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INVESTMENTS

12 Months Ended

Dec. 31, 2018

Disclosure of Investments [Abstract]

Disclosure of investments other than investments accounted for using equity method [text block]

6	INVESTMENTS

Investment at fair value through profit or loss consist of the following:

	2018		2017
	S/(000)		S/(000)

Government treasury bonds		1,318,311		1,174,613
Participation in RAL Fund (i)		445,039		–
Restricted mutual funds (ii)		407,350		–
Investment funds		323,455		–
Participation in mutual funds		310,265		52,380
Multilateral organization bonds		223,777		260,342
Corporate and leasing bonds		160,006		205,819
Listed shares		101,068		122,398
Subordinated bonds		94,413		27,789
Hedge funds		44,335		–
Negotiable certificates of deposit		29,496		74,086
Certificates of deposit BCRP		–		2,102,331
Others		50,061		1,053
Balance before accrued interest		3,507,576		4,020,811
Accrued interest		4,869		3,926
Total		3,512,445		4,024,737

The balances as of December 31, 2018 have been prepared in accordance with IFRS 9; and are not comparable to the balances as of December 31, 2017, which were prepared in accordance with IAS 39, see Note 3(f).

(i)

At December 31, 2018, these funds total approximately S/

174.3

million in bolivianos and S/

270.7

million in U.S. dollars and comprise the investments made by the Group in the Central Bank of Bolivia as collateral for deposits received from the public. These funds have restrictions for their use and are required from all banks in Bolivia.

(ii)

The restricted mutual funds comprise the participation quotas in the private pension funds managed by the Group, and are maintained in compliance with the legal regulations in Peru. Their availability is restricted and the yield received is the same as that received by the private pension funds managed.

Investments at fair value through other comprehensive income consist of the following:

	2018
			Unrealized gross amount
	Amortized cost		Profits		Losses			Estimated fair value
	S/(000)		S/(000)		S/(000)			S/(000)

Debts instruments:

Corporate, leasing and subordinated bonds (i)		8,478,834		212,549		(185,603	)		8,505,780
Certificates of deposit BCRP (ii)		9,833,776		189		(4,381	)		9,829,584
Government treasury bonds (iii)		4,977,422		260,939		(47,613	)		5,190,748
Securitization instruments (iv)		505,976		22,492		(9,980	)		518,488
Negotiable certificates of deposit		280,828		2,981		(250	)		283,559
Others		3,384		–		–			3,384
		24,080,220		499,150		(247,827	)		24,331,543
Equity instruments designated at the initial recognition

Shares issued by:
Alicorp S.A.A.		12,198		218,994		–			231,192
Inversiones Centenario		112,647		236,063		–			348,710
Bolsa de Valores de Lima		19,698		9,363		–			29,061
Bolsa de Comercio de Santiago		8,808		5,360		–			14,168
Compañía Universal Textil S.A.		9,597		248		(3,397	)		6,448
Bolsa de Valores de Colombia		4,585		–		(211	)		4,374
Others		12,099		3,418		–			15,517
		179,632		473,446		(3,608	)		649,470

Balance before accrued interest		24,259,852		972,596		(251,435	)		24,981,013
Accrued interest									214,822
Total									25,195,835

The Management of Credicorp has determined that the unrealized losses on investment at fair value through other comprehensive income at December 31, 2018 are of a temporary nature, considering factors such as intended strategy in relation to the identified security or portfolio, its underlying collateral and credit rating of the issuers. During 2018, as a result of the impairment of its investments at fair value through other comprehensive income, the Group recorded an expected loss of S/2.4 million, which is shown in “Net gain on securities” in the consolidated statement of income. Also, Management has decided and has the ability to hold each investment for a period of time sufficient to allow for an anticipated recovery in fair value, until the earlier of its anticipated recovery or maturity.

The movement of the “Reserve for investments at fair value through other comprehensive income, net of deferred income tax and non-controlling interest, is shown in Note 17(c).

During 2018, the Group has not reclassified instruments from the portfolio of investments at fair value through other comprehensive income to investments at amortized cost.

At December 31, 2018, the Group maintains IRS, which have been designated as fair value hedges of certain bonds at a fixed rate in US dollars, issued by Government, corporate and international financial entities, for a nominal amount of S/923.9 million, see Note 12(b); through these IRS these bonds were economically converted to a variable rate.

Likewise, at the end of the same year, the Group entered into repurchase agreement transactions for corporate bonds, multilateral organization bonds and foreign government bonds classified as investments at fair value through other comprehensive income, for an estimated fair value of S/

2,138.9

million, of which the related liability is presented in “Payables from repurchase agreements and securities lending” of the consolidated statement of financial position, see Note 5(c).

The maturities and annual market rates of investments at fair value through other comprehensive income are as follows:

	Maturities	Annual effective interest rate
		S/				US$				Other currencies
		Min		Max		Min		Max		Min		Max
		%		%		%		%		%		%
Corporate, leasing and subordinated bonds	Jan-2019 / Feb-2065		1.49		11.90		1.16		11.39		0.94		8.39
Certificates of deposit BCRP	Jan-2019 / Jun-2020		2.59		3.04		–		–		–		–
Government treasury bonds	Jan-2019 / Feb-2055		2.37		6.50		1.22		7.07		0.60		0.60
Securitization instruments	Jun-2019 / Sep-2045		3.40		14.81		4.56		6.85		1.68		6.00
Negotiable certificates of deposits	Jan-2019 / Dec-2026		4.54		4.54		–		–		1.40		4.98

(i)

At December 31, 2018 the most significant individual unrealized loss amounted to approximately S/8.2 million.

Likewise, the Group maintains CCS, which were designated as cash flow hedges of certain corporate bonds for a nominal amount of S/136.1million, see Note 12(b); by means of said CCS, the bonds were economically converted to soles at a fixed rate.

In December 2018, according to the foreign exchange exposure strategy, the Group discontinued the cash flow hedge of a certain corporate bond through the liquidation of the CCS whose notional amount at that date amounted to US$13.0 million, equivalent to S/43.8 million.

(ii)

The Group maintains 99,587 BCRP certificates of deposit of the Central Reserve Bank of Peru, which are instruments issued at a discount through public auction, traded on the Peruvian secondary market and payable in soles.

(iii)

At December 31, 2018, the balance includes the following Government Treasury Bonds:

	2018
	S/(000)
Peruvian sovereign bonds		4,706,121
Colombian sovereign bonds		137,936
Chilean sovereign bonds		119,517
Bolivian sovereign bonds		90,370
Others		136,804
Total		5,190,748

The Group maintains CCS, which were designated as cash flow hedges of certain government treasury bonds for a nominal amount of S/77.8 million, see Note 12(b); by means of said CCS, the bonds were economically converted to soles at a fixed rate.

(iv)

At December 31, 2018, the balance of securitization instruments includes the following:

	2018
	S/(000)
Inmuebles Panamericana		153,953
Abengoa Transmisión del Norte		80,948
Industrias de Aceite S.A.		48,231
Homecenters Peruanos S.A.		32,520
Others		202,836
Total		518,488

The bonds have semiannual payments until 2045.The pool of underlying assets consists mainly of accounts receivable from income, revenues for services and from maintenance and marketing contributions (Inmuebles Panamericana), accounts receivable for electrical transmission services from the Carhuamayo - Cajamarca line (Abengoa Transmisión Norte), accounts receivable for the transformation and commercialization of agribusiness products (Industrias de Aceite S.A.) and accounts receivable for commercialization of construction products (Homecenters Peruanos S.A.).

Investments available-for-sale consist of the following:

	2017
			Unrealized gross amount
	Amortized cost		Profits		Losses			Estimated fair value
	S/(000)		S/(000)		S/(000)			S/(000)

Corporate, leasing and subordinated bonds (i)		7,919,202		460,826		(22,838	)		8,357,190
Certificates of deposit BCRP (ii)		7,906,747		16,960		–			7,923,707
Government treasury bonds (iii)		4,308,507		336,561		(4,520	)		4,640,548
Participation in RAL Fund (iv)		527,405		–		–			527,405
Securitization instruments (v)		478,921		35,747		(6,565	)		508,103
Restricted mutual funds (vi)		186,407		230,289		–			416,696
Participation in mutual funds		398,308		11,458		(200	)		409,566
Negotiable certificates of deposit		285,493		5,036		(346	)		290,183
Multilateral organization bonds		165,830		13,897		(224	)		179,503
Certificates of Central Bank of Bolivia (vii)		94,692		33		–			94,725
Investment funds		34,703		25,013		(95	)		59,621
Collateralized mortgage obligation		17,116		7,048		(6	)		24,158
Commercial paper		5,185		–		–			5,185
Hedge funds		48		1,014		–			1,062
U.S. Federal agency bonds		799		80		–			879
		22,329,363		1,143,962		(34,794	)		23,438,531

Shares -
Listed (viii)		254,931		496,737		(1,937	)		749,731
Non-listed		14,770		1,093		–			15,863
		269,701		497,830		(1,937	)		765,594
Balance before accrued interest		22,599,064		1,641,792		(36,731	)		24,204,125
Accrued interest									219,766
Total									24,423,891

The Management of Credicorp has determined that the unrealized losses of available-for-sale investments at December 31, 2017 were of a temporary nature, considering factors such as intended strategy in relation to the identified security or portfolio, its underlying collateral and credit rating of the issuers. During 2017, as a result of the impairment assessment of its available-for-sale investments, the Group recorded an impairment loss of S/0.8 million, which is shown in “Net gain on securities” in the consolidated statement of income.

The movement of available-for-sale investment reserves, net of deferred income tax and non-controlling interest, is shown in Note 17(c).

During 2017, the Group had not reclassified instruments from the portfolio of available-for-sale investments to investments held to maturity. During the year 2017, S/2.1 million was amortized from unrealized results which were recorded in equity, and were transferred to caption “Net gain on securities” of the consolidated statement of income. At December 31, 2017, an unrealized gain amounting to S/0.02 million was held in equity, corresponding to the investments that were reclassified.

At December 31, 2017, the Group maintains IRS, which were designated as fair value hedges of certain bonds at a fixed rate in US dollars, issued by Government, corporate and international financial entities, for a nominal amount of S/659.5 million, see Note 12(b); through these IRS these bonds were economically converted to a variable rate.

Similarly, at the end of the same year, the Group entered into repurchase agreement transactions for corporate bonds, multilateral organization bonds and foreign government bonds classified as investments at fair value through other comprehensive for an estimated fair value of S/

2,691.8

million, of which the related liability is presented in “Payables from repurchase agreements and securities lending” of the consolidated statement of financial position, see Note 5(c).

The maturities and annual market rates of investments at fair value through other comprehensive income during 2017 were as follows:

	Maturities	Annual effective interest rate
		S/				US$				Other currencies
		Min		Max		Min		Max		Min		Max
		%		%		%		%		%		%
Corporate, leasing and subordinated bonds	Jan-2018 / Feb-2065		1.37		9.20		0.24		7.55		0.17		7.83
Certificates of deposit BCRP	Jan-2018 / Apr-2019		3.08		3.17		–		–		–		–
Government treasury bonds	Feb-2018 / Feb-2055		1.32		6.25		1.27		6.25		–		–
Securitization instruments	Jan-2018 / Sep-2045		4.09		11.75		3.06		6.16		1.68		6.00
Certificates deposits of Central Bank of Bolivia	Jan-2018 / Sep-2018		–		–		–		–		0.50		1.15
Negotiable certificates of deposits	Jan-2018 / Mar-2033		0.49		4.33		–		–		1.18		4.90
Multilateral organization bonds	Mar-2018 / Feb-2044		2.13		7.04		1.83		2.44		–		–
Collateralized mortgage obligations	Aug-2020 / Dec-2036		–		–		2.23		9.40		–		–
U.S. Federal agency bonds	Aug-2035		–		–		1.66		1.66		–		–

(i)

At December 31, 2017 the most significant individual unrealized loss amounted to approximately S/2.2 million.

Likewise, the Group maintains CCS, which were designated as cash flow hedges of certain corporate bonds for a nominal amount of S/228.8 million, see Note 12(b); by means of said CCS, the bonds were economically converted to soles at a fixed rate.

(ii)

The Group maintains 79,901 certificates of deposits of the Central Reserve Bank of Peru, which are instruments issued at a discount through public auction, traded on the Peruvian secondary market and payable in soles.

(iii)

At December 31, 2017, the balance includes the following Government Treasury Bonds:

	2017
	S/(000)
Peruvian sovereign bonds		4,364,172
Bolivian sovereign bonds		106,461
Colombian sovereign bonds		58,381
U.S. Federal agency bonds		55,875
Others		55,659
Total		4,640,548

At December 31, 2017, the Group maintains CCS, which were designated as cash flow hedges of certain government treasury bonds for a nominal amount of S/55.1 million, see Note 12(b); by means of said CCS, the bonds were economically converted to soles at a fixed rate.

(iv)

Comprise the investments made by the Group in the Central Bank of Bolivia as collateral for deposits received from the public. These funds have restrictions for their use and are required from all banks in Bolivia.

(v)

At December 31, 2017, the balance of securitization instruments includes the following:

	2017
	S/(000)
Inmuebles Panamericana		156,186
Abengoa Transmisión del Norte		82,492
Concesionaria La Chira S.A.		30,182
Hunt Oil Company		23,244
Others		215,999
Total		508,103

The bonds have semiannual payments until 2045.The pool of underlying assets mainly consists of accounts receivable from income, revenues for services and from maintenance and marketing contributions (Inmuebles Panamericana), accounts receivable for electrical transmission services from the Carhuamayo - Cajamarca line (Abengoa Transmisión Norte), accounts receivable for collection via banking channels of water and sanitation service bills (Concesionaria La Chira) and accounts receivable for the sale of hydrocarbons in Peru (Hunt Oil Company).

(vi)

(vii)

At December 31, 2017, certificates of deposit issued by the Central Bank of Bolivia are mainly denominated in Bolivianos.

(viii)

Between the years 2016 and 2017, the Group sold through Credicorp Capital Corredores de Bolsa, 100.0 percent of the shares that it held of Banco de Crédito e Inversiones de Chile (hereinafter “BCI Chile”) and 100.0 percent of the shares that it held of Enel Distribución Perú S.A.A. (formerly Edelnor S.A.A.) We present below the sales made:

On March 7, 2016, Credicorp signed a Memorandum of Understanding (MOU) with BCI Chile, in which, as a minority shareholder with a 4.06 percent participation in BCI Chile, it stated its intention to sell up to 50.0 percent of said shares.

Credicorp undertook not to sell the remaining 50.0 percent of its shares in BCI Chile during the period of 180 calendar days subsequent to the expiry date of the preferred option of BCI Chile which forms part of the applicable regulations in Chile. The preferred subscription period began on March 21, 2016.

Accordingly, on April 22, 2016, Credicorp sold 50.0 percent of the shares which it held in BCI Chile (2,248,593 shares), at a price of CLP 27,500 (US$41.6) per share, generating cash for approximately US$94.0 million, equivalent to S/302 million. Said sale generated a profit, net of commissions, of approximately S/124.7 million.

On September 15, 2017, Credicorp sold the remaining 50.0 percent of shares which it held in BCI Chile (2,286,328 shares), at a price of CLP 39,000 (US$62.3) per share, generating cash for approximately US$142.4 million, equivalent to S/462.8 million. Said sale generated a profit, net of commissions, of approximately S/281.1 million.

On October 4, 2017, Credicorp sold in the Lima Stock Exchange all of its position in the shares of Enel Distribución Perú S.A.A. (43,554,445 shares), at a price of S/5.5 per share, generating cash for approximately S/239.5 million. The operation generated a profit, net of commissions, of approximately S/163.7 million.

At December 31, 2017, the Group recorded the gain on the sale of these investments in the caption "Net gain on securities" in the consolidated statement of income.

At December 31, 2017 the unrealized gain on listed shares arises mainly from investment in Alicorp S.A.A. and Inversiones Centenario S.A.A. and totaled S/234.1 million, and S/226.5 million, respectively.

Amortized cost investments consist of the following:

	2018
	Carrying		Fair
	amount		value
		S/(000)		S/(000)

Peruvian sovereign bonds		3,166,639		3,168,202
Foreign government bonds		347,749		347,427
Peruvian treasury bonds		215,751		215,769
Corporate bonds		220,203		217,993
Certificates of payment on work progress (CRPAO) (*)		117,139		117,175
		4,067,481		4,066,566
Accrued interest		87,357		87,357
Total investments at amortized cost		4,154,838		4,153,923

At December 31, 2018, the expected credit loss of investments at amortized cost amounts to S/1.5 million.

At December 31, 2018, said bonds have maturities between January 2019 and February 2042, accruing interest at an annual effective interest rate between 3.15 percent and 6.24 percent on bonds denominated in soles and between 1.22 percent and 5.56 percent on bonds in U.S. dollar.

Likewise, Credicorp Management has determined that the difference between amortized cost and the fair value of these investments is temporary in nature and Credicorp has the intention and ability to hold each of these investments until its maturity.

At December 31, 2018, the Group has repurchase agreement transactions for investments at amortized cost for an estimated fair value of S/2,953.3 million, the related liability for which is presented in the caption “Payables from repurchase agreements and securities lending” of the consolidated statement of financial position, see Note 5(c).

(*)

At December 31, there are 185 certificates of Annual Recognition of Payment for Work Progress (CRPAO from Spanish acronym), respectively, issued by the Peruvian Government to finance projects and concessions. Said issuance is a mechanism established in the concession agreement signed between the State and the concessionaire, which allows the latter to obtain financing to continue with the work undertaken. Said investment matures between January 2019 and April 2026, accruing interest at an annual effective rate between 4.72 percent and 6.02 percent.

Held-to-maturity investments consist of the following:

	2017
	Carrying		Fair
	amount		value
		S/(000)		S/(000)

Peruvian sovereign bonds		3,378,046		3,700,535
Foreign government bonds		352,205		355,438
Peruvian treasury bonds		217,187		221,799
Corporate bonds		246,284		254,131
Certificates of payment on work progress (CRPAO) (*)		129,443		134,238
		4,323,165		4,666,141
Accrued interest		90,208		90,208
Total investments held to maturity		4,413,373		4,756,349

At December 31, 2017, said bonds have maturities between January 2018 and February 2042, accruing interest at an annual effective interest rate between 3.19 percent and 6.09 percent on bonds denominated in soles and between 1.39 percent and 4.55 percent on bonds in U.S. dollar

Likewise, Credicorp Management has determined that the difference between amortized cost and the fair value of held-to-maturity investment is temporary in nature and Credicorp has the intention and ability to hold each of these investments until its maturity.

As of December 31, 2017, the Group has entered into repurchase agreement transactions for held-to-maturity investments for an estimated fair value of S/2,725.8 million, which the related liability is presented in “Payables from repurchase agreements and securities lending” of the consolidated statement of financial position, See Note 5(c).

(*)

At December 31, 2017, there are, 217 certificates of Annual Recognition of Payment for Work Progress (CRPAO from Spanish acronym), respectively, issued by the Peruvian Government to finance projects and concessions. Said issuance is a mechanism established in the concession agreement signed between the State and the concessionaire, which allows the latter to obtain financing to continue with the work undertaken. Said investment has maturities between January 2018 and April 2026, accruing interest at an annual effective rate between 3.90 percent and 5.38 percent.

he table below shows the balance of investments, by maturity groupings, before accrued interest

	2018
			At fair value
	At fair value		through other
	through profit		comprehensive		Amortized
	or loss		income		cost
	S/(000)		S/(000)		S/(000)

Up to 3 months		318,648		4,280,152		371,498
From 3 months to 1 year		186,358		5,842,026		208,737
From 1 to 3 years		485,333		2,145,494		1,094,642
From 3 to 5 years		152,083		1,722,051		272,963
More than 5 years		703,476		10,341,820		2,119,641
Without maturity		1,661,678		649,470		–
Total		3,507,576		24,981,013		4,067,481

	2017
	At fair value
	through profit		Available		Held to
	or loss		for sale		maturity
	S/(000)		S/(000)		S/(000)

Up to 3 months		1,476,174		4,987,080		334,791
From 3 months to 1 year		1,096,855		3,785,935		68,690
From 1 to 3 years		516,919		2,407,141		1,625,856
From 3 to 5 years		180,739		1,516,653		110,746
More than 5 years		574,293		9,327,327		2,183,082
Without maturity		175,831		2,179,989		–
Total		4,020,811		24,204,125		4,323,165