CREDICORP LTD (BAP) Business, 2020

Credicorp Ltd. (The New York Stock Exchange (NYSE) and Bolsa de Valores de Lima (BVL) trading code: BAP) is an exempted company that was formed in Bermuda on August 17, 1995 pursuant to the Bermuda Companies Act 1981 to act as a holding company for, and to coordinate the policy and administration of our subsidiaries, which include BCP Stand-alone, BCP Bolivia, Mibanco, Grupo Pacifico, Prima AFP, Credicorp Capital and ASB. We currently hold, directly and indirectly, 97.71% of BCP, 99.96% of BCP Bolivia, 99.92% of Mibanco, 98.81% of Grupo Pacifico, 100.00% of Prima AFP, 100.00% of Credicorp Capital and 100.00% of ASHC (and 100.00% of ASB through ASHC). See “ITEM 4. INFORMATION ON THE COMPANY – 4.C Organizational Structure”. In Bermuda, Credicorp operates under the Bermuda Companies Act 1981 (as to date amended).

Our principal activity is to coordinate and manage the business plans of our subsidiaries in an effort to implement a universal banking service mainly in Peru, Bolivia, Colombia and Chile and to develop our insurance and pension funds and Investment Banking and Wealth Management businesses. Though we primarily focus on the aforementioned countries, we also make limited investments in other countries in the same region. Our registered address in Bermuda is at Clarendon House, 2 Church Street, Bermuda, the phone number is +1 441 295 5950 and the address of our Internet website is https://www.grupocredicorp.com/ (which website, and the information on such website, are not incorporated in this Form 20-F). The management and administrative office (that is, principal place of business) of our principal subsidiary, Banco de Credito del Peru, is located at Calle Centenario 156, La Molina, Lima 12, Peru, and its phone number is +51-1-313-2000.

The SEC maintains an Internet website that contains reports of issuers that file electronically with the SEC. Our electronic filings with the SEC are available to the public from the SEC’s Internet website at http://www.sec.gov. (Trading Code – BAP)

As of December 31, 2020, our total assets were S/237.4 billion and our equity attributable to Credicorp’s equity holders was S/24.9 billion. Our net profit attributable to Credicorp’s equity holders in 2018, 2019 and 2020 was S/3,983.9 million, S/4,265.3 million and S/346.9 million, respectively. See “ITEM 3. KEY INFORMATION – 3.A Selected Financial Data” and “ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS”.

During 2012, Credicorp initiated the creation of a regional investment banking platform. On April 27, 2012, Credicorp acquired a 51% stake in Correval S.A. Comisionista de Bolsa in Colombia and On July 31, 2012, Credicorp acquired 60.6% of IM Trust S.A. Corredores de Bolsa in Chile. In April 2013, Credicorp Capital Peru S.A.A. was created and included Credicorp Capital Bolsa, Credicorp Capital Titulizadora, Credicorp Capital Fondos and BCP Stand-alone’s investment banking activities.

On March 20, 2014, Credicorp, through its subsidiary Edyficar S.A. (Edyficar), acquired a 60.68% stake in Mibanco, Banco de la Microempresa S.A. (Mibanco). During the following months, Credicorp acquired an additional total of 26.25% of Mibanco’s capital stock. As of December 31, 2014, Credicorp owned 86.93% of Mibanco’s capital stock. A merger transaction between Edyficar and Mibanco was made effective on March 2, 2015. As of the date that the merger became effective, Credicorp held 95.36% of the new Mibanco’s capital stock.

In 2015, Grupo Pacifico signed an agreement with Banmedica to participate as equal partners in the health insurance and medical services business. This association includes the private health insurance managed by Pacifico Seguros, the corporate health insurance for employees sold by Pacifico Seguros corporate health insurance business, and medical subsidiaries (associate clinics, cancer centers and health laboratories) that provide medical services. As a result, Grupo Pacifico transferred the majority control of Pacifico corporate health insurance business and medical services to Banmedica. Consequently, the Pacifico corporate health insurance business and medical services are no longer consolidated with Grupo Pacifico for accounting purposes and are reported as an investment in associates.

On May 12, 2016, BCP Stand-alone sold its shares of BCP Bolivia to ICBSA, an indirect subsidiary of Credicorp Ltd. This transfer was part of the reorganization of Credicorp’s organizational structure in Bolivia to efficiently manage its investments in that country and to comply with applicable Bolivian rules and regulations.

On September 30, 2016, Credicorp Capital, through its holding subsidiaries, concluded the acquisition of non-controlling interests in its operating subsidiaries Credicorp Capital Colombia S.A. Later, Inversiones IMT S.A. was dissolved, and replaced as an operating subsidiary by Credicorp Capital Chile.

On February 23, 2017, at the Annual Shareholders’ Meetings of PPS and Pacifico Vida, the merger between PPS and Pacifico Vida was approved. The merger came into effect on August 1, 2017, after the SBS issued the corresponding merger authorization. The resulting company is Pacifico Compañia de Seguros y Reaseguros (Pacifico Seguros).

On December 20, 2017, Credicorp’s Board of Directors resolved to organize Credicorp’s subsidiaries in four LoBs: Universal Banking; Microfinance; Insurance and Pension; and Investment Banking and Wealth Management. These changes took effect on April 1, 2018.

On April 18, 2018, Credicorp Ltd., through its subsidiaries Grupo Credito and BCP Stand-alone acquired 3.23% and 0.06%, respectively, of the share capital of Mibanco from minority shareholders for approximately S/129.0 million and S/2.4 million, respectively. Additionally, on May 22 and 23, 2018, BCP Stand-alone acquired 1.22% and 0.05%, respectively, of the share capital of Mibanco from minority shareholders for approximately S/47.3 million and S/1.9 million, respectively. These acquisitions of non-controlling interest were recorded as equity transactions. Through these acquisitions, Credicorp Ltd. increased its interest in the share capital of Mibanco from 93.18% to 97.74%.

On May 7, 2018, Credicorp Ltd. sold to its subsidiary Grupo Credito 220,113,636 shares of BCP Stand-alone owned by Credicorp Ltd., which represented 2.77% of BCP Stand-alone’s share capital. The amount paid per share was S/6.61. Following this sale, Credicorp, in conjunction with its subsidiary Grupo Credito, continued to own 97.7% of the shares of BCP Stand-alone.

In January 2019, 91.36% of the Compania Incubadora de Soluciones Moviles S.A. – Culqi was acquired and Krealo S.P.A was chartered. In March 2019, Credicorp Capital Negocios Digitales S.A.S. was chartered; in July 2019, 100% of Tenpo SPA and 100% of Multicaja Prepago S.A. were acquired.

On February 12, 2019, Credicorp Ltd., through its subsidiary Credicorp Holding Colombia S.A.S., reached an agreement with the shareholders of Ultraserfinco S.A. Comisionista de Bolsa, a financial services company in Colombia, to acquire a 100% stake in Ultraserfinco S.A. Comisionista de Bolsa and its subsidiaries, which include 100% of Ultra Holding Group Inc., which in turn holds 100% of Ultralat Group Inc. (includes 100% of Ultralat Investment Advisor and 100% of Ultralat Capital Market Inc.), for approximately US$43.0 million. On November 1, 2019, after obtaining the necessary regulatory approvals, the complete acquisition of 100% of the capital stock of Ultraserfinco S.A. Comisionista de Bolsa completed through Credicorp Holding Colombia S.A.S and Credicorp Capital Fiduciaria S.A. Ultraserfinco S.A. Comisionista de Bolsa has several subsidiaries including Ultralat, a company regulated by the SEC.

On June 28, 2019, Credicorp Ltd., through its subsidiary Credicorp Holding Colombia S.A.S., reached an agreement with the majority shareholders of Banco Compartir S.A. (Bancompartir) to acquire a majority stake in Bancompartir, which provides microfinance and SME financing solutions to micro entrepreneurs and was one of the top four microfinance banks in Colombia. On December 2, 2019, Credicorp Ltd. announced that after obtaining the necessary regulatory approvals, it completed the acquisition of 77.46% of the capital stock of Bancompartir for approximately US$76.0 million, as part of Credicorp Ltd.’s strategy of expanding its microfinance business in Latin America.

On October 30, 2020, Credicorp Ltd. confirmed the merger of Bancompartir and Edyficar S.A.S (Encumbra), to be integrated under the name Mibanco - Banco de la Microempresa de Colombia S.A. (Mibanco Colombia). The merged entity has a consolidated loan portfolio of more than US$270 million as of December 31, 2020. Its operating model focuses on achieving financial inclusion and social development serving and accompanying small and micro entrepreneurs in line with the business strategy proposed by Credicorp.

Subsequent Events

· On February 1, 2021, we finalized the merger between Credicorp Capital Securities, Inc. and Ultralat Capital Markets, LLC (UCM), which resulted in Credicorp Capital LLC. Credicorp Capital LLC is a broker-dealer registered with FINRA and the SEC. Credicorp Capital LLC is owned by Credicorp Capital Limited, which is wholly owned by Credicorp Ltd. Credicorp Capital LLC has an affiliate investment adviser, Credicorp Capital Advisors LLC. They share the same Board of Directors and ownership. · ASHC is executing a merger by absorption between its subsidiaries Atlantic Security Bank (Cayman Islands) and ASB Bank Corp (Panama), with the latter being the surviving entity. The process is in the regulatory approval stage and is expected to be concluded within the second quarter of 2021. For further information, see “ITEM 4. INFORMATION ON THE COMPANY – 4.B Business Overview – (6) Supervision and Regulation – 6.2 Subsidiaries – 6.2.2 Cayman Islands and 6.2.6 Panama”.

· In March 2021, the Peruvian congress approved a new law which grants the BCRP the power to set an interest rate ceiling every six months and defines new regulation on certain fee charges. For further information, see “ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS – 5.D Trend Information”. · During the last week of March 2021, BCP Stand-alone executed a liability management transaction, to strengthen its capital base.

○ BCP Stand-alone issued a USD500 million subordinated bond maturing in 2031 at a coupon rate of 3.25%, and repurchased USD 60 million of a subordinated bond maturing in 2026 at a coupon rate of 6.875% and USD 99 million of a subordinated bond maturing in 2027 at coupon rate of 6.125%.

○ Additionally, BCP Stand-alone announced a make-whole redemption of the outstanding amount of both subordinated bonds maturing in 2026 and in 2027, which took place in April 2021.

○ The transaction generated a one-off charge in financial expenses in March 2021 and will result in a negative impact in year 2021 due to the premiums related to the repurchase and redemption of the old bonds. Nonetheless, we expect that this transaction will generate savings in financial expenses in future periods due to the lower interest rate of the new bond.

For more details please review note 36 (“Events occurred after the reported period”) to our consolidated financial statements.

Credicorp is the leading financial services holding company with operations in Peru with over 130 years of experience in the financial sector. We are organized into four LoBs: (1) Universal Banking, and (2) Insurance and Pensions that mainly serve the overall Peruvian market, together with (3) Microfinance and (4) Investment Banking and Wealth Management that have a strong presence in Latin America.

In 2020, Credicorp commemorated its 25th anniversary of listing on the New York Stock Exchange (NYSE). Throughout its history, Credicorp has leveraged the strength of its franchises and has evolved towards customer-centricity, innovation and growth, and has consolidated into a Group with more than 36,000 employees and operations mainly in four countries: Peru, Colombia, Chile and Bolivia.

Our Purpose

Contributing to improve lives by driving the changes that our countries need.

Our Vision

To be a sustainable financial services leader in Latin America. We are purpose-led, future-oriented and focused on creating superior and sustainable value for our employees, customers, shareholders and the countries we operate in.

We fulfill our vision through four key growth levers. These include: 1) our positioning as a leading player in an underpenetrated region; 2) our ability to remain close to our customers through our expansive footprint, facilitating cross-selling opportunities; 3) the actively managed approach of our independent business lines, leveraging best practices, synergies and scale; and 4) our innovative culture and ability to replicate successes throughout the organization.

Being a leading player or among the main players in each of our businesses, we continue to see an important growth potential based on the low levels of penetration in the financial industry in the markets in which we operate, where the majority of Peru’s population use informal financial products and only 43% of the adult population has a bank account, according to the SBS. Additionally, one of the reasons why banking penetration in Peru is so low is the relative informality of the Peruvian economy: 72% of the 17 million economically active Peruvians do not have formal employment, according to the Peruvian National Institute of Statistics and Informatics (Instituto Nacional de Estadisticas e Informatica or INEI by its Spanish initials). Furthermore, in Latin America, 46% of people do not have a bank account, 87% do not have a voluntary investment product, and 70% of the SMEs do not have a payment solution. While we continue to see Peru as our main market and the focus of our growth, we are also very interested in focalized opportunities in Colombia and Chile.

Each of our LoBs has made efforts to become more customer centric, so we can understand our customers better and develop processes and products that solve their needs without creating pain points. The utilization of data has been key in understanding patterns and creating solutions. In 2020, client satisfaction evolved positively in BCP (from 67% in 2019 to 69% in 2020) and Grupo Pacifico (from 63% to 70%). We also try to focus on capturing cross-selling opportunities when more than one LoB is involved in serving our clients throughout our diversified physical and digital distribution networks.

Over the past years, Credicorp has been evolving its operating model called Credicorp’s Way. The objective is to identify best practices within the LoBs staff functions, to be shared among the different units without increasing bureaucracy and costs associated with a centralized staff. This is continuously adjusted over time, as the impact of this initiative is constantly evaluated. As a result, Credicorp’s businesses share best practices such as Data and Analytics, Agility and Cybersecurity with expert staff.

As developed below in “(2) Lines of Business (LoBs)”, each of our LoBs has its own agenda, tailored to the needs of the individual customers and to the priorities and situation of each business unit. They all have a common goal, which is to rapidly adapt and transform our operating models and our distribution channels in order to improve customer experience while capturing cost efficiencies.

Open Innovation

As part of our innovation efforts at the holding level, in 2018 Credicorp set up Krealo S.P.A (Krealo), our open innovation initiative, to be better connected to the fintech ecosystem in search of opportunities that fit our long-term vision. Krealo aims to drive digital inclusion across Latin America as a means to achieve financial inclusion. The goal is to increase the size of the financial services market while evolving Credicorp’s technology and business models. To do this, Krealo builds, invests in, or partners with fintech and startup companies that create sustainable digital businesses, which complement Credicorp’s transformation. Krealo leverages Credicorp’s experience and financial knowledge combined with the agility and disruption components of fintech companies, offering a new user-centric view of the business.

Krealo targets two main segments in Latin America, consumers and SMEs, through three distinct verticals: e-commerce, SME Services, and Digital Consumers.

For the first segment, e-commerce, we have invested in the marketplace Comercio Digital Integral S.A.C. (Lumingo), which gives access to businesses to a digital sales channel. Also, we acquired Compania Incubadora de Soluciones Moviles S.A. (Culqi), a Peruvian payment gateway that allows businesses to process payments on their e-commerce platforms.

For our SME Services, after our acquisition of Culqi, we developed a mobile point-of-sale (MPOS) solution targeting the long tail of Peruvian SMEs with the objective of complementing Credicorp’s battle against cash. We also invested in the company that created Wally POS S.A.C (Wally), a Peruvian Software as a Service (SAAS) offering that gives business the tools they need to manage their day-to-day operations and finances.

Finally, for our Digital Consumer segment, we have a digital broker in Colombia, Credicorp Capital Negocios Digitales S.A.S (Tyba), which allows people to invest in financial instruments with small tickets. Also, we have Tenpo S.P.A (Tenpo), a financial ecosystem that aims to be Chile’s first neobank, or Internet-only bank. It currently offers transactional services such as peer to peer (P2P) transfers, international and domestic purchases with a digital card, mobile top-ups, utility payments, and withdrawals from PayPal accounts.

In 2021, our strategic focus is to scale our businesses and increase user engagement. We strive to reduce our customer acquisition costs by leveraging organic channels as well as partnerships with Credicorp’s companies and other market leaders. Furthermore, we are developing more products within our ventures to improve the stickiness of our solutions, generate cross-selling opportunities and keep our customers within our ecosystem with wider options according to their needs.

Our Response to the COVID-19 Pandemic

Our ongoing focus on creating stakeholder value, together with the experience of our management and the resilience of our businesses, has allowed us to quickly implement a series of initiatives to support our clients, employees and communities through the COVID-19 pandemic.

Our Response to COVID-19 Pandemic Front Initiatives Employees · Biosecurity protocols · More than 19 thousand of front-line employees received protective equipment · 95% of office support functions working remotely · Focus on fostering physical, emotional and financial stability · Full medical coverage for employees who have contracted COVID-19 Clients · Over 1.5 million clients have benefited from debt reprogramming across Peru, Colombia and Bolivia · Over 1.5 million retail clients have received fee waivers · BCP disbursed over S/22 billion and Mibanco over S/2 billion in government loans · Grupo Pacifico’s clients received COVID-19 coverage, benefited from payments reprogramming, and received partial reimbursements for car premiums · Clients across LoBs have benefitted from digital channels · Financial education campaigns to foster a healthier relationship with the financial system Society · #YoMeSumo campaign, from BCP Stand-alone, contributed with S/126 million (S/100 million from BCP, S/10 million from Mibanco and S/16 million from individuals and enterprises) to more than 160 thousand of vulnerable families · Bolstering the wellbeing of front-line national workers (Health Professionals, Police and Army) through a S/5 million donations to grant them life-insurance policies from Grupo Pacifico · Credicorp Capital, Grupo Pacifico and Prima AFP donated S/4 million to equip the Peruvian health system with medical oxygen · Supporting the Health and Social Inclusion Ministries in designing and executing relief measures through our health and banking networks Business Continuity · Effectively implemented home-office · Executed physical and cyber security measures · Reduced branch capacity in line with our biosecurity protocols and government measures · Provided support to suppliers and commercial partners to ensure service continuity · Successfully implemented contingency plan to ensure liquidity and solvency

Our ESG Approach

In 2020, to further strengthen our long-term performance and competitiveness in the markets in which we operate, we have developed a program to integrate sustainability more deeply within our business strategy and activities. The result is our 2020-2025 Commitment to Sustainability Program (the Sustainability Program) summarized below.

Each of the main subsidiaries of Credicorp will play a vital role in the Sustainability Program. By executing on tangible and feasible business opportunities that aim to improve both business performance and positive ESG impact, we aim to create long-term value for both Credicorp and its stakeholders. The Sustainability Program defines three pillars, that will guide Credicorp’s sustainability ambitions for 2020-2025:

1. Create a more sustainable and inclusive economy: Financial inclusion is a key driver of this pillar, and Credicorp has always contributed to this front; Mibanco, for instance, has played a particularly important role having historically been committed to serving the microbusiness segment. Efforts to support the growth of SMEs and microfinance customers aim to generate highly positive results in the countries in which we operate, as these are key for economic growth and societal progress. In the consumer segment, with our Yape application, we are facilitating the use of the digital wallet for those who have no bank accounts. Via this digital platform, we have also aided the government in its efforts to distribute economic relief to the country’s vulnerable population. Going forward, we will strengthen our focus on environmental risks and further develop a sustainable investing policy framework for assets under management. We will work alongside our business clients to find ways in which we can help them transition to more green and sustainable business practices through our financing opportunities as part of our 2020-2025 roadmap.

2. Improve the financial health of citizens: Client experience and efficiency have always been at the core of our strategy. Innovation, digital transformation and improving customer experiences are key to our customer-centric approach. Financial education is particularly relevant in this regard, as it helps us foster healthier relationships between our clients and the financial system. BCP, BCP Bolivia, Mibanco, Pacifico and Prima AFP actively participate in financial education. Given its client base and mission, Mibanco is especially active on this front. We intend to bolster these initiatives to help people improve their financial knowledge and skills to make better financial decisions. We plan to build trusted relationships through transparency and simplicity, while expanding not only the reach but also the content and tools of our financial education programs.

3. Empower our people to thrive: We will continue to develop our human capital has been, and will continue to be, our priority. Championing a diverse and inclusive workforce should foster creativity and innovation; secure long-term prosperity; and bolster employees’ motivation. To achieve long-term sustainability and successfully implement our ambitious transformation goals, we will need to foster the professional development of the workforce of the future, supporting people in their quests to strengthen their skills, effectiveness and impact to respond to a rapidly and constantly changing business environment. We will also encourage people to do the right thing in their careers and the community, promoting our culture and values. Finally, we will further enhance and strengthen our governance structure to ensure that we are aligned with best practices as we commit to make effective and ethical decisions.

The three pillars described above are aligned with our core business operations and with the United Nations Sustainability Development Goals (SDGs), specifically with the following SDGs:

SDG 5 – Gender Equality: Achieve gender equality and empower all women and girls

SDG 8 – Decent Work and Economic Work: Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all

SDG 10 – Reduced Inequalities: Reduce inequality within and among countries

SDG 12 – Responsible Consumption and Production: Ensure sustainable consumption and production patterns

SDG 13 – Climate Action: Take urgent action to combat climate change and its impacts

SDG 17 – Partnerships for the Goals: Strengthen the means of implementation and revitalize the global partnership for sustainable development

Our Sustainability Program includes a portfolio of over 30 client-facing initiatives and business opportunities, grouped into 8 business platforms that are specifically balanced to create financial or strategic value and generate positive stakeholder impact across multiple time horizons. Each of our 6 main subsidiaries – BCP, BCP Bolivia, Mibanco, Pacifico, Prima AFP and Credicorp Capital – contributes to the strategy, by focusing on the objectives best aligned with their core business.

For example, through the Financial Inclusion platform we will focus on developing, offering and distributing products, services and digital channels to reduce the barriers that retail customers (both citizens and SMEs) experience when seeking to join the financial system. The Financial Inclusion platform is also supported by initiatives of other platforms, such as financial education and simplicity & transparency, which can be leveraged to heighten the impact of efforts to reduce barriers.

BCP Stand-alone’s initiatives have been grouped to form its “Reconecta” Sustainability Program. The Reconecta Program is aligned with our Sustainability Program, and seeks to boost financial inclusion, financial education and empowerment for SMEs through the expansion of Yape’s user base, by providing digital tools and training programs to retail customers and SMEs, and by making financial products simpler and more accessible. Furthermore, BCP will seek to accompany wholesale customers in their transition to become more environmentally sustainable businesses.

Mibanco will also contribute to the financial inclusion platform by offering inclusive financial products; efficiently scaling its physical and digital distribution models; striving to build or participate in ecosystems; and entering into public and private partnerships. Pacifico Seguros aims to increase access to insurance products through more inclusive pricing and coverage offerings, such as its indemnity oncological insurance, while Prima AFP intends to promote savings efforts through its AhorroYa! voluntary savings program.

Another of our platforms is helping Businesses to Grow. BCP will focus on empowering SME customers through its Reconecta Program, while Mibanco will focus on growing its microfinance portfolio by scaling and digitalizing its distribution model.

Through the Sustainable asset under management platform, Prima AFP (Pension Funds), Credicorp Capital (Investment Banking and Wealth Management), and Pacifico Seguros (Insurance) are committed to incorporating sustainability factors into their investment processes and have designed diverse ESG initiatives to this effect. The three companies are signatories of the UN’s Principles for Responsible Investment. Additionally, in 2020, Credicorp Capital developed a Responsible Investment Policy framework for the Asset Management division and plans to integrate responsible investment practices in other business areas of the company.

Through the financial education platform, BCP will leverage its “ABC del BCP” initiative to educate people to use financial products, promoting a healthier relationship with the financial system in general, and with BCP in particular. Pacifico Seguros has a back-to-basics project to use its “ABC del Seguro” initiative to educate the young adult target market regarding, among others, the benefits of insurance products. Prima AFP will accelerate efforts to increase knowledge of the pension system; educate the population about the system’s importance; explain the benefits of affiliation; and demonstrate the positive effects that the system has on the broader economy. Mibanco is planning to exponentially increase the reach of its financial and digital education programs; develop digital training tools; and use mobile phone capacities with a specific focus on microloans.

To help achieve the key ambitions within each pillar, we identified 7 so-called enablers that will help step up change and ensure accountability for ESG initiatives and results. One of the main enablers, enhancing our corporate governance framework, entails creating a stronger sustainability governance structure. To that end, we have designated Credicorp’s Deputy CEO, Mr. Alvaro Correa as Executive Sponsor of our Sustainability Program, we have created a Sustainability Office at the holding level, and each subsidiary has designated an Executive Sponsor (its respective CEO) and a Sustainability Leader. We are currently in the process of developing goals and metrics to measure performance.

Credicorp’s Integrated 2020-2025 ESG Business Strategy Our Vision To be a sustainable financial services leader in Latin America. We are purpose-led, future-oriented and focused on creating superior value for our employees, customers, shareholders and the countries we operate in Three Pillars Create a more Sustainable and Inclusive Economy Improve the Financial Health of Citizens Empower our People to Thrive 12 Key Ambitions ● Increase financial inclusion ● Contribute to the transition to a more formal economy ● Support the transition to an environmentally sustainable economy, including the effects of climate change ● Enable SMEs to start and grow, including our supplier ecosystem ● Become #1 in delivering the best experience for our customers in the most efficient way ● Build long-term, trusted relationships through transparency and simplicity ● Help people improve their financial knowledge and skills to make better financial decisions ● Increase the pace of innovation to anticipate customer’s needs in the future ● Champion diversity, inclusion and gender equality ● Model the development of the workforce for the future by supporting people to enhance their skills, effectiveness, and impact ● Enhancing out governance structures and encourage people to do the right thing in their careers and the community ● Develop societal solutions and partnerships to solve important issues 8 Platforms Sustainable Assets under management Financial inclusion Sustainable Finance Financial Education Simplicity and Transparency Female oriented products and opportunities Helping businesses to grow Transition to more formal economy 7 Enablers Human Resources ●Workforce of the future ●Champion diversity, inclusion and gender equality Finance ●Optimize communication and reporting to capital markets ●Be the steward of long-term value creation Risk ●Integrate ESG into risk management framework including improving cybersecurity and data protection Other ●Enhancing corporate governance framework ●Direct environmental footprint and ESG communications

Through our Sustainability Program, we will continue to identify business opportunities, but success will ultimately depend on the internal measures the Group and its subsidiaries take to advance implementation of the program to achieve key sustainability results. We are laying the groundwork to change the way we measure the success of our operations by adding new metrics that go beyond traditional indicators of financial performance.

As we move forward, our focus will be on improving our disclosure to provide our stakeholders with up-to-date information on our sustainability efforts and policies. We will also focus on incorporating international best practices in our sustainability reporting standards and to our new holistic performance measurement framework.

Risk Rating

In June 2020, Fitch Ratings and S&P Global, assigned Credicorp Ltd.’s new issuance with the risk ratings of BBB+ and BBB, respectively. The criteria to be considered in the rating include risk management and control procedures, loan quality, financial strength, profitability, liquidity and financial efficiency.

Credicorp’s LoBs’ Contributions

According to IFRS, an operating segment is a component of an entity that engages in business activities from which it may earn revenues and incur expenses, whose operating results are regularly reviewed by the Chief Operating Decision Maker (CODM), who makes decisions about resources allocated for the segment and assesses its performance, and for which discrete financial information is available.

The following table provides certain financial information about our LoBs as of and for the year ended December 31, 2020 and 2019:

As of and for the year ended December 31, 2020 External income (2) Net interest, similarincome and expenses Non-interest income,net (3) Total assets (Soles in millions, except percentages) Amount % Total Amount % Total Amount % Total Amount % Total Universal Banking BCP Stand-alone 10,775 58.6 6,092 71.1 2,795 58.7 180,766 76.1 BCP Bolivia 773 4.2 330 3.9 103 2.2 12,472 5.3 Insurance and Pension funds Pacifico Seguros and subsidiaries 3,211 17.5 526 6.1 602 12.6 16,025 6.8 Prima AFP 389 2.1 (8 ) (0.1 ) 388 8.1 1,108 0.5 Microfinance Mibanco 1,972 10.7 1,550 18.1 24 0.5 15,649 6.6 Mibanco Colombia (1) 238 1.3 165 1.9 28 0.6 1,208 0.5 Investment Banking and Wealth Management 1,102 6.0 70 0.8 920 19.3 11,715 4.9 Other segments (78 ) (0.4 ) 431 5.0 (96 ) (2.0 ) 3,484 1.5 Eliminations - - (585 ) (6.8 ) - - (5,021 ) (2.2 ) Total consolidated 18,382 100.0 8,571 100.0 4,764 100.0 237,406 100.0

(1) Bancompartir and Encumbra merged in October 2020 to form Mibanco Colombia. See more detail in Note 2(a) to the consolidated financial statements.

(2) Corresponds to total interest and similar income, non-interest income (includes income and expenses on commissions) and net earned premiums from insurance activities.

(3) Corresponds to total non-interest income (include income and expenses for commissions) and insurance underwriting result.

As of and for the year ended December 31, 2019 External income (2) Net interest, similarincome and expenses Non-interest income,net (3) Total assets (Soles in millions, except percentages) Amount % Total Amount % Total Amount % Total Amount % Total Universal Banking BCP Stand-alone 11,750 59.8 6,245 68.7 3,632 67.3 139,832 74.4 BCP Bolivia 736 3.7 329 3.6 117 2.2 10,481 5.6 Insurance and Pension funds Pacifico Seguros and subsidiaries 3,224 16.4 493 5.4 346 6.4 13,785 7.3 Prima AFP 457 2.3 (1 ) - 457 8.5 909 0.5 Microfinance Mibanco 2,408 12.2 1,901 20.9 62 1.1 13,576 7.2 Bancompartir (1) 18 0.1 13 0.1 2 - 1,028 0.5 Encumbra 50 0.3 43 0.5 2 - 141 0.1 Investment Banking and Wealth Management 968 4.9 69 0.8 885 16.4 9,423 5.0 Other segments 63 0.3 443 4.9 561 10.4 2,998 1.6 Eliminations - - (443 ) (4.9 ) (669 ) (12.3 ) (4,314 ) (2.2 ) Total consolidated 19,674 100.0 9,092 100.0 5,395 100.0 187,859 100.0

(1) Bancompartir and Encumbra merged in October 2020 to form Mibanco Colombia. See more detail in Note 2(a) to the consolidated financial statements.

(2) Corresponds to total interest and similar income, non-interest income (includes income and expenses on commissions) and net earned premiums from insurance activities.

(3) Corresponds to total non-interest income (include income and expenses for commissions) and insurance underwriting result.

The following table sets forth the contribution to the consolidated net profit attributable to our equity holders by each of LoBs and main subsidiaries:

2018 2019 2020 (Soles in millions, except percentages) Amount % Total Amount % Total Amount % Total Universal Banking BCP Stand-alone 2,858 71.7 3,163 74.2 606 174.6 BCP Bolivia 78 1.9 79 1.8 (74 ) (21.3 ) Insurance and Pension Pacifico Seguros and subsidiaries (1) 349 8.8 377 8.8 192 55.3 Prima AFP 140 3.5 197 4.6 148 42.7 Microfinance Mibanco 445 11.2 392 9.2 (371 ) (106.9 ) Bancompartir - - (2 ) 0.0 (97 ) (28.0 ) Encumbra 5 0.1 5 0.1 - - Investment Banking and Wealth Management (2) 146 3.7 230 5.4 192 55.3 Other segments and eliminations (3) (37 ) (0.9 ) (176 ) (4.1 ) (249 ) (71.7 ) Total 3,984 100.0 4,265 100.0 347 100

(1) Includes Crediseguro S.A. Seguros Personales, Crediseguro S.A. Seguros Generales (incorporated in 2017) y Pacifico Asiste (incorporated in 2020).

(2) Bancompartir and Encumbra merged in October 2020 to form Mibanco Colombia. See more detail in Note 2(a) to the consolidated financial statements.

(3) Investment Banking and Wealth Management mainly includes Credicorp Capital Ltd and subsidiaries and Atlantic Security Bank.

(4) As of December 31, 2020, it includes Credicorp Ltd., Grupo Credito and ASHC which mainly includes expenses and others.

The following table shows our LoBs and main subsidiaries’ respective percentage contributions to our total equity attributable to Credicorp’s equity holders:

2018 2019 2020 (Soles in millions, except percentages) Amount % Total Amount % Total Amount % Total Universal Banking BCP Stand-alone 15,063 63.2 16,762 63.9 16,122 64.6 BCP Bolivia 691 2.9 736 2.8 691 2.8 Insurance and Pension Pacifico Seguros and subsidiaries (1) 2,614 11.0 2,801 10.7 2,971 11.9 Prima AFP 633 2.7 698 2.7 700 2.8 Microfinance Mibanco 1,898 8.0 2,086 8.0 2,110 8.5 Mibanco Colombia (2) - - 158 0.6 215 0.9 Edyficar S.A.S. (2) 58 0.2 61 0.2 - - Investment Banking and Wealth Management (3) 1,905 8.0 1,841 7.0 2,503 10.0 Other segments and eliminations (4) 977 4.0 1,095 4.1 (366 ) (1.5 ) Total 23,839 100.0 26,238 100.0 24,946 100

(1) Includes Crediseguro S.A. Seguros Personales, Crediseguro S.A. Seguros Generales (incorporated in 2017) y Pacifico Asiste (incorporated in 2020).

(2) Bancompartir and Encumbra merged in October 2020 to form Mibanco Colombia. See more detail in Note 2(a) to the consolidated financial statements.

(3) Investment Banking and Wealth Management mainly includes Credicorp Capital Ltd and subsidiaries and Atlantic Security Bank.

(4) Includes Grupo Credito, CCR Inc., Inversiones Credicorp Bolivia, BCP Emisiones Latam 1 S.A., SEAH and others.

For a description of the principal markets in which we compete, please refer to “ITEM 4. INFORMATION ON THE COMPANY – 4.B Business Overview – (2) Lines of Business (LoBs), – (5) Competition, and – (6) Supervision and Regulation” and Note 31 to Credicorp’s consolidated financial statements. For a breakdown of total income and operating income by geographic market for each of the last three fiscal years, as well as other historical information about our LoBs, please refer to Note 31 to Credicorp’s consolidated financial statements.

Universal Banking business, which focuses on lending and investment, is organized into (i) retail banking activities, including our Individuals, SME-Business, SME-Pyme segments, which are carried out by BCP Stand-alone’s Retail Banking Group (RBG); (ii) wholesale banking activities, including our corporate and middle-market banking business segments, which are carried out by BCP Stand-alone’s Wholesale Banking Group (WBG); (iii) treasury activities, including asset and liabilities management (ALM); sales and trading; and foreign exchange and derivatives distribution which are carried out by BCP Stand-alone’s Treasury function; and (iv) wholesale and retail banking activities in Bolivia.

The majority of our banking business is carried out through BCP Stand-alone, the leading Bank in Peru with close to 35% market share in loans and deposits. We conduct banking activities in Bolivia through BCP Bolivia, a full-service commercial bank.

BCP Stand-alone has one agency in Miami and one branch in Panama. See “ITEM 4. INFORMATION ON THE COMPANY – 4.C Organizational Structure – (1) Credicorp – (i) BCP.” BCP Stand-alone’s operations are supervised and regulated by the SBS, SMV and the BCRP in Peru, by the Office of Financial Regulation of the State of Florida Department of Financial Services and the FED in the U.S., and by the SBP in Panama. As of and for the year ended December 31, 2020, BCP Stand-alone represented 76.1% of our total assets, and 64.6% of our equity attributable to Credicorp’s equity holders.

BCP Stand-alone’s purpose and values

Our purpose is “Transforming plans into reality”. We aim to support our clients by always being with them, encouraging and transforming their dreams and plans into reality, while building Peru’s story of development and progress deepening our connection to communities to generate value for all stakeholders and ensure long-term sustainability.

We believe our values are key elements to fulfilling our purpose and shaping our culture. We call it our WOW culture because it helps us to provide the best Customer Experience with a team committed to achieving our customers goals and dreams. Our values guide our employees and shareholders to work towards our purpose and reflect the role we want in Peruvian society. Our values are:

· Customer Centricity

· Test and Learn

· Risk-conscious and righteous

· Collaboration

· Give your Best

· Boost your Skills

Our framework

The framework which guides our path is comprised of key objectives and key results, as well as strategic pillars. The former describes what we want to achieve, while the latter represents how we want to achieve it.

We have two key objectives that leads all our business efforts: (i) being number one in customer experience and (ii) having the best efficiency ratio in Latin America.

We have seven strategic pillars directly related to each of our key objectives (efficiency and experience), and internal capabilities, to help ensure a comprehensive strategic plan.

Experience:

· The best experience. We offer a WOW experience in each touchpoint with our customers; and aim to provide solutions to their needs; and to support them at critical moments.

· Deepening our connection to communities. We do business taking into consideration our role in the society and our different stakeholders.

Efficiency

· New sources and optimization of income. We continually develop new products and services to serve our customers and provide financial solutions to more Peruvians. In addition, we focus on optimizing our current revenue streams to their highest potential.

· The most efficient bank in the region. We optimize our products and processes with an overall portfolio perspective. We incorporate technology and innovation to offer the most cost-efficient option.

Internal Capabilities:

· Innovation and digital. We leverage our digital capabilities to know our customers better, and to offer them a 24x7 customer service in a simple, fast and secure manner.

· Data driven organization. We are the organization that captures and exploits data in the most effective and intelligent manner.

· The best team. We are a team with the mindset, capabilities and culture focus on delivering continuing value to our customers.

Enablers that facilitate the fulfillment of our objectives

Technology, Data and Operations:

We can now offer our clients a larger array of functionalities, improvements and availabilities. In 2020 we have improved our time-to-market, due to multiple improvements both at traditional water-fall initiatives and specially thanks to Development Security Operations (DevSecOps) practices. For example, we registered a 27% reduction in our average time for pre-production passes from 2019 to 2020 despite a 103% increase in the number of pre-production passes over the same period.

We also are transforming our legacy technologies to be more scalable, efficient and stable. We have multiple initiatives, which could be explained in three layers: front, middle and back, which are related to three technologies: cloud, middleware and APIs respectively. Our main achievements in 2020 have been related to the migration of the client-facing channels to cloud, and on developing and reutilizing APIs. The middleware efforts were postponed due to the COVID-19 pandemic, but we expect the initiative to continue during 2021.

We are using advanced analytics to detect opportunities to optimize and generate additional income. Our Center for Excellence in Analytics helps broaden this capacity to be more effective when incorporating data for decision-making at the team level.

The applications developed by the data laboratories reach multiple users, which provide us with better information on our contacts and more updated information on both clients and non-clients. As a result, we are able to increase the number of leads and pre-approved offers to individual clients.

Cybersecurity

We are focusing our efforts on the most effective strategies to reduce our exposure to cybersecurity risk and achieve our objective risk appetite at a significantly lower cost, applying the appropriate level of control to the relevant areas of potential risk. For this reason, we maintain an important investment program, which allows us to have the necessary technologies and processes to keep our operations and assets safe.

We have defined the following cybersecurity priorities for all the Group’s companies:

a. Cybersecurity governance structure: The structure consists of three lines of defense (IT Security, Cybersecurity and Audit). Additionally, we have implemented corporate cybersecurity policies.

b. Adoption of the National Institute of Standards and Technology (NIST) cybersecurity framework: we have taken the NIST cybersecurity framework as a base and using the U.S. Federal Financial Institutions Examination Council (FFIEC) Cybersecurity Assessment Tool, we have performed a self-assessment to determine our risk profile. Based on the results, we are implementing the required controls, as well as a work plan with periodic objectives.

c. Awareness program: The technology to prevent cyber-attacks is not enough; the weakest point in an organization is, usually, the internal user incorrectly handling digital tools and their exposure to possible cyber-attacks. Therefore, since 2018, BCP Stand-alone generated an awareness strategy, defining parameters and best practices to train users to prevent and respond to cyber-attacks.

d. Cybersecurity indicators: It is necessary to verify whether the controls we implement are effective. For this reason, BCP defined significant cybersecurity indicators (key risk indicators and key performance indicators) for the organization, such as patches deployment, use of the latest antivirus software, and legacy servers.

e. Third party governance: To ensure that the information we share with our suppliers complies with our standards, we have updated the critical supplier’s evaluation process including a questionnaire with cybersecurity controls. Additionally, within BCP Stand-alone, we have implemented an online monitoring tool for those critical providers that have access to our information.

f. Implementation of security technologies: Cyber-attacks are increasingly sophisticated, so the threat trend is periodically analyzed to generate a list of minimum technologies necessary to address these risks.

g. “Tabletop” tests: Due to the increase in cyber-attacks in the world, we decided to carry out “tabletop” tests to determine the level of maturity in responding to cybersecurity incidents.

Agility

During 2020 we advanced in scaling agility through new designs and the evolution of our Tribes and Centers of Excellence. Given the pandemic outbreak, we quickly adapted our model, implemented remote agility, and extended the design phase of the last units until mid-2021. All Tribes and Centers of Excellence follow an agile operating model that allows them to plan, prioritize and focus on initiatives that directly contribute to established objectives, providing flexibility and agility to offer value to clients by maximizing productivity.

These agile organizations operate in quarterly cycles. In each quarter they follow a process of planning and value accountability called QBR (Quarterly Business Review) Process. In this process, all BCP Leaders align their objectives with BCP’s strategy and coordinate interdependencies among them. Agility is aimed at generating value by creating multidisciplinary, stable, self-organized and empowered teams. In any case, applying agility may introduce operational risks to BCP Stand-alone, which are mitigated by these agile organizations following all control processes established in BCP Stand-alone (risk control, budget, audit, security, etc.) like any other unit in BCP.

In addition, we also created and deployed an Agile Academy Program for all employees at BCP. The objective was to disseminate basic concepts about agility, to encourage the rest of employees to understand and apply agility mindset and simple techniques in their day to day business.

What we have gotten so far.

As a consequence of our initiatives, we have made substantial progress in our key objectives as well as in all key results.

We have boosted our customer satisfaction consistently over the years surpassing our local competitors. In 2017, we were in the last position in customer satisfaction among the four largest banks in Peru, but only after two years we were number one among our local peers and across all business segments according to our internal survey led by Ipsos Peru. We identified the customer journeys with the lowest levels of customer satisfaction, but the highest value for our customers; and focused our efforts on improving those. For example, making a complaint was a highly valued journey and we increased our client’s satisfaction almost two times in less than three years according to our internal survey led by Ipsos Peru.

In addition, sustained increases in digital sales and accelerated adoption of digital channels has led to efficiency improvements in operational indicators and will help us achieve lower cost to income ratios. In 2017, digital sales represented only 5.4% of total units sold, but in 2020, our digital sales accounted for over 30% of total units sold. We have also increased our share of digital clients, which were 23% of individual clients in 2017 and reached 55% in 2020. To achieve these results, we have improved the experience in our digital channels increasing our mobile banking users from 0.8 million in 2017 to over 3.5 million in 2020. Moreover, in 2017, we innovated and launched Yape, the largest digital wallet in Peru with over 5 million users by the end of 2020. We increased our volume per employee (+56% in 2020 vs. 2015), reduced our branches (-15.9% in 2020 vs. 2015), and reduced our transactional cost (-60.5% in 2020 vs. 2015) placing us among the most efficient financial institutions in Latin America. By no means is this is the end of the path, and we have continued increasing our expenses and investment in IT (+65% in 2020 vs. 2015) to achieve further improvements in our efficiency indicators in the medium term.

As of December 31, 2020, retail banking-related loans represented 49.3% of BCP Stand-alone’s total loans, while retail banking-related deposits represented 61.3% of BCP Stand-alone’s total deposits.

The following table shows the client segmentation for RBG. This segmentation was a result of an analysis that addressed multiple factors such as the size and volume of activity for each client, the clients’ affiliation with other companies or groups and their credit ratings.

Client Segmentation Business Segment Group Client Income/Sales/Total debt Retail Banking Group (RBG) Individuals Enalta (High Wealth) Individual monthly income at least S/20,000; or more than US$200,000 in asset under management (not including severance indemnity deposits) in each month for the previous 6 months Affluent Individual monthly income from S/5,000 to S/20,000 in each month for the previous 6 months Consumer Focus on medium- and low-income individuals (less than S/5,000 of individual monthly income) SME Business Annual sales from S/5.6 million to S/33 million; or total debt from S/1.2 million to S/10 million Pyme Annual sales up to S/5.6 million; or total debt up to S/1.2 million

Individuals business segments within RBG are:

Enalta (High Wealth)

Enalta services include investment advisory, securities-based lending, financial planning, and day-to-day banking services such as loans and cash accounts. Enalta clients have access to 9 exclusive branches, 8 in Lima and 1 in Arequipa, and they benefit from the personalized advice of investment, insurance and loan experts, as well as exclusive, invitation-only products. Enalta has close to 44,000 clients.

Affluent

Customers in RBG’s Affluent segment receive a differentiated value proposition that includes dedicated customer services channels, such as specialized account managers, preferential service by tellers at branches and through our call center, and preferential interest rates on loans. Approximately 76% of these clients are serviced through specialized account managers responsible for improving per-client profitability and achieving long-term relationships through personalized service, cross-selling, and share-of-wallet strategies. As part of our remote banking model, during 2020 we redeployed the remaining account managers from the physical branches. This has allowed us to offer clients longer service hours, remote processes, and more personalized services through off-branch channels. We ended the redeployment with a total of 246 relationship managers who serve around 244,000 customers through this remote channel. Affluent has approximately 344,000 clients.

Consumer Banking

Our Consumer Banking segment is in charge of developing strategies for the retail customers who are not included in affluent banking or small business banking. Its customer base consists of approximately 8.7 million (only considers clients with at least one product) medium-to-low-income individuals. Consumer Banking focuses on customers who receive their payroll through BCP Stand-alone (which represents around 1.1 million clients). Its strategies vary from basic acquisition of new accounts for wage-earners with special terms regarding fees and interest rates, to more sophisticated, aggressive cross-sell and retention programs that may include non-banking benefits (such as access to discounts on non-banking products) and access to payroll advances.

The main products offered to individuals are:

Mortgage

According to the SBS and the Association of Banks of Peru (Asociacion de Bancos del Peru or ASBANC by its Spanish initials), as of December 31, 2020, BCP Stand-alone was the largest mortgage lender in Peru, with a market share of 32.78%, representing a growth of 17 basis points since December 31, 2019. This increase was mainly attributable to the growth of market share in new mortgages.

As of December 31, 2020, mortgage loans accounted for 13.2% of Credicorp’s total loan portfolio. All of our mortgage-financing programs are available to customers with a minimum monthly income of S/1,500. The mortgage loans offered by BCP Stand-alone have a maximum maturity of 25 years and loan to value (LTV) of up to 90%.

One of the product lines responsible for recent growth in the low-income segment is MiVivienda. The MiVivienda program provides government-funded loans with down payment aid to purchaser’s properties valued up to S/436,100. This program seeks to cover the deficit in housing for lower-income population segments. Mortgage loans in this sector represent approximately 3.0% of BCP Stand-alone’s total mortgage loans and 2.5% of Credicorp’s mortgages loans.

The MiVivienda Sostenible product allows banks to obtain lower-cost funding through the Peruvian Government-Owned Development Bank (Corporacion Financiera de Desarrollo S.A. or COFIDE by its Spanish initials), which translates into lower interest rates and installment payments for clients, resulting in more accessible products for clients.

BCP Stand-alone is the entity that has been making the largest number of Mivivienda loans in the financial system, in 2020 we placed around 3,000 loans. According to the SBS, as of December 31, 2020, BCP Stand-alone had a Mivivienda sales market share of 49% measured in soles.

Mortgage loans are associated with low losses because of their low LTV, as they are backed by the home equity guarantee and they have the added benefit of generating opportunities for cross selling other banking products.

Credit Card & Consumer Loans

During 2020, the credit card market was negatively affected due to COVID-19. In this context, BCP Stand-alone reduced its average current balances by S/516 million in 2020, from S/5,392 million in 2019 to S/4,866 million in 2020 (a 10% decrease) which resulted in a market share of 20.7% in December 2020, according to the SBS.

During the first two months of 2020, the credit card consumption represented 117% of the same period of the previous year. However, in April, due to the COVID lockdown and other measures imposed by the government such as border closures and internal travel ban, the consumption decreased to 29% of the previous year. Through different campaigns and targeted actions to promote the use in the main market categories, BCP Stand-alone was able to recover 85% of the previous year’s consumption. Contactless payments were promoted through credit cards and mobile payment, increasing the contactless transactions to 23% (+16pp vs. last year).

During 2020, 20.9% of credit card sales were made through our digital platform. Although total sales decreased 52.9% for 2020 as compared to 2019, due to major changes to the risk environment and widespread market contraction as a result of the aforementioned measures imposed by the government to deal with the pandemic, BCP obtained the number one position in credit card sales with 15.44% of market share in December 2020 according to the SBS.

Regarding consumer loans, the COVID-19 pandemic forced us to change our plans and in record time we designed and implemented different ways of helping our clients whose income was negatively impacted, so that they would be able to afford their loan payments. We helped thousands of clients with extended terms to repay their debts, grace periods to allow them to solve current problems and reprogramming with increasing installments. These initiatives allowed for default rates to be controlled in spite of the impact COVID-19 had on the economy. Towards the end of the year we increased the offer of loans at attractive rates. Consumer loans without collaterals grew from S/4,807 million in 2019 to S/ 5,154 million in 2020 (7% growth over the year) and digital sales accounted for 60% of the total loans sold.

The SME segments within RBG are:

SME-Pyme

SME-Pyme serves approximately 585,566 clients. Its credit portfolio reached S/17,721 million in 2020 (+93.8% vs. 2019) and a market share of 23.9%, according to the SBS. In 2020, the Peruvian government implemented the Reactiva Peru Program, the objective of which was to ensure continuity in the payment chain, providing guarantees to micro, small, medium, and large companies to access working capital loans and address their short-term capital needs. During most of 2020, we were focused on facilitating Reactiva Peru Program and debt reprogramming to our clients, while digitizing our processes and systems. We launched specialized teams in order to serve our most affected clients due to the pandemic. Almost 56 thousand clients received Reactiva Peru loans through BCP valued at S/9,000 million. In addition, during the height of the COVID.19 pandemic, we reprogrammed 76.6% of the loan portfolio, valued at S/7,690 million. Finally, according to BCP’s own customer satisfaction surveys led by Ipsos Peru, 53% of SME-Pyme clients indicated that they were satisfied or highly satisfied with BCP Stand-alone products and services.

SME-Business

SME-Business served 19,249 clients by our specialized teams. In 2020, SME-Business experienced a substantial growth in loans and deposits, which grew 64% and 51%, respectively, as compared to 2019, mostly due to the Reactiva Peru Program. Excluding the effects of the Reactiva Peru Program, loans posted a reduction of 24.4%. According to the SBS, we closed 2020 with a record of 41.2% in loans market share, maintaining credit performance and default rates, and this put us in the first place in market share. Furthermore, according to our internal customer satisfaction survey led by Ipsos Peru, 92% of our SME-Business clients indicated that they were satisfied or highly satisfied with BCP Stand-alone products and services compared to 86% in 2019.

Distribution Channels

Digital channels

· Mobile Banking: In 2020, more than 169 million transactions were channeled through Mobile Banking at BCP Stand-alone, which represented growth of 85.9% with regard to the level reported in 2019. This growth was driven by client migration to digital channels during the quarantine.

· Internet Banking: Transactions through Internet Banking at BCP Stand-alone grew 29.5% in 2020 to close the year with a total of 23.5 million transactions. Additionally, through different digital platforms, more than 2 million sales were made throughout the year. This represented growth of 71.9% with regard to the level reported in 2019.

· Yape: Yape registered higher growth than any of our other channels from 2019 to 2020, reporting expansion of 500% in monthly average transactions from 11.7 million in 2019 to 80.5 million in 2020. Yape has grown through BCP accounts and via the Yapecard product launched in May 2020.

· Cocos&Lucas: In December 2019, BCP Stand-alone launched its platform to change soles and dollars, Cocos&Lucas. This offered clients a new alternative for exchange transactions. The platform exchanged the equivalent of 194.3 million soles in 2020.

For more detail about Yape and Cocos&Lucas, please see “Retail Banking Innovations “.

Self-service channels

· ATMs: During 2020, ATM monetary transactions decreased 32% and total transactions decreased in 38% because our clients preferred to use digital channels, and they were programmed to allow cash out of the government financial assistance. BCP Stand-alone increased its ATM pool by 32 to close the year at 2,317 units.

· Kioskos BCP: The confinement measures mandated by the Peruvian government led to a 47.4% drop in the number of transactions conducted through Kioskos BCP in 2020. Kioskos BCP received 8.0 million transactions and allowed 0.8 million people to open saving accounts and/or pick up debit cards.

Physical channels

· BCP Agentes: BCP Agentes, which are legally separated points of contact at allied SMEs, with which we contract to enable our clients to carry out certain transactions, continues to constitute a highly effective channel for providing services to our clients given the wide availability of BCP Agentes in Peru. At the end of 2020, BCP Stand-alone had 7,003 BCP Agentes, which reflected a decrease of 184 BCP Agentes compared to the end of 2019.

· Branches: At the end of 2020, BCP Stand-alone had 386 branches, which represented a reduction of 20 branches with regard to the level reported in 2019. This decline was attributable to an increase in client digitalization levels in the context of the pandemic, which led us to optimize our network.

Retail Banking Innovations

Yape

Yape is an app used to make money transfers and payments through a cell phone. Yape users can receive money transfers to their bank accounts or make transfers and payments to other accounts which are linked to their cell phone number and/or to a unique QR code. The purpose of this app is to replace the use of cash when making small recurring transfers or payments for services such as utilities, among others. Yape does not aim to compete with other bank’s applications, but rather with coins and small bills.

Yape receives more than 300,000 users per month, of whom more than 80,000 are new BCP Stand-Alone clients and first time users of a debit prepaid BCP Stand-Alone bank card. A new Yape user is more likely to acquire other BCP Stand-Alone products and lead to new clients than a non-Yape user.

The goal of Yape is to achieve financial inclusion for the almost two thirds of Peruvians which today do not have access to banking services in the country. That is why Yapecard was launched in May of 2020. Yapecard is a prepaid digital account. Any Peruvian citizen, 18 years or older can register with an ID and use Yape without having a BCP Stand-Alone bank account.

In the context of COVID-19 pandemic, Yapecard was a key contributor in the distribution and payment of the Bono Familiar Universal (Universal Family Bonus) given by the Peruvian government to more than 109,000 Peruvians who were not users of the formal banking system. Those citizens were able to receive financial aid provided by the government in a timely and safe manner because of Yapecard.

In 2020, Yape focused on getting affiliates from those areas in the country that have the least amount of users of the banking system; peripheral zones around Lima and remote regions in the center of the country. As a result of this effort, Yape provided access to financial services to more than 649 thousand Peruvians for the first time.

By the end of 2020, Yape had more than 5 million users, 20 million monthly transactions, S/. 7,200 million of soles transferred and more than 761 thousand small businesses affiliated. Regarding active users, more than 45% use Yape at least once a month. The growth rate is of approximately 11 thousand registrations per day.

Today, Yape adds value to the organization through four main sources: (i) client’s transactional data. Since cash transactions are replaced by digital ones, it is possible to register information about payments and transfers from small businesses and, as a consequence, improve risk assessment and develop new products targeted to this segment; (ii) bank accounts remain with a positive balance for longer periods of time because the use of cash is less frequent as it is replaced with digital transactions. In addition, there is a reduction in the use of tellers or ATMs thus reducing associated operating costs; (iii) Yape has generated a significant number of new customers to BCP Stand-Alone with a small investment of marketing resources. Also, because those clients are mostly digital clients, customer service costs are reduced too. In addition, there are more than one million Yapecard members who can become potential users of BCP Stand-Alone bank accounts; and finally (iv) current BCP Stand-Alone clients can turn into digital clients, that is, make a more frequent use of digital channels which lowers the cost of attention.

In 2021, Yape plans to generate direct income by partnering with mobile phone carriers to let users buy cell phone credit for a fee. In addition, Yape plans to offer novel services to our Business clients and we believe there is potential to become a digital channel to offer products like loans and insurance services, among others.

Cocos&Lucas

Cocos&Lucas is a digital money exchange service manage through a web and an application. Our clients use it for exchanging money between U.S. Dollars (USD) and Peruvian Soles (PEN).

Financial and commercial transactions in US Dollars are still very common in Peru. As a result, retail clients hold saving accounts denominated in US Dollars. Over the years an informal foreign exchange market has developed in Peru and, consequently, bank costumers retire their money from their account to make cash foreign exchange transactions in the informal market. Although this carries several risks to the clients such as being robbed or receiving fake bills, some clients are willing to take the risk in order to gain money from pricing disparities between banks and the informal market.

Our objective is to seize an important portion of the informal market, by developing an easy way for making digital foreign exchange transactions based on security, immediacy and fair price.

Cocos&Lucas started operations in November 2019 and as of December 2020, the monthly volume traded was $54.7 million. As of December 2020, Cocos&Lucas has 37.1 thousand clients, of which 40% were new foreign exchange clients for BCP Stand-alone.

As of today, Cocos&Lucas adds value to the organization through four main sources: (i) The bank earns a spread in every Cocos&Lucas foreign exchange transactions, most of which were conducted in the unregulated market before Cocos&Lucas started operation; (ii) we improve our client data, as these operations are recorded by BCP Stand-alone, and it would not have been possible for us to record the transactions if they had been conducted in the informal market; (iii) bank accounts remain with a positive balance for longer periods of time since the use of cash is less frequent as it is replaced with digital transactions and (iv) Cocos&Lucas creates new clients for BCP Stand-alone’s foreign exchange business as 40% of Cocos&Lucas clients were not previously foreign exchange clients of BCP Stand-alone.

COVID-19 management

RBG extended financial facilities to 500,000 clients for 22,000 million soles through skips, frozen installments, reprogramming loans and debt consolidation; and waived fees on the following: 7.2 million domestic money orders, 3.6 million interbank transfers and 130,390 credit card maintenance fees during 2020, starting in the month March.

Also, BCP’s branches disbursed more than 1.6 million payments of government financial assistance to vulnerable population, served 2.1 million pension fund withdrawals and 1.8 million severance indemnity withdrawals. In addition, 157,964 individuals received financial assistance from donations of private institutions and individuals through the Program Yo Me Sumo1.

BCP Stand-alone has segmented its RBG portfolio into risk levels based on credit scores and ratings, both of which are adjusted to recognize the potential exposure to COVID-19 in their modeling, aiming to achieve a more accurate assessment and management of risk

1 On April 2020, BCP Stand-alone launched a social program to collect donations to the vulnerable families that was not considered by the Government Financial Assistance

As of December 31, 2020, wholesale banking loans represented 50% of BCP Stand-alone’s total loans, while wholesale banking deposits represented 37% of BCP Stand-alone’s total deposits. WBG competes with local and foreign banks in Peru. WBG’s average daily balances amounted to S/52,061 million in 2020 (a 13.1% increase from 2019), compared to average daily balances of S/46,042 million in 2019 (a 2.8% increase from 2018) and S/44,779 million in 2018 (a 9.3% increase from 2017). It also maintained its leadership in the Peruvian Wholesale Banking market with a 36.8% market share in loans, according to the SBS and ASBANC. It has also established longstanding client relationships with virtually all major industrial and commercial groups in Peru. The WBG provides its customers with cash management solutions, short- and medium-term loans in local and foreign currencies, foreign trade-related financing, and lease and project financing.

The following table shows the client segmentation of BCP Stand-alone’s WBG segments. This segmentation was a result of an analysis, which addressed multiple factors such as the size and volume of activity for each client, the clients’ affiliation with other companies or groups and their credit ratings.

Client Segmentation Business Group Client Income/Sales/Total debt WBG (1) Corporate Annual sales higher than $100 million (equivalent to S/362 million) Middle-Market Annual sales from $10 million to $100 million (equivalent to S/36 million to S/362 million)

(1) Converted into Soles at the exchange rate of S/3.621 per US Dollar, December 31, 2020 - SBS.

WBG is divided into the following divisions and support areas:

Corporate and International Division (CID)

The CID provides financing for capital expenditures and investments, sales, international trade, and inventories. It offers medium- and long-term financing, financial leases, and project financing and includes the following subdivisions:

1. Corporate banking subdivision, which provides loans and other credit and financial services. Focuses on serving large-sized companies in Peru that have annual sales of over US$100 million, corporate governance, audited financial statements, and dominant market positions in their particular brands or product areas. Even if clients do not meet any of these criteria, the CID may provide services to firms under this category if they belong to a large economic group of an important industry to Peru’s economy.

2. International banking & leasing subdivision manages relationships with financial institutions (locally and abroad) and provides trade products, international operational services, and financial leasing products.

· BCP Stand-alone’s Correspondent Banking Unit focuses on obtaining and providing short-term funding for international trade, as well as medium-term lines of credit funded by international commercial banks and other countries’ governmental institutions. Besides, this unit earns fees by confirming letters of credit and guarantees issued by international banks and otherwise by providing international payment and trade finance services. The department also provides funding to some other Latin American banks which send their international trade and guarantee flows to Peru through BCP Stand-alone. BCP Stand-alone’s Correspondent Banking Unit also promotes international trade activities with its local clients by structuring trade products and services, organizing and sponsoring conferences, and advising customers through a wide range of trade products.

Through the CID, BCP Stand-alone assists its corporate clients with financial services, cash management solutions, and short- and medium-term financing through the CID. BCP Stand-alone’s corporate banking loans, measured in average daily balances, increased from S/28,083 million in 2018 to S/28,269 million in 2019 and S/30,801 million in 2020.

BCP Stand-alone has a leading position in the Peruvian banking system with 35.9% of the market share for corporate banking loans, according to the SBS and ASBANC. Despite the intense competition of foreign banks that may offer lower rates to the market, since they finance their operations at lower costs from their headquarters.

Middle-Market Banking Division (MMD)

(i) The MMD serves mid-sized companies, organizations, and institutions. MMD considers a mix of different characteristics in identifying potential clients, such as annual revenues, financial leverage, overall debt, product penetration, and complexity. The MMD clients’ annual revenues generally range between US$10 million to US$100 million and are serviced nationwide by 12 BCP Stand-alone regional managers and multiple industry-focused service teams.

(ii) MMD focuses principally on serving for-profit and non-profit organizations, state-owned companies, and other significant institutions.

(iii) Furthermore, the Institutional Banking Unit, which operates within the MMD, serves 1,477 clients throughout Peru. In Lima, a specialized MMD team serves governmental entities, educational institutions, religious organizations, international bodies, non-governmental organizations, civil associations, and regulated entities, such as microfinance institutions, insurance companies, pension funds, and private funds. Also, BCP Stand-alone has deployed specialized MMD teams in the largest provinces in Peru. On the other hand, in the smaller provinces in Peru, MMD is supported by the Retail Banking Division team who attends our customers’ needs.

(iv) Cash management and transactional services subdivision, which develops products and services to support clients’ daily cash management activities, collections payments, and investments, among others.

The MMD loan portfolio was S/16,696 million as of December 31, 2018, S/17,773 million as of December 31, 2019, and S/21,260 million as of December 31, 2020. As of December 31, 2020, BCP Stand-alone had a market share of 37.8% in the Peruvian middle-market segment, according to the SBS and ASBANC.

The products offered to middle-market clients are similar to those offered to corporate banking clients. The major types of products are:

(1) Revolving credit lines to finance working capital needs and international trade financing;

(2) Standby letters of credit and bond guarantees;

(3) Structured long-term and medium-term financing, through loans or financial leasing; and

(4) Cash management, transactional products, and electronic banking.

WBG Tribes

There are three Tribes in the WBG, and their main objectives are:

(1) Tribe of Business Credit Products: Giving their business clients efficient financial solutions through an outstanding and unique experience that satisfies their main needs.

(2) Tribe of Transactional Products for Businesses: Giving their business clients integral solutions that simplify their cash management processes and generate customer loyalty.

(3) Tribe of Digital Platforms for Businesses: Giving their business clients an outstanding and unique digital experience to become their ‘top of mind’ choice.

Digital Transformation

At WBG we aim to strengthen our clients’ preferences by improving business profitability, preserving risk quality, and enhancing our digital platforms. Therefore, our strategy focuses on the following points:

· Collections defense: due to greater competition in the non-lending business, today we have projects focused on digitalizing our clients’ collection journey to provide them with an improved customer experience and maintain our leadership position in the market.

· A unique and powerful digital platform offering: make our Office Banking the best digital platform in the local financial market that allows us to accompany our clients in all their journeys, offering a digital end to end solution with 24/7 accessibility to our product and services portfolio.

· Financial Ecosystems development: we focus on creating an interconnected services network that allows users to satisfy multiple needs through a single integrated digital experience.

COVID-19 management

Since mid-March 2020, most companies suffered large economic losses due to COVID-19. In addition to their liquidity needs, many of our clients need complex attention and ad hoc structuring to help them overcome the crisis.

· The creation of the Restructured Customer area: many of our clients suffered large economic losses due to the global pandemic. For this reason, this area was created to look after some of our Middle-Market and Corporate division clients who might need closer monitoring and special financing structures, with the aim of maintaining the commercial relationship and ensuring their financial performance recovery.

· Credit Rescheduling: In response to liquidity needs, WBG provided rescheduling of short and long-term loans to its clients to provide them with a new schedule that better suits their payment capabilities. More than 34,800 credits were reprogramed (approximately an amount of S / 3,166 million).

· Reactiva Peru Program: The Peruvian government implemented the Reactiva Peru Program, the objective of which was to ensure continuity in the payment chain, providing guarantees to micro, small, medium, and large companies to access working capital loans and address their short-term capital needs. WBG participated in the program, and we granted loans to 1,773 clients (a total of S/7,127 million, which represents 47% of Reactiva loans given to corporations and medium-sized companies in the banking system) according to the MEF.

· Risk segmentation: the WBG portfolio by client economic sector was divided into four exposure level groups (with the percentage of total loans in each group in parentheses): (i) high risk (21%), mainly composed of retail, car sales, real estate, air travel, tourism, transportation and restaurants; (ii) above average (34%), mainly composed of construction, suppliers of construction materials, education, hydrocarbons, among others; (iii) moderate (25%), mainly composed of universal banking, fishing, cargo transportation, telecommunications; and (iv) limited (20%), mainly composed of agricultural export, energy, food and beverage production and Health services.

BCP Stand-alone’s Treasury function is divided into four primary units: (1) ALM Group, (2) Sales & Trading Unit, (3) Foreign Exchange and Derivatives Distribution Unit, and (4) Treasury Tribe.

ALM Group

The ALM Group is responsible for managing BCP Stand-alone’s statement of financial position and for taking reasonable interest rate and liquidity risks under the oversight of our Asset and Liabilities Committee (ALCO). The ALM Group is also responsible for maintaining our liquidity asset portfolio and Liquidity Coverage Ratio (LCR) and Common Equity Tier 1 (CET1) ratio compliance under the third Basel Committee Accord (Basel III) standards. In addition, the ALM Group is a participant in money and debt capital markets, oversees reserve requirements, and manages BCP Stand-alone’s liquidity and the bank’s statement of financial position. The ALM Group has been active in auctions held by the BCRP for certificates of deposit as well as in financing its funding needs through certificates of deposit, interbank transactions and guaranteed negotiable notes, among other instruments.

Sales and Trading Unit

BCP Stand-alone’s Sales and Trading Unit manages both Foreign Exchange and Interest Rate Risk exposure for proprietary trading purposes. The managed risk originates mainly from client transactions and from open proprietary positions. Market risk exposures and limits are independently defined by the Market Risk Unit and closely monitored by the Treasury Risk Unit. Additionally, an Investor Sales team has been recently launched within the Sales & Trading unit to actively cover the Institutional Investor segment providing direct access to market maker prices and liquidity. The Sales and Trading Unit manages both Foreign Exchange Desk and Interest Rate Desk risk as follows:

· Foreign Exchange: The foreign exchange Desk offers liquidity for foreign exchange Spot and Forward transactions for its clients in US Dollar-Peruvian Soles (USDPEN), other Latin-American currencies, and G-10 currencies. The foreign exchange Trading Desk also manages a foreign exchange volatility book for USDPEN. Additionally, the desk participates in foreign exchange transactions related to different instruments designed by the BCRP in the local currency market.

· Rates: The Rates Desk manages the risk originated from both Fixed Income and Swap transactions from clients and from proprietary positions. Fixed Income portfolio consists mainly of government bonds (both in local and hard currency) from Latin-American countries and US Treasuries. The BCP Fixed Income desk is one of the main liquidity providers in the Peruvian government bond market, where it is a leading participant of the Market Maker Program of the MEF, according to the MEF.

Foreign Exchange and Derivatives Distribution Unit

BCP Stand-alone’s Foreign Exchange and Derivatives Distribution Unit helps companies with their foreign exchange needs (spot and hedging) through the Distribution Desk. The broad portfolio of foreign exchange products provided to its client base has allowed the Foreign Exchange and Derivatives Distribution Unit to position itself as a benchmark in the foreign exchange business in the Peruvian market.

Treasury Tribe

The Treasury Tribe is responsible for providing technological support to the different units that make up the Treasury through the enabling of platforms and technological tools; as well as, through the implementation of different initiatives that allow business scalability. The tribe is made up of six squads, five for the development of initiatives related to products, such as Exchange, Foreign Exchange & Derivatives, Investments & Funding, Liquidity, ALM and one for shared requirements across those products.

BCP Stand-alone has adopted a risk appetite framework and established objective metrics and thresholds to periodically monitor the Bank’s evolving risk profile. The framework was approved by the Bank’s Board of Directors; and is managed and monitored by the Risk Management Division within BCP Stand-alone’s Central Risk Management Group. The adoption of a risk appetite framework reflects BCP Stand-alone’s commitment to aligning its forward-looking business strategy with its corporate risk vision.

BCP Stand-alone’s uniform credit policies and approval and review procedures are based upon conservative criteria and are uniformly applied to all of its subsidiaries. These policies are administered in accordance with guidelines established by the Peruvian financial sector laws and SBS regulations. For further information, see “ITEM 4. INFORMATION ON THE COMPANY – 4.B Business Overview – (6) Supervision and Regulation”.

BCP Stand-alone’s credit approval process is based primarily on an evaluation of each borrower’s repayment capacity and commercial and banking references. BCP Stand-alone determines a corporate borrower’s repayment capacity by analyzing the historical and projected financial condition of the company and of the industry in which it operates. Other important factors that BCP Stand-alone analyzes include the company’s current management, banking references, past experiences in similar transactions, and the quality of any collateral to be provided. In addition, BCP Stand-alone’s credit officers analyze the corporate client’s ability to repay obligations, estimate the probability of default of the client using an internal risk rating model, and define the maximum credit exposure that BCP Stand-alone wants to hold with the client.

The process of standardized risk model building and monitoring based on new sources of information and innovative statistical techniques was crucial to the Group transformation to endure decisions in the credit process, such as admission, monitoring and recovery. In particular, more complex models with enriched data allow for the inclusion of lesser-known customers into BCP Stand-alone portfolio and the more precise estimation of income and sales, which otherwise would have been done by physical means. These models are continuously monitored in order to assess their accuracy and revised if necessary.

BCP Stand-alone evaluates individual and small business borrowers by considering the client’s repayment capacity, a documented set of policies (including, among other issues, the client’s financial track record and the degree of knowledge of the client) and credit scores, which assign loan-loss probabilities relative to the expected return of each market segment. Nowadays a significant part of BCP Stand-alone’s credit card and consumer loan, and SME loan application decisions, are made through automatic means. Loan application decisions in BCP Stand-alone’s mortgage segment and the remaining portions of its small business and consumer segments are made by credit officers who use credit scores and profitability models as inputs for their evaluations and report to a centralized unit. Since 2020, BCP’s Credit Risk Department has adopted an agile framework, in which Tribes and Squads follow an agile operating model that allows them to plan, prioritize and focus on initiatives that directly contribute to established objectives, providing flexibility and agility, in order to create value for our clients.

By March 2021, BCP’s Retail Risk Division will have accomplished the first year of successful operations under the agile framework. This framework has facilitated speed when calibrating and creating credit scoring models and various analytical tools required for credit management. It also allowed a fast response when adjusting credit policy and credit processes; capabilities which have been critical for the bank to face the COVID downturn.

Under the agile framework, Tribes and Squads now consist of diverse team members such as risk specialists, data scientists, risk policy implementation members, among others, that previously worked more separately and more remotely in distinct units. Operating under cross-functional Squads has created a better understanding and alignment of goals in a timely schedule, through increased and improved communication and collaboration. Squads achieve a faster and more effective exchange of data, information and knowledge. Consequently, BCP’s Retail Risk Division has used the framework to enhance the bank’s abilities to more precisely and timely identify and assess the specific segments and subsegments that may require adjustments in credit policies and processes in order to be optimally managed.

Our performance in the small business and personal lending areas depends largely on BCP Stand-alone’s ability to obtain reliable credit and client information about prospective borrowers. BCP Stand-alone has a large body of transactional information that is used in credit risk models. Also, the SBS has an extensive credit bureau, which has expanded its credit exposure database service to cover businesses and individuals that have borrowed any amounts from Peruvian financial institutions.

As a result of COVID-19, BCP Stand-alone has introduced methodological adjustments and new sources of information (including thousands of surveys given to different pools of clients to capture the impact of COVID-19 on their personal income or level of operations) to calibrate the expected loss models. Some of these improvements include a greater granularity and better capture the real situation of deterioration of the clients (mainly SME-Pyme and Consumer portfolios). This led to closely monitoring the potential continued effects and impacts of COVID-19, as well as the effectiveness of actions and measures especially for our vulnerable clients.

BCP Stand-alone has a strictly enforced policy that limits the lending authority of its loan officers. It also has procedures to ensure that these limits are adhered to before a loan is disbursed. Under BCP Stand-alone’s credit approval process, the lending authority for WBG is centralized into a specialized credit risk analysis division; and there is another specialized credit risk analysis division for RBG. These divisions are operated by officers that have specific lending limits. In addition to the controls built into the loan approval workflow systems, the credit risk management divisions and internal auditors regularly review credit approvals to ensure compliance with lending policies.

For the WBG, in accordance with international standards, BCP Stand-alone has established lending authority limits based on risk rating (probability of default) and particular guarantees of the borrower. Requests for credit facilities in excess of the limits set for credit officers are reviewed by the Credits Committee, Executive Committee or, if the amount requested is sufficiently large, by the BCP Stand-alone’s Board of Directors. In addition, BCP Stand-alone has concentration limits in the loan portfolio by industry, which is based on its target risk appetite and market share.

BCP Stand-alone believes that an important factor to maintain the quality of its loan portfolio is the selection and training of its loan and risk officers. BCP Stand-alone requires loan officers to have degrees in economics, accounting, business administration or related fields from competitive local or foreign universities. In addition, training for new loan officers begins with a three-month program that covers all aspects of banking and finance. Subsequently, loan officers receive training in specific matters throughout their careers at BCP Stand-alone. Laterally-hired officers are generally required to have prior experience as loan officers.

BCP Stand-alone operates in substantial part as a secured lender. As of December 31, 2020, approximately S/59.3 billion of its loan portfolio and off-balance-sheet exposure was secured by collateral, which represents 47.2% of its total loan portfolio based on unconsolidated figures (excluding overseas branch office BCP Panama and overseas agency Banco de Credito del Peru, Miami Agency (BCP Miami)), as compared to 38.3% in 2019 and 39.3% in 2018. The increase in 2020 was driven in large party by the loans guaranteed under the Reactiva Peru Program (which provides coverage between 80% and 95%). Excluding these loans, 37.3% of the portfolio was secured by collateral.

Liquid collateral is a small portion of BCP Stand-alone’s total collateral. BCP Stand-alone requires collateral for the extension of credit depending on the risk profile and the business segment of the client, among other factors. When BCP Stand-alone requires collateral, it is usually valued at between 110% and 150% of the principal amount of the credit facility granted. The appraisal of illiquid collateral, in particular real estate assets, machinery and equipment, is performed by independent experts. BCP Stand-alone’s internal audit division conducts selected revisions and analyses on borrowers’ financial statements, consistent with the local banking regulations of the jurisdictions in which it operates.

To understand the impact of the crisis on each client, we established a process that prioritized the review of “high risk” and “above average risk” clients, and to a lesser extent those of “moderate risk” (according to its internal rating). To this end, more than 1,600 clients were reviewed, including more than once, with more than 2,000 special COVID reviews being carried out. Likewise, we developed a “Sector Map” to characterize the client portfolio based on the economic activity they carry out. According to the Sector Map, a level of exposure to risk was assigned to the COVID-19 situation of each client: “limited”, “moderate”, “above average”, “high”. Finally, an internal credit guideline was drawn up to guide decision-making taking into account the economic activity performed by each client and their financial capacity to face the shock.

BCP Bolivia’s activities include wholesale banking and retail banking. As of December 31, 2020, BCP Bolivia has total assets of S/12,472.4 million, total net loans of S/8,223.9 million, deposits of S/10,722.7 million, and equity of S/691.0 million, with a 2020 ROAE of -10.37% (compared to 11.07% in 2019).

As of December 31, 2020, BCP Bolivia’s loans represented approximately 9.2% of total loans in the Bolivian financial system, and its deposits represented approximately 9.5% of total deposits in the Bolivian financial system, according to the ASFI.

The following table shows the client segmentation of BCP Bolivia. This segmentation was a result of an analysis, which addressed multiple factors such as the size (by income, sales, and/or debt) and volume of activity for each client, the clients’ affiliation with other companies or groups, and their credit ratings.

Client Segmentation (1) Business Group Income/Sales/Total Debt Wholesale Banking Large companies (2) Annual sales higher than approximately S/54 million Medium companies (3)Small business (5) Annual sales from approximately S/4 million to S/54 million Annual sales from approximately S/0.1 million to S/4 million Retail Banking (5) Micro business (5) Annual sales of at least approximately S/0.1 million Consumer (6) Payroll workers and self-employed workers Mortgage Banking Payroll workers, independent professionals and business owners

(1) Converted into Soles at the exchange rate of S/3.621 per U.S. Dollar, December 31, 2020 - SBS.

(2) Loans to Large companies account for 35% of BCP Bolivia’s total loans. This segment accounts for approximately 1,050 customers.

(3) Loans to Medium companies account for 11% of BCP Bolivia’s total loans. This segment accounts for approximately 1,609 customers.

(4) At the end of 2020, retail banking loans accounted for 54% of total loans of BCP Bolivia, while retail banking deposits accounted for 26% of BCP Bolivia’s total deposits.

(5) Small and Micro business banking accounts for 13% of total loans of BCP Bolivia, small business banking serves approximately 9,214 clients while Micro Business serves approximately 11,870 business clients.

(6) Consumer banking accounts for 9% of total loans of BCP. Its customer base consists of approximately 54,902 Payroll and self-employed workers. Our strategies are based on cross-selling and retention programs that expand benefits to non-banking products. This segment serves 11,993 customers, representing 31% of BCP’s total loans.

During 2020, we progressed and extended our digital portfolio products (insurance, consumer credits, savings account, fixed-term deposits, payday loan), with an intention of changing the traditional sales format. We also digitalized and automated the credit evaluation processes of the above-mentioned products.

1. We set up data governance and began the process of implementing the data architecture and a Data Lake.

2. We promoted the development of digital ecosystems by introducing a mobile app called SOLI (a 100% digital payment method) to the market (specially the unbanked).

3. We strengthened the innovation area with the creation of new squads (multidisciplinary teams, that work under agile methodologies) and we continued with the process of cultural change through the in-house development of agile and digital talent.

Distribution Channels

Digital channels

· Soli: As part of our commitment to banking more of the population, BCP Bolivia launched an ecosystem for digital payments in 2020 called Soli. The objective of this new application is to reach the unbanked population in Bolivia.

Self-service channels

· ATMs: BCP Bolivia increased its number of ATMs by 9 and reported 310 units at December 31, 2020.

Physical channels

· BCP Agentes: BCP Bolivia, on the other hand, incorporated 405 new BCP Agentes in 2020, bringing the total number of BCP Agentes to 851.

· Branches: At the end of 2020, BCP Bolivia had a total of 54 branches.

The Microfinance LoB is focused on offering commercial banking activities and specialized financial services to small and micro business clients in Peru and Colombia through Mibanco. Mibanco Colombia was created in October 2020 after a reverse merger between between Edyficar S.A.S. (whose commercial name was Encumbra) and Bancompartir (the surviving entity). According to the Economist, Mibanco franchise is the leading Microfinance group in the Americas and the second largest private microfinance bank in the world with a loan portfolio of 14,141 million soles and approximately 1.8 million clients and represents around 7.1% of Credicorp’s total assets and 9.43% of the equity attributable to Credicorp’s equity holders. As of December 31, 2020, Mibanco Peru represented around 91.8% of the total loans of the Microfinance LoB.

Mibanco’s purpose

Mibanco’s purpose is to transform lives and accompany our clients as they write their success stories. By doing so, we expand financial inclusion in the markets in which we operate. Microfinance is a social business, and its success depends on the social development of our clients, employees and communities.

Microfinance transformation

In Microfinance, our transformation strategy is focused on migrating our traditional business model, which is intensive in people and offices, to a hybrid multichannel model guided by information and analysis to improve our customers’ experiences. Transformation entails: ensuring the evolution of our culture; driving a change in mindset; and making innovations in the way we serve our clients and in our business model. We will accomplish this by leveraging new technologies and forms of work to ensure that we are on track to meet our objectives.

Our focus covers three main objectives: to become a reference point for customer experience; lead growth in the region; and become a benchmark for the microfinance business model.

We are focused on five enabling fronts:

▪ Customer Centric, to provide an extraordinary experience that is in tune with the needs of our clients. ▪ Digital Business Model, to generate digital capacities and evolve the current business model by focusing on customer experience and efficient growth. ▪ Collaborative Organizational Culture focused on implementing a customer-client focus; reinforcing reliability and commitment; and ensuring that we have the talent and leadership required for transformation while forming work squads and tribes. ▪ Data driven: focused on creating a competitive advantage by generating advanced analytical capacities to support core business practices (origination, collections, commercial effectiveness, pricing and key personnel) and analytics to make decisions. ▪ IT & Digital Risk: Having flexible architecture to support digital transformation and to ensure that cybersecurity is at necessary levels.

In Colombia, there is an opportunity to replicate, through the “Mibanco Way,” the improvements that we are already seeing in Peru in terms of productivity, cost of risk and efficiency.

2.2.1 Mibanco Peru

The following table shows how Mibanco segments its clients. This segmentation is based on an analysis that considers multiple factors, such as business size and client income, sales, and/or total debt, among others, as well as the client’s affiliation with other companies or groups and their credit ratings.

Client Segmentation (1) Group Income/Sales/Total debt SME – medium (2) Annual sales up to S/20 million Total debt higher than S/300,000, without issued debt in the capital markets SME – small (3) Total debt from S/20,000 to S/300,000 Micro-business (4) Total debt up to S/20,000 Consumer (5) Focus on debt unrelated to business Mortgage (6) Focus on individuals for the acquisition and construction of homes and granting mortgages

(1) As of December 31, 2020, Mibanco had 856,263 registered clients. All portfolio percentages and customer counts in this table and the associated notes are as of December 31, 2020, unless otherwise disclosed.

(2) Mibanco’s SME – medium segment focuses on financing production, trade, or service activities for companies that (1) have total debt in the last 6 months higher than S/300,000, (2) annual sales up to S/20 million in the last 2 consecutive years, and (3) have not participated in the capital markets. This segment represents 4% of Mibanco’s total loans and 3,197 of its clients.

(3) Mibanco’s SME – small segment focuses on financing production, trade, or service activities for companies that have total debt between S/20,000 and S/300,000 in the last 6 months (without including mortgage loans). This segment represents 57% of Mibanco’s total loans and 186,920 of its clients.

(4) Mibanco’s micro-business segment focuses on financing production, trade, or service activities for companies that have total debt up to S/20,000 in the last 6 months (without including mortgage loans). Micro-business loans represent 31% of Mibanco’s total loans and 540,387 of its clients.

(5) Mibanco’s consumer segment focuses on financing individuals to cover payments of goods and services or expenses unrelated to business. Consumer loans represent 4% of Mibanco’s total loans and 120,366 of its clients.

(6) Mibanco’s mortgage segment focuses on financing individuals’ acquisition, construction, renovation, remodeling, expansion, improvement, and subdivision of homes. Mortgage loans represent 4% of Mibanco’s total loans and 5,393 of its clients. Mibanco’s mortgage segment has a policy of limiting LTV to up to 90%.

Progress in Transformation

In 2020, we made the following progress on our transformation journey:

Customer Centric

As proof of our desire to put our customers’ needs first, we offered financial facilities to our clients to help them overcome the crisis arising from the COVID-19 pandemic, which generated a drop, albeit temporary, in our margins this year. We are working on deploying the NPS (Net Promoter Score) throughout our branch network to align the whole organization under the Customer Centric enabling front. This will materially increase the number of surveys that are conducted, which will serve as a foundational element of our effort to lead the microfinance market in the region by enhancing the customer experience. In 2020, we achieved an NPS of 16%. We are also using the Employee Net Promoter Score (ENPS) indicator in our management processes to measure the employee experience. As of December 2020, our ENPS score was situated at 65%. This is the result of the first year of applying this indicator, so it will be our baseline for improving the satisfaction of our employees.

Digital Business Model

We have advanced in our journey to a hybrid business model by developing digital tools and implementing new sale channels as alternatives to traditional outlets (business advisor), providing customers services through:

· Telephone sales, APP, home banking, teller and platform.

· URPI, a digital instrument for business advisors, which facilitates the advisor’s assessment, sales and collections in the field to ensure that they have more face-to-face time with clients. As of December 2020, 16.2% of the credit operations were conducted through alternative sales channels and 100% of our relationship managers were utilizing the functionalities available on URPI. These functionalities include field information on the clients, an operation simulator (amount, tenure and rate), planning sales priorities and collections in the field.

· We have launched a digital model through an alliance with Uber Technologies Inc. and MO Technologies, a fintech that conducts a digital assessment of potential clients with the database of Uber drivers to grant them loans which are disbursed in Mibanco’s deposit accounts; this provides information that allows us to expand our client base selectively and provides a great deal of information to scale up our business with controlled risk.

Collaborative Organizational Culture

We have adopted agile forms of work through squads. By the 2020, we had 15 squads, which supported: origination, collections, digital development, experimental work and client experience. Additionally, we developed six business models for intelligent business; advanced analytics teams; and set up one digital channels tribe.

Data Driven

In 2020, we were focused on generating competitive advantages through centralized loan assessment and working on a multi-channel collections strategy. Improvements in this regard were supported by advanced analytics models, which helped us increase the number of loans approved through leads from 26.1% in 2019 to 27.3% in 2020.

IT & Digital Risk

We made progress in integrating the platform that supports digital transformation and rolled out processes to ensure that we meet all cybersecurity requirements. We also advanced in our quest to implement tools for digital collaboration.

Distribution Channels

Digital channels

· Mibanco Mobile App: In 2020, 218,422 client inquiries were processed through the Mibanco Mobile App and 3 million transactions were conducted, which represented growth of 800% with regard to 2019.

· Mibanco Web: Mibanco’s web page processed 546,168 transactions in 2020. Additionally, 796 clients requested loans through the web, which translated into S/1.3 million in disbursements.

· Yape: Since June 2020, Mibanco’s clients have been able to create a Yape account with their bank account. This has allowed 110,116 of Mibanco’s clients to become Yape users.

· Culqi: Mibanco created an alliance with Culqi, a digital POS, in October 2019. In 2020, more than 21,000 of these units were placed.

· Digital Alliances: The digital alliance between Uber, MO and Mibanco has generated fruits. In 2020, we conducted 970 new loan disbursements and since June 2019, have disbursed 1,918 loans and opened 2,788 savings accounts to customers originated through this alliance.

Physical channels

· Kasnet Agentes: As part of the services offered to its clients, Mibanco has an agreement with Kasnet Agentes, a network of Multibank correspondents in Peru. At the end of 2020, 9,026 Kasnet Agentes were available for Mibanco clients; this represented an increase of 6.5% with regard to the figure registered in 2019.

· Branches: At the end of 2020, Mibanco had 323 branches; 289 were own branches while 34 belonged to Banco de la Nacion, which offers services to Mibanco clients under a special agreement.

COVID-19 Management

Mibanco created a matrix segmenting the portfolio according to the type of relief received, the stage of the relief (under grace period or current), the risk Scoring adjusted to the adverse economic scenario and a COVID-19 score developed in the second quarter. This score was developed with the objective of identifying the level of exposure and impact of the COVID-19 and was based on client interviews, location, economic sector and payment behavior. The above served to segment the portfolio into four groups to develop the commercial and risk strategies, according to each segment current risk and probability of default.

Credit Reprogramming: In response to liquidity needs, Mibanco offered reprogramming for short and long-term loans to provide clients with payments schedules that are better aligned with their payment capacities. Approximately 890,000 loans were reprogrammed (in the total amount of S/8,607 million).

Reactiva Peru Program: Mibanco participated in the program, and we granted loans to approximately 245,000 clients (in the total amount of S/2,485 million).

FAE-Mype Program: The Peruvian government implemented the micro and small Business Support Fund (Fondo de Apoyo Empresarial a la Mype or FAE-Mype by its Spanish initials) program to provide working capital to micro and small businesses in all productive sectors. Mibanco participated in the FAE-Mype program and granted loans to approximately 35,000 clients for a total of S/386 million.

2.2.2 Mibanco Colombia

The following table shows how Mibanco Colombia segments its clients. This segmentation is based on an analysis that considers multiple factors, such as business size, client income, assets and/or total debt, among others, as well as the client’s affiliation with other companies or groups and their credit ratings.

Client Segmentation Group Income/Sales/Total debt (1) Commercial (2) Debt not categorized as micro, consumer or mortgage. Micro (3) Total debt up to 120 statutory minimum wages (equivalent to S/100,000). Consumer (4) Focus on debt unrelated to business. Mortgage (5) Focus on individuals for acquisition, construction of homeownership and granted with mortgages.

(1) Converted into Soles at the exchange rate of S/0.001065 per Colombian Peso as of December 31, 2020. As of December 31, 2020, Mibanco had 97,617 registered clients. All portfolio percentages and customer counts in this table and the associated notes are as of December 31, 2020, unless otherwise disclosed.

(2) Mibanco’s commercial segment focuses on all credits other than Micro, Consumer and Mortgage. Commercial loans represent 22% of Mibanco’s total loans and 4,315 of its clients.

(3) Mibanco’s micro-business segment focuses on financing production, trade, or service activities for companies that have total debt up to 25 statutory minimum wages (approximately S/20 million) and workers up to 10. Micro-business loans represent 71% of Mibanco’s total loans and 87,818 of its clients.

(4) Mibanco’s consumer segment focuses on financing individuals to cover payments of goods and services or expenses unrelated to business. Consumer loans represent 3% of Mibanco’s total loans and 4,527 of its clients.

(5) Mibanco’s mortgage segment focuses on financing individuals’ acquisition, construction, renovation, remodeling, expansion, improvement, and subdivision of homes. Mortgage loans represent 5% of Mibanco’s total loans and 957 of its clients.

2.3 Insurance & Pensions

2.3.1 Grupo Pacifico

(I) Grupo Pacifico Overview

We conduct our insurance business exclusively through Grupo Pacifico, which operates in Peru and Bolivia and is the second-largest Peruvian insurance company by written premiums in 2020, according to the SBS and the National Superintendency of Health of Peru (Superintendencia Nacional de Salud or Susalud by its Spanish initials). Grupo Pacifico provides a broad range of insurance products focusing on three business areas: P&C, life insurance business, and corporate health insurance and medical services. Grupo Pacifico, like other major Peruvian insurance companies, sells its products both directly (through its own sales force) and through independent brokers, bancassurance (which is an arrangement between a bank and an insurance company allowing the insurance company to sell its products to the bank’s client base) and sponsors.

For further information see “ITEM 4. INFORMATION ON THE COMPANY – 4.A History and development of the company”.

In the last few years, we have seen a greater level of awareness in the need for protection. This was evidenced by the interest generated by certain high volume, low ticket products which we have successfully introduced. Moreover, the current situation has generated an even greater desire for protection, and a wider acceptance of digital channels in the insurance category.

During 2020, we have developed a strategy to capture this growth opportunity, which is based on three axes: customer-centric innovation, a focus on Credicorp distribution channels and digitalization for both sales and services.

The first strategic axis is geared towards customer-centricity through innovation by closely understanding our market and generating products based on the current and future needs of the population. Through the axis we have developed a product of flexible annuities, after the introduction of a law that allows the retrieval of 95.5% of the pension funds upon retirement, which has grown 3-fold since its launch. Another example is our new auto insurance product called “Plan Kilometros” where customers pay a low fixed premium plus a variable amount based on the kilometers driven, which has grown 8 times since 2019 (from S/0.53 million to S/4.56 million).

A second strategic axis focuses on capitalizing on the reach and provided by the Credicorp channels. Currently, BCP and Mibanco have over 9 million customers, which provides a great opportunity for Pacifico to cross-sell and grow. To seize this opportunity, we have created a Bank-assurance Tribe combining team members from BCP and Grupo Pacifico, all focused on generating business and products for BCP customers. Additionally, we created the first combined squad with Grupo Pacifico and Mibanco team members, to develop ad-hoc products adapted to the needs of lower income clients.

The third strategic axis is oriented around digitalization. Our industry will become increasingly digital and we must be at the forefront of this trend. Grupo Pacifico has been adding products to its e-commerce platform with great success: in the last year we have doubled our direct-digital premiums, and also, we have launched a digital health insurance product focused only on cancer coverage. Finally, we have improved our self-service capabilities by continuing to develop our app “Mi Espacio Pacifico”, where we have quadrupled the registered users and doubled the percentage of customer self-service.

Distribution Channels

Digital channels

· Mi Espacio Pacifico App: In 2020, more than 169 thousand clients used Grupo Pacifico’s app, compared to 39 thousand in 2019. Additionally, 60% of inquiries were self-managed as compared to 33% of inquiries that were self-managed in 2019.

· Pacifico Web: In 2020, more than 7 million visits were made to Grupo Pacifico’s website, which compared favorably with the 5 million reported in 2019. Sales through the website and other digital channels totaled S/88 million, which represented a growth of 74% with regard to the level in 2019.

Physical channels

· Branches: Due to the social distancing measures enacted during the pandemic, Grupo Pacifico temporarily closed its offices and branches to the public. Nevertheless, the company has continued providing its clients with the services they need.

COVID-19 Management

· Pacifico reimbursed 50% of car premiums for March and April 2019 to individual clients who were up to date on their payments.

· Pacifico donated S/5 million in life insurance to healthcare professionals, police and the army.

2.3.2 Prima AFP

(I) Prima AFP Overview

Credicorp conducts its pension fund business through Prima AFP, the second largest player in the Pensions business in Peru, which operates through individual capitalization accounts and provides its affiliates with retirement, disability, survival, and burial benefits. For this purpose, Prima AFP collects affiliates’ mandatory and voluntary contributions, and invests the funds in local and foreign financial markets. The funds that Prima AFP holds in custody for its affiliates are non-attachable by it and autonomous assets and are not affected by Prima AFP’s financial results. Prima AFP offers four types of funds, which differ by risk profile and the asset classes in which they invest. The investment and risk management policies are defined by internal committees and supervised by the SBS and the SMV.

For further information see “ITEM 4. INFORMATION ON THE COMPANY – 4.B Business Overview – (5) Competition – 5.3 Insurance & Pensions – 5.3.2 Prima AFP” and “Item 4. INFORMATION ON THE COMPANY – 4.B Business Overview – (6) Supervision and regulation – 6.2. Subsidiaries – 6.2.1 Peru.”

For Prima AFP, 2020 was an atypical year with many challenges due to the COVID-19 pandemic. The Peruvian Government, in order to mitigate the health and economic crisis, promulgated a Law and various Emergency Decrees (DU) that ranged from the suspension of pension contributions in April, to the withdrawal of funds by clients. To comply with the requirements of the government, we had to rapidly execute actions. On the commercial front, we increased the processing capacity of our customer service channels, doubled the chat infrastructure to provide more prompt attention to customers, and implemented a bot that is available 24 hours per day, to quickly attend client needs. Additionally, we equipped a team of customer service executives with tools to attend clients from their homes and provide specialty service.

At Prima AFP, the commitment to our employees has always prevailed, providing them with job stability and continuity of working conditions. They also received the tools to work from their homes. Likewise, an active communication was maintained by the general management to keep everyone updated on the news and strategies taken by the organization.

In 2020 and coming years, Prima AFP’s efforts are focused on the experience of our clients, on providing the best profitability to the funds under management and on the efficiency of our organization. All this under a framework of sustainability which focuses on the progress of our clients. Additionally, we continue to implement our responsible investment model, which applies environmental, social and corporate governance (ESG) factors in our investment process.

Since 2019, we have been immersed in a transformation process that focuses on becoming an agile and adaptable organization to generate value, strengthen the PPS, face up disruptive competition and meet the expectations of our customers by providing them with extraordinary experiences.

Distribution Channels

Digital channels

· Prima AFP’s App: Thanks to our clients’ migration to digital channels, in 2020 more than 8 million sessions were initiated in Prima AFP’s mobile app, compared to 367 thousand in 2019.

· Prima AFP’s Web: In 2020, more than 2 million sessions were initiated through Prima AFP’s web page, compared to 334 thousand in 2019. Users can use the web page to check contributions; find details on fund movements and balances; and request a change in fund risk level.

Physical channels

· Branches: Prima has 15 offices nationwide. Nevertheless, as of March 2020, all offices have been closed to the public due to government measures in the context of COVID-19.

For further detail about Prima AFP COVID-19 Management, see “ITEM 4. INFORMATION ON THE COMPANY – 4.B Business Overview – (1) Credicorp Overview” and “ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS – 5.A Operating Results – (2) Political and Macroeconomic Environment – COVID-19 Measures.”

2.4 Investment Banking & Wealth Management

Credicorp Capital carries out its investment banking and wealth management operations in the Latin America region through Credicorp Capital Peru, Credicorp Capital Colombia, and Credicorp Capital Chile which hold a considerable market share in the Peruvian, Colombian and Chilean markets, respectively.

In 2018, the creation of the Investment Banking & Wealth Management LoB included the addition of BCP Stand-alone’s and ASB Wealth Management Division to Credicorp Capital. The main objective of this new LoB is to operate as a single regional wealth management model within one business unit, instead of three different models under different business units. This new structure facilitates sharing of best practices and delivery of a regional value proposition, with ASB supporting all wealth management business units and clients (instead of focusing on Peru-based wealth management customers).

In 2019, Credicorp Capital completed the acquisition of Ultraserfinco and its subsidiaries, a leading financial services company licensed to operate as a broker-dealer in Colombia. In June 2020, the merger with Ultralat, a broker-dealer and financial advisor in the U.S., concluded successfully. This allowed to expand our Wealth Management business in Colombia, in addition to the possibility of building a robust Capital Markets and Wealth Management Platform in the U.S.

With operations in Chile, Peru, Colombia and the United States, we are consolidating our leadership position operating through four main business units: Asset Management, Capital Markets, Corporate Finance and Wealth Management, with ASB as our banking operation in Panama that supports our Wealth Management business, consolidates some of our Capital Markets Trading Strategies and increasingly provides its balance sheet to support our Corporate Finance business unit.

Asset management

Through the regional platform provided by Latin-American Integrated Market (Mercado Integrado Latinoamericano), our asset management business unit offers a wide array of products, including mutual funds, alternative funds, and portfolio management, as well as structured products, to a broad base of clients, including those in our retail, private and high-net-worth, corporate, and institutional segments. We also act as a third-party distributor in Latin America, representing other global asset managers.

Capital markets

Our capital markets business unit has an active role in secondary markets, particularly equity and fixed-income products, as well as exchange rate products and derivatives. Our participation in the placement of equity and debt instruments, vis-à-vis our corporate finance team, is also relevant, especially for corporate issuances in local markets. We also have proprietary investments, with trading books managed in Peru, Colombia and Chile.

Corporate finance

Our corporate finance business unit provides advisory services for the structuring of mid- and long-term financing and the structuring and placement of equity and fixed-income instruments in capital markets. It also offers a wide range of financial advisory services and advisory services for mergers and acquisitions.

Wealth management

We run a financial and investment advisory model tailored to high-net-worth and ultra-high-net-worth individuals under a comprehensive value proposition where we offer our clients a broad range of products (including investment advisory, investment management, long-term financial planning, banking services, and credit solutions), an expert advisory model (in which a single relationship manager coordinates the various financial services for their clients) and a multi-platform that provides access to local, regional and international markets, including the U.S.

Distribution Channels

Digital channels

· Tyba: Tyba is an online application that operates as a digital broker in Colombia and allows clients to manage their personal finances, making investments according to their own risk profile and tailored to their investment plans. It provides a simple and secure means for clients to access to investment products by allowing any investment of a minimum amount of 100,000 Colombian Pesos (COP) to be made entirely through the Tyba platform. At the end of 2020, Tyba has 218,000 users.

Physical channels and Telephone

· Offices: Credicorp Capital’s clients can be served through its 23 regional offices, which are distributed across Peru, Colombia and Chile, and also have points of contact in the United States and Panama. Additionally, BCP clients can manage their investments in mutual funds through its network of agencies across Peru.

· Call center: Through a specialized team, we serve and advise our Capital Market clients in the intermediation of fixed income and variable income securities.

(3) Corporate compliance and ethics

Credicorp and all its subsidiaries, using a comprehensive approach based on international best practices and our principles and ethical values, have established 10 corporate compliance and ethics programs that cover local and international regulations and mitigate conduct risks by encouraging ethical behavior in order to protect the reputation of the corporation. These programs are the following:

· Anti-money laundering and Counter financing of terrorism (AML/CTF)

· Financial stability

· Fiscal transparency (FATCA & CRS)

· Regulatory compliance

· Ethics and conduct

· Anti-corruption

· Market abuse prevention

· Personal data protection

· Occupational safety and health

· Market Conduct

The programs listed above are under the oversight of the Chief Compliance and Ethics Officer who has full autonomy to carry out her functions and duties independently, and reports directly to our Board of Directors, through the Sustainability Committee, in order to provide regular and consolidated reports about the performance of the compliance and ethics programs in place at all of our subsidiaries. Each subsidiary has a compliance and ethics officer, who works with a specialized team and reports to the head office.

In 2020, we continued with our strategy about the migration from a single-program perspective to a comprehensive compliance and ethics advisory framework to provide timely risk assessment of new products, channels, service initiatives or changes in the realm of compliance. We have implemented a new way of providing comprehensive advice (that includes all programs within the role of compliance and ethics) to Credicorp business units, tribes and squads to ensure that products and services can be rolled out in a timely manner.

Fiscal Transparency

The Fiscal Transparency Unit within Credicorp oversees the implementation of the U.S. Foreign Account Tax Compliance Act (FATCA) and the OECD’s Common Reporting Standard (CRS) which are the global standards for the automatic exchange of financial information between governments; and apply these standards to all Credicorp financial institutions. Understanding FATCA and CRS requirements and having a comprehensive Fiscal Transparency compliance program are essential for financial institutions to limit non-compliance risk and meet the obligations set out by applicable country Intergovernmental Agreements (IGAs) with the U.S. Internal Revenue Service (IRS) and the commitments signed with Organization for Economic Co-operation and Development (OECD).

FATCA at Credicorp: Credicorp has investment vehicles located in countries under IGA Model I (Bahamas, Luxembourg, Colombia, the Cayman Islands and Panama), IGA Model II (Bermuda and Chile), and General Regulation (Bolivia and EE.UU.). Obligations include complying with client due diligence, client annual reporting and financial counterparties exchange of status information. Peru still holds the status of “agreement in substance” while the Peruvian government and the U.S. Department of Treasury continue with the negotiations to sign an IGA Model I. Given this status, in 2018 the MEF announced that the Annual Client Reporting obligation would be put on hold, while negotiations continue. However, all Peruvian financial institutions must comply with all other FATCA obligations as if the IGA were already in force.

CRS at Credicorp: Credicorp has financial institutions located in countries that started CRS implementation in 2016 (Colombia, the Cayman Islands and Luxembourg), 2017 (Panama and Chile) and 2019 (Peru). In the countries that adopted CRS in 2016 and 2017, our main activities will continue to focus on (i) keeping the information of our clients and counterparts updated, (ii) sending annual reports to tax authorities and (iii) completing the certifications and audits according to the laws applicable to each country.

In Peru, the implementation of CRS is part of the mandatory requirements of the OECD to grant full membership status to Peru. Therefore, all Credicorp financial institutions in Peru, including BCP Stand-alone, Grupo Pacifico, Mibanco, Prima AFP, Credicorp Capital Bolsa, Credicorp Capital Fondos, and Credicorp Capital Titulizadora; submitted their first Annual Report to the Superintendence of Tax Administration of Peru (Superintendencia Nacional de Aduanas y de Administracion Tributaria de Peru or SUNAT by its Spanish initials), the Peruvian Tax Authority, in August 2020.

(4) Internal Audit

In 2020, our internal audit unit focused on creating a permanent risk-based framework to evaluate the effectiveness and efficiency of Credicorp’s risk management, control and governance processes. The unit’s objectives are improving and protecting the corporation’s value through an agile and timely independent assessment, as well as data-based consulting and risk analysis. For this purpose, our internal audit unit formulated the Annual Audit Plan using a risk-based audit methodology, which is aligned with the rules of The Institute of Internal Auditors (IIA) and approved by the SBS. Based on industry-specific concerns, topics related to data analytics, cybersecurity and agility were given special attention and therefore addressed the audit management strategy.

During 2020, for the tenth consecutive year, an internal evaluation was conducted in compliance with Standard 1311 of the IIA. During this evaluation, we received the qualification of “General Compliance” (the highest qualification rating provided by the IIA) due in part to our Quality Assurance and Improvement Program. The evaluation also verified that our internal audit function complies with the International Standards for Professional Practice, Fundamental Principles and the IIA Code of Ethics. For the year 2021, we plan to deploy the Audit Maturity Model, recommended by the IIA.

During 2020, our Chief Internal Auditor remained as Chairman of the Financial Services Guidance Committee the IIA, whose mission is to strategically direct the development of the International Framework for Professional Practice of Internal Auditing to support the advancement of the professional auditing practice in the global financial services industry by identifying, prioritizing, launching and, ultimately, approving guidelines specifically geared to the special needs of internal auditors who provide services to the financial services industry. Furthermore, during the year, Grupo Pacifico’s Chief Auditor continued as Chairman of the Lima Chapter of the Information Systems Audit and Control Association (ISACA), and participated with our Chief Auditor on behalf of Credicorp, with counterparts from various peer universal banking institutions from various Latin-American countries in the Agility Internal Audit Committee - Latin American Banks, a self-organized group composed by the audit function of those banks, to share experience and knowledge. Furthermore, the Auditor of ASB was part of the Board of Directors of the Audit Committee of the Association Banking of Panama. Another highlight was the confirmation of the new Credicorp Capital Peru Audit team in July 2020.

Consistent with recommended industry practices, Credicorp continued to apply the Cybersecurity Assessment Tool (CAT) of the U.S. Federal Financial Institutions Examination Council (FFIEC) to its operations. In addition, Credicorp implemented a centralized methodology to apply data analytics in a coordinated and integrated manner and, during 2020, we also began to apply a decentralized data analytics model following best practices and promoted the use of Agile audit methodology guidelines. In that sense, for example at BCP the percentage of our audit engagement using data & analytics techniques grew from 55% in 2019 to 91% during 2020.

Despite the COVID-19 pandemic, Credicorp Audit was able to fulfill its annual plan remotely, due to the technical facilities deployed by the different companies of the group. In this field, special methodologies were developed for remote visits to agencies that serve our clients.

In 2020, we provided 20,704 hours of training to our internal auditors, with an average of 91 hours per auditor (above the 40 hours per auditor recommended by international practices) in topics related to fraud prevention, IFRS 9, new cybersecurity frameworks such as those promulgated by the IIA, NIST or the FFIEC, internal quality assessment, data analytics, risk management, programming language, anti-money laundering, validation of models and other topics of financial and operational audit.

(5) Competition

5.1 Universal Banking

As of December 31, 2020, there are 54 financial institutions, and four state-owned banks (Banco de la Nacion, Corporacion Financiera de Desarrollo S.A., a Peruvian government-owned development bank, Agrobanco and Fondo MiVivienda) in the Peruvian universal banking sector.

Private Financial System as of December 31, 2020 Number of entities Assets (Soles in thousands) Deposits (Soles in thousands) Loans (Soles in thousands) Banking Sector (1) 16 515,698,170 329,937,958 326,021,798 Financial firms (2) 10 15,445,489 8,379,218 13,340,950 Municipal savings banks (3) 12 34,910,251 25,452,829 26,454,575 Rural savings banks (4) 7 2,999,392 1,780,372 2,394,140 Edpymes (5) 9 2,862,092 — 2,549,945 Total (6) 54 571,915,394 365,550,377 370,761,408

Source: SBS

(1) Banca Multiple under SBS definition and terminology

(2) Empresas Financieras under SBS definition and terminology

(3) Cajas Municipales under SBS definition and terminology

(4) Cajas Rurales under SBS definition and terminology

(5) The same name under SBS definition and terminology

(6) The total Private Financial entities doesn’t include savings and loans associations (COOPACS), since the information for COOPACS is not yet publicly available from the SBS

(i) Banking Sector

The Banking Sector includes universal banks, offering financial services to retail and wholesale clients, among others. The following table sets forth the percentages, by assets, deposits and loans, represented by the major Peruvian banking institutions.

As % of total Private Financial System As % of Banking Sector As of December 31, 2020 Assets Deposits Loans Assets Deposits Loans BCP Stand-alone 31.92 % 31.85 % 30.50 % 35.40 % 35.29 % 34.68 % Banco BBVA Peru 18.78 % 19.51 % 18.98 % 20.82 % 21.62 % 21.59 % Scotiabank Peru 13.50 % 12.18 % 13.76 % 14.98 % 13.50 % 15.65 % Interbank 11.91 % 12.02 % 11.22 % 13.21 % 13.32 % 12.76 % Banco Interamericano de Finanzas 3.21 % 3.51 % 3.26 % 3.56 % 3.89 % 3.70 % Mibanco 2.73 % 2.34 % 3.50 % 3.03 % 2.59 % 3.98 %

Source: SBS

As of December 31, 2020, BCP Stand-alone ranked first among all Peruvian multiple banks by assets, deposits and loans, according to the SBS.

As of December 31, 2020, the principal Peruvian non-state financial institutions reported total loan balances of S/243,371 million in local currency and of US$22,825 million in foreign currency (in comparison to S/200,331 million and US$25,877 million in 2019, respectively). These figures represented an annual expansion of local currency loan balances of 21.5% and a contraction of foreign currency loan balances of 11.8% (compared to an expansion of 8.7% and 1.0%, respectively, from December 31, 2018 to December 31, 2019). As a result, the dollarization of loans reduced to 25.4% as of December 31, 2020 (compared to 30.0% as of December 31, 2019 and 31.9% as of December 31, 2018). As of December 31, 2020, Peru’s total amount of multiple banking deposits were S/329,938 million, and the multiple banking dollarization rate for deposits was 37.9% (compared to 38.9% as of December 31, 2019 and 39.5% as of December 31, 2018). As part of its plan to decrease the dollarization level of loans in the Peruvian financial system, in order to reduce the risks of currency depreciation associated with borrowing in US Dollars, the BRCP established a de-dollarization program beginning in January 2015. For further information, see “ITEM 4. INFORMATION ON THE COMPANY – 4.B Business Overview – (6) Supervision and Regulation – 6.2 Subsidiaries – 6.2.1 Peru – (i) Peruvian Regulators”.

Peru’s capital ratio (regulatory capital divided by risk-weighted assets (RWAs)) was 15.52% as of December 31, 2020, which was above the 10% legal minimum that became effective in July 2011 and represented an increase of 95 basis points from the capital ratio reported as of December 31, 2019 (14.57%). In 2019, the ratio decreased by 9 basis points from a ratio of 14.66% as of December 31, 2018.

Peru’s loan portfolio quality indicators deteriorated in 2020. As of December 31, 2020, internal overdue ratio reached 3.80%, 78 basis points higher than the ratio reported as of December 31, 2019 (3.02%). As of 2019, the ratio had increased 7 basis points compared to December 31, 2018 (2.95%). Also, the internal overdue, refinanced and re-structured loans over total loans ratio was 5.52% as of December 31, 2020, 106 basis points higher than the figure reported at year-end 2019, 4.46% (compared to 4.44% in 2018). Similarly, the coverage ratio of Peru’s internal overdue loan portfolio was 177.7% as of December 31, 2020 (compared to 152.1% as of December 31, 2019 and 153.6% as of December 31, 2018).

The liquidity of the Peruvian banking system remained at high and comfortable levels. As of December 31, 2020, the local currency liquidity ratio and the foreign currency liquidity ratio were 52.2% and 49.2%, respectively (compared to 27.0% and 49.6% in 2019 and to 27.0% and 44.5% in 2018, respectively). The significant increase in the local currency liquidity ratio is mainly attributable to the government program liquidity measures. These liquidity ratio levels were well above the minimum required by SBS regulations (10% for local currency and 25% for foreign currency).

(ii) Other financial institutions

BCP Stand-alone also faced a strong competition from credit providers, aside banking institutions, primarily with respect to consumer loans and SME-Pyme loans. SME-Pyme loan providers from other financial institutions, lent S/19.7 billion to borrowers in 2020, compared to S/17.3 billion in 2019, and S/16.3 billion in 2018, according to the SBS. In 2020, overall SME-Pyme loans to customers of other financial institutions represented 18.0% of the total loans in the Peruvian financial system (compared to 22.8% in 2019 and 22.0% in 2018).

Consumer loan providers from other financial institutions lent S/14.0 billion to borrowers in 2020, compared to S/15.1 billion in 2019 and S/12.3 billion in 2018, according to the SBS. In 2020, overall loans to consumers of other financial institutions represented 21.2% of total loans in the financial system (compared to 21.2% in 2019 and 19.9% in 2018).

(iii) Recent Competitive Developments

In recent years, several foreign companies have shown interest in entering the Peruvian universal banking market while financial companies already in Peru have taken steps to expand operations and develop new businesses. In addition, non-traditional players, such as fintech and startup companies, began to operate in the financial sector in recent years. These new strong competitors may affect adversely our results as they set and provide similar products and services. In particular, the following authorizations and applications from and to the SBS may be significant to our competitive environment:

(1) In May 2018, Scotiabank acquired 51% of Banco Cencosud, authorized by the regulator. This acquisition increases Scotiabank’s market share in the retail banking segment in Peru, as they will jointly manage both portfolios. Afterwards, in February 2019, the regulator approved the conversion of Banco Cencosud from a bank to a rural savings bank.

(2) In November 2019, the SBS modified the credit and debit card regulations given the current context of technological innovation that has been transforming the business models. This new regulation is focused on ensuring a responsible offer, changing the definition of a traditional credit and debit card, and improving their security.

(3) In December 2019, BCP won the contest held by Peru’s Deposit Insurance Fund (Fondo de Seguro de Depositos), so it will be the entities in charge of returning the money of the Financiera TFC to its clients after the SBS order its closure. For further details about the closure of Financiera TFC, see “ITEM 4. INFORMATION OF THE COMPANY – 4.B Business Overview - (5) Competition – 5.2. Microfinance – 5.2.1 Peruvian microfinance system – Recent competitive developments”. The SBS pointed out that in a first stage the payments will correspond to the savings and term deposits of individuals that do not maintain joint accounts, severance indemnity deposits, or debts with Financiera TFC that are covered by the Deposit Insurance Fund.

(4) In April 2020, the SBS authorized the operation of Bank of China (Peru) S.A. as a multiple operation banking company. Bank of China already has a representative office on Peru.

During 2020, along with our traditional competitors, there was new technology-driven entities such as fintech and startup companies, which showed greater interest in the financial sector, in line with higher digitization under the COVID-19 context. We highlight specific strategic alliances between these and current financial institutions competitors such as: (i) BBVA: Kontigo, (ii) Banco Interamericano de Finanzas: Microwd, and (iii) Interbank: RappiBank and Kambista.

5.2 Microfinance

According to The Economist Intelligence Unit in 2020, among 55 selected countries, Peru and Colombia have the most conducive environments for financial inclusion. We are aware that a large portion of microbusiness owners in both countries are currently unbanked, which constitutes an opportunity to contribute to these economies while growing our businesses.

5.2.1 Peruvian microfinance system

As of December 31, 2020, the Peruvian Microfinance System is mainly regulated by the SBS and is comprised of entities that vary in size, client segments, and ambit of geographic action: 1 bank, which is Mibanco; 10 financial firms, 12 municipal savings banks, 7 rural savings banks and 9 development entities for small and microbusinesses (Edpymes). This system also includes 150 savings and loan associations (Cooperativa de Ahorro y Creditos or COOPACS by its Spanish initials), which have small portfolios and target specific geographic areas.

As of December 31, 2020, the Peruvian microfinance system (excluding COOPACS) represented around 70% of the total entities regulated by the Peruvian financial system, with microfinance loans totaling approximately 57.7 billion soles (15% of Peruvian Financial System). As of December 2020, according to the SBS, microfinance customers represented 59.1% of borrowers in the regulated Peruvian financial system.

Peruvian Microfinance System as of December 2020 Number of entities Assets (Soles in thousands) Loans (Soles in thousands) Deposits (Soles in thousands) Multiple banking 1 15,625,042 12,985,006 8,548,184 Financial firms 10 15,445,489 13,340,950 8,379,218 Municipal savings banks 12 34,910,251 26,454,575 25,452,829 Rural savings banks 7 2,999,392 2,394,140 1,780,372 Edpymes 9 2,862,092 2,549,945 — Savings and loan associations (Coopacs) (1) 150 N/A N/A N/A Total 189 71,842,266 57,724,616 44,160,603

(1) In 2019, SBS began overseeing COOPACS and according to the latest financial information available, at the end of 2019, 131 COOPACS reported (aggregate) a total of S/13.2 billion in assets S/9.8 billion in loans and S/9.7 billion in deposits

Source: SBS

According to the SBS, as of December 31, 2020, Mibanco led the market for loans in the micro and small business segments regulated by SBS, with shares of 28.6% and 18.2% respectively (compared to 24.5% and 21.1%, respectively, as of December 31, 2019 and 26.4% and 21.2%, respectively, as of December 31, 2018).

Municipal savings banks are important players in the microfinance system in the Peru. In 2020, 12 institutions were operating and represented 46% of the total loans at year-end. The business model used by municipal savings associations is similar to the traditional relational model used by Mibanco, which conducts an on-site cash flow assessment of the customer. The municipal savings associations operate in municipal government ambits, and as such, their ability to innovate and modify products and processes is limited by the existence of multiple layers of approval.

In 2020, in the context of the pandemic, Mibanco worked to keep its portfolio quality in check while acting prudently to manage its internal overdue loan coverage ratio, which was situated at 198.2% in IFRS. In local GAAP, Mibanco’s internal overdue loan coverage ratio was situated at 160.8% and the average for municipal savings banks was situated at 186.1% at the end of December 2020. Mibanco’s global capital ratio was situated at 19.8% at year end, which far exceed the 15.6% reported by municipal savings associations at the end of December 2020.

Recent competitive developments

The most relevant news and developments in the Peruvian microfinance sector from 2018 to 2020 were:

· The expansion of Fondo Crecer, a Peruvian government initiative created in September 2018 to grant loans to small and microbusinesses. Eight of the 18 financial institutions participating in the program operate with resources from this fund, which offers micro, small and medium businesses access to loans at rates of 15% (compared to rates of 32% prior to 2018). The fund also implemented extended guarantees to expand access to more companies and to cooperatives.

· A new trust account signed by Fondemi (a government fund to develop micro and small business) and Peruvian Government-Owned Development Bank (or COFIDE by its initials in Spanish) will permit loans of up to S/100,000 to medium and small businesses. These resources will be offered to clients through financial institutions, municipal savings banks, rural savings banks, Edpymes and non-governmental organizations (NGOs).

· In January 2019, Law No. 30822 (COOPAC Law) went into effect, which created a registry of cooperatives that operate in the market and set up the cooperative deposit insurance fund. This law gives the SBS oversight powers, which utilize a modular scheme that considers the business’s size and assets.

· In November 2019, through Resolution SBS N° 5646-2019, the coverage for insurance fund deposits was extended to COOPACS Coverage maximums are S/5,000 or S/10,000, depending on the cooperative’s size and assets; the objective is to protect members’ savings.

· In December 2019, through Urgent Decree No. 025-2019, exemptions on tax payments for foundations and NGOs were extended until December 31, 2020.

· In December 2019, the SBS ordered the closure of Financiera TFC S.A (TFC), after its effective equity level fell more than 50% in 12 months. TFC operated in the microfinance sector and most of its loan funding was for the medium, mortgage and small business segments. In January 2020, through Urgent Decree 013-2020, new regulation was issued to advance efforts to fund microbusinesses by introducing a regulatory framework that contemplates establishing crowdfunding platforms to finance entrepreneurial projects, micro and small-sized companies, and startups in Peru.

· In 2020, most of the developments and regulations affecting the Peruvian microfinance were related to Government relief measures in the context of COVID-19. In March 2020, through Multiple Resolution (Oficio Multiple) No. 11170-2020-SBS, the SBS authorized entities in the financial system to modify loan contracts to extend grace periods for borrowers. This allowed clients to repay debts over longer periods without generating the usual black marks on credit histories that are generated when grace periods expire. For more information, please refer to the following section: ITEM 3 KEY INFORMATION – 3.D Risk Factors – Our business and results of operations may continue to be negatively impacted by the COVID-19 outbreak or other public health crises beyond our control.

5.2.2 Colombian microfinance system

The Colombian microfinance system is regulated by the Financial Superintendence of Colombia (Superintendencia Financiera de Colombia or SFC by its Spanish initials).

As of December 2020, Colombian microfinance institutions represented around 27% of the total entities regulated by the Colombian financial system, with microfinance loans totaling approximately 15.3 billion Colombian pesos. Mibanco Colombia, which belongs to the Multiple Banking sector, was ranked 6th in the microfinance system with a market share of 8.55% of loans in this segment according to the SFC. Microfinance institutions reported a presence in 1,103 municipalities (99% of total municipalities in the country) and 56.0% of the microentrepreneurs were women, according to the Association of Microfinance Institutions of Colombia (or Asomicrofinanzas by its Spanish initials) (Colombian Association of Microfinance Institutions).

Colombian Financial System in December 2020 Number of entities Assets (Pesos in millions) Deposits (Pesos in millions) Loans (Pesos in millions) Loans microfinance (Pesos in millions) Multiple banking 26 729,840,954 458,282,570 498,837,827 12,698,854 Financial corporations 10 12,198,987 6,317,450 10,703,388 375,436 Finance company 5 22,513,546 4,957,754 0 0 Financial cooperatives 5 4,170,282 2,668,942 3,270,935 696,783 Microfinance institutions 17 N/A N/A N/A 1,440,369 Total 63 768,723,769 472,226,716 512,812,150 15,211,442

Source: SFC

Recent competitive developments

The most relevant new developments in the Colombian microfinance sector were:

· The elimination of restrictions on activities of banks and non-bank institutions to allow remote account openings and proportional reductions in due diligence requirements. These changes have allowed financial institutions to open simplified accounts with requirements similar to those imposed on companies that specialize in electronic deposits and payments.

· In May 2019, Law No. 1955-2019 formally adopted a regulatory approach to the testing environment, which adds to previous regulations, such as Decree No. 1357 of 2018, to facilitate the use of collective financing, or “crowdfunding,” and bank investment in financial technology.

· Electronic payments on existing cash transfer programs such as Familias en Accion (FA), Jovenes en Accion (JA) and Colombia Mayor (CM) increased during the COVID-19 pandemic.

· In April 2020, through decree 518 of 2020, the Programa Ingreso Solidario (IS) was created to support impoverished households by providing monetary support to individuals who are not included in the FA, CM, JA and Devolucion del IVA (DI) programs. The objective was to reach an additional layer of low-income families. The program has banked 2.5 million individuals who were previously not included in the formal system.

· In 2020, ‘Unidos por Colombia’ was created to guarantee $12 billion to fund credit for any company but with particular emphasis on providing funds to small and medium businesses (SMEs) and microbusinesses with guarantees that cover up to 60% of the loans granted by banks and non-banking entities, including microfinance institutions.

· In July 2020, Bill 122-2020, created the Law for Entrepreneurial Endeavors, which seeks to propitiate the growth, consolidation and sustainability of entrepreneurship to increase social wellbeing and generate equity in the country. The objective is to create a favorable environment to grow collective and individual initiatives to make Colombia a point of reference in the region for sustainability.

5.3 Insurance & Pensions

5.3.1 Grupo Pacifico

The Peruvian insurance market, which includes property and casualty (P&C), life and corporate health insurance market, is highly concentrated, comprising of 19 active companies, which 7 are dedicated to P&C and lifelines, 8 exclusively to P&C, and 4 exclusively to life. According to the SBS and Susalud, as of December 31, 2020, four companies (Rimac, Grupo Pacifico, Mapfre and La Positiva) represented a combined 84.8% market share in terms of written premiums, and the leading two companies had a combined market share of 61.1%, both according to the SBS.

In 2020, Grupo Pacifico was the second-largest insurance company in Peru in terms of written premiums, with a consolidated market share of 28.9% (compared to 28.7% in 2019), according to the SBS and Susalud. While the Peruvian average written premiums decrease in 0.1% during 2020 in line with the lower economic activity in the context of COVID-19, Grupo Pacifico had a 0.7% written premium increase from 2019 to 2020 due to its efficient management. As a result, Grupo Pacifico remains the largest insurance company in the life and health insurance market with 30.0% and 44.8% of market share respectively according to the SBS.

Grupo Pacifico has a relatively well-diversified product portfolio, with composition comparable to that of the overall Peruvian insurance industry. In contrast to the Latin-American region, Peru maintains a low insurance penetration level: as of December 31, 2020, the region has an insurance penetration level of 3.0%, while Peru’s was 2.0%.

In 2020, the Peruvian insurance industry’s total written premiums totaled S/16,542 million, which is 0.1% lower than in 2019. This explained by the crisis originated by the application of confinement and social distancing measures to face the COVID-19 pandemic, in addition to the political noise of transitory governments, which makes the economic outlook difficult for the country.

The SBS had initiated a reform to the PPS in September 2013, by establishing a tender process for the exclusive right to manage the PPS’s collective insurance policies for disability and survivorship (D&S) and burial expenses. As a result of the SBS’s reform, these exclusive rights were offered for the collective insurance contract which were submitted on September 13, 2013, and the winning bidder obtained the right to manage the PPS’s collective insurance policies from October 1, 2013 until December 31, 2014. The bid submitted by Grupo Pacifico was not selected, and as a result Grupo Pacifico did not issue insurance policies in the PPS for D&S and burial expenses from October 2013 through December 2014. However, in December 2014, Pacifico won the tender process and was able to issue policies for D&S and burial expenses in the PPS from January 2015 to December 2016. In 2017 and 2019, Grupo Pacifico won the third and fourth tender process, which allowed the company to continue in the D&S business from 2017 to 2020. Finally, Pacifico won the latest D&S tender process, which allows it to continue in the D&S business from January 1, 2021 to December 31, 2022. We expected that the tender will positively impact Grupo Pacifico’s market share on these product lines.

Market Share by Annual Written Premiums (1) 2018 2019 2020 1. Rimac 32.1 % 32.2 % 32.1 % 2. Grupo Pacifico 29.1 % 28.7 % 28.9 % 3. Mapfre 12.6 % 12.3 % 12.1 % 4. La Positiva 10.4 % 11.2 % 11.6 % 5. Interseguro 6.2 % 5.1 % 4.5 % 6. Protecta 1.8 % 2.4 % 2.5 % Annual Written Premiums (Soles in millions) 15,122 16,567 16,542 Source: SBS + Susalud (1) P&C + Life + Corporate Health Insurance Businesses

Life and P&C insurance market

In 2020, total written premiums in the Peruvian life and P&C insurance sectors decreased 0.7%, after a significant 9.7% increase in 2019, and a higher growth of 13.6% in 2018, according to the SBS. Written premiums in the Peruvian life and P&C insurance market totaled S/14,021 million in 2020, lower than S/14,113 million registered in 2019. Total written premiums in the Peruvian life insurance business decrease 4.1% from 2019 to 2020, while those in the P&C business grew by 2.7% from 2019 to 2020. In the same year, Peru’s GDP decrease by 11.1% according to the BCRP.

According to the SBS, in 2020, Grupo Pacifico’s written premiums in the consolidated life and P&C businesses made up 26.1% of the Peruvian market, compared to 25.9% in 2019. These figures place Grupo Pacifico as the second largest company in the consolidated life and P&C insurance market.

Life Insurance market

In 2020, written premiums in Peru’s life insurance market totaled S/6,654.3 million, according to the SBS, which represents a decrease of 4.1% from 2019. This was mainly attributable to the individual life (which decreased 10.9% from 2019), annuity line (which decreased 8.9% from 2019), and to a lesser extent, D&S line (which decreased 3.2% from 2019). These decreases were partially offset by group life (which increased 7.3% from 2019) and credit life (which increased 1.5% from 2019).

According to the SBS, in 2020, Grupo Pacifico had the largest market share in the Peruvian life insurance market by written premiums (30.0%), which was higher than its market share of 28.8% in 2019. Grupo Pacifico’s written premiums increased 0.2% from 2019, compared to a decrease in written premiums in the overall Peruvian life insurance market. The increase in Grupo Pacifico’s written premiums was primarily attributable to credit life (which increased 8.1% from 2019) through the alliance channel due to solidarity payments (debt delinquency that is assumed by the entity) and an increase in sales in the bancassurance channel; and individual life (which increased 6.8% from 2019) due to an increase in renewal premiums, an improvement in collections and an increase in the exchange rate; and annuity line (which increased 2.3% from 2019).

P&C Insurance market

In 2020, the written premiums of Peru’s P&C insurance market totaled S/7,367.2 million, according to the SBS, which represents an increase of 2.7% from 2019. This result was primarily attributable to medical assistance (which increased 8.7% from 2019), fire risk (which increased 19.5% from 2019), agricultural insurance (which amounted S/94 million as compared to S/7 million in 2019) and earthquake insurance (which increased 5.9% from 2019). This was attenuated by automobile (which decreased 12.8% from 2019) and personal accident (which decreased 22.6% from 2019).

According to the SBS, Grupo Pacifico had the second largest market share in Peru’s P&C sector at 22.5% in 2020, which is lower than its 23.2% market share in 2019. Grupo Pacifico’s written premiums decreased -0.5% from 2019, while Peru’s average growth rate for P&C written premiums was 2.7% from 2019 to 2020. Grupo Pacifico’s decrease is mainly explained by automobile (which decreased 11.2% from 2019), SOAT (which decreased 30.0% from 2019) and Personal Accident (which decreased 8.8% from 2019) due to mandatory social immobilization in the context of the pandemic, causing less circulation of vehicles and lower sales in the school insurance product.

Corporate Health Insurance and Medical Services market

According to Susalud, in 2020, written premiums in Peru’s health insurance market totaled S/2,521 million, which represented an increase of 2.8% compared to the previous year. This increase was mainly attributable to an increase in regular corporate health insurance. Based in figures from Susalud, Grupo Pacifico had Peru’s largest market share (44.8%) in this market in 2020.

Risk rating

Grupo Pacifico managed to reaffirm the solidity and solvency of the company, maintaining its international credit ratings, despite the difficult context of the COVID-19 pandemic and related disruptions, as follows: AM Best A-, Fitch BBB+, Moody’s Baa2. Grupo Pacifico also accessed the capital market and placed in subordinated bonds for US$50 million at a competitive rate in December 2020, in order to finance working capital, support potential future growth and other corporate uses.

5.3.2 Prima AFP

The PPS consists of four companies, and Prima AFP is the second largest of the four by funds under management. According to the SBS, as of December 31, 2020, funds under management in the PPS reached S/164.9 billion, of which Prima AFP managed S/49.8 billion. This represented a market share of 30.2%, a slight decrease compared to its market shares of 31.0% and 31.2% in 2019 and 2018, respectively also according to SBS data.

On December 31, 2020, the PPS reached 7.8 million affiliates, of which 2.4 million were Prima AFP’s customers, this represented a market share of 30.3%, lower than its market shares of 31.8.% and 30.4% in 2019 and 2018, respectively, according to the SBS.

Collections in the PPS in 2020 reached S/10.9 billion, of which S/3.4 billion was collected by Prima AFP. This represents a market share of 31.4%, which is lower than its market shares of 35.4% and 34.1% in 2019 and 2018, according to the SBS.

As discussed below under “PPS Reforms”, the Peruvian government began a process of reforming the PPS in 2012 through the passage of the PPS Reform Law. This reform contemplated a tender process to be held every 24 months, in which the AFP that offers the lowest management fee wins the tender. As a result, new workers who enter the PPS become members of the tender holder and remain in it for at least 24 months.

The following table shows the PPS tender processes held to date and their respective winners:

No. Date Held Period Winner — September 2012 October 2012 – May 2013 Prima AFP 1st December 2012 June 2013 – May 2015 AFP Habitat 2nd December 2014 June 2015 – May 2017 AFP Habitat 3rd December 2016 June 2017 – May 2019 Prima AFP 4th December 2018 June 2019 – May 2021 AFP Integra 5th December 2020 June 2021 - May 2023 AFP Integra

5.4 Investment Banking and Wealth Management

Our Investment Banking and Wealth Management LoB is organized into four main business units: asset management, capital markets, corporate finance, and wealth management. In addition, we have a regional business support team and a centrally managed Treasury Department.

Asset Management

In Asset Management, Credicorp Capital’s proprietary funds saw increased participation by institutional clients and individuals (the latter supported by the development of wealth management teams in Colombia and Chile and an already established team in Peru). Credicorp Capital has the leading market position in mutual funds in Peru, with a market share of 37.9% by total market assets under management, according to the SMV. We are also developing alternative funds in real estate, infrastructure, and private debt at a regional level and offer third-party funds from global asset managers to our clients.

Capital Markets

In capital markets, our brokerage house in Peru reaffirmed its leadership, holding the largest market share in equities (32% of traded value) and the second largest in fixed income (37% of traded volume), excluding the volumes outside of the stock market, according to the Lima Stock Exchange (Bolsa de Valores de Lima or BVL by its Spanish initials). Similarly, our brokerage company in Colombia held the largest market share among brokers in equities (21% of traded value) and in fixed income (25% of traded volume) according to the Colombian Stock Exchange. In Chile, we held the fifth largest market share in equities (5%) and the second largest in fixed income proprietary accounts (7%), in terms of traded volume, according to the Santiago Stock Exchange.

Corporate Finance

In Corporate Finance, our teams are mainly recognized in Peru and Chile, while the team in Colombia is still building up its reputation. These teams offer lending and capital markets solutions for corporations’ financing needs and offer them advisory services for mergers and acquisitions.

Wealth Management

In Wealth Management, while the team is consolidated in Peru, we recognize the opportunity for growth in Colombia and Chile. In this business, Credicorp competes in a regional market led by global banks and financial institutions, especially in the ultra-high-net-worth segment.

Credicorp Capital also offers trust services to its clients in Peru and Colombia. In Peru, we have a strong leadership position in fiduciary and custody services to retail and institutional clients, but further growth is limited by market size. On the other hand, we have a relatively low market share in fiduciary services in Colombia (less than 4% measured by number of trust deeds), according to the Association of Fiduciaries of Colombia (Asociacion de Fiduciarias de Colombia), which also presents us with an opportunity for growth.

(6) Supervision and regulation

6.1 Credicorp

Credicorp Ltd. is an exempted company located in Bermuda. Credicorp maintain presence and conduct its activities in Peru, Cayman Islands, Bolivia, Colombia, Chile, Panama and the United States, through its different LoBs and subsidiaries.

Save as aforesaid, there are no applicable regulations under Bermuda Law that are likely to materially impact our operations as they are currently structured. Under Bermuda law, there is no regulation applicable to us as a holding company that would require that we separate the operations of our subsidiaries incorporated and existing outside Bermuda. See “ITEM 3. KEY INFORMATION - 3. D Risk Factors - Credicorp, as a Bermuda exempted company, may be adversely affected by any change in Bermuda law or regulation”.

Our common shares are listed on the NYSE. We are therefore subject to regulation by the NYSE and the SEC as a “foreign private issuer”. We also must comply with the Sarbanes-Oxley Act of 2002.

We are subject to certain requirements set forth by Law No. 26702, as well as certain banking resolutions issued by the Peruvian banking regulator, the SBS, including SBS Resolution No. 11823-2010, which was enacted in September 2010 and which approved the “Regulation of the Consolidated Supervision of Financial and Mixed Conglomerates”. Resolution No. 11823-2010 was partially amended by Resolution No. 2945-2013, which was enacted in May 2013. These regulations affect us primarily in the areas of reporting, risk control guidelines, limitations, ratios and capital requirements.

Since our common shares are listed on the BVL in addition to the NYSE, we are subject to certain reporting requirements to the SMV, the Peruvian securities market regulator, and the BVL. See “Item 9. The Offer and Listing – 9.C Markets – (2) Market Regulation”. In the last year, the SMV issued SMV Resolution 016-2019-SMV/01 - “Guidelines for the qualification of Independent Directors”. These Guidelines are not binding rules; they are only recommendations to the issuers listed on the BVL that are under SMV supervision.

(i) Capital Adequacy Requirements

SBS Resolution 11823-2010 established the methodologies for calculating the regulatory capital and capital requirements for financial and mixed conglomerates. Article 4 of SBS Resolution 11823-2010 identifies two categories of consolidated groups: (i) the financial system consolidated group and (ii) the insurance system consolidated group. A combined group of companies formed by these two categories of entities is called a financial group. The financial system consolidated group, the insurance system consolidated group, and the financial group are each required to hold regulatory capital that is greater than or equal to the capital requirements applicable to each respective group.

The capital requirements applicable to the financial group are the sum of the capital requirements applicable to the financial system consolidated group and to the insurance system consolidated group. The capital requirements applicable to the financial system consolidated group and to the insurance system consolidated group are the sum of the capital requirements applicable to the companies that belong to each respective group. For unsupervised companies, regulatory capital is required to be the greater of: (i) 10% of third party assets or (ii) the ratio of third party assets over total assets multiplied by the sum of paid-in-capital, legal reserves, supplementary capital premiums, voluntary reserves distributable only with prior SBS approval, and retained earnings with capitalization agreements net of current and past years’ losses.

Article 6 of SBS Resolution 11823-2010, provides that regulatory capital of the consolidated groups comprises the sum of basic capital and supplementary capital and is calculated as follows:

· Basic Capital: Basic Capital or Tier 1 capital is comprised of:

(i) paid-in-capital (which includes common stock and perpetual non-cumulative preferred stock), legal reserves, supplementary capital premiums, voluntary reserves distributable only with prior SBS approval, and retained earnings with capitalization agreements (that is, earnings that the shareholders or the Board of Directors, as the case may be, have committed to capitalize as common stock); and

(ii) other elements that have characteristics of permanence and loss absorption that are in compliance with regulations enacted by the SBS;

Items deducted from Tier 1 capital include:

(a) current and past years’ losses;

(b) deficits of loan loss provisions;

(c) goodwill resulting from corporate reorganizations or acquisitions; and

(d) half of the amount referred to in “Deductions” below. Absent any Tier 2 capital, 100% of the amount referred to in “Deductions” below must be deducted from Tier 1 capital.

The elements referred to in item (ii) above should not exceed 17.65% of the amount resulting from adding components (i) of Basic Capital or Tier 1 capital net of the deductions in (a), (b), and (c) in the list above.

· Supplementary Capital: Supplementary capital comprises the sum of Tier 2 and Tier 3 capital. Tier 2 capital elements include:

(a) paid-in-capital, legal reserves, supplementary capital premiums, and voluntary reserves that may be reduced without prior consent from the SBS;

(b) the eligible portion of the consolidated redeemable subordinated debt and of any other components that have characteristics of debt and equity as provided by the SBS;

(c) for banks using the SBS standardized approach method, the generic loan loss provision up to 1.25% of total credit RWAs; or, alternatively, for banks using the internal ratings-based (IRB) method, the generic loan loss provision up to 0.6% of total credit RWAs (pursuant to Article 189 of Law No. 26702); and

(d) half of the amount referred to in “Deductions” below. Tier 3 capital comprises consolidated redeemable subordinated debt that is incurred with the sole purpose of covering market risk.

· Deductions: The following elements are deducted from Tier 1 and Tier 2 capital:

(i) for the financial system consolidated group, all investments in shares and subordinated debt issued by other local or foreign financial institutions and insurance companies; for the insurance system consolidated group, all investments in shares and subordinated debt issued by other local or foreign insurance companies;

(ii) all investments in shares and subordinated debt issued by entities that are part of the holding but do not belong to any of the consolidated groups;

(iii) for the financial system group, the amount by which (a) an investment in shares issued by a real sector company which is neither part of the holding nor part of the negotiable portfolio exceeds 15% of the financial system consolidated group’s regulatory capital; and (b) the amount by which the aggregate amount of all investments in shares issued by real sector companies which are not part of the Conglomerate and which are not part of the financial system consolidated group’s negotiable portfolio exceeds 60% of the regulatory capital.

Article 7 of SBS Resolution 11823-2010 provides that the following limits apply when calculating regulatory capital: (i) the aggregate amount of supplementary capital must not exceed the aggregate amount of basic capital; (ii) the amount of redeemable Tier 2 subordinated instruments must be limited to 50% of the amount resulting from the sum of Tier 1 elements in “Basic Capital” above; and (iii) the amount of Tier 3 capital must be limited to 250% of the sum of Tier 1 elements.

Article 10 of SBS Resolution 11823-2010 provides that regulatory capital of the financial group is comprised of the sum of basic capital and supplementary capital, and is calculated as follows:

· Basic Capital: Basic Capital or Tier 1 capital comprises:

(i) paid-in-capital (which includes common stock and perpetual non-cumulative preferred stock), legal reserves, supplementary capital premiums, voluntary reserves distributable only with prior SBS approval, and retained earnings with capitalization agreements (that is, earnings that the shareholders or the Board of Directors, as the case may be, have committed to capitalize as common stock); and

(ii) other elements that have characteristics of permanence and loss absorption that are in compliance with regulations enacted by the SBS.

· Items deducted from Tier 1 capital include:

(i) current and past years’ losses;

(ii) deficits of loan loss provisions;

(iii) goodwill resulting from corporate reorganizations or acquisitions; and

(iv) half of the amount referred to in “Deductions” below. Absent any Tier 2 capital, 100% of the amount referred to in “Deductions” below must be deducted from Tier 1 capital.

· Supplementary Capital: Supplementary capital is comprised of the sum of Tier 2 and Tier 3 capital. Tier 2 capital elements include:

(i) paid-in-capital, legal reserves, supplementary capital premiums, and voluntary reserves that may be reduced without prior consent from the SBS;

(ii) the eligible portion of the consolidated redeemable subordinated debt and of any other components that have characteristics of debt and equity as provided by the SBS;

(iii) the generic loan loss provision included in the supplementary capital of the financial consolidated group; and

(iv) half of the amount referred to in “Deductions” below.

Tier 3 capital comprises consolidated redeemable subordinated debt computed in the consolidated groups.

· Deductions: The following elements are deducted from Tier 1 and Tier 2 capital:

(i) all investments in shares and subordinated debt issued by other local or foreign financial institutions and insurance companies;

(ii) all investments in shares and subordinated debt issued by entities that are part of the Conglomerate but do not belong to any of the consolidated groups;

(iii) all investment in shares issued by real sector companies that are not part of the Conglomerate and the negotiable portfolio, computed as deductions in the financial system consolidated group.

For further information, see “ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS – 5. B Liquidity and Capital Resources – (1) Capital Adequacy and Solvency Management – (1.1) Credicorp”.

6.2 Subsidiaries

6.2.1 Peru

Credicorp’s main subsidiaries, BCP Stand-alone, Mibanco, Grupo Pacifico, Prima AFP and Credicorp Capital Peru, are located in Peru and they offer banking and financial services. Furthermore, they are regulated by Peruvian laws and supervised by Peruvian Financial Regulators.

In Peru financial institutions, insurance companies and pension funds are regulated by Law No. 26702. In general, it provides for loan loss reserve standards, brings asset risk weighting in line with Basel Committee on Banking Regulations and Supervisory Practices of International Settlements (Basel Committee) guidelines, empowers the SBS to supervise financial holding companies, and includes specific treatment of a series of recently developed products in the capital markets and derivatives areas.

(i) Peruvian Regulators

The Peruvian Central Bank (BCRP)

The BCRP was established in 1922. Pursuant to the Peruvian Constitution, its primary role is to ensure the stability of the Peruvian monetary system. The BCRP regulates Peru’s money supply, administers international reserves, issues currency, target inflation ranges, determines Peru’s balance of payments and other monetary accounts, and furnishes information regarding the country’s financial situation. It also represents the government of Peru at the IMF and the Latin American Reserve Fund, which is a financial institution intended to provide balance of payments assistance to its member countries by granting credits or guaranteeing loans to third parties.

The highest decision-making authority within the BCRP is its seven-member Board of Directors. Each Director serves a five-year term. Of the seven Directors, four are selected by the executive branch and three are selected by Peru’s congress. The Chairman of the BCRP is one of the executive branch nominees but must be approved by Peru’s congress.

The BCRP’s Board of Directors develops and oversees monetary policy, establishes reserve requirements for entities within the financial system, and approves guidelines for the management of international reserves. All entities within the financial system are required to comply with the decisions of the BCRP.

One of the functions of the BCRP is to periodically revise its reference interest rate in accordance with its monetary policy objectives. Once a month, the Board of Directors of the BCRP approves and announces the monetary program through a press release. The following chart summarizes the reference interest rate changes in 2018, 2019 and 2020:

Changes in BCRP’s reference interest rate (2018-2020) Month Rate January 2018 3.00 % March 2018 2.75 % August 2019 2.50 % November 2019 2.25 % March 2020 1.25 % April 2020 0.25 %

As part of its dollarization control function, the BCRP has taken steps to foster the de-dollarization of credit to reduce the risks of currency depreciation associated with borrowing in US Dollars and thus reduce this vulnerability by implementing in January 2015 the so-called “De-dollarization Program”. The program imposes additional US Dollar reserve requirements on financial institutions based on limits to the credit balance in US Dollars for total credit, as well as mortgage and vehicle credits, in order to reduce credit dollarization. As of December 2020, this marginal reserve requirement in foreign currency was of 35% (unchanged from the levels of December 2019 and December 2018), and is applied on based two criteria: (i) balance of total loans in US Dollars, and (ii) balance of car and mortgage loans in US Dollars.

In the context of the De-dollarization Program, Credicorp’s main subsidiary, BCP Stand-alone has reduced significantly the level of foreign exchange risk on credit risk, which in turn reduces the impact discussed in this risk factor.

These targets were complemented by the addition of two new types of Currency Repurchase Agreements (known as Repo). The instruments complemented the de-dollarization process by:

· Providing liquidity in local currency to financial institutions for an amount up to 20% of such institution’s Total Liabilities Subject to Reserve Requirements (TOSE by its Spanish Initials) in US Dollars through a Repo - Expansion. However, under no circumstance, can the median reserve requirements decrease below 25%;

· Providing local currency to financial institutions at spot foreign exchange prices in order to finance the re-denomination of their loans in US Dollars through a Repo – Substitution.

The Superintendence of Banks, Insurance and Pension Funds (SBS)

The SBS is the regulatory authority in charge of, supervising and regulating all financial, insurance and pension fund institutions in Peru. Peru’s Constitution and Law No. 26702, which contains the statutory charter of the SBS, grant the SBS the authority to oversee and control banks and financial institutions (with the exception of brokerage firms, which are regulated by the SMV), insurance and reinsurance companies, companies that receive deposits from the general public, AFPs and other similar entities as defined by Law No. 26702. The SBS is also responsible for supervising the BCRP to ensure that it abides by its statutory charter and Bye-laws.

The SBS has administrative, financial and operating autonomy. Its objectives include protecting the public interest, ensuring the financial stability of the institutions over which it has authority and punishing violators of its regulations. Its responsibilities include: (i) reviewing and approving, with the assistance of the BCRP, the establishment and organization of subsidiaries of the institutions it regulates; (ii) overseeing mergers, dissolutions and reorganization of banks, financial institutions and insurance companies; (iii) supervising financial, insurance and related companies from which information on an individual or consolidated basis is required, through changes in ownership and management control (this supervision also applies to holding companies that are not banks, such as Credicorp); (iv) reviewing the Bye-laws and amendments to Bye-laws of these companies; (v) issuing criteria governing the transfer of bank shares, when permitted by law, for valuation of assets and liabilities and for minimum capital requirements; and (vi) controlling the bank’s Risk Assessment Center, to which all banks are legally required to provide information regarding all businesses and individuals with whom they deal without regard to the amount of credit risk (the information provided is made available to all banks to allow them to monitor individual borrowers’ overall exposure to Peru’s banks). The SBS is also responsible for setting criteria for the establishment of financial or mixed conglomerates in Peru and for supervising these entities. As a result, in addition to its supervision of BCP Stand-alone, Mibanco Grupo Pacifico and Prima AFP, the SBS also supervises Credicorp Ltd. because Credicorp Ltd. is a financial conglomerate conducting the majority of its operations in Peru.

The Superintendence of the Securities Market (SMV)

The SMV is the Peruvian government institution in charge of: (i) promoting the securities markets, (ii) making sure fair competition takes place in the securities markets, (iii) supervising the management of businesses that trade in the securities markets, and (iv) regulating such businesses’ activities and accounting practices. The SMV enjoys functional, administrative, economic, technical, and budgetary autonomy relative to other branches of the Peruvian government. Financial institutions such as banks, insurance companies, pension funds and brokerage firms must inform the SMV of significant events that affect their business and are required to provide financial statements to both the SMV and the BVL each quarter. Those institutions are also regulated by the SMV when they conduct operations in the local Peruvian securities market.

National Institute for the Defense of Competition and the Protection of Intellectual Property (Instituto Nacional de Defensa de la Competencia y de la Proteccion de la Propiedad Intelectual or INDECOPI by its Spanish initials)

INDECOPI regulates the protection of the consumer’s rights. This regulation is stated in Law No. 29571. INDECOPI has the authority to issue fines to financial institutions if they violate the laws and regulations regarding protection of the consumer rights.

National Authority for the Protection of Personal Data (Autoridad Nacional de Proteccion de Datos Personales or ANPDP by its Spanish initials)

The ANPDP regulates the protection of personal data in Peru. The primary governing regulation for the ANPDP is Law No. 29733. ANPDP has the authority to issue fines to financial institutions that violate the laws and regulations regarding personal data protection.

(ii) Supervised Institutions

Under Peruvian law, financial institutions are classified as universal banks, insurance companies, pension funds, finance companies and other financial institutions such as small business finance companies, savings and loan corporations, financial services companies, investment banks, mutual housing associations, municipal savings and credit associations and savings and credit cooperatives.

Financial institutions must obtain the SBS’s authorization before beginning operations. BCP Stand-alone and Mibanco are classified as a universal bank, Grupo Pacifico is classified as an insurance company and Prima AFP is classified as a pension fund company.

Universal Banks

A universal bank, or bank is defined by Law No. 26702 as an enterprise whose principal business consists of (i) receiving money from the public, whether by deposits or by any other form of contract, and (ii) using such money (together with the bank’s own capital and funds obtained from other sources) to grant loans or discount documents, or in operations that are subject to market risks.

Banks are permitted to carry out various types of financial operations, including the following:

· receiving demand deposits, time deposits, savings deposits and deposits in trust;

· granting direct loans;

· discounting or advancing funds against bills of exchange, promissory notes and other credit instruments;

· granting mortgage loans and accepting bills of exchange in connection with the mortgage loans;

· granting conditional and unconditional guaranties;

· issuing, confirming, receiving and discounting letters of credit;

· acquiring and discounting certificates of deposit, warehouse receipts, bills of exchange and invoices of commercial transactions;

· performing credit operations with local and foreign banks, as well as making deposits in those institutions;

· issuing and placing local currency and foreign currency bonds, as well as promissory notes and negotiable certificates of deposits;

· issuing certificates in foreign currency and entering into foreign exchange transactions;

· purchasing banks and non-Peruvian institutions that conduct financial intermediation or securities exchange transactions in order to maintain an international presence;

· purchasing, holding and selling gold and silver, as well as stocks and bonds listed on one of the Peruvian stock exchanges and issued by companies incorporated in Peru;

· acting as financial agent for investments in Peru for external parties;

· purchasing, holding and selling instruments evidencing public debt, whether internal or external, as well as obligations of the BCRP;

· making collections, payments and transfers of funds;

· receiving securities and other assets in trust and leasing safety deposit boxes; and

· issuing and administering credit cards and accepting and performing trust functions.

In addition, banks may carry out financial leasing operations by forming separate departments or subsidiaries. Banks may also promote and direct operations in foreign commerce, underwrite initial public offerings, and provide financial advisory services apart from the administration of their clients’ investment portfolios. By forming a separate department within the bank, a bank may also act as a trustee for trust agreements.

Under Peruvian law, universal banks may conduct brokerage operations and administer mutual funds but must do so through subsidiaries. However, universal bank employees may market the financial products of the bank’s brokerage and mutual fund subsidiaries. Banks are prohibited from issuing insurance policies but are not prohibited from distributing insurance policies issued by insurance companies.

Peruvian branches of foreign banks enjoy the same rights and are subject to the same obligations as Peruvian universal banks. Multinational banks, with operations in various countries, may perform the same activities as universal Peruvian banks, although their foreign activities are not subject to Peruvian regulations. To carry out banking operations in local Peruvian markets, multinational banks must maintain capital in Peru of at least the minimum amount that is required for Peruvian banks.

Those universal banks who violate Law No. 26702 and its underlying regulations may be subject to administrative sanctions and criminal penalties Additionally, the SBS and the BCRP have the authority to issue fines to financial institutions and their Directors and officers if they violate the laws or regulations of Peru, or their own institutions’ Bye-laws.

Insurance companies

Since the Peruvian insurance industry was deregulated in 1991, insurance companies have been authorized to conduct all types of operations and to enter into all forms of agreements that are needed to offer risk coverage to customers. Insurance companies may also invest in financial and non-financial assets in order to maintain liquidity and capital requirements to pay their clients when claim occurs.

Law No. 26702 and Law No. 29946 are the main laws governing insurance companies and insurance in Peru. The SBS is the government agency charged with the supervision and regulation of all insurance companies. The incorporation of an insurance company requires prior authorization of the SBS. Also, SMV supervises and regulates insurance companies through the Law No. 26126 and its amendments.

On May 27, 2013, a new Peruvian insurance law, Insurance Law No. 29946, became effective. Law No. 29946 governs all insurance contracts, except for those that are expressly governed by other regulations. It substantially changes how insurance policies are offered by insurance companies, regulates the information provided by the insured and includes changes to termination and arbitration clauses included in insurance contracts. Law No. 29946 also provides a list of terms and conditions that cannot be included in any insurance contract and ensures that any changes in the contract can only be made if 45 days’ notice is given to the policyholder prior to renewal of the policy. Other measures include restrictions on the duration and renewal of contracts, consumer protection rules, and regulations governing how to address non-payment of premium installments required under insurance contracts.

In September 2013, the SBS established a tender process for the exclusive right to manage collective insurance policy for D&S and burial expenses of the PPS as part of its reform.

Peruvian insurance companies must submit regular reports to the SBS concerning their operations. In addition, the SBS conducts on-site reviews on an annual basis, primarily to evaluate compliance with solvency margin, reserve and investment requirements and rules governing the recognition of premium income. If the SBS determines that a company is unable to meet the solvency margin or technical reserve requirements or is unable to pay claims as they become due, it may either liquidate the company or permit it to merge with another insurance company.

Under Peruvian law, insurance companies may engage in certain credit risk operations, such as guarantees, bonds, and trusteeships, but are prohibited from offering other banking services, operating mutual funds, or offering portfolio management services. In addition, insurance companies may not conduct brokerage operations for third parties.

Peruvian insurance companies are also prohibited by an SBS resolution (SBS Resolution No. 3930-2017) from having an ownership interest in other insurance or reinsurance companies of the same class unless such risks are offset by insurance companies acting as subsidiaries and that risk is withdrawn from the principal insurance company’s activities. This resolution also prohibits Peruvian insurance companies from having an ownership interest in private pension funds.

Peruvian law establishes certain minimum capital requirements for insurance and reinsurance companies, which must be satisfied by cash investments in the company.

Pension Funds

Pension Funds operations are regulated by the Unified Text of the Private System for the Administration of Fund Act, approved by Supreme Decree No. 054-97-EF and modified by Law No. 29903 in force since August 2013.

Under Peruvian legislation, AFPs must have only one business activity: managing pension funds through individual capitalization accounts, sourced by mandatory and/ or voluntary contributions. AFPs must also provide benefits for retirement, disability, and survivorship and finance funeral expenses.

Finance companies

Under Law No. 26702, finance companies are authorized to carry out the same operations as banks, with the exception of (i) issuing loans as overdrafts in checking accounts and (ii) participating in derivative operations. These operations can be carried out by finance companies only if they fulfill the requirements stated by the SBS.

Other financial institutions

The Peruvian financial system has a number of less significant entities that may provide credit, accept deposits or otherwise act as financial intermediaries on a limited basis. Leasing companies specialize in financial leasing operations where goods are leased over the term of the contract and in which one party has the option of purchasing the goods at a predetermined price. Savings and loans associations or cooperatives may accept certain types of savings deposits and provide other similar financial services.

Peru also has numerous mutual housing associations, municipal savings and credit associations, savings and credit cooperatives and municipal credit bureaus. Over the past six years the entry of new participants, including foreign banks and non-bank financial institutions, has increased the level of competition in Peru.

(iii) Peruvian Commercial Banks Regulation - BCP Stand-alone and Mibanco

Management of operational risk Requirements

SBS Resolution No. 37-2008, which sets forth the guidelines for enterprise risk management (ERM), and Resolution No. 2116-2009, collectively established guidelines for operational risk management by banks. Under these resolutions, operational risk management is defined broadly to include those risk resulting from the possibility of suffering financial losses due to inadequate or failed internal processes, people and systems, or from adverse external events. The resolutions also establish responsibilities for developing policies and procedures to identify, measure, control and report such risks. Banks are required to manage risks involved in the performance and continuity of their operations and services adequately in order to minimize possible financial losses and reputation damage due to inadequate or non-existent policies or procedures. Banks also are required to develop an information security model to guarantee physical and logical information integrity, confidentiality and availability.

On April 1, 2018, SBS Resolution No. 37-2008 was replaced by SBS Resolution No. 272-2017. The new regulation has introduced the following modifications regarding risk management:

a. Risk management must also consider the macroeconomic environment that affects the markets in which the company operates;

b. The following new types of risk are incorporated in the regulation: (a) money laundering and terrorist financing risk, defined as the possibility of the company being used for money laundering and terrorist financing purposes; and (b) reinsurance risk, defined as the possibility of losses caused by the insufficiency of reinsurance coverage contracted by the assigning insurance company; and

c. The definition of liquidity risk has been modified. It is now understood as the possibility of losses due to anticipated or forced sale of assets at unusual discounts in order for the company to meet its obligations, as well as not being able to close open positions or cover positions in sufficient quantity. Before this modification, it was understood as the possibility of losses caused by the failure to comply with the financing requirements and the application of funds arising from the mismatches of cash flows requirements.

In addition, the new regulation provides that companies must incorporate a centralized unit or units specialized in specific risk management. Under the previous regulation this was optional. The SBS may require companies to create specialized risk units if considered necessary. Under the previous regulation, if the company did not have a specialized risk unit, it was understood that these functions had been assigned to the CEO. With the new regulation such provision has been eliminated.

Companies must submit the annual risk report to the SBS within 90 days from the end of each year.

Credicorp, following these SBS requirements, as well as the guidelines issued by the Basel Committee on Banking Supervision, and the advice of international consultants, has appointed a specialized team responsible for operational risk management across our organization. This team reports regularly to our risk committee, top managers and the Board of Directors.

In evaluating operational risks and potential consequences, we mainly assess risks related to critical processes, critical suppliers, critical information assets, technological components, new products and significant changes to our services, and channels. To support the operational risk management process, we have developed a Business Continuity Management (BCM) discipline, which involves the implementation of continuity plans for critical business processes, incident management, and training and testing. In addition, our methodology and data processing team has developed procedures to register, collect, analyze and report operational risk losses, using advanced models for operational risk capital allocation. We also have monitoring and reporting procedures that are designed to monitor KRIs and other performance metrics.

We intend to be guided by the risk control standards of international financial institutions that are noted for their leadership in this field. Our overall objective is to implement an efficient and permanent monitoring system to control operational risks, while training our operational units to mitigate risks directly.

Pursuant to Section 404 of the U.S. Sarbanes-Oxley Act of 2002, we are required to make certain certifications regarding our internal controls over financial reporting. We have developed internal methods to identify and evaluate risk and controls over our critical processes to determinate how effective internal controls are over financial reporting using the Committee of Sponsoring Organizations of the Treadway Commission (COSO) 2013 Internal Control Framework.

Capital adequacy requirements

Capital adequacy requirements applicable to us are set forth in Law No. 26702 and Legislative Decree 1028. Legislative Decree 1028 was aimed at adapting Law No. 26702 to the capital guidelines and standards established by the second Basel Committee Accord (Basel II). Capital adequacy requirements are also included in Peruvian GAAP guidelines. Pursuant to Basel II guidelines, financial institutions are required to hold regulatory capital that is greater than or equal to the sum of (i) 10% of credit RWAs, and (ii) 10 times the amount required to cover market and operational risks.

Since July 2009, Peruvian financial institutions generally have applied a standardized approach to calculate their capital requirement related to credit, market and operational risk. As an alternative to the standardized approach, financial institutions may request authorization from the SBS to use different models for calculating the reserve amount associated with any of these three risks. In July 2009, the SBS started accepting applications to use alternative models, referred to as Internal Models Methods. If the amount of an institution’s reserve requirements would be higher using the standard model than it would be using the approved Internal Models Method, then the institution will have to maintain between 80% and 95% of the standard amount during a phase-in period. Even after the phase-in period, institutions using an Internal Models Method are subject to regulatory capital floors.

On July 20, 2011, the SBS issued SBS Resolution 8425-2011, establishing the methodologies and the implementation schedule of additional capital requirements consistent with certain aspects of Basel III, which is a comprehensive set of reform measures and guidelines, followed by the SBS, to strengthen the regulation, supervision and risk management of the banking sector. The additional capital requirements include requirements to cover concentration, excessive interest rate risk in the banking book and systemically important risk. Additionally, pro-cyclical capital requirements were established. These additional requirements were fully implemented in July 2016.

Article 184 of Law No. 26702, as amended by Legislative Decree 1028, provides that regulatory capital may be used to cover credit risk, market risk and operational risk. Regulatory capital is comprised of the sum of basic capital and supplementary capital, and is calculated as follows:

Basic Capital: Basic Capital or Tier 1 capital comprises:

(i) paid-in-capital (which includes common stock and perpetual non-cumulative preferred stock), legal reserves, supplementary capital premiums, voluntary reserves distributable only with prior SBS approval, and retained earnings with capitalization agreements (earnings that the shareholders or our Board of Directors, as the case may be, have committed to capitalize as common stock); and

(ii) other elements that have characteristics of permanence and loss absorption that are in compliance with regulations enacted by the SBS, such as hybrid securities.

Items deducted from Tier 1 capital include:

(a) current and past years’ unrealized losses; deficits of loan loss provisions;

(b) banks must deduct the difference between total expected loss and eligible provisions in case internal models are used to estimate credit capital requirements.

(c) goodwill resulting from corporate reorganizations or acquisitions; and

(d) half of the amount referred to in “Deductions” below. Absent any Tier 2 capital, 100% of the amount referred to in “Deductions” below must be deducted from Tier 1 capital.

The elements referred to in item (ii) above should not exceed 17.65% of the amount resulting from adding components (i) of Basic Capital or Tier 1 capital net of deductions (a), (b) and (c) from “Basic Capital” listed above.

Supplementary Capital: Supplementary capital is comprised of the sum of Tier 2 and Tier 3 capital. Tier 2 capital elements include:

(i) voluntary reserves that may be reduced without prior consent from the SBS;

(ii) the eligible portion of redeemable subordinated debt and of any other components that have characteristics of debt and equity as provided by the SBS;

(iii) for banks using the SBS standardized approach method, the generic loan loss provision up to 1.25% of credit RWAs; or, alternatively, for banks using the IRB Method, the generic loan loss provision up to 0.6% of total credit RWAs (pursuant to Article 189 of Law No. 26702); and

(iv) half of the amount referred to in “Deductions” below.

Tier 3 capital is comprised of redeemable subordinated debt that is incurred with the exclusive purpose of covering market risk, as referred to in Article 233 of Law No. 26702.

Deductions: The following elements are deducted from Tier 1 and Tier 2 capital:

(i) all investments in shares and subordinated debt issued by other local or foreign financial institutions and insurance companies;

(ii) all investments in shares and subordinated debt issued by an affiliate with which the bank consolidates its financial statements, including its holding company and such subsidiaries referred to in Articles 34 and 224 of Law No. 26702;

(iii) the amount in which an investment in shares issued by a company with which the bank does not consolidate its financial statements and which is not part of the bank’s negotiable portfolio exceeds 15% of the bank’s regulatory capital;

(iv) the aggregate amount of all investments in shares issued by companies with which the bank does not consolidate its financial statements and which are not part of the bank’s negotiable portfolio exceeds 60% of the regulatory capital;

(v) when applicable, the amount resulting from the formula prescribed in Article 189 of Law No. 26702; and

(vi) unrealized gains and retained earnings in subsidiaries.

For the purposes herein, “regulatory capital” excludes the amounts referred to in clauses (iii), (iv) and (v) of the elements deducted from Tier 1 and Tier 2 capital listed above.

Article 185 of Law No. 26702 also provides that the following limits apply when calculating regulatory capital:

(i) the aggregate amount of supplementary capital must not exceed the aggregate amount of basic capital;

(ii) the amount of redeemable Tier 2 subordinated instruments must be limited to 50% of the amount resulting from the sum of Tier 1 elements net of deductions (a), (b), and (c) from “Basic Capital” listed above;

(iii) the amount of Tier 3 capital must be limited to 250% of the amount resulting from the sum of Tier 1 elements net of deductions (a), (b), and (c) from “Basic Capital” listed above in the amounts assigned to cover market risk.

SBS Resolution No. 8548-2012, adopted in 2012, modified the regulatory capital requirements for credit RWAs in SBS Resolution No. 14354-2009 and established a schedule for implementing the modifications.

On February 24, 2016, SBS issued Resolution 975 -2016 - “Subordinated Debt Regulation”, which aims to improve the quality of banks’ total regulatory capital and align Peruvian regulation towards Basel III, by modifying:

· The characteristics that subordinated debt must meet to be considered in the calculation of total regulatory capital; and

· The calculation of RWAs.

Under this regulation, subordinated debt issued prior to the regulation that did not meet the requirements was to be recognized as total regulatory capital, according to the following:

· Tier 1 subordinated debt: as of January 2017, and for 10 years following, Tier 1 subordinated debt is subject to a 10% discount. However, the amount not computable as Tier 1 regulatory capital may be computed as a Tier 2 instrument, if it has a residual maturity equal to or greater than 15 years.

· On November 2019, BCP redeemed the total amount of its Tier 1 subordinated debt issuance (issued in 2009) totaling US$250 million. Thus, as of December 2019, neither Tier 1 nor Tier 2 of BCP’s regulatory capital was comprised of non-compliant Tier 1 subordinated debt.

· Tier 2 subordinated debt: during the five years prior to maturity, the principal balance will be discounted by 20%. In the year prior to its maturity, the Tier 2 subordinated debt will not be considered in the calculation of Tier 2. This treatment did not change compared to previous regulation. As a result, Tier 2 Subordinated debt issued previous to the rule was grandfathered.

In addition, the SBS Resolution also included changes to the calculation of RWAs of the following accounting items:

· Intangibles (excluding goodwill);

· Deferred tax assets (DTAs) that are originated by operating losses; and

· DTAs that are associated with temporary differences and that exceed the threshold of 10% of the “adjusted total capital”. In each case, DTAs are to be net of deferred income tax liabilities.

These assets will experience a gradual increase in their risk weights (until they reach a maximum of 1,000% in 2026) to replicate the deductions established by Basel III. The RWAs calculated based on these risk weights will be used exclusively for calculating the Basel III ratios.

Furthermore, the new regulation requires the calculation of a new solvency ratio: Adjusted total capital on adjusted total RWAs. This methodology is similar to that which is used to calculate the CET1 ratio under Basel III. As a result, the accounting items mentioned above are deducted from the numerator of the new solvency ratio, and the calculation of RWAs (the denominator) does not consider these deductions. As of December 31, 2020, BCP Stand-alone’s CET1 ratio was 11.40%.

SBS Resolution 4280-2018, adopted in October 2018, modified the risk weight applied to intangibles (excluding goodwill) to speed up the increase in this risk weight towards 100%, with the purpose of closing the regulatory gap with Basel III guidelines, which clearly require intangibles to be fully deducted from core capital measurements.

In March 2020, as the scale of the global COVID-19-induced economic shock became apparent, the SBS passed Resolution 1264-2020, which suspended the countercyclical capital requirements for the banking system, unlocking a significant capital buffer for local banks, which was built during the last several years, in order to prevent a credit contraction.

Furthermore, in April 2020, the Ministry of Finance and the BCR engineered and launched a large Credit enhancement program, Reactiva Peru, in response to the economic crisis, which comprised government guarantees for a broad range of loans to local enterprises. This program successfully promoted the expansion of credit to local enterprises in 2020 without consuming significant capital requirements to local banks.

Common Equity Tier 1 (CET1)

In November 2013, BCP Stand-alone’s Board of Directors decided to track the Basel III ratio known as CET1. CET1 comprises:

· paid-in-capital (which includes common stock and perpetual non-cumulative preferred stock);

· legal and other capital reserves;

· accumulated earnings;

· unrealized profits (losses);

· deficits of loan loss provisions;

· intangibles;

· net deferred taxes that rely on future profitability;

· goodwill resulting from corporate reorganizations or acquisitions; and

· 100% of the amount referred to in “Deductions” above.

CET1 Internal Targets

In October 2018, BCP Stand-alone’s Risk Committee approved a rise on CET1 ratio limits for BCP Stand-alone and Mibanco, targeting them in 11.00% and 15.00%, respectively. These limits are part of their risk appetite framework. BCP Stand-alone’s CET1 ratio is estimated based on BCP Stand-alone’s understanding, expectations and interpretation of the proposed Basel III requirements in Peru.

Intervention by the SBS

Pursuant to Law No. 26702, as amended by Law No. 27102, the SBS has the authority to seize the operations and assets of a bank. These laws provide for three levels of action by the SBS: a supervisory regime, an intervention regime and the liquidation of the bank. Any of these actions may be taken if certain events occur, such as if the bank: (i) interrupts payments on its liabilities, (ii) repeatedly fails to comply with the regulations of the SBS or the BCRP, (iii) repeatedly violates the law or the provisions of the bank’s Bye-laws, (iv) repeatedly manages its operations in an unauthorized or unsound manner or (v) has its regulatory capital fall or be reduced by more than 50%.

During the intervention regime, rather than seizing the operations and assets of a bank, the SBS may adopt other measures, including (i) placing additional requirements on the bank, (ii) ordering it to increase its capital stock or divest certain or all of its assets, or (iii) imposing a special supervision regime during which the bank must adhere to a financial restructuring plan.

The SBS intervention regime stops a bank’s operations for up to 45 days, which may be extended for an additional 45 days. During this time, the SBS may institute measures such as: (i) canceling losses by reducing reserves, capital and subordinated debt, (ii) segregating certain assets and liabilities for transfer to another financial institution and (iii) merging the intervened bank with an acquiring institution according to the program established by Urgent Decree No. 108-2000, enacted in November 2000. After the intervention, the SBS will liquidate the bank unless it is merged with an acquiring institution, as described in clause (iii) above.

The intervention procedure entails an automatic stay, protecting the assets of the bank or insurance company. Hence, the following actions are temporarily suspended: (i) collection of debts (judicially or administratively), (ii) execution of any judicial order, (iii) creation of liens, and (iv) making payments, advances or offsetting debts; although statute regulates some specific cases where offsetting is admitted during the stay.

In case of dissolution of the bank, the priority of payments goes as follows: (a) wages and social benefits of the bank’s employees, (b) return of saving deposits (in the portion not covered by the Deposit Insurance Fund), (c) tax obligations; and, (d) the rest of the obligations under general rules of payment.

Liens created against bank’s assets survive the dissolution, but the following rules apply:

1. Each encumbered asset is sold separately.

2. The proceeds of the sales are deposited separately from the rest of the bank’s assets to preferentially pay the secured obligations.

3. If the wages and social benefits of the bank’s employees are fully paid with the rest of the company’s assets, the proceeds described in clause (2) above are used to pay the secured obligations. Otherwise, they are used to complete such payments, reducing pro-rata the amount available for payment of secured obligations.

4. If the secured obligations are fully paid and there is an excess from the proceeds described in clause (2) above, the balance is added to the rest of the bank’s assets.

5. If the secured obligations are not fully paid, the unpaid balance is treated as an unsecured obligation and may be collected, if possible, against the rest of the bank’s assets.

Legal reserve requirements

In accordance with Peruvian regulation (article 67 of Law No. 26702) a reserve of up to at least 35% of paid-in capital of the Group’s subsidiaries operating in Peru is required to be established through annual transfers of at least 10% of their net profit.

Under Law No. 26702, banks and financial institutions are required to maintain legal reserve requirements for certain obligations. The BCRP requires financial institutions to maintain marginal reserve requirements for foreign currency obligations and sets the exact level and method of calculation of that requirement. The reserve requirements in Peru apply to obligations such as demand and time deposits, savings accounts, securities, certain bonds and funds administered by banks. Additionally, the BCRP requires reserves on amounts due to foreign banks and other foreign financial institutions. Since January 2011, obligations of foreign subsidiaries and affiliates also have been subject to the reserve requirement.

In 2017, the BCRP lowered the local currency reserve requirement rate (from 6.5% in December 2016 to 5.0% in April 2017). In 2018, the BCRP lowered the marginal reserve requirements from 40% in December 2017 to 35% in July 2018 (70% in December 2016), and is applied on based two criteria: (i) balance of total loans in US Dollars, and (ii) balance of car and mortgage loans in US Dollars. According to the BCRP, this reduction in rates aims to maintain flexible credit conditions considering decreasing demands for loans and increasing external rates. In 2020, the BCRP lowered reserve requirements for obligations with an average term equal to or below 2 years with financial institutions from abroad, subject to a special regime, from 50% to 9% and suspended the additional reserve requirement based on the evolution of foreign currency loans until April 2021. By December 2020, Peruvian commercial banks’ average effective reserve requirement ratio for foreign currency was 34.4%.

In addition to overall changes in reserve requirements, in 2016, the BCRP increased the minimum level for current account deposits that Peruvian banks must keep at the BCRP as reserve funds, from 0.75% at the close of 2015 to 1.00% by March 2016. In April 2020, the BCRP lowered the minimum level for current account deposits back to 0.75% as part of measures to ease financial conditions. Moreover, in April 2020 it also lowered the legal and general regime local currency reserve requirement rate from 5.0% to 4.0%.

In order to offset the excessive pressure of the derivatives market on the domestic currency, the BCRP has adjusted additional reserve requirements in Soles according to foreign exchange derivatives market conditions. Moreover, after significant depreciation of the Sol against the US Dollar in 2014 (6.8%) and 2015 (14.6%) the BCRP established a program (De-dollarization Program) aimed at contributing to the de-dollarization of credit to reduce the risks of currency depreciation associated with borrowing in US Dollars.

For further historical events please refer to previous 20-F documents, see “ITEM 3. KEY INFORMATION – 3.D Risk Factors – Economic and market conditions in other countries may affect the Peruvian economy and the market price of Peruvian securities”.

Lending activities requirements

Law No. 26702 sets the maximum amount of credit that a financial institution may extend to a single borrower, whether the borrower is an individual or an economic group. Resolution SBS No. 5780-2015 establishes that an “economic group” is one that has a single or common risk exposure and includes a person, such person’s close relatives and the companies in which such person or his or her close relatives have significant share ownership or decision-making capability. Significant decision-making capability is deemed to be present when, among other factors, a person or group can exercise material and continuous influence over the decisions of a company, when a person or company holds seats on the Board of Directors or has principal officers in another company, or when it can be assumed that one company or person is the beneficiary of credit facilities granted to another company.

The limit on credit that may be extended to one borrower varies according to the type of borrower and the collateral received. The credit limit for any Peruvian borrower is 10% of a bank’s regulatory capital, applied to both unconsolidated and consolidated records, which may be increased to up to 30% if the loan is collateralized in a manner acceptable under Law No. 26702. If a financial institution exceeds these limits, the SBS may impose a fine on the institution. As of December 31, 2018, 2019 and 2020, the 10.0% unconsolidated credit limit per borrower of BCP Stand-alone for unsecured loans was S/1,767.9 million, S/1,940.8 million and S/2,121.0 million, respectively. As of December 31, 2018, 2019 and 2020, the 30.0% credit limit for secured loans was S/5,303.7 million, S/5,822.4 million and S/6,363.1 million, respectively.

Pursuant to Article 52 of the organic law of the BCRP, under certain circumstances, the BCRP has the authority to establish limits on interest rates charged by commercial banks and other financial institutions. Such limits are not currently in place; however, there can be no assurance that the BCRP will not establish such limits on interest rates in the future.

In addition, according to SBS Resolution No. 6941-2008, as amended, banks and other financial entities must adopt a system to manage the risk of over-indebtedness that (a) allows the mitigation of such risk before and after making the loan, (b) permits the performance of a permanent monitoring of the portfolio to identify over indebted borrowers and (c) includes the periodic evaluation of the control mechanisms being used and of the corrective actions or required improvements, as the case may be.

Portfolio Classification Requirement

In order to comply with the SBS regulation, we have a loan portfolio classified in accordance with SBS Resolution No. 11356-2008 and it was amended as of July 1, 2010. For this reason, a bank’s portfolio is classified into eight different categories: corporate, large companies, medium-sized companies, small companies, micro-companies. Commercial, consumer revolving, non-renewable consumer, and residential mortgage loans.

Related party transactions requirements

Law No. 26702 regulates transactions between financial institutions on the one hand and related parties or affiliates on the other. The SBS and the SMV have also enacted regulations that define indirect ownership, related parties and economic groups, in order to limit transactions with related parties and affiliates. These regulations also provide standards for the supervision of financial and mixed conglomerates formed by financial institutions.

The total amount of loans to Directors, employees or close relatives of any such persons may not exceed 7% of a bank’s regulatory capital. All loans made to any single Director or employee borrower, considering his or her close relatives, may not exceed 0.35% of regulatory capital (that is, 5% of the overall 7% limit).

Pursuant to Law No. 26702, as amended by Law No. 27102, the aggregate amount of loans to related party borrowers considered to be part of an economic group (as defined above) may not exceed 30% of a bank’s regulatory capital. For purposes of this test, related party borrowers include (i) any person holding, directly or indirectly, 4% or more of a bank’s shares, (ii) Directors, (iii) certain principal executive officers of a bank, and (iv) people affiliated with the administrators of the bank. Loans to individual related party borrowers are also subject to the limits on lending to a single borrower described under “ITEM 4. INFORMATION ON THE COMPANY – 4.B Business Overview – (6) Supervision and Regulation – 6.2 Subsidiaries – 6.2.1 Peru”. All loans to related parties must be made on terms no more favorable than the best terms that BCP Stand-alone or Mibanco offers to the public.

Ownership restrictions

Law No. 26702 establishes certain restrictions on the ownership of a bank’s shares. Banks must have a minimum of two shareholders. Among other restrictions, those convicted of drug trafficking, money laundering, terrorism or other felonies, and those who are Directors, employees or advisors of public entities that regulate and supervise the activities of banks, are subject to ownership limitations. All transfers of shares in a bank must be recorded at the SBS. Transfers involving the acquisition by any individual or corporation, whether directly or indirectly, of more than 10% of a bank’s capital stock require prior authorization from the SBS. The SBS may deny authorization to such transfer of shares if the purchasers (or their shareholders, Directors or employees, in the case of juridical persons) are legally disabled or have engaged in illegal activity in the area of banking, finance, insurance or reinsurance, or if objections are raised on the basis of the purchaser’s moral fitness or economic solvency, among other reasons. The decision of the SBS on such matters is final and cannot be overturned by the courts. If a transfer is made without obtaining the prior approval of the SBS, the purchaser shall be fined with an amount equivalent to the value of the transferred shares and is obligated to sell the shares within 30 days, or the fine is doubled. In addition, the purchaser is not allowed to exercise its voting rights at the shareholders’ meetings. Foreign investors receive the same treatment as Peruvian nationals under the limitations described above.

Additionally, on January 7, 2021, Law No. 31112 was promulgated, which provides that any transaction that causes ownerships to cross the threshold set by Law No. 31112 and can result in action in concert must have the authorization of INDECOPI to complete that ownership. According to this law, financial institutions must present the acquisition request to the SBS. If the SBS determines that there is a financial crisis, the acquisition does not require authorization from INDECOPI.

Finally, under Peruvian law, individuals or corporations that acquire, directly or indirectly, 1% of the capital stock of a bank in a period of 12 months, or acquire a 3% or more share participation, have the obligation to provide the information that the SBS may require to identify such individuals’ or corporations’ main economic activities and asset structure.

Risk rating requirements

Law No. 26702 and SBS Resolutions No. 672 and 18400-2010 require that all financial companies be rated by at least two risk rating companies on a semi-annual basis, in addition to the SBS’s assessment. Criteria to be considered in the rating include risk management and control procedures, loan quality, financial strength, profitability, liquidity and financial efficiency. Five risk categories are assigned, from “A” (lowest risk) to “E” (highest risk), allowing for sub-categories within each category. In October 2019 and September 2020, the Moody’s Local PE Clasificadora de Riesgos S.A. and Apoyo y Asociados Internacionales S.A.C. rating agencies, affirmed their respective “A+” risk categories for BCP Stand-alone. In September 2020, both rating agencies affirmed their “A” risk categories for Mibanco. As of December 2020, BCP Stand-alone and Mibanco maintained the risk categories of “A+” and “A”, respectively, with both rating agencies.

Deposit insurance fund

Law No. 26702 provides for mandatory deposit insurance to protect the deposits of financial institutions by establishing the Deposit Insurance Fund for individuals, associations, not-for-profit companies, and demand deposits of non-financial companies. Financial institutions must pay an annual premium calculated on the basis of the type of deposits accepted by the entity and the risk classification of such entity, made by the SBS and at least two independent risk-rating agencies. The annual premium, which is set by Law No. 26702, begins at 0.65% of total funds on deposit under the coverage of the Deposit Insurance Fund and increases to 1.45%, which is applicable to banks in the highest risk category. Such annual premium basis and maximum were modified by Resolution SBS No. 0657-99 which established complementary proceedings and modified the amount of the annual premium; such that the annual premium now begins at 0.45% of total funds on deposit and increases to 1.45% which is applicable to banks in the highest risk category. BCP Stand-alone and Mibanco are currently classified in the lowest risk category and apply the 0.45% set by the Resolution SBS No 0657-99.

The maximum amount that a customer is entitled to recover from the Deposit Insurance Fund is S/ 101,522.00 for the period starting from December 2020 until February 2021.

(iv) Peruvian Insurance Companies Regulation - Grupo Pacifico

Solvency requirements

Pursuant to Law No. 26702, the SBS regulates the solvency margin of Peruvian insurance companies. The solvency margin calculations consider the amount of premiums written and losses incurred during a specified period prior to the date of the calculation.

Insurance companies must also maintain solvency equity, which must be the greater of (i) the solvency margin and (ii) the minimum capital requirement, as established by law. The required amount of solvency equity is recalculated at least quarterly. If an insurance company has outstanding credit risk operations, part of the solvency equity must be set aside for its coverage.

Legal reserve requirements

Peruvian law also requires that all insurance companies establish a legal guarantee reserve for policyholders by setting aside 10% of income before taxes until the reserve reaches at least 35% of paid-in capital.

Technical reserve requirements

Pursuant to Law No. 26702 and regulations issued by the SBS, Peruvian insurance companies must establish technical reserves. Law No. 26702 also requires insurance companies to create a reserve for incurred but not reported (IBNR) claims that are reflected as a liability in their consolidated financial statements. Reserves for IBNR claims are estimated by using generally accepted actuarial reserving methods. See Note 3(e) to our consolidated financial statements. Finally, Grupo Pacifico is required by the SBS to establish pre-event reserves for risk of catastrophes, which, in accordance with IFRS principles, are not considered in our financial statements. See “ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS – 5.A Operating results – (6) Lines of Business (LoBs) – 6.3 Insurance & Pensions – (i) Grupo Pacifico”.

According to a new regulation regarding actuarial management, SBS Resolution No. 3863-2016, the actuarial function must (i) ensure the use of real and adequate parameters in both pricing and technical reserves calculation and (ii) guarantee the consistency of the results obtained. Likewise, based on the sufficiency evaluation analysis, actuarial management must propose changes in the methodologies applied in the calculation of technical or additional reserves.

Investment requirements

Pursuant to Law No. 26702 and a regulation issued by the SBS Resolution No. 1041-2016, the total amount of an insurance company’s solvency equity and technical reserves must be permanently supported by diversified assets, which may not be pledged or otherwise encumbered. The investment regulations further state that deposits in and bonds of one financial institution together cannot exceed 7% of the total of an insurer’s solvency equity and technical reserves combined. In general, no more than 15% of an insurance company’s combined solvency equity and technical reserves may be invested in instruments (including stocks and bonds) issued by a company or group of companies. In order for an insurance company to invest in non-Peruvian securities, the securities must be rated by an internationally recognized credit rating agency and the asset class must be authorized by Peruvian SBS regulations. Securities owned by insurance companies must be registered in the Public Registry of Securities of Peru or the comparable registry of their respective country.

Related party transactions requirements

Law No. 26702 provides that insurance companies may not extend credit to or guarantee the obligations of employees or members of the Board of Directors, except for certain home mortgage loans to employees.

Ownership restrictions

Law No. 26702 sets forth the same types of restrictions regarding the ownership and transfer of insurance company shares as it does regarding the ownership and transfer of shares in banks. See “ITEM 4. INFORMATION ON THE COMPANY – 4.B Business overview – (6) Supervision and Regulation – 6.2 Subsidiaries – 6.2.1. Peru”.

(v) Peruvian Pension Fund Regulation – Prima AFP

Minimum capital requirements

SBS authorization is required for an AFP to begin operations. Peruvian law requires a minimum capital requirement, paid in cash by shareholders. There are certain limitations on the ownership and transfer of AFP shares. Additionally, Peruvian law requires that companies maintain a legal reserve funded with 10% of their net profit, until the reserve reaches the equivalent of 20% of their share capital.

Investment limits

The SBS has set investment limits, which restrict investments in certain asset classes, economic groups, and issuers. In addition, some of these limits differ according to the fund’s risk profile. The general limits are:

▪ The total amount invested in instruments issued or guaranteed by the Peruvian State cannot exceed 30% of the fund value;

▪ The total amount invested in instruments issued or guaranteed by the BCRP cannot exceed 30% of the fund value;

▪ The total amount invested in instruments issued or guaranteed by the Peruvian State and the BCRP overall cannot exceed 40% of the fund value; and

▪ The total amount invested in instruments issued by governments, financial institutions, and non-financial institutions whose commercial activities are mostly abroad cannot exceed 50% of the fund value.

The SBS requires that AFPs ensure a minimum yield. Part of the guarantee is the obligatory reserve requirement, which is paid with resources belonging to the AFPs. The amount depends on the assets in the portfolio, but it is approximately 1% of the AFP’s funds under management.

PPS Reforms

PPS Reform and changes of the PPS between 2012 and 2017

Since 2012, the Private Pension System has witnessed different reforms and changes applied by the Peruvian government and its regulators. The most relevant changes contemplated during 2012 to 2017 were the following:

▪ In 2012, a tender process held every 24 months were incorporated, in which the AFP that offers the lowest management fee wins the tender. As a result, new workers who enter the PPS become members of the tender holder and remain in it for at least 24 months.

▪ In 2014, new local and foreign investment regulations made the PPS registration process for new investment securities more flexible. It allows AFPs to make non-complex investments and use derivatives instruments under certain restriction without authorization from the SBS.

▪ In 2015, SBS Resolution No. 5540-2015 was also published and regulates the new Fund Type Zero, which is mandatory for participants from the age of 65 and up who opt for a statutory retirement pension. The Fund Type Zero became effective on April 1, 2016 and invests only in national currency short-term instruments and debt securities.

▪ In April 2016, Peruvian Law No. 30425 (further modified by Law No. 30478) was passed and came into force in Peru. Among the most relevant changes, the law allows affiliates to: (i) withdraw up to 95.5% of their pension funds when they reach the age of 65 (retirement age); (ii) use up to 25% of their pension funds as the down payment or amortization of a mortgage loan used to buy a first house; and (iii) in the case of affiliates with terminal illness, withdraw up to 50% of their pension funds. The new law also extended the Special Regime of Early Retirement until December 31, 2018, for affiliates who had been unemployed for at least 12 months. The Regime applies to men and women who are at least 55 and 50 years old respectively, and pensioners who choose the retirement program.

▪ In 2017, BCRP raised the foreign investment limit up to 46% for pension funds to encourage AFPs to diversify their investments.

For further detail please refer to Credicorp’s previous 2019 20-F document, see “ITEM 4. INFORMATION OF THE COMPANY – 4.B Business Overview – (9) Supervision and Regulation – 9.5 Prima AFP”.

Changes to PPS in 2018

Between February and September 2018, the BCRP raised the foreign investment limit for pension funds at a rate of 0.5 percentage points per month until it reached the 50% limit set by the SBS.

In 2018, the withdrawals of funds in Prima AFP totaled approximately S/2,992 million.

Changes to PPS in 2019

On April 3, 2019, Peru’s congress permanently approved the Special Regime of Early Retirement for affiliates with a minimum age of 55 years old for men and 50 years old for women, who are unemployed for at least 12 consecutive months, and who prove an income of less than S/29,400 (7 UIT), to receive independent employment (4th category) income during their unemployment period. These modifications were promulgated by Peruvian Law No. 30939.

Peru’s congress also approved new criteria to apply for Ordinary Early Retirement. Ordinary Early Retirement is available to affiliates with a minimum age of 55 years old for men and 50 years old for women, who have a pension fund that allows them to access a pension of at least 40% of the average income received during the last 120 months. These modifications were promulgated by Peruvian Law No. 30939. In 2019, the withdrawals of funds in Prima AFP totaled approximately S/2,797 million.

Additionally, in 2020, the Peruvian government and congress took measures to provide liquidity to private pensioners by allowing them to draw down their funds. These measures had an impact on funds under management and on income at the AFP in 2020 and will have impact in 2021. For further information about the measures taken by the government, see “ITEM 3. KEY INFORMATION – 3.D Risk Factors – Regulatory changes and adoption of new international guidelines to sectors in which we operate could impact our earnings and adversely affect our operating performance” and “ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS – 5.A Operating results – (2) Political and Macroeconomic Environment”.

(vi) Peruvian Investment Banking & Wealth Management Company Regulation - Credicorp Capital Peru

Credicorp Capital Peru is the main shareholder of Credicorp Capital Sociedad Agente de Bolsa S.A., Credicorp Capital Sociedad Titulizadora S.A., Credicorp Capital Servicios Financieros S.A and Credicorp Capital S.A. Sociedad Administradora de Fondos.

The Securities Market Law (Legislative Decree No. 861), as amended, governs the public offering and trading of securities listed on the SMV and the BVL. The BVL, as the only stock exchange in Peru, also provides internal regulations that form part of the regulations and administrative rulings that govern the offering and trading of securities.

6.2.2 Cayman Islands

Atlantic Security Holding Corporation (ASHC) Regulation

ASHC is an entity regulated under Cayman Islands Companies Law, and operations of its main subsidiary, Atlantic Security Bank (ASB), are supervised by the Cayman Island Monetary Authority (CIMA). Under the law of the Cayman Islands, ASB is subject to the following continuing requirements: (i) to remain in good standing under the Cayman Islands Companies Law, including the filing of annual and other returns and the payment of annual fees; (ii) to file with the Registrar of Companies any change in the information or documents required to be provided and to pay annual fees; (iii) to file certain prescribed forms with CIMA on a quarterly basis; (iv) to file with CIMA audited accounts within three months of each financial year (in the case of a locally incorporated bank which is not part of a substantial international banking group, a senior officer or board member discusses these accounts each year at a meeting with CIMA); and (v) to file an annual questionnaire.

ASB has a registered branch in Panama (ASB Panama Branch), which holds an International Banking License issued by the SBP and a Securities Broker License issued by the Superintendency of the Securities Market of the Republic of Panama. The International Banking License allows institutions to carry out banking operations with effects outside of the jurisdiction from a permanent establishment in Panama. The SBP and the Superintendency of the Securities Market of the Republic of Panama act as the main regulators for ASB Panama Branch, although supervision is closely coordinated with CIMA as regulator for the Head Office in the Cayman Islands.

Currently, a merger project is being executed between ASB (Cayman Islands) and ASB Bank Corp (Panama), both wholly owned subsidiaries of Credicorp. The merger is carried out under the modality of merger by absorption, with ASB Bank Corp being the surviving entity. Therefore, after the merger is concluded, ASHC will continue to be regulated by Cayman Islands Companies Law, but ASB now will have the Panamanian authorities as the principal entities to foresee continuing requirements. The process is in the regulatory approval stage and is expected to be concluded within the second quarter of 2021. The merger is being carried out with the purpose of consolidating the operation of the private banking segment in Panama, and no material changes are foreseen in the offer of products and services, operation and management resulting from this restructuring.

Atlantic Security Bank Regulation

ASB, a subsidiary of ASHC, is a Cayman Islands bank with a branch in Panama (ASB Panama Branch). ASB is regulated and supervised by the regulatory authorities of the Cayman Islands (CIMA) while its Panama branch is regulated by the SBP and the Superintendency of the Securities Market of the Republic of Panama.

ASB is registered as an exempt company and is licensed in the Cayman Islands pursuant to the Banks and Trust Companies Law (Cayman Banking Law). ASB holds an unrestricted Category B Banking and Trust License, as well as a Mutual Fund Administrator License. As a holder of a Category B License, ASB may not take deposits from any person residing in the Cayman Islands other than another licensee, an exempt company, or an ordinary non-resident company which is not carrying on business in the Cayman Islands.

ASB may not invest in any asset which represents a claim on any person residing in the Cayman Islands, except a claim resulting from: (i) a loan to an exempt or an ordinary non-resident company not carrying on business in the Cayman Islands; (ii) a loan by way of a mortgage to a member of its staff or to a person possessing or being deemed to possess Caymanian status under the immigration law, for the purchase or construction of a residence in the Cayman Islands to be owner-occupied; (iii) a transaction with another licensee; or (iv) the purchase of bonds or other securities issued by the government of the Cayman Islands, a body incorporated by statute, or a company in which the government is the sole or majority beneficial owner. In addition, ASB may not, without the written approval of the CIMA, carry on any business in the Cayman Islands other than business permitted by the Category B License.

ASB must receive prior approval from CIMA (i) for any proposed change in the Directors or senior officers, though in exceptional cases a waiver can be obtained enabling changes to be reported after the event or annually in the case of a branch of a substantial international bank; (ii) for the issue, transfer or other disposal of shares (it is rare for a waiver to be granted with respect to shares except in the case of a branch of a substantial international bank and where the shares are widely held and publicly traded); (iii) for any significant change in the business plan filed on the original license application; or (iv) to open a subsidiary, branch, agency, or representative office outside the Cayman Islands. Finally, ASB must obtain the prior approval of CIMA to change its name and must notify CIMA of any change in its principal office or its authorized agent in the Cayman Islands.

ASB Casa de Valores holds a Securities Broker license issued by the Superintendence of the Securities Market of the Republic of Panama that enables the entity to act as securities broker, manager and custodian. It is required to comply with regulations pertaining to corporate governance; minimum working capital and liquidity requirements to meet obligations with customers and vendors; adequate accounting practices and recordkeeping; provision of regulatory reports; adherence to confidentiality standards, code of ethics and prevention of conflict of interest; and adequate anti-money laundering and terrorism finance laundering controls, policies, and programs, among others.

6.2.3 Bolivia

Bolivian Regulators

Pursuant to Supreme Decree No. 29894, in May 2009 the ASFI was vested with the authority to regulate the Bolivian banking system. The ASFI also supervises brokerage and mutual fund management activities that Credicorp Ltd. conducts through BCP Bolivia’s affiliates, Credibolsa and Credifondo. These affiliates operate under the Securities Markets Law No. 1834, enacted on March 31, 1998. Additionally, the Central Bank of Bolivia (Banco Central de Bolivia or BCB by its Spanish initials) regulates financial intermediation and deposit activities, determines monetary and foreign exchange policy, and establishes reserve requirements on deposits.

Regulation of Bolivian financial institutions

Until November 2013, the Bolivian banking system operated under the Law of Banks and Financial Entities No. 1488, enacted on April 14, 1993, and later modified by Law 3076 of June 20, 2005. On August 21, 2013, the Bolivian Government enacted a new Banking Law (Law 393), which became effective on November 21, 2013. This new law envisions a more active role of government in the financial services industry and emphasizes the social objective of financial services.

On December 10th, 2010 through the enactment of Law No 065 (Ley de Pensiones), the supervision of all insurance activities in Bolivia was transferred from the ASFI to the Supervision and Control Authority for Pensions and Insurance (Autoridad de Fiscalizacion y Control de Pensiones y Seguros or APS by its Spanish initials). Our life and P&C insurance affiliates in Bolivia, which operate under the commercial name Crediseguro, are thus regulated and supervised by the APS.

In 2012, the Bolivian government imposed an additional income tax of 12.5% on earnings before taxes, which applied to all financial institutions with a ratio of earnings before taxes to equity in excess of 13%. Additionally, in November 2012, the government approved a new tax on sales of foreign exchange. This new tax, which levied all sales of foreign exchange with a 0.70% rate on the amount of foreign currency sold, was in effect for 36 months and expired in December 2015.

The additional income tax rate was subsequently increased to 22% in December 2015, and to 25% in March 2017, and was made applicable to all financial institutions with a ratio of earnings before taxes to equity in excess of 6%.

In 2013, Supreme Decree No. 1842 set interest rate caps for social housing loans ranging from 5.5% to 6.5%, and for loans to productive sectors (agriculture, tourism, manufacture, etc.), and established loan quotas pursuant to which, by December 31, 2018, and afterwards, at least 60% of the loan portfolio of all universal banks needs to be comprised of loans to productive sectors and social housing loans.

As per Law 393, in 2014, the Bolivian government, through Supreme Decrees No. 2136 and No. 2137, instructed banks in Bolivia to contribute 6% of that year’s total profits for the creation of a Guarantee Fund – to be administered by the banks - intended to provide guarantees of up to 20% of the amount financed of productive sector and social housing loans. From 2015 to 2019, the government instructed banks to contribute 6% of those years’ profits to replenish either the existing Guarantee Funds or to make contributions to a newly created Seed Capital Fund administered by the government-owned development bank.

On February 27, 2020, the Bolivian Government issued Supreme Decree No. 4164 which modified the loan quotas that were enacted in 2013. The percentage of the loan portfolio that needed to be comprised of productive and social housing loans was lowered from 60% to 50%. Additionally, it established that in any given year, loan growth had to include at least 40% of loans to productive sectors or social housing. As per Supreme Decree No. 4408 of December 2nd, 2020, Supreme Decree No. 4164 was modified reinstating the loan quotas that had been in force since 2013.

In response to the COVID-19 pandemic, on April 1st, 2020, the Bolivian government enacted Law No 1294, which established the automatic deferral of all loan installments (capital, interest and other charges) payable to financial institutions for the duration of the Emergency Declaration due to the Coronavirus Pandemic. Supreme Decree No. 4206 established an initial deferral period from March 2020 to May 2020, which was subsequently extended to August 2020 through Supreme Decree No. 4248, and then to December 2020 through Law No. 1319.

On December 2nd, 2020, the Government issued Supreme Decree, No. 4409, establishing that the capital portion of the installments that had been deferred in 2020 would not accrue interest until their cancellation.

On December 28th, 2020, Law No.1356 was enacted, eliminating the tax exemption for capital gains generated in the Bolivian Stock Exchange and introducing an additional income tax of 25% applicable to all brokerage houses, mutual fund administrators and insurance companies with a ratio of earnings before taxes to equity in excess of 6%.

In accordance with Bolivian regulation, a reserve of up to at least 50% of paid-in capital of the Group’s subsidiaries operating in Bolivia is required to be established through annual transfers of at least 10% of their net profit. As of December 31, 2018, 2019, and 2020, these reserves amounted to approximately S/5,179.0 million, S/6,236.5 million and S/6,990.1 million, respectively.

6.2.4 Colombia

Colombia Regulation – Mibanco Colombia & Credicorp Capital Colombia

The SFC is an entity whose main function is to oversee the financial sectors. Although it has an important role in monitoring and surveillance, it also has certain regulatory powers that permit it to issue regulations through regulatory circular letters laws and decrees. Separately, the AMV supervises and regulates the conduct of securities intermediaries, as well as the certification of those who carry out such activities. The AMV is a private entity and is the product of a self-regulatory scheme. established after the termination of Law No. 964 of 2005.

The regulation of the financial sector and the securities market in Colombia is directed by Colombia’s congress, which issues laws, and the Colombian Ministry of Finance’s Financial Regulation Unit (Unidad de Regulacion Financiera), which issues decrees.

6.2.5 Chile

Chilean Regulation – Credicorp Capital Chile

The CMF is responsible of the supervision of entities of the securities markets, insurance, banks and financial institutions, and other entities established by law. The CMF regulates Credicorp Capital Chile through the Chilean stock exchange market. The CMF ensures that persons or supervised institutions, from formation until liquidation, comply with laws, regulations, statutes, and other provisions governing the functioning of these markets. The CMF also authorizes companies to manage mutual funds (known as Mutual Fund Administrators and General Fund Management or AFM and AGF, respectively, by their Spanish initials) and oversees such companies and their respective funds to ensure compliance with laws and regulations by monitoring their legal, financial and accounting information.

In Chile, there are laws, regulations, and rules that govern the various sectors of the stock market. One of those laws is the Chilean Securities Market Law, which governs the functioning of the Chilean market and the laws related to corporations, management of third-party funds (investment funds, mutual funds, pension funds and others), and deposit and custody of securities.

6.2.6 Panama

International Bank Regulation – BCP Panama and ASB Bank Corp.

BCP Panama, a branch of BCP Stand-alone, and ASB Bank Corp., a wholly owned subsidiary of ASHC, were registered in the Republic of Panama in 2002 and 2020 respectively, under an international license issued by the SBP, in accordance with Law Decree No. 9 of February 26, 1998, as amended. ASB also has a Securities Broker License issued by the Superintendency of the Securities Market of the Republic of Panama.

BCP Panama is subject to an inspection made by auditors and inspectors of the SBP, to determine, among other things, its compliance with the Law Decree No. 2 of February 22, 2008 and No. 23 of April 27, 2015, the Law on the Prevention of Money Laundering, Terrorism Financing and Financing of Proliferation of Weapons of Mass Destruction.

ASB Bank Corp. has been created with the purpose of merging with Atlantic Security Bank, with ASB Bank Corp. as the surviving entity. ASB Bank Corp. will not launch operations until the intended merger process takes place, once the relevant regulatory authorizations have been obtained. It is expected that the merger shall be completed in the second quarter of 2021. For further information, see “ITEM 4. INFORMATION ON THE COMPANY – 4.A History and development of the company – Subsequent Events”.

6.2.7 United States

International Bank Regulation – BCP Miami

BCP Miami Agency is licensed to operate as an international bank agency in the State of Florida and was authorized to transact business by the Comptroller of Florida on September 3, 2002. The BCP Miami Agency is regulated, supervised and examined by the Office of Financial Regulation of the State of Florida Department of Financial Services and by the Federal Reserve through the Federal Reserve Bank of Atlanta. Our direct and indirect nonbanking subsidiaries doing business in the United States also are subject to regulation by the Federal Reserve.

Investment Banking and Wealth Management Company Regulation – Credicorp Capital LLC

Credicorp Capital LLC is a broker-dealer registered with FINRA and the SEC. Credicorp Capital LLC is the entity resulting from the recent merger between Credicorp Capital Securities, Inc. and Ultralat Capital Markets, LLC which took place on February 1st, 2021. Credicorp Capital LLC is owned by Credicorp Capital Limited, which is wholly owned by Credicorp Ltd. Headquartered in Brickell, Florida, Credicorp Capital LLC provides brokerage services through a clearing agreement with Pershing, LLC. There are currently 7 registered principals at Credicorp Capital LLC, all of whom are Series 7 and Series 24 licensed. At the trading desk, all registered representatives maintain their Series 7 and Series 63 licenses.

Credicorp Capital LLC has an affiliate investment adviser, Credicorp Capital Advisors LLC. They share the same Board of Directors and ownership.

(7) Selected statistical information

In the following tables, we have set forth certain selected statistical information and ratios regarding our business for the periods indicated. You should read the selected statistical information in conjunction with the information included in “ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS – 5.A Operating Results” and the consolidated financial statements (and the notes that accompany the consolidated financial statements). The statistical information and discussion and analysis given below for the years 2016 through 2019 reflect our consolidated financial position as well as that of our subsidiaries, as of December 31, 2016, 2017, 2018, 2019 and 2020 and our results of operations for such years.

7.1 Average statements of financial position and income from interest-earning assets

The tables below set forth selected statistical information based on our average statements of financial position prepared on a consolidated basis. Except as otherwise indicated, we have classified average balances by currency (Soles or foreign currency, primarily US Dollars) rather than by the domestic or international nature of the balance. For the years 2020, 2019 and 2018, the average balances are computed as the average of period-beginning and period-ending balances on a monthly basis. Any of these month-end balances that were denominated in US Dollars have been converted into Soles using the applicable SBS exchange rate as of the date of such balance. Our management believes that the stated averages are representative of our operations, and that it would be too costly to produce daily averages using daily book balances in IFRS, but does not believe that the stated averages present trends in a materially different manner from those that would be presented by daily averages.

Average Statements of Financial Position

Assets, interest earned and average interest rates (1)

Year ended December 31, 2018 2019 2020 ASSETS: Average Balance Interest Earned Nominal Avg. Rate Average Balance Interest Earned Nominal Avg. Rate Average Balance Interest Earned Nominal Avg. Rate (in thousands of Soles, except percentages) Interest-earning assets: Deposits in BCRP Soles 152,306 3,603 2.37 % 194,045 4,978 2.57 % 4,158,501 10,551 0.25 % Foreign Currency 12,587,920 100,296 0.80 15,438,824 248,337 1.61 19,792,862 41,908 0.21 Total 12,740,226 103,899 0.82 15,632,869 253,315 1.62 23,951,363 52,459 0.22 Deposits in other Banks Soles 348,152 11,544 3.32 480,586 13,103 2.73 520,306 3,826 0.74 Foreign Currency 7,154,138 43,938 0.61 6,189,004 54,295 0.88 6,568,981 18,528 0.28 Total 7,502,290 55,482 0.74 6,669,590 67,398 1.01 7,089,287 22,354 0.32 Investment securities Soles 20,630,689 830,958 4.03 23,282,679 926,539 3.98 30,422,192 983,791 3.23 Foreign Currency 12,710,524 421,841 3.32 11,645,709 384,903 3.31 14,395,322 388,373 2.70 Total 33,341,213 1,252,799 3.76 34,928,388 1,311,442 3.75 44,817,514 1,372,164 3.06 Total loans (1) Soles 61,525,068 7,772,611 12.63 67,091,181 8,222,685 12.26 84,042,922 7,695,726 9.16 Foreign Currency 42,514,346 2,268,486 5.34 43,818,575 2,441,834 5.57 45,916,114 2,332,108 5.08 Total 104,039,414 10,041,097 9.65 110,909,756 10,664,519 9.62 129,959,036 10,027,834 7.72 Total dividend-earning assets Soles 657,736 11,578 1.76 561,253 8,990 1.60 484,417 8,123 1.68 Foreign Currency 161,226 12,812 7.95 101,031 16,269 16.10 307,482 17,480 5.68 Total 818,962 24,390 2.98 662,284 25,259 3.81 791,899 25,603 3.23 Total interest-earning assets Soles 83,313,951 8,630,294 10.36 91,609,744 9,176,295 10.02 119,628,338 8,702,017 7.27 Foreign Currency 75,128,154 2,847,373 3.79 77,193,143 3,145,638 4.08 86,980,761 2,798,397 3.22 Total 158,442,105 11,477,667 7.24 168,802,887 12,321,933 7.30 206,609,099 11,500,414 5.57 Noninterest-earning assets: Cash and due from banks Soles 2,583,630 2,798,404 2,946,320 Foreign Currency 2,818,460 2,666,835 2,159,340 Total 5,402,090 5,465,239 5,105,660 Allowance for direct loan losses Soles (3,744,935 ) (3,925,507 ) (6,530,146 ) Foreign Currency (1,143,984 ) (1,016,238 ) (1,390,331 ) Total (4,888,919 ) (4,941,745 ) (7,920,477 ) Premises and equipment Soles 872,780 1,832,146 1,383,640 Foreign Currency 729,061 836,470 882,677 Total 1,601,841 2,668,616 2,266,317 Other non-interest-earning assets, derivatives and other interest income Soles 4,314,519 25,471 5,049,093 29,313 8,873,581 32,965 Foreign Currency 6,205,714 19,496 6,183,773 30,418 3,723,751 14,269 Total 10,520,233 44,967 11,232,866 59,731 12,597,332 47,234 Total non-interest-earning assets Soles 4,025,994 25,471 5,754,136 29,313 6,673,395 32,965 Foreign Currency 8,609,251 19,496 8,670,840 30,418 5,375,437 14,269 Total 12,635,245 44,967 14,424,976 59,731 12,048,832 47,234 Total average assets Soles 87,339,945 8,655,765 9.91 97,363,880 9,205,608 9.45 126,301,733 8,734,982 6.92 Foreign Currency 83,737,405 2,866,869 3.42 85,863,983 3,176,056 3.70 92,356,198 2,812,666 3.05 Total 171,077,350 11,522,634 6.74 183,227,863 12,381,664 6.76 218,657,931 11,547,648 5.28

(1) Figures for total loans include internal overdue loans, but do not include accrued but unpaid interest on such internal overdue loans in the year in which such loans became internal overdue loans. Accrued interest is included.

Average Statements of Financial Position

Liabilities, Interest Paid and Average Interest Rates (1)

Year ended December 31, 2018 2019 2020 LIABILITIES AverageBalance InterestPaid NominalAvg. Rate AverageBalance InterestPaid NominalAvg. Rate AverageBalance InterestPaid NominalAvg. Rate (thousands of Soles, except percentages) Interest-bearing liabilities: Savings deposits Soles (1) 15,732,389 94,017 0.60 % 18,086,800 107,467 0.59 % 24,980,192 146,089 0.58 % Foreign Currency (1) 14,606,975 61,082 0.42 15,263,456 69,312 0.45 17,761,179 76,798 0.43 Total 30,339,364 155,099 0.51 33,350,256 176,779 0.53 42,741,371 222,887 0.52 Time deposits Soles (1) 18,860,241 697,297 3.70 21,700,375 870,034 4.01 20,014,910 610,238 3.05 Foreign Currency (1) 19,619,139 378,298 1.93 19,317,889 436,061 2.26 19,931,021 394,083 1.98 Total 38,479,380 1,075,595 2.80 41,018,264 1,306,095 3.18 39,945,931 1,004,321 2.51 Due to banks and correspondents and payables from repurchase agreements Soles 9,307,160 383,127 4.12 9,308,252 382,906 4.11 22,117,488 431,654 1.95 Foreign Currency 8,583,916 239,874 2.79 7,786,339 208,002 2.67 6,223,888 125,487 2.02 Total 17,891,076 623,001 3.48 17,094,591 590,908 3.46 28,341,376 557,141 1.97 Bonds Soles 3,731,852 213,532 5.72 3,676,399 229,542 6.24 3,741,617 203,617 5.44 Foreign Currency 11,619,518 697,474 6.00 11,849,698 670,630 5.66 12,360,656 680,296 5.50 Total 15,351,370 911,006 5.93 15,526,097 900,172 5.80 16,102,273 883,913 5.49 Total interest-bearing liabilities Soles 47,631,642 1,387,973 2.91 52,771,826 1,589,949 3.01 70,854,207 1,391,598 1.96 Foreign Currency 54,429,548 1,376,728 2.53 54,217,382 1,384,005 2.55 56,276,744 1,276,664 2.27 Total 102,061,190 2,764,701 2.71 106,989,208 2,973,954 2.78 127,130,951 2,668,262 2.10 Non-interest-bearing liabilities and equity: Demand deposits (2) Soles (1) 12,369,427 55,216 0.45 13,784,465 57,963 0.42 23,333,665 78,880 0.34 % Foreign Currency (1) 18,353,988 56,300 0.31 18,608,112 69,701 0.37 23,382,041 65,381 0.28 Total 30,723,415 111,516 0.36 32,392,577 127,664 0.39 46,715,706 144,261 0.31 Other liabilities, derivatives and other interest expenses Soles 7,839,399 12,029 10,523,703 37,635 10,115,435 34,789 Foreign Currency 7,708,343 145,283 7,658,275 150,660 10,033,400 128,995 Total 15,547,742 157,312 18,181,978 188,295 20,148,835 163,784 Equity attributable to Credicorp equity holders Soles Foreign Currency 22,302,712 25,211,482 24,168,217 Total 22,302,712 25,211,482 24,168,217 Non-controlling interest Soles Foreign Currency 442,291 452,618 494,222 Total 442,291 452,618 494,222 Total non-interest-bearing liabilities and equity Soles 20,208,826 67,245 24,308,168 95,598 33,449,100 113,669 Foreign Currency 48,807,334 201,583 51,930,487 220,361 58,077,880 194,376 Total 69,016,160 268,828 76,238,655 315,959 91,526,980 308,045 Total average liabilities and equity Soles 67,840,468 1,455,218 2.15 77,079,994 1,685,547 2.19 104,303,307 1,505,267 1.44 Foreign Currency 103,236,882 1,578,311 1.53 106,147,869 1,604,366 1.51 114,354,624 1,471,039 1.29 Total 171,077,350 3,033,529 1.77 183,227,863 3,289,913 1.80 218,657,931 2,976,306 1.36

(1) Includes the amount paid - for the deposit insurance fund.

(2) Our policy does not consider the payment of interests for demand deposits; however, in exceptional circumstances the group pays interest on certain demand deposits of corporate clients that exceed certain amounts. These payments are not considered material.

7.1.1 Changes in net interest, similar income and expense: volume and rate analysis

The table below sets forth the net effect on annual variation in interest income and interest expense of increases and decreases due to changes in volume and rate. Volume and rate variations have been calculated based on variations in average balances over the period and changes in average rates on interest-earning assets and interest-bearing liabilities from one period to the other. The net changes in “Interest and similar income” and “Interest and similar expense” attributable to both changes in functional currency (Sol) and changes in foreign currency also are presented in the table:

2019/2018 2020/2019 Increase/(Decrease) due to changes in: Increase/(Decrease) due to changes in: Volume Rate Net Change Volume Rate Net Change (in thousands of Soles) Interest and similar income: Interest-earning deposits in BCRP Soles 1,029 346 1,375 55,881 (50,308 ) 5,573 Foreign Currency 34,286 113,755 148,041 39,627 (246,056 ) (206,429 ) Total 35,315 114,101 149,416 95,508 (296,364 ) (200,856 ) Deposits in other banks Soles 4,001 (2,442 ) 1,559 688 (9,965 ) (9,277 ) Foreign Currency (7,197 ) 17,554 10,357 2,203 (37,970 ) (35,767 ) Total (3,196 ) 15,112 11,916 2,891 (47,935 ) (45,044 ) Investment securities Soles 106,176 (10,595) 95,581 257,498 (200,246 ) 57,252 Foreign Currency (35,266 ) (1,672 ) (36,938 ) 82,530 (79,060 ) 3,470 Total 70,910 (12,267 ) 58,643 340,028 (279,306 ) 60,722 Total loans (1) Soles 692,681 (242,607 ) 450,074 1,814,928 (2,341,887 ) (526,959 ) Foreign Currency 71,135 102,213 173,348 111,711 (221,437 ) (109,726 ) Total 763,816 (140,394 ) 623,422 1,926,639 (2,563,324 ) (636,685 ) Total dividend-earning assets Soles (1,622 ) (966 ) (2,588 ) (1,260 ) 393 (867 ) Foreign Currency (7,238 ) 10,695 3,457 22,491 (21,280 ) 1,211 Total (8,860 ) 9,729 869 21,231 (20,887 ) 344 Total interest-earning assets Soles 845,154 (299,153 ) 546,001 2,422,338 (2,896,616 ) (474,278 ) Foreign Currency 81,206 217,059 298,265 356,870 (704,111 ) (347,241 ) Total 926,360 (82,094 ) 844,266 2,779,208 (3,600,727 ) (821,519 ) Interest and similar expense: Demand deposits Soles 6,133 (3,386 ) 2,747 36,218 (15,300 ) 20,918 Foreign Currency 866 12,536 13,401 15,615 (19,936 ) (4,321 ) Total 6,999 9,150 16,149 51,833 (35,236 ) 16,597 Savings deposits Soles 14,030 (580 ) 13,450 40,636 (2,014 ) 38,622 Foreign Currency 2,863 5,366 8,229 11,071 (3,585 ) 7,486 Total 16,893 4,786 21,679 51,707 (5,599 ) 46,108 Time deposits Soles 109,437 63,300 172,737 (59,482 ) (200,314 ) (259,796 ) Foreign Currency (6,304 ) 64,068 57,763 12,982 (54,960 ) (41,978 ) Total 103,133 127,368 230,501 (46,500 ) (255,274 ) (301,774 ) Due to banks and correspondents and issued bonds Soles 45 (266 ) (221 ) 388,457 (339,709 ) 48,748 Foreign Currency (21,797 ) (10,075 ) (31,872 ) (36,621 ) (45,894 ) (82,515 ) Total (21,752 ) (10,341 ) (32,093 ) 351,836 (385,603 ) (33,767 ) Bonds Soles (3,318 ) 19,328 16,010 3,811 (29,736 ) (25,925 ) Foreign Currency 13,422 (40,266 ) (26,844 ) 28,520 (18,854 ) 9,666 Total 10,104 (20,938 ) (10,834 ) 32,331 (48,590 ) (16,259 ) Total interest-bearing liabilities Soles 152,325 49,650 201,975 449,971 (648,322 ) (198,351 ) Foreign Currency (5,391 ) 12,668 7,277 49,643 (156,984 ) (107,341 ) Total 146,934 62,318 209,252 499,614 (805,306 ) (305,692 )

(1) Figures for total loans include internal overdue loans, but do not include accrued but unpaid interest on such internal overdue loans in the year in which such loans internal overdue loans. Accrued interest is included.

7.1.2 Average interest-earning assets, net interest margin (NIM), and yield spread

The following table shows for each of the periods indicated, by currency, the levels of average interest-earning assets, net interest income, gross yield, NIM, and yield spread, all on a nominal basis:

Year ended December 31, 2018 2019 2020 (in thousands of Soles, except percentages) Average interest-earning assets (1) Soles 83,313,951 91,609,744 119,628,338 Foreign Currency 75,128,154 77,193,143 86,980,761 Total 158,442,105 168,802,887 206,609,099 Net interest income from interest-earning assets Soles 7,242,321 7,586,346 7,310,419 Foreign Currency 1,470,645 1,761,633 1,521,733 Total (2) 8,712,966 9,347,979 8,832,152 Gross yield (3) Soles 10.36 % 10.02 % 7.27 % Foreign Currency 3.79 % 4.08 % 3.22 % Weighted-average rate 7.24 % 7.30 % 5.57 % NIM (4) Soles 8.69 % 8.28 % 6.11 % Foreign Currency 1.96 % 2.28 % 1.75 % Weighted-average rate 5.50 % 5.54 % 4.27 % Yield spread (5) Soles 7.44 % 7.00 % 5.31 % Foreign Currency 1.26 % 1.52 % 0.95 % Weighted-average rate 4.54 % 4.52 % 3.47 %

(1) Monthly average balances.

(2) Net interest income includes the interest earned on total interest-earning assets and interest paid on total interest-bearing liabilities, as shown in section “– 10.1 Average Statements of Financial Position and income from interest-earning assets”.

(3) Gross yield is interest income divided by average interest-earning assets.

(4) NIM represents “Net interest income from interest-earning assets” divided by “Average interest-earning assets”, both computed on a monthly basis.

(5) Yield spread, on a nominal basis, represents the difference between gross yield on average interest-earning assets and average cost of interest-bearing liabilities.

7.1.3 Interest-earning deposits with other banks

The following table shows the short-term funds deposited with other banks. These deposits are denominated by currency as of the dates indicated. Deposits held in countries other than Peru are denominated in several currencies; however, the majority of these deposits are denominated in US Dollars. All currencies were converted to Soles using the applicable SBS exchange rate as of the dates indicated.

Year ended December 31, 2018 2019 2020 (in thousands of Soles) Sol-denominated: BCRP 173,725 668,760 6,980,064 Commercial banks 449,775 311,099 436,218 Total Sol-denominated 623,500 979,859 7,416,282 Foreign Currency-denominated: BCRP (US Dollars) 13,033,160 17,698,891 19,023,351 Commercial banks (US Dollars) 1,040,489 1,038,176 1,838,676 Commercial banks (other currencies) 35,560 92,480 298,073 Total Foreign Currency-denominated 14,109,209 18,829,547 21,160,100 Total 14,732,709 19,809,406 28,576,382

7.2 Investment portfolio

As of December 31, 2018, 2019 and 2020, the Group classified its investments in one of the categories defined by IFRS 9 based on the business model for managing the financial assets and the characteristics of the contractual cash flows of the investment.

For information about how we classify, and measure of investments refer to Note 3(f) (Significant Accounting Policies: Financial Instruments: Initial recognition and subsequent measurement) to the consolidated financial statements.

The following table shows, for 2018, 2019 and 2020, the fair value of our investments at fair value through profit or loss, investments at fair value through other comprehensive income and the amortized cost of our investments at amortized cost under IFRS 9, in each case, without accrued interest and broken down by type of security at the dates indicated.

Year ended December 31, 2018 2019 2020 (in thousands of Soles) Sol-denominated: Government treasury bonds 7,137,786 8,893,831 15,861,567 Certificates of deposit BCRP 9,829,584 8,665,272 15,364,282 Bonds 2,627,894 3,453,610 5,525,067 Equity securities 636,774 561,253 484,417 Restricted mutual funds 407,350 460,086 436,770 Other investments 319,975 649,303 779,698 Total Sol-denominated 20,959,363 22,683,355 38,451,801 Foreign currency- denominated: Bonds 6,576,285 6,073,850 8,421,303 Government treasury bonds 3,102,946 2,379,653 2,697,579 Certificates of deposit BCRP — — 1,872,875 Equity securities 113,764 101,031 307,482 Participation in RAL Funds 445,039 300,398 278,819 Restricted mutual funds — — 111 Other investments 1,360,207 1,656,249 2,616,214 Total foreign currency- denominated 11,598,241 10,511,181 16,194,383 Total securities holdings (1) 32,557,604 33,194,536 54,646,184

(1) Excludes accrued interest, which amounts to S/307.0 million, S/336.3 million and S/528.3 million as of December 31, 2018, 2019 and 2020, respectively. Also excludes provision for credit losses on investment at amortized cost.

The allowance for decline in value of marketable securities is debited from the value of each individual security.

The weighted-average yield on our Sol-denominated interest-earning investment securities was 4.0% in 2018, 3.8% in 2019 and 3.2% in 2020. The weighted-average yield on our foreign currency-denominated portfolio was 3.3% in 2018, 3.6% in 2019 and 2.7% in 2020. The total weighted-average yield of our investment securities was 3.8% in both 2018 and 2019, and 3.1% in 2020.

The weighted-average yield on our Sol-denominated dividend-earning assets was 1.8% in 2018, 1.6% in 2019 and 1.7% in 2020. The weighted-average yield on our foreign currency-denominated portfolio was 7.9% in 2018, 16.1% in 2019 and 5.7% in 2020. The total weighted-average yield of our dividend-earning assets was 3.0% in 2018, 3.8% in 2019 and 3.2% in 2020.

As of December 31, 2020, the investments at fair value through other comprehensive income and investments at amortized cost pledged as collateral amounted to S/3,764.0 million. The following table shows the maturities, as of December 31, 2020, of our investments at fair value through profit or loss, at fair value through other comprehensive income and at amortized cost designated by type of security:

Without maturity Within 1 year After 1 year but within 3 years Maturing after 3 years but within 5 years Maturing after 5 years but within 10 years After 10 years Total (in thousands of Soles) Sol-denominated: Government treasury bonds — — 139,626 2,462,150 5,551,682 7,708,109 15,861,567 Certificates of deposit BCRP — 14,638,193 726,089 — — — 15,364,282 Bonds — 1,195,922 1,007,553 474,136 1,444,881 1,402,575 5,525,067 Equity securities 484,417 — — — — — 484,417 Restricted mutual funds 436,770 — — — — — 436,770 Other investments 248,434 22,556 45,626 32,308 107,185 323,589 779,698 Total Sol-denominated 1,169,621 15,856,671 1,918,894 2,968,594 7,103,748 9,434,273 38,451,801 Foreign Currency-denominated: Bonds — 295,383 2,063,851 1,390,394 2,201,702 2,469,973 8,421,303 Government treasury bonds — 655,966 484,259 260,164 599,379 697,811 2,697,579 Certificates of deposit BCRP — 1,872,875 — — — — 1,872,875 Equity securities 307,482 — — — — — 307,482 Participation in RAL Funds 278,819 — — — — — 278,819 Restricted mutual funds 111 — — — — — 111 Other investments 894,487 611,818 430,855 269,428 194,851 214,775 2,616,214 Total Foreign Currency-denominated 1,480,899 3,436,042 2,978,965 1,919,986 2,995,932 3,382,559 16,194,383 Total securities holdings: 2,650,520 19,292,713 4,897,859 4,888,580 10,099,680 12,816,832 54,646,184 Weighted-average yield (1) 3.06 %

(1) Yields on non-taxable investment securities have not been calculated on a tax-equivalent basis because the effect of such calculation would not be material.

The maturities of our investment securities classified as fair value through other comprehensive income, as of December 31, 2020, are described in “ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT RISK MANAGEMENT”.

As of December 31, 2018, 2019 and 2020, the Group held 99,587, 87,530 and 153,760 certificates of deposit of the Central Reserve Bank of Peru, respectively, which are instruments issued at a discount through public auction, traded on the Peruvian secondary market and payable in soles.

Pursuant to the criteria described below, our management has determined that the unrealized losses of our investments at fair value through other comprehensive income, as of December 31, 2018, 2019 and 2020, amounted to S/251.2 million, S/21.7 million and S/94.4 million, respectively, were temporary, and we intend to hold each investment for a sufficient period of time to allow for a potential recovery in fair value. This holding period will last until the earlier of the investment’s recovery or maturity.

As of December 31, 2018, 2019 and 2020, for debt instruments measured at amortized cost or fair value through other comprehensive income, the management establishes a three-stage expected credit loss model, based on whether there has been a significant increase in the credit risk of the financial asset since its initial recognition. These three stages determine the amount of expected credit loss (ECL) to be recognized at each reporting date.

The ECL is an estimate that considers multiple forward-looking macro-economic scenarios that result in more timely recognition of credit losses.

Management considers a number of factors to determine whether to hold an investment, including (i) a quantitative estimate of the expected recovery period (which may extend to maturity), (ii) the severity of the impairment and (iii) its strategy with respect to the security or portfolio. If management had determined it is not desirable to hold the security for a sufficient period of time to allow for a potential recovery in the security’s amortized cost, we recorded the unrealized loss in our consolidated income statement.

7.3 Loan portfolio

7.3.1 Loans by type of loan

The following table shows our loans by type of loan, at the dates indicated:

On December 31, 2016 2017 2018 2019 2020 (in thousands of Soles) Loans (1) 78,829,537 84,592,203 94,745,078 99,960,555 120,842,725 Leasing receivables 8,302,898 7,401,018 6,322,477 5,978,421 5,775,917 Discounted notes 1,921,403 1,999,099 2,313,478 2,200,142 1,483,723 Factoring receivables 1,428,571 1,722,436 1,923,456 2,015,513 2,153,689 Advances and overdrafts in current account 151,613 113,630 255,027 162,149 52,807 Refinanced and restructured loans 844,956 915,614 1,281,487 1,186,292 1,669,395 Total performing loans 91,478,978 96,744,000 106,841,003 111,503,072 131,978,256 Internal overdue loans 2,620,411 3,020,914 3,119,621 3,304,886 4,685,569 Unearned interest (114,879 ) (66,823 ) (66,402 ) (68,689 ) (201,429 ) Accrued interest 784,391 779,684 865,168 870,410 1,197,489 Total loans (2) 94,768,901 100,477,775 110,759,390 115,609,679 137,659,885

(1) The credit card loans balance amounts to S/7,037.0 million, S/6,880.0 million, S/7,847.0 million, S/8,479.4 million and S/5,629.2 million for the years 2016, 2017, 2018, 2019 and 2020, respectively.

(2) “Total loans” refers to “loans, net of unearned income” as disclosed in our consolidated financial statement, which refers to direct loans minus unearned interest plus accrued interest. See Note 7 to the consolidated financial statements. In addition to loans outstanding, we had off-balance-sheet items that amounted to S/19,832.0 million, S/19,369.6 million, S/20,774.3 million, S/21,081.0 million, and S/20,973.8 million, as of December 31, 2016, 2017, 2018, 2019 and 2020 respectively. See Note 21 to the consolidated financial statements.

The loan portfolio categories set forth in the table above are based on internal classifications, which apply to loans generated by BCP Stand-alone, SEAH, Mibanco, BCP Bolivia, Mibanco Colombia and ASB. We categorize loans as follows:

· Loans: Basic term loans documented by promissory notes and other extensions of credit, such as mortgage loans, credit cards and other consumer loans in various forms, including trade finance loans to importers and exporters on specialized terms adapted to the needs of the international trade transaction.

· Leasing receivables: Transactions that involve our acquisition of an asset and the financial leasing of that asset to a client.

· Discounted notes: Loans discounted at the outset (the client signs a promissory note or other evidence of indebtedness for the principal amount payable at a future date). Discounted loans also include discounting of drafts, where we make a loan supported by a draft signed by one party and discounted by another party, with recourse to both parties.

· Factoring receivables: The sale of title of a company’s account receivables to a bank (or financial company). The receivables are sold without recourse, and the bank cannot recover from the seller in the event that the accounts are uncollectible. For factoring loans, the seller receives funds from the bank prior to the average maturity date based on the invoice amount of the receivable, less cash discounts and allowances for estimated claims and returns, among other items.

· Advances and overdrafts in current account: Extensions of credit to clients by way of an overdraft facility in the client’s checking account. This category also includes secured short-term advances.

· Refinanced loans: Loans that were refinanced because the client was unable to pay at maturity. A loan is categorized as a refinanced loan when the debtor is experiencing payment problems and asks for a new payment schedule that will allow the debtor to comply with the installments. This policy is based on internal models and past experience as well as IFRS.

· Internal overdue loans: Includes overdue loans and under legal collection loans. See “ITEM 4. INFORMATION ON THE COMPANY – 4.B Business Overview – (7) Selected statistical information – 7.3 Loan Portfolio – 7.3.9 Internal overdue Loan Portfolio” for further detail.

7.3.2 Loans by economic activity

The following table shows our total loan portfolio composition, net of unearned interest, based on the borrower’s principal economic activity:

At December 31, 2016 2017 2018 2019 2020 (in thousands of Soles, except percentages) Amount % Total Amount % Total Amount % Total Amount % Total Amount % Total Economic Activity Mortgage Loans 14,495,454 15.30 15,452,087 15.38 17,770,692 16.04 19,675,821 17.02 20,568,378 14.94 Commerce 15,520,410 16.38 17,689,341 17.61 19,058,456 17.21 19,344,169 16.73 26,440,537 19.21 Manufacturing 14,884,790 15.71 16,167,458 16.09 18,616,912 16.81 17,397,443 15.05 20,204,843 14.68 Consumer Loans 11,831,353 12.48 11,930,879 11.87 13,326,489 12.03 15,281,239 13.22 14,205,774 10.32 Realty Business and Leasing Services 8,139,463 8.59 7,058,946 7.03 8,327,763 7.52 9,145,997 7.91 12,648,755 9.19 Communication, Storage and Transportation 5,254,997 5.55 5,617,270 5.59 6,076,879 5.49 6,263,029 5.42 8,047,222 5.85 Community Services 4,704,773 4.96 5,231,161 5.21 5,379,498 4.86 5,868,022 5.08 7,897,438 5.74 Agriculture 2,448,592 2.58 2,714,051 2.70 3,011,384 2.72 3,549,298 3.07 4,330,378 3.15 Construction 2,323,252 2.45 2,440,563 2.43 2,592,134 2.34 2,797,020 2.42 4,066,692 2.95 Electricity, Gas and Water 4,850,589 5.12 4,452,954 4.43 4,670,536 4.22 3,314,968 2.87 3,742,212 2.72 Mining 2,497,185 2.64 3,166,968 3.15 2,784,726 2.51 3,379,787 2.92 3,702,900 2.69 Hotels and Restaurants 1,764,543 1.86 1,860,259 1.85 2,129,048 1.92 2,387,737 2.07 3,077,985 2.24 Financial Services 2,452,993 2.59 2,326,300 2.32 2,435,109 2.20 2,881,599 2.49 2,891,472 2.10 Education, Health and Other Services 943,075 1.00 1,234,408 1.23 1,441,309 1.30 1,501,122 1.30 1,855,636 1.35 Fishing 452,901 0.48 467,411 0.47 516,642 0.47 477,736 0.41 677,858 0.49 Others 1,535,019 1.60 1,954,858 1.95 1,823,047 1.64 1,542,971 1.33 2,305,745 1.66 Sub total 94,099,389 99.29 99,764,914 99.29 109,960,624 99.28 114,807,958 99.31 136,663,825 99.28 Unearned interest (114,879 ) (0.12 ) (66,823 ) (0.07 ) (66,402 ) (0.06 ) (68,689 ) (0.06 ) (201,429 ) (0.15 ) Earned interest 784,391 0.83 779,684 0.78 865,168 0.78 870,410 0.75 1,197,489 0.87 Total 94,768,901 100.00 100,477,775 100.00 110,759,390 100.00 115,609,679 100.00 137,659,885 100.00

As of December 31, 2020, 91.00% and 6.31% of the loan portfolio was concentrated in Peru and Bolivia, respectively, which represent, separately, more than 52% and 3% of total assets of the Group, respectively. As of December 31, 2019, 90.52% and 6.59% of the loan portfolio was concentrated in Peru and Bolivia, respectively.

7.3.3 Concentrations of loan portfolio and lending limits

As of December 31, 2020, loans and other off-balance-sheet exposure to our 20 largest customers (considered as economic groups) equaled S/17,087.0 million and represented 12.41% of our total loan portfolio. See “ITEM 4. INFORMATION ON THE COMPANY – 4.B Business Overview (6) Supervision and Regulation – 6.2 Subsidiaries – 6.2.1 Peru” for the definition of “economic group”. Our total loans and other off-balance-sheet exposure outstanding to each of these customers ranged from S/322.2 million to S/1,621.7 million, including 11 customers with over S/778.9 million. Total loans and other off-balance-sheet exposure outstanding to our 20 largest customers were ranked in the following risk categories as of December 31, 2020: Class A (normal)—91.59%; Class B (potential problems)—3.71%; Class C (substandard)—4.70%; Class D (doubtful)—0.00% percent; and Class E (loss)—0.00%. For further information, see “– 7.3 Loan Portfolio – 7.3.7 Classification of the Loan Portfolio”.

BCP Stand-alone’s loans to a single borrower are subject to lending limits imposed by Law No. 26702. See “ITEM 4. INFORMATION ON THE COMPANY – 4.B Business Overview – (6) Supervision and Regulation – 6.2 Subsidiaries – 6.2.1 Peru”. The lending limits depend on the nature of the borrower involved and the type of collateral received. The sum of BCP Stand-alone’s loans and deposits in either another Peruvian universal bank or Peruvian FI, plus any guarantees of third-party performance received by BCP Stand-alone from such institution, may not exceed 30% of BCP Stand-alone’s regulatory capital (as defined by the SBS). The sum of BCP Stand-alone’s loans and deposits in non-Peruvian financial institutions, plus any guarantees of third-party performance received by BCP Stand-alone from such institutions, are limited to 5%, 10% or 30% of BCP Stand-alone’s regulatory capital, depending upon the level of government supervision of the institution and whether the institution is recognized by the BCRP as an international bank of prime credit quality. The limits on lending to non-Peruvian financial institutions increase to 50% of BCP Stand-alone’s regulatory capital if the amount by which such loans exceed the 5%, 10% or 30% limits is backed by certain letters of credit.

BCP Stand-alone’s loans to Directors and employees and their relatives have a global limit of 7% of regulatory capital and an individual limit of 5% of such global limit.

Loans to non-Peruvian individuals or companies that are not financial institutions have a limit of 5% of BCP Stand-alone’s regulatory capital. However, this limit increases to 10% if the additional 5% is guaranteed by a mortgage or certain publicly-traded securities. The limit rises to 30% if the additional amount is guaranteed by certain banks or by cash deposits in BCP Stand-alone. Lending on an unsecured basis to individuals or companies residing in Peru that are not financial institutions is limited to 10% of BCP Stand-alone’s regulatory capital. This limit rises to 15% if the additional 5% is guaranteed by a mortgage, certain securities, equipment or other collateral, and to 20% if the additional amount is either backed by certain debt instruments guaranteed by other local banks or a foreign bank determined by the BCRP to be of prime credit quality, or by other highly liquid securities at market value. The single borrower lending limit for loans backed by a cash deposit at BCP Stand-alone or by debt obligations of the BCRP is 30% of BCP Stand-alone’s regulatory capital.

Considering the regulatory capital of BCP Stand-alone, which amounted to S/21,210.3 million on December 31, 2020, BCP Stand-alone’s legal lending limits varied from S/1,060.5 million to S/10,605.2 million. The Group’s consolidated lending limits, based on our regulatory capital on a consolidated basis of S/28,969.3 million on December 31, 2020, ranged from S/1,448.5 million to S/14,484.7 million. As of December 31, 2020, BCP Stand-alone was in compliance with the lending limits of Law No. 26702.

As of December 31, 2020, we complied with the applicable legal lending limits in each of the jurisdictions in which we operate. These limits are calculated quarterly based upon our consolidated equity plus reserves for impaired loans not specifically identified at quarter-end. We have also set internal lending limits, which are more restrictive than those imposed by law. A limited number of exceptions to our internal limits have been authorized by our Board of Directors based on the credit quality of the borrower, the term of the loan, and the amount and quality of collateral provided. We may, in appropriate and limited circumstances, increase or choose to exceed these internal limits as long as our credit exposure does not exceed the legal lending limits.

We may experience an adverse impact on our financial condition and results of operations if (i) customers to which we have significant credit exposure are not able to satisfy their obligations to us, and any related collateral is not sufficient to cover these obligations, or (ii) a reclassification of one or more of these loans or other off-balance sheet exposure results in an increase in provisions for loan losses.

7.3.4 Loan portfolio denomination

The following table presents our Sol and foreign currency-denominated loan portfolio at the dates indicated:

At December 31, 2016 2017 2018 2019 2020 (in thousands of Soles, except percentages) Total loan portfolio: Sol-denominated 56,007,585 59.10 % 59,552,110 59.27 % 65,479,712 59.12 % 70,838,841 61.27 % 92,956,345 67.53 % Foreign Currency-denominated 38,761,316 40.90 % 40,925,665 40.73 % 45,279,678 40.88 % 44,770,838 38.73 % 44,703,540 32.47 % Total loans (1) 94,768,901 100.00 % 100,477,775 100.00 % 110,759,390 100.00 % 115,609,679 100.00 % 137,659,885 100.00 %

(1) Includes unearned interest and accrued interest.

7.3.5 Maturity composition of the performing loan portfolio

The following table sets forth an analysis of our performing loan portfolio on December 31, 2020, by type and by time remaining to maturity. Loans are stated before deduction of the allowance for loan losses.

Maturing Amount at December 31, 2020 Within 3 months After 3 months but within 12 months After 1 year but within 3 years After 3 years but within 5 years After 5 years (in thousands of Soles, except percentages) Loans 120,842,725 18,073,621 25,896,537 38,969,324 11,589,811 26,313,432 Leasing receivables 5,775,917 380,768 2,989,324 1404,347 748,433 253,045 Discounted notes 1,483,723 1,182,904 235,122 84 169 65,444 Factoring receivables 2,153,689 2,075,669 78,020 — — — Refinanced and restructured loans 1,669,395 94,294 287,046 523,801 474,033 290,221 Advances and overdrafts in current account 52,807 52,807 — — — — Total 131,978,256 21,860,063 29,486,049 40,897,556 12,812,446 26,922,142 Internal overdue loans 4,685,569 Unearned interest (201,429 ) Accrued interest 1,197,489 Total Loans 137,659,885 % of total performing loan portfolio 100.00 % 16.56 % 22.34 % 30.99 % 9.71 % 20.40 %

7.3.6 Loan portfolio by interest rate type

The following table sets forth the breakdown of our loan portfolio as of December 31, 2020 by interest rate type, currency, and remaining maturity:

Amount atDecember 31, 2020 MaturingAfter 1 year (in thousands of Soles) Variable Rate Sol-denominated 97,969 76,298 Foreign Currency-denominated 8,152,087 6,082,932 Total 8,250,056 6,159,230 Fixed Rate Sol-denominated 92,69,555 59,309,467 Foreign Currency-denominated 35,784,214 15,163,447 Total 128,413,769 74,472,914 Sub total 136,663,825 80,632,144 Unearned interest (201,429 ) Accrued interest 1,197,489 Total loans 137,659,885

7.3.7 Classification of the loan portfolio

We classify Credicorp’s loan portfolio in accordance with internal practices. According to these criteria, all loans and other credits are classified into one of four categories based upon the purpose of the loan. These categories are:

(1) Commercial loans are generally those that finance the production and sale of goods and services, including commercial leases, as well as credit card debt on cards held by business entities.

(2) Micro-business loans, which are exclusively targeted for the production and sale of goods and services, are made to individuals or companies with no more than S/300,000 in total loans received from the financial system (excluding mortgage loans).

(3) Consumer loans are generally loans granted to individuals, including credit card transactions, overdrafts on personal demand deposit accounts, leases, and financing goods or services not related to a business activity.

(4) Residential mortgage loans are all loans to individuals for the purchase, construction, remodeling, subdivision or improvement of the individual’s home, in each case backed by a mortgage. Mortgage loans made to Directors and employees of a company are also considered residential mortgage loans. Mortgage-backed loans are considered commercial loans. The classification of the loan determines the amount to reserve should the borrower fail to make payments as they become due.

The following table sets forth our loan portfolio by class at the dates indicated:

At December 31, 2016 2017 2018 2019 2020 (in thousands of Soles) Commercial loans 54,133,871 58,455,548 63,609,988 63,097,073 79,899,769 Residential mortgage loans 14,495,454 15,452,087 17,770,692 19,675,821 20,568,378 Micro-business loans 12,951,628 13,927,557 15,253,455 16,753,825 21,989,904 Consumer loans 12,518,436 11,929,722 13,326,489 15,281,239 14,205,774 Total 94,099,389 99,764,914 109,960,624 114,807,958 136,663,825 Accrued interest 784,391 779,684 865,168 870,410 1,197,489 Unearned interest (114,879 ) (66,823 ) (66,402 ) (68,689 ) (201,429 ) Total loans 94,768,901 100,477,775 110,759,390 115,609,679 137,659,885

We employ a range of policies and practices to mitigate credit risk. Our usual practice is to take security for fund advances. We implement guidelines on the acceptability of specific classes of collateral or credit risk mitigation. The principal collateral types for loans and advances are mortgages over residential properties, liens over business assets (such as premises, inventory and accounts receivable), and liens over financial instruments (such as debt securities and equities).

Long term financing and lending to corporate entities are generally secured, while revolving individual credit facilities are generally unsecured. In order to minimize credit loss, we seek additional collateral as soon as impairment indicators become apparent.

We determine the appropriate collateral to hold as security for financial assets (other than loans) according to the nature of the instrument. Debt securities, treasury and other eligible bills are generally unsecured, except for asset-backed securities and other similar instruments, which are secured by portfolios of financial instruments.

Our management monitors the market value of collateral, requests additional collateral in accordance with the underlying agreement, and monitors the market value of the additional collateral obtained during its review of the allowance for impairment losses. Our policy is to dispose of repossessed properties in an orderly manner. We use the proceeds to reduce or repay the outstanding claim. In general, we do not use repossessed properties for our own business.

We review our loan portfolio on a continuing basis and we classify our loans based upon risk by assessing the following factors: (i) the payment history of the particular loans, (ii) the history of our dealings with the borrower, (iii) the borrower’s management, (iv) the borrower’s operating history, (v) the borrower’s repayment capability, (vi) the borrower’s availability of funds, (vii) the status of collaterals or guarantees, (viii) the borrower’s financial statements, (ix) the general risk of the sector in which the borrower operates, (x) the borrower’s risk classification made by other financial institutions and (xi) other relevant factors.

According to IFRS7, we classify our portfolio, according to its credit risk quality, in one of the three following levels:

· Loans neither past due nor impaired: this level comprises those direct loans which are zero days past due and which not in default.

· Past due but unimpaired loans: this level comprises those direct loans which are past due when debtors have failed to make a payment on the due date contractually agreed but are not in default.

· Impaired loans: this level comprises all the direct loans in default.

We continually review our loan portfolio to assess the completeness and accuracy of our loan classifications.

We assess financial guarantees and letters of credit in the same way we assess loans.

When a borrower is in a country where there is an increased risk of difficulty servicing external debt, we assess the political and economic conditions in that country, and factor additional country risk into our assessment.

When we determine that a loan is uncollectible, it is written off against the provision for loan impairment. We write off these loans after all necessary procedures have been completed and the amount of the loss is determined. Subsequent recoveries of amounts previously written off decrease the amount of the provision for loan impairment in our consolidated income statements.

The following tables show our direct loan portfolio at the dates indicated:

At December 31, 2020 (in thousands of Soles, except percentages) Level of Risk Stage 1 Stage 2 Stage 3 Total Classification Amount Amount Amount Amount % Total Neither past due nor impaired 105,185,254 19,489,880 — 124,675,134 91.2 Past due but not impaired 841,400 1,341,067 — 2,182,467 1.6 Impaired debt — — 9,806,224 9,806,224 7.2 Total (1) 106,026,654 20,830,947 9,806,224 136,663,825 100

At December 31, 2019 (in thousands of Soles, except percentages) Level of Risk Stage 1 Stage 2 Stage 3 Total Classification Amount Amount Amount Amount % Total Neither past due nor impaired 99,220,798 6,923,249 — 106,144,047 92.4 Past due but not impaired 1,745,518 1,099,098 — 2,844,616 2.5 Impaired debt — — 5,819,295 5,819,295 5.1 Total (1) 100,966,316 8,022,347 5,819,295 114,807,958 100

Level of Risk Classification At December 31, 2016 2017 2018 (in thousands of Soles, except percentages) Amount % Total Amount % Total Amount % Total Neither past due nor impaired 88,152,199 93.7 93,268,440 93.5 101,604,197 92.4 Past due but not impaired 1,735,784 1.8 1,920,828 1.9 3,118,972 2.8 Impaired debt 4,211,406 4.5 4,575,646 4.6 5,237,455 4.8 Total (1) 94,099,389 100 99,764,914 100 109,960,624 100.0

(1) Without unearned interest and accrued interest. Includes internal overdue loans (overdue loans and under legal collection loans).

7.3.8 Classification of the loan portfolio based on the borrower’s payment performance

We classify a loan as internal overdue mainly based on three aspects: (i) number of days as internal past-due, based on the due date contractually agreed; (ii) the banking subsidiary; and (iii) the type of loan. In that sense:

· BCP Stand-alone, SEAH, Mibanco and Mibanco Colombia consider loans as internal overdue: (i) after 15 days for corporate, large business and medium business loans; (ii) after 30 days for small and micro business loans and (iii) after 30 days for overdrafts. In the case of consumer, mortgage and leasing loans, the past-due installments are considered overdue after 30 to 90 days; after 90 days, the outstanding balance of the loan is considered overdue.

· ASB considers loans as internal overdue when the scheduled principal and/or interest payments are overdue for more than 90 days.

· Banco de Credito de Bolivia considers loans as internal overdue when they have 30 or more days past due.

Furthermore, with regards to refinanced loans, Credicorp’s policy categorizes a loan as “refinanced” when a debtor is experiencing payment problems and asks for a new payment schedule that will allow the debtor to comply with the installments. This policy is based on internal models and experience as well as IFRS.

Finally, Non-performing loans are composed of internal overdue, refinanced and restructured loans. For further detail, see Note 34.1(c) to the consolidated financial statements.

Over the past five years, we have recognized interest income on these loans of S/125.6 million in 2016, S/162.4 million in 2017, S/657.9 million in 2018, S/548.3 million in 2019 and S/491.4 million in 2020. The following table sets forth the repayment status of our loan portfolio as of the dates indicated:

At December 31, 2016 2017 2018 2019 2020 (in thousands of Soles, except percentages) Current 91,478,978 96,744,000 106,841,003 111,503,072 131,978,256 Internal overdue loans: Overdue up to 90 days 539,947 639,329 635,893 692,161 851,755 Overdue 90 days or more 2,080,464 2,381,585 2,483,728 2,612,725 3,833,814 Subtotal internal overdue 2,620,411 3,020,914 3,119,621 3,304,886 4,685,569 Total 94,099,389 99,764,914 109,960,624 114,807,958 136,663,825 Accrued interest 784,391 779,684 865,168 870,410 1,197,489 Unearned interest (114,879 ) (66,823 ) (66,402 ) (68,689 ) (201,429 ) Total direct loans 94,768,901 100,477,775 110,759,390 115,609,679 137,659,885 Internal overdue loans amount as % of total loans (1) 2.78 % 3.03 % 2.84 % 2.88 % 3.43 %

(1) Without unearned interest and accrued interest. Includes overdue loans (overdue loans and under legal collection loans).

With respect to consumer, mortgage and leasing loans, BCP Stand-alone recognizes payments as overdue installments if the loan is less than 90 days overdue. The entire amount of the loans is considered as internal overdue after 90 days. For IFRS 7 disclosure requirements on past-due loans, see Note 34.1 to the consolidated financial statements.

7.3.9 Internal overdue loan portfolio

The following table analyzes our internal overdue loans portfolio by the type of loan at the dates indicated:

At December 31, 2016 2017 2018 2019 2020 (in thousands of Soles) Internal overdue loan amounts: Loans 2,231,198 2,563,755 2,671,664 2,820,909 3,984,422 Discounted notes 12,330 13,075 20,628 46,544 53,006 Advances and overdrafts in demand deposits 21,492 26,114 38,964 36,068 38,758 Leasing transactions 71,445 60,458 65,562 66,905 176,604 Refinanced and restructured loans 283,946 357,512 322,803 334,460 432,779 Total internal overdue loans 2,620,411 3,020,914 3,119,621 3,304,886 4,685,569 Less: Allowance for loan losses (1) (4,416,692 (4,943,008 ) (5,314,531 ) (5,507,759 ) (10,435,623 ) Total internal overdue loans portfolio net of allowance (1,796,281 ) (1,922,094 ) (2,194,910 ) (2,202,873 ) (5,750,054 )

(1

(1) Includes allowance for direct and indirect credits (see “ITEM 4. INFORMATION ON THE COMPANY – 4.B Business Overview – (7) Selected Statistical Information – 7.3 Loan portfolio – 7.3.11 Allowance for loan losses”).

7.3.10 Total Non-performing loans

Non-performing loans include internal overdue loans (S/4,685.6 million as of December 31, 2020), as well as current refinanced and restructured loans (S/1,669.4 million as of December 31, 2020). Therefore, Non-performing loans amounted to S/6,355.0 million. As of December 31, 2020, our delinquency ratio (internal overdue-loan ratio) was 3.40% and our Non-performing loan ratio (including internal overdue and refinanced and restructured loans) was 4.62%. As of December 31, 2019, our delinquency ratio was 2.86% and our Non-performing loan ratio was 3.88%. See “ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS – 5.A Operating Results – (5) Financial Position – 5.1 Total Assets – Portfolio quality”.

7.3.11 Allowance for loan losses

The following tables show the changes in our allowance for loan losses and movements at the dates indicated. The first table corresponds to years 2020, 2019 and 2018 under IFRS 9 methodology, and the second table contains historical data under IAS 39:

Year ended December 31, 2018 Year ended December 31, 2019 Year ended December 31, 2020 (in thousands of Soles) Allowance for loan losses at the beginning of the year 4,943,008 5,314,531 5,507,759 Effect of adopting IFRS9 320,952 — — Allowance for loan losses at the beginning of the year (restated) 5,263,960 5,314,531 5,507,759 Credit loss of the period: New loans and liquidation, net 307,452 331,672 (128,653 ) Changes in PD, LGDs, EADs 1,507,446 1,768,419 6,208,942 Write-offs (1,582,196 ) (1,822,919 ) (1,269,118 ) Sale of loan portfolio (158,551 ) (111,312 ) (23,490 ) Exchange difference and others (1) (23,580 ) (90,735 ) 140,183 Acquisition of business — 118,103 — Total allowance for loan losses at the end of the year 5,314,531 5,507,759 10,435,623

Year ended December 31, 2016 2017 (in thousands of Soles) Allowance for loan losses at the beginning of the year 4,032,219 4,416,692 Provision for loan losses 2,063,209 2,057,478 Write-off (1,612,138 ) (1,426,201 ) Exchange difference and other (1) (66,598 ) (104,961 ) Total allowance for loan losses at the end of the year 4,416,692 4,943,008

(1) Corresponds to the effect of fluctuation in the exchange rate for foreign currency loans. Considering that the functional currency is the Peruvian Sol, and that the main impact of foreign currency is the US Dollar; the effects presented in this account are primarily driven by changes in the Sol/US Dollar exchange rate.

For a discussion of the risk elements in the loan portfolio and the factors considered in determining the amount of specific reserves, see “ITEM 4. INFORMATION ON THE COMPANY – 4.B Business Overview – 7.3.7 Classification of the Loan Portfolio” and “– 7.3.8 Classification of the loan portfolio based on the borrower’s payment performance”. The balance of the allowance for loan losses for the years 2018, 2019 and 2020 are included in Note 7(c) to the consolidated financial statements.

As of December 31, 2020, the allowance for loan losses was S/10,435.6 million which meant an increase of 89.5% compared to S/5,507.8 million in 2019. The allowance for loan losses, as of December 31, 2020, included S/9,898.8 million for direct loans losses and S/536.8 million for indirect loan losses or off-balance-sheet exposure losses as compared to S/5,124.0 million and S/383.8 million, respectively, in 2019. The allowance for indirect loans is included in the “Other liabilities” caption of our consolidated statement of financial position. See Notes 7(c) and 13(a) to the consolidated financial statements. The charge-off process is performed with prior approval of our board of Directors and the SBS. Potential charge-offs are considered by the board of Directors on a case-by-case basis.

Provision for credit losses increased to S/6,080.3 million in 2020 from S/2,100.1 million in 2019. This change reflects the greater risk and deterioration of Credicorp’s loan portfolio due to the impact of the COVID-19 pandemic on the financial condition of the Group’s clients. This impact mainly comes from adjustments made to the risk models that take into consideration current transactional information of our clients and their responses to questionnaires know the impact of COVID-19 on their operations.

7.3.12 Allocation of allowance for loan losses

The following table sets forth the amounts of our allowance for loan losses attributable to commercial, micro-business, consumer, and residential mortgage loans at the dates indicated (see also Note 7(c) to the consolidated financial statements):

At December 31, 2016 2017 2018 2019 2020 (in thousands of Soles) Commercial loans 1,235,970 1,680,126 1,819,129 1,870,047 3,616,932 Micro-business 1,353,168 1,476,578 1,585,404 1,636,487 3,144,154 Consumer loans 1,634,169 1,558,017 1,385,829 1,464,745 2,765,113 Residential mortgage loans 193,385 228,287 524,169 536,480 909,424 Total allowance 4,416,692 4,943,008 5,314,531 5,507,759 10,435,623

Credicorp’s total allowance for loan losses increased by 89.48% from December 31, 2019 to December 31, 2020 – mainly in the first two quarters of 2020. This increase is due primarily to the projection of the effect related to COVID-19, reflected in the adjustments and adaptations to the risk models. This increase had a reduction in the last two quarters of 2020 due to the end of the confinement, the progressive economic reactivation observed in the early indicators and better macroeconomic expectations for the following years. These expectations may be modified by future waves of infections or by strict containment measures. The effects of the pandemic on the loan portfolio have also caused significant transitions to phases with greater deterioration.

The main methodological adjustments in the internal credit risk models made during 2020 are:

· Internal models were reviewed, and upgrades were carried out using representative and updated COVID-19 impact customer surveys, using updated information on customer transaction after confinement. This made it possible to characterize the different types of clients in order to assign them the corresponding level of risk in a granular manner and in line with the first observed indicators of early payment of the transactions and portfolio maturities (real data observed that complements the assumptions used).

· LGD (Loss Given Default) estimates were adjusted with updated information on assumptions, recovery costs and payments from clients in arrears, in order to collect the impact of COVID-19 on recoveries, which have been affected by delays in lawsuits, deterioration in the value of guarantees and increased penalties.

Further, the macroeconomic projections were updated, collecting a better expectation for 2021, although it is noted that these projections are not expected to recover the absolute levels of the pre-COVID-19 context yet.

7.4 Deposits

The following table presents the components of our deposit base at the dates indicated:

At December 31, 2018 2019 2020 (in thousands of Soles) Demand deposits: Sol-denominated 13,762,008 14,882,670 27,879,297 Foreign currency-denominated 18,753,155 19,330,518 26,651,058 Total 32,515,163 34,213,188 54,530,355 Savings deposits: Sol-denominated 17,343,268 19,599,971 29,944,969 Foreign currency-denominated 15,250,711 15,579,799 20,124,160 Total 32,593,979 35,179,770 50,069,129 Time deposits: Sol-denominated 14,813,343 15,960,194 12,214,773 Foreign currency-denominated 15,613,401 16,893,382 15,906,321 Total 30,426,744 32,853,576 28,121,094 Severance indemnity deposits Sol-denominated 5,172,119 5,707,854 5,512,943 Foreign currency-denominated 2,399,256 2,189,345 2,223,804 Total 7,571,375 7,897,199 7,736,747 Bank’s negotiable certificates Sol-denominated 297,358 401,178 512,509 Foreign currency-denominated 579,505 779,283 690,487 Total 876,863 1,180,461 1,202,996 Total deposits: Sol-denominated 51,388,096 56,551,867 76,064,491 Foreign currency-denominated 52,596,028 54,772,327 65,595,830 Total deposits and obligations without interest payable 103,984,124 111,324,194 141,660,321

Our deposits increased 27.3% in 2020 compared to 2019, which is attributable to an increase in the level of savings and demand deposits denominated in soles and in foreign currency, mainly at BCP Stand-alone and Mibanco. The increase in savings and demand deposits was related to non-interest bearing deposits as a consequence of the measures taken by the government, which gave retail banking a platform to capture deposits and allowed clients in the wholesale banking, business and SME clients to benefit from loans from Reactiva Peru and FAE-Mype, as discussed in section “5.A Operating Results – (6) Lines of Business – 6.1 Universal Banking – 6.1.3 Funding Structure”. In addition, Mibanco had an increase their retail deposits as is explained in Section “5.A Operating Results – (6) Lines of Business – 6.2 Microfinance – 6.2.3 Funding Structure”.

The following table presents the non-interest-bearing demand deposits and the interest-bearing demand deposits at the dates indicated:

At December 31, 2018 2019 2020 (in thousands of Soles) Sol-denominated: Non-interest-bearing demand deposits 13,711,144 14,861,045 24,454,469 Interest-bearing demand deposits 50,864 21,625 3,424,828 Total 13,762,008 14,882,670 27,879,297 Foreign currency-denominated: Non-interest-bearing demand deposits 18,538,462 18,969,121 23,168,650 Interest-bearing demand deposits 214,693 361,397 3,482,408 Total 18,753,155 19,330,518 26,651,058

The following table sets forth information regarding the maturity of our time deposits in denominations of S/362,100 (US$100,000) or more on December 31, 2020:

At December 31, 2020 (in thousands of Soles) Time deposits: Maturing within 30 days 7,207,234 Maturing after 30 but within 60 days 1,675,389 Maturing after 60 but within 90 days 725,377 Maturing after 90 but within 180 days 745,890 Maturing after 180 but within 360 days 367,559 Maturing after 360 days 805,708 Total time deposits 11,527,157

7.5 Return on equity and assets

Year ended December 31, 2018 2019 2020 Return on average assets (1) 2.29 % 2.34 % 0.16 % Return on average equity (2) 17.47 % 17.03 % 1.36 % Dividend payout ratio (3) 39.90 % 55.91 % 0 % Equity to assets ratio (4) 13.30 % 13.76 % 11.05 % Shareholders’ equity to assets ratio (5) 13.04 % 14.01 % 11.28 %

(1) Net profit attributable to our equity holders as a percentage of average total assets, computed as the average of period beginning and period ending balances.

(2) Net profit attributable to our equity holders as a percentage of average equity attributable to our equity holders, computed as the average of monthly balances.

(3) Dividends declared per share divided by net profit attributable to our equity holders per share.

(4) Average equity attributable to our equity divided by average total assets, both averages computed as the average of month-ending balances.

(5) Average equity attributable to our equity shareholders divided by average total assets, both averages computed as the average of month-ending balances.

7.6 Short-term borrowing

Our short-term borrowing, other than deposits, equaled, S/5,382.1 million, S/5,772.7 million and S/2,093.4 million, as of December 31, 2018, 2019 and 2020, respectively. Our average balances of borrowed amounts increased in 2019 due to an increase in foreign trade operations and promotional credit lines. As of December 31, 2018, 2019 and 2020, the short-term borrowing also included repurchase transactions by the BCRP and interbank debts, which are presented separately in this Annual Report. The following table sets forth certain information regarding our short-term borrowing at the dates and for the periods indicated.

At December 31, 2018 2019 2020 (in thousands of Soles, except percentages) Year-end balance 5,382,124 5,772,653 2,093.377 Average balance 4,147,240 5,020,969 4,017,597 Maximum month-end balance 6,337,113 6,890,362 6,733,650 Weighted-average nominal year-end interest rate 3.16 % 2.58 % 1.97 % Weighted-average nominal interest rate 2.88 % 3.25 % 1.96 %

4. C Organizational structure

(1) Credicorp

The following tables show our organizational structure and the organization of our main subsidiaries as of December 31, 2020, indicating in each case its country of incorporation:

(1) Grupo Credito holds 33.61%.

(2) Credicorp Capital Holding Peru S.A. holds 85.04% of Credicorp Capital Peru S.A.A., and Credicorp Capital Ltd holds an additional 12.795% of Credicorp Capital Peru S.A.A.

(3) Pacifico Compañia de Seguros y Reaseguros S.A. controls the entity Inversiones Credicorp Bolivia S.A. holds 51.95%.

(4) Pacifico Compañia de Seguros y Reaseguros S.A. controls the entity Inversiones Credicorp Bolivia S.A. holds 51.87%.

(i) BCP

(1) Grupo Credito holds 4.99%.

(2) Grupo Credito holds 49.56%. In addition, this entity is in the process of liquidation.

BCP’s principal subsidiaries as of December 31, 2020 are as follows:

(i) Mibanco, Banco de la Microempresa S.A., is a limited liability company that was chartered in Peru in March 1998. As of the end of December 2018, BCP Stand-alone owns 94.931% of this entity’s shares, and Grupo Credito owns 4.99%.

(ii) Solucion Empresa Administradora Hipotecaria S.A. (SEAH) is a company that specializes in offering mortgage loans. It was initially chartered as a financial company in Peru in 1979. After several modifications to the company’s structure, it became a mortgage loan company in 2010. BCP owns 100 percent of its shares. On September 1, 2017, SEAH absorbed Edyficar Peru, of which BCP had held 99.95 percent, before the merger.

(iii) BCP Emisiones Latam 1 S.A. is a special purpose company domiciled in Santiago, Chile. It was chartered in January 2009 and its sole purpose is to invest in all types of real estate securities and debt securities, which are financed through bond issuances in Chile. At the end of November 2015, this company absorbed Inversiones BCP SA. The company is currently in liquidation process.

4. D Property, plants and equipment

As of December 31, 2020, we owned 326 properties (307 in Peru, 8 in Bolivia, 9 in Colombia and 2 in Chile) and leased 859 properties (625 in Peru, 152 in Colombia, 72 in Bolivia, 5 in Chile, 1 in Panama and 4 in Miami), all of which we use for the operation of our branch network and our business. We own the buildings where our headquarters are located in Lima, Peru and La Paz, Bolivia. As of December 2020, we had 773 bank branches, of which 390 were BCP Stand-alone branches, 54 were BCP Bolivia branches and 322 were Mibanco branches in Peru.

There are no significant encumbrances on any of our properties and addition, both, owned and leased properties, have multi-risk property insurance. The respective policy is renewed annually and covers our properties against the risks of fire, natural disasters, and socio-political risks among others.

During the year 2020, the principal disbursement was related mainly to the remodeling of its headquarters in La Molina and integral remodeling of the Café Dasso office. For more details on the balance of properties, plants and equipment in progress, see note 10 to the consolidated financial statements.

For further detail about the possible impact of IFRS 16, please refer to Note 3 Significant accounting policies - ad) International Financial Reporting Standards issued but not yet effective – (i) IFRS 16, “Leases”.