Scotiabank Perú A : 22. INFORMES DE CLASIFICACIÓN DE RIESGO. 10. INFORMACIÓN FINANCIERA Y MEMORIA ANUAL.

Banks

Universal Commercial Banks

Peru

	Scotiabank Peru S.A.A.
		Ratings
	Update
		Foreign Currency
			Long-Term IDR	BBB+
			Short-Term IDR	F1
	Key Rating Drivers		Local Currency
		Long-Term IDR	A-
			Short-Term IDR	F1
	Parent Support: Scotiabank Peru S.A.A.'s (SBP) Issuer Default Ratings (IDRs) and Shareholder
	Support Rating (SSR) are based on expected support from its parent, The Bank of Nova Scotia		Viability Rating	bbb
	(BNS, 'AA-'/Stable). Fitch Ratings considers SBP a strategically important subsidiary for BNS,		Shareholder Support Rating	bbb+
	underpinning the bank's SSR of 'bbb+'. SBP's Long-Term (LT) Foreign Currency (FC) IDR is
	capped by the country risks related to transfer and convertibility reflected in the Country		Sovereign Risk
	Ceiling of 'BBB+' and constrains Fitch's assessment of the ability of the shareholder to support
		Long-TermForeign-Currency
	its subsidiary. SBP's Local Currency (LC) IDR is consistent with a maximum uplift of two notches
		IDR	BBB
	above Peru's sovereign rating. The Outlook revision to Negative on SBP's LT FC and LC IDRs
		Long-TermLocal-Currency IDR	BBB
	mirrors the Outlook revision on the sovereign's LT IDRs.		Country Ceiling	BBB+
	Credit Profile Sensitive to Operating Environment (OE): SBP's Viability Rating (VR) is in line with		Outlooks
	the implied VR, which is underpinned by its solid business profile and capitalization. The Negative
		Long-TermForeign-Currency
	Outlook revision on the IDRs mirrors the revision of the Outlook on Peru's ratings, as the banks
		IDRa	Negative
	are constrained by the sovereign's ratings based on their current intrinsic credit profiles.
		Long-TermLocal-Currency
	Solid Capital Levels: Although SBP continues to report one of the strongest capitalization		IDRa	Negative
		Sovereign Long-Term Foreign-
	metrics among the largest Peruvian banks, it has decreased from its peak in 2020 (14.8%). The
		Currency IDRb	Negative
	Fitch Core Capital/risk-weighted assets (FCC/RWA) ratio stood at 13.3% as of June 2022. In		Sovereign Long-Term Local-
	Fitch's view, the capital ratio is explained by growth in secured loans, recurrent earnings		Currency IDRb	Negative
	generation and a flexible dividend payout. Loss absorption was also enhanced by higher loan		aRevised from Stable on Oct. 28, 2022.
	loss allowance coverage. Fitch's capitalization assessment is a rating strength and supports the		bRevised from Stable on Oct. 20, 2022.
	current VR, as the assessment highly benefits from ordinary support from its ultimate parent.
	Risk Profile Underpinned Asset Quality: SBP's adjustment to its risk appetite contributes to		Applicable Criteria
	the return of asset quality to pre-coronavirus pandemic levels. Additionally, continued slight		Bank Rating Criteria (September 2022)
	adjustments of its internal models and ongoing monitoring of the loan portfolio and warning
	signals, as well as a strengthened collection process, have contributed to asset quality		Related Research
	performance. As expected by Fitch, consolidated PDL decreased to 3.6% at 2Q22 from 6.5% at
		Fitch Takes Actions on Peruvian FIs following
	YE20, a result close to its average for 2016-2019 of 3.6%.
		Sovereign and OE Outlook Revision to
	Operational Profits Recovery: In Fitch's opinion, SBP's recovery in profitability is explained by		Negative (October 2022)
		Peru (October 2022)
	risk appetite adjustments, good efficiency levels and solid business generation amid local
		Fitch Affirms Bank of Nova Scotia at 'AA-';
	political uncertainty pressures. Although loan portfolio rebalancing and low interest rates
	decreased business volume, SBP operational profit recovery was supported by lower than		Outlook Revised to Stable (July 2022)
	expected provision expenses and greater subsidiaries and fees contribution. Operating profit
	to RWA was 3.3% at 2Q22, up from 1.8% in Dec. 2021 and 0.4% at YE20, slightly better than
	the Peruvian bank average of 2.9% for the same period.
	Adequate Liquidity and Stable Funding: SBP has appropriately managed its liquidity to fund
	asset growth while closely matching the maturities of its liabilities. SBP's funding profile is		Analysts
	strengthened by its diversified mix of deposits, short-term funding and LT debt. SBP conforms
	to Basel III regulatory liquidity requirements and significantly reduced its historical asymmetry		Robert Stoll
	of loans/deposits in LC versus FC. Its loans to customer deposits ratio of 132.2% as of June 2022	[phone]
	is explained by SBP's usage of LT debt that aims for a composition of stable resources in line		[e-mail]
	with liquidity policies and coverage ratios.
			Sergio Pena
		[phone]
			[e-mail]
Firmado Digitalmente por:
FRANCISCO GUILLERMO
RIVADENEIRA GASTANETA
Fecha: 14/11/2022 05:41:21 p.m.
	Update │ November 14, 2022		fitchratings.com	1

Banks

Universal Commercial Banks

Peru

Rating Sensitivities

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

Action/Downgrade

• Under Fitch's current support assessment and a multiple notch downgrade scenario from BNS, SBP's IDRs will likely remain at the level determined by its own VR or one notch below its parent's IDR, whichever is higher, but subject to sovereign rating and Country Ceiling considerations.
• Pressure on SBP's VR could arise from a significant asset quality or profitability deterioration that erodes SBP's reserve and capital cushion, specifically operating profit/RWA sustained below its historical average of 2.0% and an FCC ratio below 10%.

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

Action/Upgrade

• A rating upgrade of SBP's LT LC IDR is unlikely over the rating horizon. Over the medium term, this rating could be upgraded if the parent's ratings are upgraded or if Fitch's support assessment of SBP changes to an equalization of its IDRs with those of the parent, but it is subject to constraints on the maximum uplift above the sovereign rating.
• While unlikely in the current OE, SBP's LT FC IDR would be upgraded if Peru's sovereign rating and Country Ceiling are upgraded.

Debt Rating Classes

Rating Level	Rating
Subordinated: Long-Term	BBB
Source: Fitch Ratings.

Subordinated debt: SBP's subordinated debt rating of 'BBB' is one notch below what Fitch considers the appropriate anchor rating, the bank's own support-driven LT FC IDR of 'BBB+'. This anchor rating is capped by Peru's Country Ceiling, which addresses transfer and convertibility risks; hence, the overall notching for this issue rating is only one notch lower than the anchor to reflect loss severity risk partially mitigated by institutional support, instead of the baseline case of two notches lower.

Rating Sensitivities

• SBP's subordinated debt ratings would move in line with their respective anchor rating, the bank's support-driven LT FC IDR.

Scotiabank Peru S.A.A.
Update │ November 14, 2022	fitchratings.com	2

Banks

Universal Commercial Banks

Peru

Ratings Navigator

Operating Environment

Financial Profile

Shareholder SupportRating

Business Profile

Risk Profile

Asset Quality

Earnings & Profitability

Capitalisation & Leverage

Funding & Liquidity

Implied Viability Rating

Viability Rating

Issuer Default Rating

20%

10%

20%

15%

25%

10%

aaa

aaa

aaa

aaa

AAA

aa+

aa+

aa+

aa+

AA+

aa

aa

aa

aa

AA

aa-

aa-

aa-

aa-

AA-

a+

a+

a+

a+

A+

a

a

a

a

A

a-

a-

a-

a-

A-

bbb+

bbb+

bbb+

bbb+ bbb+

BBBBB++ Neg

bbb

bbb

bbb

bbb bbb

bbb

BBB

bbb-

bbb-

bbb-

bbb-

BBB-

bb+

bb+

bb+

bb+

BB+

bb

bb

bb

bb

BB

bb-

bb-

bb-

bb-

BB-

b+

b+

b+

b+

B+

b

b

b

b

B

b-

b-

b-

b-

B-

ccc+

ccc+

ccc+

ccc+

CCC+

ccc

ccc

ccc

ccc

CCC

ccc-

ccc-

ccc-

ccc-

CCC-

cc

cc

cc

cc

CC

c

c

c

c

C

f

f

f

ns

D or RD

The Key Rating Driver (KRD) weightings used to determine the implied Viability Rating (VR) are shown as percentages at the top. In cases where the implied VR is adjusted upward or downward to arrive at the VR, the KRD associated with the adjustment reason is highlighted in red. The shaded areas indicate the benchmark-implied scores for each KRD.

Significant Changes

Fitch revised the Outlook on the sovereign's LT IDR to Negative as a deterioration in political stability and government effectiveness has increased downside risks to Peru's ratings. In the agency's view, weaker governance poses greater downside risks to investment and economic growth.

Fitch also revised the Outlook on the OE score to negative as a slowdown in economic and loan growth, an increase in borrowing costs and persistent political uncertainty are detracting from Peruvian banking sector activity. However, sustained capitalization, improving profitability and lower loan impairment charges provide sufficient resilience to face stress from political uncertainty and external shocks.

Scotiabank Peru S.A.A.
Update │ November 14, 2022	fitchratings.com	3

Banks

Universal Commercial Banks

Peru

Summary Financials and Key Ratios

	6/30/22				2019
	Six Months - Interim
				Audited -
(PEN Mil., Year End Dec, 31, Unaudited)	(USD Mil.)		2021	2020	Unqualified
Summary Income Statement
Net Interest and Dividend Income	448	1,710.0	3,181.2	4.130.2	4,398.3
Net Fees and Commissions	131	500.0	617.7	532.5	685.4
Other Operating Income	39	149.7	399.7	425.0	524.7
Total Operating Income	618	2,359.7	4,198.6	5,087.7	5,608.4
Operating Costs	243	927.3	1,976.7	2,022.7	2,062.5
Pre-Impairment Operating Profit	375	1,432.4	2,221.9	3,065.0	3,545.9
Loan and Other Impairment Charges	70	265.9	910.7	2,845.3	1,599.1
Operating Profit	305	1,166.5	1,311.2	219,7	1,946.8
Other Non-Operating Items (Net)	(3.0)	(9.8)	19.2	35.7	11.6
Tax	98	375.4	298,3	3,0	485.8
Net Income	205	781.3	1.032,1	252.4	1,472.6
Other Comprehensive Income	(34)	(128.1)	(416.1)	(118.6)	32.9
Fitch Comprehensive Income	171	653.2	616.0	133.8	1,505.5
Summary Balance Sheet
Assets
Gross Loans	16,253	62,086.4	58,926.5	54,929.4	53,843.8
- of which impaired	594	2,268.0	2,317.9	3,530.8	2,017.7
Loan Loss Allowances	986	3,766.6	3,890.5	5,374.7	2,912.9
Net Loan	15,267	58,319.8	55,036.0	49,554.7	50,930.9
Interbank	175	668.5	661.6	474.5	38.0
Derivatives	104	396.8	412.8	189.6	158.1
Other Securities and Earning Assets	1,192	4,555.2	5,256.3	8,875.3	6,492.0
Total Earning Assets	16,738	63,940.3	61,366.7	59,094.1	57,619.0
Cash and Due from Banks	3,540	13,522.9	13,646.8	17,117.3	15,072.2
Other Assets	1,109	4,237.7	3,870.3	3,792.7	3,623.6
Total Assets	21,388	81,700.9	78,883.8	80,004.1	76,314.8
Liabilities
Customer Deposits	12,292	46,955.2	47,237.6	48,575.2	44,763.0
Interbank and Other Short-Term Funding	2,118	8,091.1	6,480.1	16,709.3	12,718.3
Other Long-Term Funding	3,591	13,715.8	12,711.3	3,312.9	7,340.9
Trading Liabilities and Derivatives	136	518.4	398.3	181.6	129.7
Total Funding and Derivatives	18,136	69,280.5	66,827.3	68,779.0	64,951.9
Other Liabilities	574	2.194.2	1,250.8	1,203.6	1,464.7
Total Equity	2,677	10,226.2	10,805.7	10,021.5	9,898.2
Total Liabilities and Equity	21,388	81,700.9	78,883.8	80,004.1	76,314.8
Exchange Rate	USD1 = PEN3,82 USD1 = PEN3,9849	USD1 = PEN3,62	USD1 = PEN3,312

Source: Fitch Ratings, Fitch Solutions.

Scotiabank Peru S.A.A.
Update │ November 14, 2022	fitchratings.com	4

Banks

Universal Commercial Banks

Peru

Summary Financials and Key Ratios

(As of Dec. 31)	6/30/22	2021	2020	2019
Ratios (%, annualized as appropriate)
Profitability
Operating Profit/Risk-Weighted Assets	3.3	1.8	0.4	2.9
Net Interest Income/Average Earning Assets	5.5	5.1	6.9	8.0
Non-Interest Expense/Gross Revenue	39.5	47.4	39.9	36.9
Net Income/Average Equity	15.3	10.0	2.5	15.9
Asset Quality
Impaired Loans Ratio	3.7	3.9	6.4	3.8
Growth in Gross Loans	5.4	7.3	2.0	8.4
Loan Loss Allowances/Impaired Loans	166.1	167.9	152.2	144.4
Loan Impairment Charges/Average Gross Loans	0.9	1.6	5.1	3.0
Capitalization
Fitch Core Capital Ratio	13.3	13.8	14.8	13.6
Tangible Common Equity/Tangible Assets	11.6	12.7	11.5	11.8
Net Impaired Loans/Fitch Core Capital	(16.0)	(15.9)	(20.3)	(10.0)
Funding and Liquidity
Gross Loans/Customer Deposits	132.2	124.7	113.1	120.3
Customer Deposits/Total Non-Equity Funding	68.3	71.1	70.8	69.1

Source: Fitch Ratings, Fitch Solutions.

Scotiabank Peru S.A.A.
Update │ November 14, 2022	fitchratings.com	5