Nov 2 (Reuters) - Credicorp, one of Peru's largest financial holding companies, posted a 6% drop in third-quarter net profit on Thursday as loan-loss provisions grew in the period due to the country's recession and high inflation.

Profit of the South American lender, which offers universal banking, microfinance, insurance and pensions, fell to 1.24 billion soles ($330.3 million) in the quarter, slightly below the 1.27 billion soles estimated by LSEG analysts.

Peru's economy, for years one of the fastest-growing in the region, entered a technical recession earlier this year, with officials now looking for measures to jump-start growth.

Funds set aside in case of bad loans, or so-called loan-loss provisions, rose 85% year-on-year at Credicorp, with units Banco de Credito del Peru (BCP) and MiBanco taking hits from the country's current economic slide.

Loan-loss provisions also rose for BCP's small-business loans on higher-risk, low-ticket customers.

Overall loans also inched up 1.2% from the year-ago quarter.

During the July-to-September period, Credicorp's cost of risk, an indicator of expected losses, rose to 2.5% while non-performing loans rose to 6% of its total portfolio.

The company's return on equity (ROE) landed at 16.2% for the quarter, down from 19.8% in the year-ago period.

"Peru's economic performance is significantly weaker than expected," the firm said in a release, adding that this, coupled with the expected adverse effects from a moderate-to-strong El Nino climate phenomenon, led it to alter its outlook.

Peru's central bank also kicked off an interest rate cut cycle in September, slashing the rate again in October to 7.25%. While the lower interest rates had limited effect in the third quarter, Credicorp "is an asset sensitive bank, (and) lower rates tend to be a headwind," analysts at J.P. Morgan wrote. ($1 = 3.7543 soles) (Reporting by Kylie Madry and Marion Giraldo in Mexico City Editing by David Alire Garcia and Matthew Lewis)