related both to rollover and to interest rates. If liquid assets do not cover maturing debts; a consolidated statements of financial position is vulnerable to a rollover risk. Furthermore, a sharp increase in interest rates can dramatically increase the cost of rolling over short-term liabilities, leading to a rapid increase in debt service. The contractual-maturity gap report is useful in showing liquidity characteristics.

F-119

Notes to the consolidated financial statements (continued)

The table below presents the cash flows payable by the Group by remaining contractual maturities (including future interest payments) at the date of the consolidated statements of financial position. The amounts disclosed in the table are the contractual undiscounted cash flows:

	As of December 31, 2012												As of December 31, 2011
	Up to a month		From 1 to 3 months		From 3 to 12 months		From 1 to 5 years		Over 5 years		Total		Up to a month		From 1 to 3 months		From 3 to 12 months		From 1 to 5 years		Over 5 years		Total
	US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)

Deposits and obligations		7,909,590		1,337,516		12,894,069		1,907,363		155,544		24,204,082		5,411,905		1,052,528		10,728,911		1,533,582		133,685		18,860,611
Payables from repurchase agreements and security lending		1,224,514		101,272		84,784		282,156		209,184		1,901,910		-		-		250,509		-		-		250,509
Due to banks and correspondents		442,018		500,526		752,393		1,221,451		267,081		3,183,469		470,666		96,349		571,842		997,278		197,562		2,333,697
Accounts payable to reinsurer and coinsurers		11,980		34,229		18,998		3,329		-		68,536		18,899		33,650		22,817		-		-		75,366
Financial liabilities designated at fair value through profit or loss		96,124		-		-		-		-		96,124		-		-		-		-		-		-
Technical, insurance claims reserves and reserves for unearned premiums		70,287		194,062		256,621		387,062		706,966		1,614,998		36,818		83,432		139,250		342,179		1,076,579		1,678,258
Bonds and notes issued		10,050		75,857		209,579		2,154,331		2,802,397		5,252,214		26,354		242,985		690,932		2,191,469		2,437,042		5,588,782
Other liabilities		421,163		85,779		382,370		4,827		7,629		901,768		626,736		32,322		17,943		471		9,713		687,185

Total liabilities		10,185,726		2,329,241		14,598,814		5,960,519		4,148,801		37,223,101		6,591,378		1,541,266		12,422,204		5,064,979		3,854,581		29,474,408

The table below shows the contractual maturity of the Group’s contingent credits at the date of the consolidated statements of financial position:

As of December 31, 2012

As of December 31, 2011

Up to a
month

From 1 to 3
months

From 3 to 12
months

From 1 to 5 years

Over 5
years

Total

Up to a
month

From 1 to 3
months

From 1 to 12
months

From 1 to 5 years

Over 5
years

Total

US$(000)

Contingent credits (indirect loans)

461,974

1,327,976

1,727,667

734,937

267,553

4,520,107

375,937

1,332,821

1,490,899

451,492

76,851

3,728,000

The Group expects that not all of the contingent liabilities or commitments will be drawn before expiration of the commitments.

F-120

Notes to the consolidated financial statements (continued)

30.4.

Operational risk -

Operational risk is the risk of loss arising from systems failure, human error, fraud or external events. When controls fail to perform, operational risks can cause damage to reputation, have legal or regulatory implications, or lead to financial loss. The Group cannot expect to eliminate all operational risks, but through a control framework and by monitoring and responding to potential risks, the Group is able to manage the risks. Controls include effective segregation of duties, access, authorization and reconciliation procedures, staff education and assessment processes, including the use of Internal Audit.

30.5

Risk of the insurance activity -

The principal risk the Group faces under insurance contracts is that the actual claims and benefit payments or the timing thereof, differ from expectations. This is influenced by the frequency of claims, severity of claims, actual benefits paid and subsequent development of long-term claims. Therefore the objective of the Group is to ensure that sufficient reserves are available to cover these liabilities.

The above risk exposure is mitigated by diversification across a large portfolio of insurance contracts. The variability of risks is also improved by careful selection and implementation of underwriting strategy guidelines, as well as the use of reinsurance arrangements. The Group’s placement of reinsurance is diversified such that it is neither dependent on a single reinsurer nor are the operations of the Group substantially dependent upon any single reinsurance contract.

Life insurance contracts

The main risks that the Group is exposed are mortality, morbidity, longevity, investment return, expense incurred of loss arising from expense experience being different than expected, and policyholder decision, all of which, do not vary significantly in relation to the location of the risk insured by the Group, type of risk insured or industry.

The Group’s underwriting strategy is designed to ensure that risks are well diversified in terms of type of risk and level of insured benefits. This is largely achieved through diversification across insurable risks, the use of medical screening in order to ensure that pricing takes account of current health conditions and family medical history, regular review of actual claims experience and product pricing, as well as detailed claims handling procedures. Underwriting limits are in place to enforce appropriate risk selection criteria. For example, the Group has the right not to renew individual policies, it can impose deductibles and it has the right to reject the payment of fraudulent claims.

For contracts when death is the insured risk, the significant factors that could increase the overall frequency of claims are epidemics, widespread changes in lifestyle and natural disasters, resulting in earlier or more claims than expected.

For retirement, survival and disability annuities contracts, the most significant factor is continuing improvement in medical science and social conditions that would increase longevity.

Management has made a sensitivity analysis of the estimates of the technical reserves, Note 15(c).

F-121

Notes to the consolidated financial statements (continued)

Non-life insurance contracts (general insurance and healthcare)

The Group principally issues the following types of general insurance contracts: automobile, fire and allied and technical lines and healthcare. Healthcare contracts provide medical expense cover to policyholders. Risks under non-life insurance policies usually cover 12 months.

For general insurance contracts the most significant risks arise from climate changes, natural disasters and other type of damages. For healthcare contracts the most significant risks arise from lifestyle changes, epidemics and medical science and technology improvements.

These risks do not vary significantly in relation to the location of the risk insured by the Group, type of risk insured or industry.

The above risks exposures are mitigated by diversification across a large portfolio of insurance contracts. The variability of risk is improved by careful selection and implementation of underwriting strategies, which are designed to ensure that risks are diversified in terms of risks type and level of insured benefits. This is largely achieved through diversification across industry sectors and geography. Further, strict claim review policies to assess all new and ongoing claims, regular detailed review of claims handling procedures and frequent investigation of possible fraudulent claims are all policies and procedures put in place to reduce the Group’s risk exposure. Insurance contracts also entitle the Group to pursue third parties for payment of some or all costs. Also, the Group actively manages and promptly pursues claims, in order to reduce its exposure to unpredictable future developments that can negatively impact the Group.

The Group has also limited its exposure by imposing maximum claim amounts on certain contracts as well as the use of reinsurance arrangements in order to limit its exposure to catastrophic events.

In the following paragraphs the Group has segregated some risk information related to its insurance business, which has been already included in the Group’s consolidated risk information; in order to provide more specific insight about this particular business.

F-122

Notes to the consolidated financial statements (continued)

(a)

Sensitivity to changes in interest rates -

The following tables demonstrate the sensitivity to a reasonably possible change in interest rates, with all other variables held constant, in consolidated statements of income and consolidated statements of comprehensive income of the insurance activity, before income tax:

As of December 31, 2012

Currency

Changes in basis points

Sensitivity of net
income

Sensitivity of
comprehensive income

US$(000)

U.S. Dollar

+/-

-/+

129

-/+

26,571

U.S. Dollar

+/-

-/+

194

-/+

39,857

U.S. Dollar

+/-

100

-/+

259

-/+

53,144

U.S. Dollar

+/-

150

-/+

388

-/+

79,715

Peruvian Currency

+/-

-/+

9,734

Peruvian Currency

+/-

102

-/+

14,601

Peruvian Currency

+/-

100

+/-

136

-/+

19,468

Peruvian Currency

+/-

150

+/-

204

-/+

29,202

As of December 31, 2011

Currency

Changes in basis points

Sensitivity of net
income

Sensitivity of
comprehensive income

US$(000)

U.S. Dollar

+/-

-/+

108

-/+

16,895

U.S. Dollar

+/-

-/+

163

-/+

25,343

U.S. Dollar

+/-

100

-/+

217

-/+

33,791

U.S. Dollar

+/-

150

-/+

325

-/+

50,686

Peruvian Currency

+/-

-/+

6,444

Peruvian Currency

+/-

111

-/+

9,665

Peruvian Currency

+/-

100

+/-

148

-/+

12,887

Peruvian Currency

+/-

150

+/-

222

-/+

19,331

The interest rate sensitivities set out in the table above are illustrative only and employ simplified scenarios. It should be noted that the effects may not be linear and therefore the results cannot be extrapolated. The sensitivities do not incorporate actions that could be taken by Management to mitigate the effect of the interest rate movements, nor any changes in policyholders’ behaviors.

F-123

Notes to the consolidated financial statements (continued)

(b)

Liquidity risk of the insurance activity -

The Group’s insurance companies are exposed to requirements of cash available, mainly for contracts of insurance claims of short term. The Group holds the available funds for covering its liabilities according to their maturity and estimated unexpected claims.

The Group’s insurance companies control liquidity risk through the exposure of the maturity of their liabilities. Therefore, the investment plan has been structured considering the maturities in order to manage the risk of fund requirements to cover insurance claims and others, in addition to the Group support.

The undiscounted cash flows payable by the Group for insurance claims reserves and technical reserves by their remaining contractual maturities, including future interest payments, is presented in Note 30.3.

Other non-derivative financial liabilities are related to the balances presented in the consolidated statements of financial position and include mainly accounts payable to reinsurers and coinsurers and other liabilities with contractual maturities of less than one year, see also Note 30.3.

Unit linked liabilities are payable on demand and are included in the up to a year column.

(c)

Credit risk of the insurance activity -

Credit risk is the risk that one party to a financial instrument will cause a financial loss to the other party by failing to discharge an obligation.

The following policies and procedures are in place to mitigate the Group’s exposure to credit risk:

The Group sets the maximum amounts and limits that may be advanced to corporate counterparties by reference to their long- term credit ratings.

Credit risk from customer balances, will only persist during the grace period specified in the policy document or trust deed until the policy is paid up or terminated. Commissions paid to intermediaries are netted off against amounts receivable from them in order to reduce the risk of doubtful accounts.

Reinsurance is placed with counterparties that have a good credit rating and concentration of risk is avoided by following guidelines in respect of counterparties’ limits which are set each year by the Board of Directors and are subject to regular reviews. At each reporting date, Management performs an assessment of creditworthiness of reinsurers and updates the reinsurance purchase strategy, ascertaining suitable allowance for impairment.

A Group policy setting out the assessment and determination of what constitutes credit risk for the Group is in place, its compliance is monitored and exposures and breaches are reported to the Group risk committee. The policy is regularly reviewed for pertinence and for changes in the risk environment.

The Group issues unit linked contracts whereby the policyholder bears the investment risk on the financial assets held in the Company’s investment portfolio as the policy benefits are directly linked to the value of the assets in the portfolio. Therefore, the Group has no material credit risk on unit linked financial assets.

F-124

Notes to the consolidated financial statements (continued)

The Group has not provided the credit risk analysis for the financial assets of the unit linked business. This is due to the fact that, in unit linked business, the liability to policyholders is linked to the performance and value of the assets that back those liabilities and the shareholders have no direct exposure to any credit risk in those assets.

30.6.

Capital management -

The Group maintains an actively managed capital base to cover risks inherent in its business. The adequacy of the Group’s capital is monitored using, among other measures, the rules and ratios established by the SBS, the supervising authority of its major subsidiaries and for consolidation purposes.

The Group’s objectives when managing capital, which is a broader concept than the “Equity” on the face of the consolidated statements of financial position, are: (i) to comply with the capital requirements set by the regulators of the markets where the entities within the Group operate; (ii) to safeguard the Group’s ability to continue as a going concern so that it can continue to provide returns for shareholders and benefits for other stakeholders; and (iii) to maintain a strong capital base to support the development of its business.

Considering the Banking Law and Legislative Decree N° 1028, the regulatory capital must be equal to or more than 10 percent of total risk weighted assets and contingent operations, represented by the sum of: the regulatory capital requirement for market risk multiplied by 10, the regulatory capital requirement for operational risk multiplied by 10 and the weighted assets and contingent credits by credit risk. This calculation must include all balance sheet exposures or assets in local or foreign currency. As of December 31, 2012 and 2011, the minimum requirement is 10.0 percent.

The risk-weighted assets are measured by means of a hierarchy of five risk weights classified according to the nature and reflecting an estimate of credit, market and other risks associated with each asset and counterparty, taking into account any eligible collateral or guarantees. A similar treatment is adopted for off-balance sheet exposure, with some adjustments to reflect the more contingent nature of the potential losses.

According to the SBS regulations, the Junior Subordinated Notes issued by BCP are computable to determinate the Group’s regulatory capital, see Note 16(a)(iii).

F-125

Notes to the consolidated financial statements (continued)

As of December 31, 2012 and 2011, the regulatory capital for the subsidiaries engaged in financial and insurance activities amounted to approximately US$3,975.6 and US$3,022.7 million, respectively. This regulatory capital has been determined in accordance with SBS regulations in force as of such dates. According to the SBS regulations, the Group’s regulatory capital exceeds in approximately US$357.5 million the minimum regulatory capital required as of December 31, 2012 (approximately US$549.8 million as of December 31, 2011).

On July 20, 2011, SBS issued Resolution N° 8425 - 2011which states that an entity must determine an additional regulatory capital. In this sense, Peruvian financial institutions must develop a process to assess the adequacy of its regulatory capital in relation with their risk profile, which must follow the methodology described in said resolution. The additional regulatory capital will be equal to the amount of regulatory capital requirements calculated for each of the following components: economic cycle, concentration risk, market concentration risk, interest rates risk, among others. Peruvian financial institutions have a term of five years from July 2012 to adequate their regulatory capital to the new requirements.

Considering the excess of regulatory capital held by the Group as of December 31. 2012 and 2011 in the Management’s opinion, the Group has complied with the requirements set forth in such resolution.

30.7.

Fair value -

(a)

Fair value is defined as the amount for which an asset could be exchanged or a liability settled, between knowledgeable, willing parties in an arm’s length transaction, assuming an on-going enterprise.

When a financial instrument is traded in an active and liquid market, its quoted market price in an actual transaction provides the best evidence of its fair value. When a quoted market price is not available, or may not be indicative of the fair value of the instrument, to determine such fair value the current market value of another instrument that is substantially similar, discounted cash flow analysis or other estimation techniques may be used, all of which are significantly affected by assumptions used. Although Management uses its best judgment in estimating the fair value of these financial instruments, there are inherent weaknesses in any estimation technique. As a result, the fair value may not be indicative of the net realizable or liquidation value.

The methodologies and assumptions used to determine fair values depend on the terms and risk characteristics of the various financial instruments and include the following:

(i)

Assets for which fair value approximates carrying value - For financial assets and financial liabilities that are liquid or having a short term maturity (less than three months) it is assumed that the carrying amounts approximate to their fair value. This assumption is also applied to demand deposits, savings accounts without a specific maturity and variable rate financial instruments.

F-126

Notes to the consolidated financial statements (continued)

(ii)

Fixed rate financial instruments - The fair value of fixed rate financial assets and liabilities carried at amortized cost are estimated by comparing market interest rates when they were first recognized with current market rates offered for similar financial instruments. The estimated fair value of fixed interest bearing deposits is based on discounted cash flows using prevailing market interest rates for financial instruments with similar credit risk and maturity. For quoted debt issued the fair values are calculated based on quoted market prices. When quoted market prices are not available, a discounted cash flow model is used based on a current interest rate yield curve appropriate for the remaining term to maturity.

(iii)

Financial instrument recorded at fair value - The fair value for financial instruments traded in active markets at the dates of the consolidated statements of financial position is based on their quoted market price or dealer price quotations (bid price for long positions and ask price for short positions), without any deduction for transaction costs. For all other financial instruments not listed in an active market, the fair value is determined by using appropriate valuation techniques. Valuation techniques include net present value techniques and comparison to similar instruments for which market observable prices exist, see (b).

F-127

Notes to the consolidated financial statements (continued)

Based in the aforementioned, set out below is a comparison of the carrying amounts and fair values of the Group’s financial instruments that are carried in the consolidated statements of financial position. The table does not include the fair values of non-financial assets and non-financial liabilities:

	2012				2011
	Book value		Fair value		Book value		Fair value
	US$(000)		US$(000)		US$(000)		US$(000)
Assets
Cash and due from banks		7,849,105		7,849,105		5,502,862		5,502,862
Receivables from reverse repurchase agreements and security borrowing		1,200,218		1,200,218		-		-
Trading securities		176,751		176,751		75,611		75,611
Investments available-for-sale		7,411,695		7,411,695		5,915,601		5,915,601
Held-to-maturity investments		259,663		262,565		-		-
Loans, net		20,772,622		20,777,432		16,922,233		16,933,934
Financial assets designated at fair value through profit or loss		107,138		107,138		90,103		90,103
Premiums and other policies receivable		183,983		183,983		174,367		174,367
Accounts receivable from reinsurers and coinsurers		167,460		167,460		151,080		151,080
Due from customers on acceptances		100,768		100,768		61,695		61,695
Other assets		861,392		861,392		632,628		632,628
Total		39,090,795		39,098,507		29,526,180		29,537,881

Liabilities
Deposits and obligation		24,040,420		24,040,420		18,703,847		18,703,847
Payables from repurchase agreements and security borrowing		1,878,341		1,878,341		250,000		250,000
Due to banks and correspondents		2,686,261		2,613,368		2,060,020		2,054,358
Bankers’ acceptances outstanding		100,768		100,768		61,695		61,695
Financial liabilities designated at fair value through profit or loss		96,124		96,124		-		-
Accounts payable to reinsurers and coinsurers		68,536		68,536		75,366		75,366
Bonds and notes issued		4,783,388		5,190,989		3,965,522		3,711,199
Other liabilities		952,222		952,222		617,380		617,380

Total		34,606,060		34,940,768		25,733,830		25,473,845

F-128

Notes to the consolidated financial statements (continued)

(b)

Determination of fair value and fair values hierarchy –

The following table shows an analysis of financial instruments recorded at fair value by level of the fair value hierarchy:

		Level 1		Level 2		Level 3		Total
December 31, 2012	Note	US$(000)		US$(000)		US$(000)		US$(000)

Financial assets
Derivative financial instruments:
Forward exchange contracts			-		74,955		-		74,955
Interest rate swaps			-		30,028		-		30,028
Cross currency swaps			-		27,017		-		27,017
Currency swaps			-		26,931		-		26,931
Options			-		433		-		433
	12(b)		-		159,364		-		159,364

Trading securities			176,751		-		-		176,751
Financial assets designated at fair value through profit or loss	8(a)		90,126		17,012		-		107,138
Investments available-for-sale
Debt securities
BCRP Certificates of deposit			-		2,965,313		-		2,965,313
Corporate, leasing and subordinated bonds			811,088		1,267,480		12,760		2,091,328
Government‘s treasury bonds			650,533		90,244		-		740,777
Other instruments			76,586		838,622		24,278		939,486
Equity securities			610,594		5,884		7,584		624,062
	6(a)		2,148,801		5,167,543		44,622		7,360,966
Total financial assets			2,415,678		5,343,919		44,622		7,804,219

Financial liabilities
Derivative financial instruments:
Forward exchange contracts			-		59,379		-		59,379
Interest rate swaps			-		86,170		-		86,170
Currency swaps			-		16,975		-		16,975
Cross currency swaps			-		3,211		-		3,211
Options			-		423		-		423
	12(b)		-		166,158		-		166,158
Financial liabilities at fair value through profit or loss			16,040		80,084		-		96,124
Total financial liabilities			16,040		246,242		-		262,282

F-129

Notes to the consolidated financial statements (continued)

		Level 1		Level 2		Level 3		Total
December 31, 2011	Note	US$(000)		US$(000)		US$(000)		US$(000)

Financial assets
Derivative financial instruments:
Forward exchange contracts			-		21,135		-		21,135
Interest rate swaps			-		31,754		-		31,754
Cross currency swaps			-		11,331		-		11,331
Currency swaps			-		18,093		-		18,093
Options			-		206		-		206

	12(b)		-		82,519		-		82,519

Trading securities			75,611		-		-		75,611
Financial assets designated at fair value through profit or loss	8(a)		76,931		13,172		-		90,103
Investments available-for-sale
Debt securities
BCRP Certificates of deposit			-		2,059,780		-		2,059,780
Corporate, leasing and subordinated bonds			648,366		1,076,617		2,724		1,727,707
Government‘s treasury bonds			712,290		134,572		-		846,862
Other instruments			55,774		700,555		5,838		762,167
Equity securities			471,759		6,781		876		479,416
	6(a)		1,888,189		3,978,305		9,438		5,875,932
Total financial assets			2,040,731		4,073,996		9,438		6,124,165

Financial liabilities
Derivative financial instruments:
Interest rate swaps			-		106,201		-		106,201
Forward exchange contracts			-		28,672		-		28,672
Currency swaps			-		9,587		-		9,587
Options			-		801		-		801
Total financial liabilities	12(b)		-		145,261		-		145,261

Included in the Level 1 category are financial instruments that are measured in whole or in part by reference to published quotes in an active market. A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency and those prices represent actual and regularly occurring market transactions on an arm’s length basis.

The Level 2 category are financial instruments that are measured based in observed markets factors. This category includes instruments valued using: quoted prices for similar instruments, either in active or less active markets and other valuation techniques (models) where all significant inputs are directly or indirectly observable based on market data.

F-130

Notes to the consolidated financial statements (continued)

Following is a description of how fair value is determined for the main Group’s financial instruments where valuation techniques were used:

Derivatives financial instruments

The most frequently applied valuation techniques include forward pricing and swap models, using present value calculations. The models incorporate various inputs, including the credit quality of counterparties, foreign exchange spot and forward rates and interest rate curves. Options are valued using well-known, widely accepted valuation models.

Debt securities available for sale classified as level 2

Valuation of BCRP certificates of deposit, corporate, leasing, subordinated bonds and Government‘s treasury bonds are measured calculating their Net Present Value (NPV) through discounted cash flows, using appropriate zero coupon rate curves and considering observable current market transactions. Other debt instruments are measured using valuation techniques based on assumptions supported by prices from observable current market transactions, obtained via pricing services. Nevertheless, when prices have not been determined in an active market, fair values are based on broker quotes and assets that are valued using models whereby the majority of assumptions are market observable.

The Level 3 category are financial assets measured using a valuation technique based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.

As of December 31, 2012 and 2011, the net unrealized gain of Level 3 financial instruments amounts to US$6.6 million and US$1.4 million, respectively. During 2012 and 2011, there were no transfer from Level 3 to Level 1 and Level 2 of financial instruments measured at fair value.

30.8.

Fiduciary activities, management of funds and pension funds -

The Group provides custody, trustee, investment management and advisory services to third parties; therefore, the Group makes allocations and purchase and sale decisions in relation to a wide range of financial instruments. Assets that are held in a fiduciary capacity are not included in these consolidated financial statements. These services give rise to the risk that the Group will be accused of poor administration or under-performance.

As of December 31, 2012 and 2011, the assigned value of the financial assets under administration (in millions of U.S. Dollars) is as follows:

	2012		2011

Investments funds		5,340.3		2,818.8
Pension funds		11,846.8		9,395.8
Equity managed		4,959.0		3,850.5

Total		22,146.1		16,065.1

F-131

Notes to the consolidated financial statements (continued)

31.

Commitments and contingencies

Legal claim contingencies –

(i)

Madoff Trustee Litigation -

On September 22, 2011, the Trustee for the liquidations of Bermard L. Madoff Investment Securities LLC (BLMIS), and the substantively consolidated state of Bermard L. Madoff (“the Madoff Trustee”) filed a complaint against Credicorp’s subsidiary Atlantic Security Bank (ASB) in U.S. Bankruptcy Court Southern District of New York, for an amount of approximately US$120 million (“the Complaint”), which corresponds to the funds that ASB managed in Atlantic US Blue Chip Fund and that were redeemed between the end of 2004 and the beginning of 2005 from Fairfield Sentry Limited in Liquidation (hereafter “Fairfield”), a feeder fund that invested in BLMIS.

The Complaint further alleges that the Madoff Trustee filed an adversary proceeding against Fairfield, seeking to avoid and recover the initial transfers of monies from BLMIS to Fairfield; that on June 7 and 10, 2011, the Bankruptcy Court approved a settlement among the Madoff Trustee, Fairfield and others; and that the Madoff Trustee is entitled to recover the sums sought from ASB as “subsequent transfers” of “avoided transfers” from BLMIS to Fairfield that Fairfield subsequently transferred to ASB. The Madoff Trustee has filed similar actions against other alleged “subsequent transferees” that invested in Fairfield and its sister entities which, in turn, invested and redeemed funds from BLMIS.

ASB counsel and the Trustee agreed that ASB has until June 24, 2013 to move, answer or otherwise respond to the Complaint.

Management believes that ASB has substantial defenses against the Madoff Trustee’s claims alleged in the Complaint and intends to contest these claims vigorously. Management considers, among other substantial defenses, that the Complaint considers only the amounts withdrawn, without taking into account the amounts invested in Fairfield. Furthermore, ASB after redeeming said funds from Fairfield re-invested them in BLMIS, through another vehicle, that resulted in a net loss in the funds that ASB managed on behalf of its clients for approximately US$78 million as of December, 2008.

F-132

Notes to the consolidated financial statements (continued)

(ii)

Fairfield Liquidator Litigation -

On April 13, 2012, Fairfield Sentry Limited (In Liquidation) and its representative, Kenneth Krys (the “Fairfield Liquidator”), filed an adversary proceeding against ASB pursuant to Chapter 15 of the U.S. Bankruptcy Code, in the U.S. Bankruptcy Court for the Southern District of New York against (1) ASB and (2) beneficial owners of accounts in Fairfield Sentry funds held by ASB, styled as Fairfield Sentry Limited (In Liquidation) v. Atlantic Security Bank, Adv. Pro. No. 12-01550 (BRL) (Bankr. S.D.N.Y.) (“Fairfield Complaint” or “Fairfield v. ASB Adversary Proceeding”). The Fairfield Complaint is similar to others complaints the Fairfield Liquidators have filed in the Southern District Bankruptcy Court against other entities that invested in various Fairfield funds and redeemed their accounts prior to the Fairfield funds’ insolvency in the wake of the collapse of BLMIS. The Fairfield Complaint sought to recover the amount of approximately US$115.2 million that was redeemed by ASB prior to June 15, 2005. The complaint alleged various common law claims grounded in British Virgin Island (BVI) law against both ASB and beneficial owners on behalf of whom ASB held and redeemed Fairfield Sentry Funds shares.

Thereafter, the Fairfield v. ASB Adversary Proceeding was procedurally consolidated by the Bankruptcy Court with other adversary actions filed by the Fairfield Liquidator against former investors in Fairfield Sentry. Pursuant to that consolidation, and by stipulation of the parties, the Bankruptcy Court’s previously entered stay of all proceedings in the Fairfield Liquidator adversary actions (except for the filing of amended complaints) in light of the pending litigation in the BVI courts calling into question the Fairfield Liquidator’s ability to seek recovery of funds invested with and redeemed from Fairfield Sentry, was applied in the Fairfield v. ASB Adversary Proceeding, thereby indefinitely extending ASB’s time to answer or move until the stay is lifted. On January 14, 2013, the Fairfield Liquidator filed an Amended Complaint in the Fairfield v. ASB Adversary Proceeding seeking the same amount of recovery as in the original complaint but adding additional allegations and causes of action. The Bankruptcy Court stay remains in effect, and ASB’s time to answer or move remains stayed indefinitely pending further order of the Bankruptcy Court.

Management believes that ASB has substantial defenses against the Fairfield Liquidator’s claims alleged in the Amended Complaint and intends to contest these claims vigorously.

F-133