Sunday, March 13, 2016

Seeking Alpha: Credicorp Generating Good Results In An Underserved Market

I was pretty down on Credicorp (NYSE:BAP) shares back in May of 2015, as I didn't think the shares offered enough upside to offset the risk. While the company has done pretty well on an operating basis since then, the shares are down about 10% since that last article and have more or less tracked the movement of the Peruvian nuevo sol versus the dollar.

I continue to have mixed feelings about Credicorp. I think this is a pretty well-run emerging market bank, and I like the company's leadership in a growing under-banked market. I don't like the company's heavy reliance on the Peruvian central bank to subsidize the de-dollarization process (moving from dollar-denominated loans and deposits to PEN-denominated), and I have some modest concerns about the level of reserves. I think the shares are about 10% to 15% undervalued even after incorporating a higher cost of capital, so it's not a clear-cut buy to me right now.

Read more:
Credicorp Generating Good Results In An Underserved Market

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