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INVESTMENTS | 12 Months Ended
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Dec. 31, 2019
INVESTMENTS |
INVESTMENTS | 6 INVESTMENTS a) Investment at fair value through profit or loss consist of the following:
|  | 2019 |  | 2018
|  | S/(000) |  | S/(000)
Government treasury bonds (i) |  | 1,276,573 |  | 1,318,311
Mutual funds |  | 593,552 |  | 397,918
Restricted mutual funds (ii) |  | 460,086 |  | 407,350
Corporate bonds |  | 326,673 |  | 160,006
Investment funds |  | 327,659 |  | 179,015
Participation in RAL Funds (iii) |  | 300,398 |  | 445,039
Central Bank of Chile bonds |  | 182,540 |  | 30,382
Shares |  | 83,085 |  | 101,068
Subordinated bonds |  | 80,084 |  | 94,413
Royalty Pharma (iv) |  | 68,584 |  | 56,787
Multilateral organization bonds |  | 53,353 |  | 193,395
Others |  | 93,204 |  | 123,892
Balance before accrued interest |  | 3,845,791 |  | 3,507,576
Accrued interest |  | 4,971 |  | 4,869
Total |  | 3,850,762 |  | 3,512,445
(i) At December 31, 2019 and 2018 the balance of these instruments includes the following government treasury bonds:
|  | 2019 |  | 2018
|  | S/(000) |  | S/(000)
Colombian Treasury bonds |  | 1,102,865 |  | 1,259,516
Peruvian Treasury bonds |  | 95,308 |  | 58,795
U.S. treasury and federal agency bonds |  | 78,400 |  | —
Total |  | 1,276,573 |  | 1,318,311
(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. (iii) At December 31, 2019, these funds are approximately S/166.9 million in bolivianos and S/133.5 million in U.S. Dollars (S/174.3 million in bolivianos and S/270.7 million in U.S. Dollars at December 31, 2018) 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. (iv) It corresponds to participations in RPI International Holding, LP, who invests in a series of subordinate funds whose objective is to invest in Royalty Pharma Investments, an investment fund established under the laws of Ireland. This investment fund is dedicated to buying medical and biotechnology patents. Participations in RPI International Holdings, LP, are not liquid and require authorization for negotiation. During the year of 2019 and 2018, the Group has received dividends from these participations for S/3,610.7 and S/3,689.4, respectively; which are presented in the item of “Interest and similar income” of the consolidated statement of income. b) Investments at fair value through other comprehensive income consist of the following:
|  | 2019 |  | 2018
|  |  |  | Unrealized gross amount |  |  |  |  |  | Unrealized gross amount |  |
|  | Amortized |  |  |  |  |  | Estimated |  | Amortized |  |  |  |  |  | Estimated
|  | cost |  | Profits |  | Losses |  | fair value |  | cost |  | Profits |  | Losses |  | fair value
|  | S/(000) |  | S/(000) |  | S/(000) |  | S/(000) |  | S/(000) |  | S/(000) |  | S/(000) |  | S/(000)
Debts instruments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Corporate bonds (i) |  | 7,974,080 |  | 706,394 |  | (8,322) |  | 8,672,152 |  | 8,263,943 |  | 208,409 |  | (182,479) |  | 8,289,873
Certificates of deposit BCRP (ii) |  | 8,649,885 |  | 15,388 |  | (1) |  | 8,665,272 |  | 9,833,776 |  | 189 |  | (4,381) |  | 9,829,584
Government treasury bonds (iii) |  | 6,009,137 |  | 690,048 |  | (1,109) |  | 6,698,076 |  | 4,977,422 |  | 260,939 |  | (47,613) |  | 5,190,748
Securitization instruments (iv) |  | 580,778 |  | 53,328 |  | (8,344) |  | 625,762 |  | 505,976 |  | 22,492 |  | (9,980) |  | 518,488
Negotiable certificates of deposit |  | 369,016 |  | 856 |  | (303) |  | 369,569 |  | 280,828 |  | 2,981 |  | (250) |  | 283,559
Subordinated bonds |  | 150,172 |  | 14,085 |  | (100) |  | 164,157 |  | 163,891 |  | 3,900 |  | (2,443) |  | 165,348
Others |  | 167,529 |  | 7,896 |  | — |  | 175,425 |  | 54,384 |  | 240 |  | (681) |  | 53,943
|  | 23,900,597 |  | 1,487,995 |  | (18,179) |  | 25,370,413 |  | 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 |  | 201,567 |  | — |  | 213,765 |  | 12,198 |  | 218,994 |  | — |  | 231,192
Inversiones Centenario |  | 112,647 |  | 195,305 |  | — |  | 307,952 |  | 112,647 |  | 236,063 |  | — |  | 348,710
Bolsa de Valores de Lima |  | 19,423 |  | 2,115 |  | — |  | 21,538 |  | 19,698 |  | 9,363 |  | — |  | 29,061
Bolsa de Comercio de Santiago |  | 4,964 |  | 5,688 |  | — |  | 10,652 |  | 8,808 |  | 5,360 |  | — |  | 14,168
Compañía Universal Textil S.A. |  | 9,597 |  | 248 |  | (3,432) |  | 6,413 |  | 9,597 |  | 248 |  | (3,397) |  | 6,448
Pagos Digitales Peruanos S.A. |  | 5,197 |  | — |  | — |  | 5,197 |  | 4,717 |  | — |  | — |  | 4,717
Corporación Andina de Fomento |  | 4,441 |  | 181 |  | — |  | 4,622 |  | 4,428 |  | 57 |  | — |  | 4,485
Bolsa de Valores de Colombia |  | 872 |  | 4,070 |  | (53) |  | 4,889 |  | 4,681 |  | 1,958 |  | — |  | 6,639
Others |  | 2,638 |  | 1,533 |  | — |  | 4,171 |  | 2,858 |  | 1,192 |  | — |  | 4,050
|  | 171,977 |  | 410,707 |  | (3,485) |  | 579,199 |  | 179,632 |  | 473,235 |  | (3,397) |  | 649,470
Balance before accrued interest |  | 24,072,574 |  | 1,898,702 |  | (21,664) |  | 25,949,612 |  | 24,259,852 |  | 972,385 |  | (251,224) |  | 24,981,013
Accrued interest |  |  |  |  |  |  |  | 253,111 |  |  |  |  |  |  |  | 214,822
Total |  |  |  |  |  |  |  | 26,202,723 |  |  |  |  |  |  |  | 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, 2019 and 2018 are of a temporary nature, considering factors such as intended strategy in relation with the identified security or portfolio, its underlying collateral and credit rating of the issuers. During 2019, as a result of assesment of the impairment of its investments at fair value through other comprehensive income, the Group recorded a recovery of credit loss of S/0.7 million (recovery of credit loss of S/1.9 million during the year 2018), 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 18(c). During 2019 and 2018, the Group has not reclassified instruments from the portfolio of investments at fair value through other comprehensive income to investments at amortized cost. The maturities and annual market rates of investments at fair value through other comprehensive income during the years of 2019 and 2018, are as follows:
|  |  |  |  |  | Annual effective interest rate
|  |  |  |  |  | 2019 |  | 2018
|  |  |  |  |  |  |  |  |  |  |  |  |  | Other |  |  |  |  |  |  |  |  |  | Other
|  |  |  |  |  | S/ |  | US$ |  | currencies |  | S/ |  | US$ |  | currencies
|  | Maturities |  | Min |  | Max |  | Min |  | Max |  | Min |  | Max |  | Min |  | Max |  | Min |  | Max |  | Min |  | Max
|  | 2019 |  | 2018 |  | % |  | % |  | % |  | % |  | % |  | % |  | % |  | % |  | % |  | % |  | % |  | %
Corporate bonds |  | Jan-2020 / Feb-2065 |  | Jan-2019 / Feb-2065 |  | 1.09 |  | 8.16 |  | 0.47 |  | 8.25 |  | 0.62 |  | 6.55 |  | 1.49 |  | 11.90 |  | 1.16 |  | 11.39 |  | 0.94 |  | 8.39
Certificates of deposit BCRP |  | Jan-2020 / Jul-2021 |  | Jan-2019 / Jun-2020 |  | 2.02 |  | 2.35 |  | — |  | — |  | — |  | — |  | 2.59 |  | 3.04 |  | — |  | — |  | — |  | —
Government treasury bonds |  | Jan-2020 / Feb-2055 |  | Jan-2019 / Feb-2055 |  | 0.55 |  | 5.31 |  | 1.11 |  | 4.61 |  | 0.43 |  | 0.82 |  | 2.37 |  | 6.50 |  | 1.22 |  | 7.07 |  | 0.60 |  | 0.60
Securitization instruments |  | May-2020 / Sep-2045 |  | Jun-2019 / Sep-2045 |  | 2.46 |  | 13.26 |  | 3.08 |  | 9.14 |  | 1.68 |  | 6.00 |  | 3.40 |  | 14.81 |  | 4.56 |  | 6.85 |  | 1.68 |  | 6.00
Negotiable certificates of deposits |  | Jan-2020 / Dec 2026 |  | Jan-2019 / Dec-2026 |  | 3.27 |  | 4.01 |  | 2.48 |  | 2.68 |  | 1.00 |  | 4.98 |  | 4.54 |  | 4.54 |  | — |  | — |  | 1.40 |  | 4.98
Subordinated bonds |  | Apr-2022 / Aug-2045 |  | Jan-2021 / Feb-2057 |  | 1.21 |  | 5.52 |  | 3.27 |  | 5.23 |  | 1.53 |  | 1.53 |  | 3.21 |  | 7.41 |  | 3.60 |  | 7.26 |  | 2.52 |  | 2.52
Others |  | Jan-2020 / Jan-2028 |  | Oct-2019 / Jun-2021 |  | 1.95 |  | 3.73 |  | 4.73 |  | 6.92 |  | — |  | — |  | 4.24 |  | 6.14 |  | — |  | — |  | — |  | —
At December 31, 2019, the Group maintains IRS, which have been designated as fair value hedges of certain bonds at a fixed rate in U.S. Dollars, issued by Government treasury bonds, corporate and multilateral organization entities, classified as investments at fair value through other comprehensive income,for a notional amount of S/618.8 million (S/923.9 million at December 31, 2018),see note 13(b); through these IRS these bonds were economically converted to a variable rate. Likewise, at December 31,2019, 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/1,588.7 million (S/2,138.9 million at December 31, 2018), 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). (i) At December 31, 2019 the most significant individual unrealized loss amounted to approximately S/1.5 million (S/8.2 million at December 31, 2018). Likewise, at December 31,2019, the Group maintains CCS, which were designated as cash flow hedges of certain corporate bonds for a notional amount of S/107.4 million (S/136.1 million at December 31, 2018), see note 13(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) At December 31, 2019, the Group maintains 87,530 certificates of deposits BCRP (99,587 at December 31, 2018); which are instruments issued at discount through public auction, traded on the Peruvian secondary market and payable in soles. (iii) At December 31, 2019 and 2018, the balance includes the following Government Treasury Bonds:
|  | 2019 |  | 2018
|  | S/(000) |  | S/(000)
Peruvian treasury bonds |  | 5,959,066 |  | 4,706,121
U.S. treasury and federal agency bonds |  | 391,475 |  | 82,477
Chilean treasury bonds |  | 173,364 |  | 119,517
Bolivian treasury bonds |  | 72,516 |  | 90,370
Colombian treasury bonds |  | 61,009 |  | 137,936
Others |  | 40,646 |  | 54,327
Total |  | 6,698,076 |  | 5,190,748
At December 31, 2018, the Group maintained CCS, which were designated as cash flow hedges of certain government treasury bonds for a notional amount of S/77.8 million, see note 13(b); by means of said CCS, the bonds were economically converted to soles at a fixed rate. The CCS matured in March 2019. (iv) At December 31, 2019 and 2018, the balance of securitization instruments includes the following:
|  | 2019 |  | 2018
|  | S/(000) |  | S/(000)
Inmuebles Panamericana |  | 169,959 |  | 153,953
Abengoa Transmisión del Norte |  | 87,377 |  | 80,948
Industrias de Aceite S.A. |  | 32,050 |  | 48,231
Homecenters Peruanos S.A. |  | 35,269 |  | 32,520
Others |  | 301,107 |  | 202,836
Total |  | 625,762 |  | 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.). c) Amortized cost investments consist of the following:
|  | 2019
|  | Carrying |  | Fair
|  | amount |  | value
|  | S/(000) |  | S/(000)
Peruvian sovereign bonds (i) |  | 3,277,667 |  | 3,694,631
Foreign government bonds (i) |  | 21,168 |  | 21,168
Certificates of payment on work progress (CRPAO) (ii) |  | 100,298 |  | 103,015
Sub total |  | 3,399,133 |  | 3,818,814
Accrued interest |  | 78,180 |  | 78,180
Total investments at amortized cost |  | 3,477,313 |  | 3,896,994
Provision for credit losses |  | (267) |  | (267)
Total investments at amortized cost, net |  | 3,477,046 |  | 3,896,727
|  | 2018
|  | Carrying |  | Fair
|  | amount |  | value
|  | S/(000) |  | S/(000)
Peruvian sovereign bonds (i) |  | 3,167,666 |  | 3,169,229
Foreign government bonds (i) |  | 347,824 |  | 347,502
Peruvian treasury bonds (i) |  | 215,769 |  | 215,787
Corporate bonds (i) |  | 220,583 |  | 218,373
Certificates of payment on work progress (CRPAO) (ii) |  | 117,173 |  | 117,209
Sub total |  | 4,069,015 |  | 4,068,100
Accrued interest |  | 87,357 |  | 87,357
Total investments at amortized cost |  | 4,156,372 |  | 4,155,457
Provision for credit losses |  | (1,534) |  | (1,534)
Total investments at amortized cost, net |  | 4,154,838 |  | 4,153,923
(i) At December 31, 2019, said bonds have maturities between January 2020 and February 2042, accruing interest at an annual effective interest rate between 2.14 percent and 5.28 percent on bonds denominated in soles and between 0.45 percent and 2.53 percent annual on bonds issued in other currencies. (at December 31, 2018 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. Dollars). Likewise, Credicorp Management has determined that at December 31, 2018, 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, 2019, the Group has repurchase agreement transactions for investments at amortized cost for an estimated fair value of S/1,569.3 million (S/2,953.3 million at December 31, 2018), 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). (ii) At December 31, 2019 there are 153 certificates of Annual Recognition of Payment on Work Progress - CRPAO from Spanish acronym (185 CRPAOs at December 31, 2018 ), 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 2020 and April 2026, accruing interest at an annual effective rate between 3.74 percent and 4.67 percent at December 31, 2019 (between January 2019 and April 2026, accruing interest at an annual effective rate between 4.72 percent and 6.02 percent at December 31, 2018). On July 30, 2019, the Assets and Liabilities Committee (ALCO) approved the request to change the Atlantic Security Bank (ASB) business model to manage its investments according to its new balance sheet structure, which generated a reclassification of the entire investment portfolio classified as amortized cost to the investment portfolio at fair value with through other comprehensive income and then sell them and acquire new investments that adapt to the new investment portfolio strategy. The value of the investments at amortized cost as of July 30, 2019 amounted to US$73,030.4 (in thousands) with a fluctuation amounting to US$2,117.5 (in thousands), with a market value of US$ 75,147.9 (in thousands) and finally an expected credit loss of US$82.4 (in thousands). The fluctuation and expected credit loss were recorded in other comprehensive income. d) The table below shows the balance of investments classified by maturity, without consider accrued interest or provision for credit loss:
|  | 2019
|  |  |  | 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 |  | 237,624 |  | 2,420,464 |  | 9,969
From 3 months to 1 year |  | 269,199 |  | 6,694,486 |  | 908,271
From 1 to 3 years |  | 472,215 |  | 2,155,053 |  | 42,440
From 3 to 5 years |  | 289,393 |  | 2,961,767 |  | 690,289
More than 5 years |  | 1,029,883 |  | 11,138,643 |  | 1,748,164
Without maturity |  | 1,547,477 |  | 579,199 |  | —
Total |  | 3,845,791 |  | 25,949,612 |  | 3,399,133
|  | 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 |  | 372,525
From 3 months to 1 year |  | 197,829 |  | 5,842,026 |  | 208,812
From 1 to 3 years |  | 485,333 |  | 2,145,494 |  | 1,094,660
From 3 to 5 years |  | 152,083 |  | 1,722,051 |  | 273,343
More than 5 years |  | 871,020 |  | 10,341,820 |  | 2,119,675
Without maturity |  | 1,482,663 |  | 649,470 |  | —
Total |  | 3,507,576 |  | 24,981,013 |  | 4,069,015

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