Moody's: Peru banks stable

Moody's Investors Service said in a report on Peru's banking industry that robust loan growth and improving financial fundamentals are factors underpinning the stable outlook for bank financial strength and deposit ratings.

"Peruvian bank earnings expanded strongly in 2006 and particularly in the first half of 2007, with loan growth and securities and foreign exchange income contributing to a surge in profitability," said the report's author, vice president and regional credit officer Jeanne Del Casino.

"Improving macroeconomic and country risk conditions provide a healthy backdrop for business growth," the analyst explained in an agency release, "and - coupled with still low long term interest rates - are boosting credit demand. These trends should continue into 2008 as long as the banks keep control of credit and operating costs in the context of this broad credit expansion."

Of some concern is the recent uptick in benchmark interest rates in response to higher inflation and. to a lesser degree, the turmoil in international credit markets, the agency noted.

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