OREANDA-NEWS. Fitch Ratings has published a peer review of Peru's five largest private banks comprising approximately 89% of Peru's banking system assets at year-end 2015 (YE15). The five banks have a universal bank profile -- largely concentrated in Peru -- and assets between USD39.8 billion and USD3.3billion at year-end 2015.

The Peruvian banks have maintained strong and healthy profitability. Revenues are well diversified and have shown resilience in the face of current economic conditions, while operating expenses -- which saw periodic surges due to network expansion -- have grown in line with asset growth. Profitability is expected to decline but should continue to compare well among peers. Balance sheets for the Peruvian banks are generally well diversified between corporate and retail lending. Within retail portfolios, a gradual re-balancing in terms of products occurred in the past few years with a renewed focus on low-risk mortgages.

Financial regulation in Peru is among the strongest in the region and has meeting Basel III standards since 2012. Minimum capital requirements were raised, including buffers for obligor, industry or geographic concentration, interest rate risk in the banking book and risk appetite. A countercyclical reserve buffer rule is in place and had been triggered ever since rolling GDP growth slowed in 2014. Peruvian banks have been reporting liquidity coverage ratios (LCR) since 2013 and will have to comply with 100% of the target during 2017.

Regulators are working on a net stable funding ratio (NSFR) and new rules to improve the quality of capital and tighten requirements for equity-like subordinated debt, although the latter will require modifications of the banking law.