By Marco Aquino and Terry Wade
LIMA (Reuters) - Peru's Banco de Credito (CRE.LM: Quote, Profile, Research, Stock Buzz), the Andean country's largest bank, expects its loan portfolio to grow by up to 30 percent this year, Chief Executive Walter Bayly said on Wednesday.
Still, portfolio growth may be tempered this year by the central bank, which has twice raised reserve requirements for banks as part of an attempt to control inflation. That has left banks with less cash to lend out.
"I think credit growth will slow in coming months as a result of the measures the central bank has taken," Bayly said, adding that he favors keeping inflation under control.
He said Banco de Credito would invest $150 million building new branches, cash points and on other banking infrastructure this year as it tries to reach new customers. Many Peruvians still don't have bank accounts.
"If the loan portfolio grows 30 percent, our earnings won't grow by that much because we are investing a lot" in banking infrastructure.
Bayly, who spoke at the Reuters Latin America Investment Summit, said Fitch Ratings upgrade of the country to investment-grade status on Wednesday is "extremely important" and will bring in a new era of cheaper, more abundant financing once other credit rating agencies lift their views for Peru.
"This is a sign that the country is protected from any important macroeconomic movement," Bayly said of shocks hitting the global economy.
He said there is a broad consensus in Peru to gradually de-dollarize the economy, where about half of all loans are made in U.S. dollars, to boost overall stability.
"It's in everybody's interest," he said. "Everybody is in favor of it."
Many economists and some credit rating agencies say Peru should decrease the use of dollars as borrowers and lenders could be squeezed if the local currency, the sol PEN=PE, depreciates again after a long appreciation cycle.
Bayly said nearly all new home loans the bank issues are denominated in soles, though older loans were made in dollars. The use of dollars in Peru's economy grew in response to economic chaos of the 1980s.
Peru's largest bank, the main unit of Credicorp (BAP.LM: Quote, Profile, Research, Stock Buzz) (BAP.N: Quote, Profile, Research, Stock Buzz), had total loans of 24.6 billion soles ($9 billion) at the end of 2007. Peru's economy grew 9 percent last year, lifting consumption and production while boosting the banking market.
"Things are going very well," he said. "We see this growth going on for a few more years."
($1=2.73 Peru soles)
(For the summit blog: summitnotebook.reuters.com/)
(Reporting by Marco Aquino and Terry Wade, editing by Richard Chang)
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