Banco BBVA Perú S A : 22. INFORMES DE CLASIFICACIÓN DE RIESGO.

Banks

Universal Commercial Banks

Peru

Banco BBVA Peru

Update

Ratings

Foreign Currency

Long-Term IDR	BBB
Short-Term IDR	F2

Key Rating Drivers

Standalone Strength: Banco BBVA Peru's (BP's) Issuer Default Ratings (IDRs) are driven by its Viability Rating (VR) of 'bbb'. Fitch Ratings believes the operating environment (OE) is a high influence factor for the ratings. The bank's robust company profile, marked by a strong position as the second-largest bank in Peru (BBB/Stable) with a sizable market share, highly influences its VR.

Local Currency

Long-Term IDR	BBB
Short-Term IDR	F2
Viability Rating	bbb
Support Rating	2

BP's VR reflects good but slightly deteriorated asset quality, ample reserves, reduced yet improving profitability and an ample and diversified funding base. Capital metrics are still pressured with respect to regional peers, although capitalization is enhanced by ordinary support. BP's ratings are constrained at the sovereign level, due to limited geographic diversification outside of Peru and material exposure to foreign currency.

Operating Environment Affects VR: Fitch believes the current Peruvian OE has a high influence on the bank's financial profile. The stabilization of the OE mirrors the Stable Outlook of the sovereign rating and indicates that Fitch expects any modest additional fallout from the rapidly developing external shocks and political uncertainty could be absorbed by the current OE level.

Challenging Asset Quality: The bank's asset quality deteriorated in 2020, as Fitch expected, amid a less benign OE resulting from the onset of the pandemic. However, asset quality continues to benefit from a portion of the loan portfolio being under relief programs. Additionally, 90 days' past due loans (PDLs) reached 3.09% as of 2Q21, compared with 3.03% from YE 2020. BP's asset quality is still better than the industry average and that of other regional peers.

Increasing Provisions: Reserves improved as the bank increased its voluntary provisions to cover about 2.1x 90-day PDLs, as of June 2021, compared with 2.0x at YE 2020 and 1.7x at YE 2019, a level Fitch considers adequate. This is due to the level of historical losses and current expected deterioration in the credits under relief programs, which should remain commensurate with the rating category.

Financial Performance Affected by Reserves: BP's performance in 2020 and 2021 was affected by an increase in loan impairment charges. The bank's net interest margin declined as a consequence of lower interest rates and the bank's focus on Reactiva program loans, which have a lower interest rate compared with more standard commercial loans. Operating profits/risk-weightedassets (RWA) improved to 1.78%, as of 2Q21, from 1.17% at YE 2020. Profitability is expected to return to pre-pandemiclevels during 2022.

Adequate Capital: BP's Fitch Core Capital (FCC) was positively affected by better asset density resulting from the increase in Reactiva loans, which have a lower weighting compared with standard commercial loans, even though BP had higher loan and asset growth in 2020. The FCC ratio, as of 2Q21, was 11.6%, down slightly from YE 2020. A conservative dividends payout ratio policy, especially after lower results in 2020, should sustain capital conservation and support loan growth for the remainder of 2021 and 2022.

Ample and Diversified Funding Base: Funding is stable and diversified, with wider access to domestic and abroad capital markets and adequate matching in currency and tenure. Capital markets funding provides the bank with lower funding costs and long-term funding, which improves asset/liability matching.

Sovereign Risk

Long-Term Foreign Currency IDR	BBB
Long-Term Local Currency IDR	BBB
Country Ceiling	BBB+

Outlooks

Long-Term Foreign Currency IDR	Stable
Long-Term Local Currency IDR	Stable
Sovereign Long-Term Foreign
Currency IDR	Stable
Sovereign Long-Term Local
Currency IDR	Stable

Applicable Criteria

Bank Rating Criteria (February 2020)

Related Research

Fitch Takes Actions on Peruvian FIs Following Sovereign Downgrade (October 2021)

Financial Data

Banco BBVA Peru

(PEN Mil.)	6/30/21	12/31/20
Total Assets	28,144.5	29,651.2
(USD Mil.)
Total Assets	108,328.3	107,337.3
Total Equity	9,458.9	9,361.9

Analysts

Robert Stoll

[phone]

	BP and the largest Peruvian banks were seen as a refuge in 2020 and 2021 after pension fund	Andres Marquez
	[phone]
	withdrawals and lower withdrawals from clients, positively affecting deposit growth. Loans/deposits
	[e-mail]
	was 100.3%, as of YE 2020, returning to levels close to the 2017-2019 period by June 2021.
Firmado Digitalmente por:
ROSA STEFANY CAMPOS GUTARRA
Fecha:	12/11/2021 11:07:20 a.m.
	Update │ November 12, 2021	fitchratings.com	1

Banks

Universal Commercial Banks

Peru

Support Rating: The bank's Support Rating (SR) of '2' reflects its role as one of Banco Bilbao Vizcaya Argentaria's (BBVA; BBB+/Stable) most important subsidiaries in Latin America. In Fitch's opinion, BP is strategically important for BBVA's strategy; therefore, institutional support should be forthcoming, if needed. BBVA's ability to support BP is illustrated by its IDR.

Subordinated Debt Rating: BP's subordinated debt ratings were downgraded to 'BB+', reflecting its baseline notching for loss-severity of two notches from the entity's VRs.

Rating Sensitivities

Factors that Could, Individually or Collectively, Lead to Negative Rating

Action/Downgrade

• BP's IDRs are sensitive to a material deterioration in the local operating environment or a negative sovereign rating action.
• BP's VR could be negatively affected if the bank's asset quality deteriorates significantly causing a sustained decline of the bank's operating performance and capital cushions. A sustained decline in the bank's FCC/adjusted RWA ratio to less than 10%, assuming the maintenance of excess reserves and noncore loss absorbing capital, or operating profit/RWA below 2.5%.
• BP's IDR and its Outlook are driven by its VR and the implied downside potential on this rating. However, if the VR were downgraded, the Long-Term and Short-Term IDRs could become support-driven and remain one notch below the parent BBVA. This is due to Fitch's "higher of" approach and assessment of the subsidiary being strategically important. In this latter case, the Outlook or Rating Watch would mirror that of the parent and the Short-Term IDR will mirror that of the support-driven IDR.

Factors that Could, Individually or Collectively, Lead to Positive Rating

Action/Upgrade

• There is limited upside potential for BP's VR, given the sovereign's current rating and Stable Outlook.
• Over the medium term, ratings can be upgraded by the confluence of an improvement of the OE and the financial profile of the bank.
• BP's IDRs could benefit from an improvement of its parent's ability to provide support, as evidenced by BBVA's IDR.

Support Rating

Factors that Could, Individually or Collectively, Lead to Negative Rating

Action/Downgrade

• BP's SR would be affected by any negative change in BBVA's ability or willingness to support the bank.

Factors that Could, Individually or Collectively, Lead to Positive Rating

Action/Upgrade

• BP's SR would be affected by a positive change in BBVA's ability or willingness to support the bank.

Senior and Subordinated Debt

• BP's senior debt ratings would move in line with its IDR.
• BP's subordinated debt ratings will mirror any action on the bank's VR.

Banco BBVA Peru
Update │ November 12, 2021	fitchratings.com	2

Banks

Universal Commercial Banks

Peru

Issuer Ratings (Including Main Issuing Entities)

Rating Level	Rating
Long-Term Foreign Currency IDR	BBB
Short-Term Foreign Currency IDR	F2
Long-Term Local Currency IDR	BBB
Short-Term Local Currency IDR	F2
Viability Rating	bbb
Support Rating	2
Outlook/Watch	Stable
IDR - Issuer Default Rating.
Source: Fitch Ratings.

Debt Rating Classes

Rating Level	Rating
Senior Unsecured: Long-Term	BBB
Subordinated: Long-Term	BB+
Source: Fitch Ratings.

Banco BBVA Peru
Update │ November 12, 2021	fitchratings.com	3

Banks

Universal Commercial Banks

Peru

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Banco BBVA Peru

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Stable D or RD

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Significant Changes

Fitch has taken selected actions on Peruvian financial institutions (FIs) following Peru's sovereign downgrade to 'BBB' from 'BBB+'. The Rating Outlook was revised to Stable. The review also follows Fitch's adjustment of its OE assessment for Peruvian FIs to 'bbb-' with a Stable Outlook from 'bbb' with a Negative Outlook. For additional details on the sovereign rating action see our analysis Fitch Downgrades Peru to 'BBB' from 'BBB+'; Outlook Stable.

BP's VRs drive its IDRs and, therefore, is sensitive to the OE. The downgrade of the Long-Term IDRs to 'BBB' from 'BBB+' reflect the recent downgrade of Peru's ratings, as the bank ratings are constrained by the sovereign's ratings based on its current intrinsic credit profile. The Short-Term ratings were affirmed at 'F2' due to its strong funding and liquidity profile and are also supported by the higher rating of its parent company BBVA.

Bar Chart Legend

Vertical bars - VR range of Rating Factor Bar Colors - Influence on final VR

Higher influence Moderate influence Lower influence

Bar Arrows - Rating Factor Outlook

	Positive		Negative
	Evolving		Stable

Banco BBVA Peru
Update │ November 12, 2021	fitchratings.com	4

Banks

Universal Commercial Banks

Peru

Summary Financials

	6/30/21
	Six Months (Interim)	2020	2019	2018	2017
	Unaudited	Unaudited	Audited -	Audited -	Audited -	Audited -
(PEN Mil. as of YE Dec. 31)	(USD Mil.)	(PEN Mil.)	Unqualified	Unqualified	Unqualified	Unqualified
Summary Income Statement
Net Interest and Dividend Income	435	1,675.2	3,244.2	3,421.6	3,164.2	2,904.8
Net Fees and Commissions	108	417.1	811.5	812.8	813.4	794.2
Other Operating Income	112	429.9	659.7	692.9	581.3	563.8
Total Operating Income	655	2,522.2	4,715.4	4,927.3	4,558.9	4,262.8
Operating Costs	273	1,049.2	2,056.0	1,952.2	1,767.6	1,775.5
Pre-Impairment Operating Profit	383	1,473.0	2,659.4	2,975.1	2,791.3	2,487.3
Loan and Other Impairment Charges	199	765.4	1,751.2	757.9	744.1	550.9
Operating Profit	184	707.6	908.2	2,217.2	2,047.2	1,936.4
Other Non-Operating Items (Net)	2	6.0	(20.8)	22.1	(10.5)	(41.9)
Tax	61	233.5	239.2	630.2	567.8	505.5
Net Income	125	480.1	648.2	1,609.1	1,468.9	1,389.0
Other Comprehensive Income	(23)	(88.3)	96.3	30.8	(14.4)	6.0
Fitch Comprehensive Income	102	391.8	744.5	1,639.9	1,454.5	1,395.0
Summary Balance Sheet
Assets
Gross Loans	19,519	75,129.9	71,012.9	59,305.3	54,645.3	52,357.9
- Of Which Impaired	603	2,321.5	2,151.5	1,666.5	1,470.0	1,248.4
Loan Loss Allowances	1,288	4,956.6	4,419.1	2,907.0	2,630.2	2,361.5
Net Loan	18,232	70,173.3	66,593.8	56,398.3	52,015.1	49,996.4
Interbank	222	853.2	5,498.9	3,782.8	3,198.8	2,126.4
Derivatives	455	1,750.3	1,001.9	572.3	459.3	500.5
Other Securities and Earning Assets	3,227	12,420.6	11,426.0	6,655.5	6,553.8	7,721.3
Total Earning Assets	22,135	85,197.4	84,520.6	67,408.9	62,227.0	60,344.6
Cash and Due from Banks	4,302	16,559.2	19,593.0	11,184.0	9,736.2	13,200.1
Other Assets	1,707	6,571.7	3,223.7	3,186.0	3,019.5	3,066.1
Total Assets	28,145	108,328.3	107,337.3	81,778.9	74,982.7	76,610.8
Liabilities
Customer Deposits	17,103	65,828.1	70,737.7	54,556.5	48,946.5	47,401.8
Interbank and Other Short-Term Funding	4,769	18,354.1	16,948.9	5,760.7	4,399.6	11,455.7
Other Long-Term Funding	1,851	7,124.2	6,836.1	9,216.8	10,095.5	7,316.5
Trading Liabilities and Derivatives	349	1,343.1	891.0	510.7	546.3	526.0
Total Funding	24,071	92,649.5	95,413.7	70,044.7	63,987.9	66,700.0
Other Liabilities	1,616	6,219.9	2,561.7	2,553.7	2,642.6	2,251.5
Preference Shares and Hybrid Capital	N.A.	N.A.	N.A.	N.A.	N.A.	N.A.
Total Equity	2,457	9,458.9	9,361.9	9,180.5	8,352.2	7,659.3
Total Liabilities and Equity	28,145	108,328.3	107,337.3	81,778.9	74,982.7	76,610.8
Exchange Rate		USD1 = PEN3.85	USD1 = PEN3.62	USD1 = PEN3.31	USD1 = PEN3.37 USD1 = PEN3.24

N.A. - Not applicable.

Source: Fitch Ratings, Fitch Solutions.

Banco BBVA Peru
Update │ November 12, 2021	fitchratings.com	5